Mark Latham Commodity Equity Intelligence Service

Friday 11th March 2016
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    China:Debt for Equity.

    China's central bank is preparing regulations that would allow commercial lenders to swap non-performing loans of companies for stakes in those firms, two people with direct knowledge of the new policy told Reuters.

    The new rules would reduce commercial banks' non-performing loan (NPL) ratios, and free up cash for fresh lending for investment in a new wave of infrastructure products and factory upgrades that the government hopes will rejuvenate the world's second-largest economy.

    NPLs surged to a decade-high last year as China's economy grew at its slowest pace in a quarter of a century. Official data showed banks held more than 4 trillion yuan ($614 billion) in NPLs and "special mention" loans, or debts that could sour, at the year-end.

    The sources, who spoke on condition of anonymity, said the release of a new document explaining the regulatory change was imminent. The People's Bank of China (PBOC) did not immediately respond to requests for comment.

    "Such a rule change shows banks' bad loans have risen to such a level that this issue has to be tackled now before it's too late," said Wu Kan, Shanghai-based head of equity trading at investment firm Shanshan Finance.

    State banks have extended loans to government financing vehicles and state-owned coal and steel producers, so this policy can help give lenders time to deal with non-performing assets as China pushes supply-side reforms, Wu added.

    The quality of assets held by banks is worse than it looks, analysts have said. To avoid stumping up capital and to protect their balance sheets, some banks have under-reported bad loans and under-recognized overdue debt.

    The top banking regulator has warned commercial lenders to pay special attention to risks.

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    China's oil giant, Alibaba to jointly offer 'smart energy' services

    Open up the app on your cellphone and pay your gas bill with just one tap.

    That is what possibly could be achieved through a partnership between China's energy giant China National Petroleum Corporation (CNPC), Alibaba and its Internet finance arm Ant Financial, after the two sides signed an official agreement on Thursday.

    According to a statement published on CNPC website, the partnership will focus on online maps, logistics, Internet payment, and membership sharing.

    CNPC PetroChina already allows customers to add credit to their pre-paid gas cards through Ant Financial's Alipay, one of the country's leading mobile payment systems.

    This agreement is a new approach by CNPC in its battle against low oil prices and signals a desire by both sides to transform the oil and gas industry, the statement said.

    China is transforming its energy sector with the help of the Internet. A guideline on the "Internet Plus" strategy released by the State Council last year has listed "smart energy" as one of its 11 priorities.

    CNPC and Alibaba are attempting to a system that improves the customer experience by meeting their demand, the statement said.

    For Alibaba, the partnership could also mean an expansion of its logistics network, with PetroChina's over 20,000 gas stations countrywide.

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    Ethane leaves Us from Marcus Hook. Chemical execs in denial.

    Ineos's first US shale gas shipment to arrive in Norway soon

    12:50 AM MST | March 10, 2016 | Natasha Alperowicz

    The Ineos Intrepid, the world’s largest LNG multi gas carrier, on Wednesday left the Markus Hook terminal near Philadelphia bound for Rafnes, Norway carrying 27,500 cubic meters of US shale gas ethane. The shale gas is cooled to -90ºC for the journey of 3,800 miles, which is expected to take 9-10 days.  US shale gas will complement the declining gas feed from the North Sea. “This is an important day for Ineos and Europe. We know that shale gas economics revitalized US manufacturing and for the first time Europe can access this important energy and raw material source too,” says Jim Ratcliffe, chairman and founder of Ineos.This is the first time that US shale gas has ever been imported into Europe.   The Ineos Intrepid is one of four specially designed Dragon class ships that will form part of a fleet of eight of the world’s largest ethane carriers. The Ineos Intrepid has “Shale Gas for Progress” emblazoned along its 180 metre length. “Shale gas economics has revitalised US manufacturing. When US shale gas arrives in Europe, it has the potential to do the same for European manufacturing,” Ratcliffe says.    The project has included the long-term chartering of eight Dragon class ships and will create a virtual pipeline across the Atlantic; connection to the new 300 mile Mariner East pipeline from the Marcellus shale in Western Pennsylvania to the Markus Hook deep water terminal near Philadelphia, with new export facilities and storage tanks. To receive the gas, Ineos has built the largest two ethane gas storage tanks in Europe at Rafnes, Norway and Grangemouth, UK. Ineos will use the ethane from US shale gas in its two gas crackers at the two sites, both as a fuel and as a feedstock. It is expected that shipments to Grangemouth will start later this year.   “We are nearing the end of a hugely ambitious project that has taken us five years. I am proud of everyone involved in it and I believe that Ineos is one of very few companies in the world who could have successfully pulled this off. I can’t wait for the Ineos Intrepid to finally get to Norway and complete the job,” Ratcliffe says.     

    Producers in denial about chems market shifts - consultants

    07 March 2016 13:46 Source:ICIS News

    denialLONDON (ICIS)--Management teams at some petrochemical companies are not fully facing up to the reality of the extent of shifts that have rippled through the market in recent years, the co-authors of a report by ICIS Analytics & Consulting and International eChem said on Monday.

    Firms looking to maintain course in spite of the global downturn and demographic shifts in many key markets are avoiding facing up to the reality of the current state of the economy, according to International eChem’s Paul Hodges.

    “The first reaction to a shock is usually denial,” he told ICIS.

    “People adopt a position of ‘It’s not great, but I can carry on with what I’m doing, I just need to be a little smarter,’” he said. “That is the comfortable middle, and we can’t go on like that.”

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    China 13th Five-Year Plan endorsed by NPC committee

    The draft outline of the 13th Five-Year Plan on national economy and social development was endorsed by the National People's Congress (NPC) Financial and Economic Committee (FEC) at a meeting on March 9, Xinhua reported.

    The draft has been examined by NPC deputies as well as the FEC and related committees since it was submitted on Saturday to the NPC annual session.

    The draft outline for the years between 2016 and 2020 is well versed and feasible, said the FEC, advising it to be passed.

    The committee's review report will be submitted to the NPC session if the presidium approves the submission.

    The committee also endorsed the reports on the drafts of the 2016 national economy and social development plan and the 2016 central and local budgets.

    The FEC advised the lawmakers to approve the development plan, while asking the State Council to actively push forward supply-side structural reform, substantively increase support for the real economy, accelerate transformation of agricultural development, greatly enhance resources saving and ecological and environmental protection, further improve social welfare and people's livelihood, and effectively prevent risks.

    The committee also supported approval of the NPC deputies for the budgets plan, requiring the State Council to employ an active fiscal policy, vigorously contribute to fiscal and taxation reform and legislation, improve cost benefit of fiscal expenditure, prevent government debt risks, standardize budget management, and tighten audit and supervision.

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    China Feb PPI down 4.9pct on year CPI up 2.3pct

    China’s Producer Price Index (PPI), which measures inflation at wholesale level, dropped 4.9% year on year and down 0.3% month on month in February, showed the latest data released by the National Bureau of Statistics (NBS) on March 10.

    It marked the 48th straight month of decline, said the NBS.

    In the same period, prices of coal mining and washing industry fell 17.6% on year and down 0.8% on month; prices of oil and natural gas mining industry posted a plunge of 36.1% on year and down 13.6% on month.

    Besides, prices of ferrous metal industry dropped 18.4% from the previous year and down 0.9% from January, data said.

    In February, prices of production materials dropped 5.8% on year and 0.5% on month.

    Over January-February, China’s PPI dropped 5.1% on average from the previous year; prices of production materials fell 6.0% on year.

    Of this, the average price of coal mining and washing industry fell 17.7% on year; while the price of oil and natural gas mining industry decreased 37.3% on year; price of ferrous metal industry dropped 18.6% from the previous year, data showed.

    The data came along with the release of the Consumer Price Index (CPI), which rose 2.3% from the year prior and up 1.6% on month in February.
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    Brazil prosecutors charge Lula in money laundering probe

    Former Brazilian President Luiz Inacio Lula da Silva was charged in a money laundering investigation led by Sao Paulo state prosecutors on Wednesday, intensifying scrutiny of the politician questioned in a separate federal graft probe last week.

    A spokesman for the state prosecutors declined to specify the charges, but state investigators have said they suspect Lula's family owned an undeclared beachfront apartment in the city of Guaruja.

    Federal investigators echoed those allegations after they detained Lula for questioning in police custody on Friday, fanning a political crisis that has rattled his successor, President Dilma Rousseff.

    Lula has denied any wrongdoing and rejected the idea that he owned the luxury condo in Guaruja built by engineering group OAS, one of the conglomerates snared in a vast corruption scandal tied to state-run oil company Petrobras.

    Lula's lawyer called the charges an attempt by prosecutor Cassio Roberto Conserino to smear the former president.

    "Conserino turned two visits to an apartment in Guaruja into concealed ownership," defense attorney Cristiano Zanin Martins said in a statement calling on the Supreme Court to decide if state or federal prosecutors had jurisdiction.

    The charges may make it more urgent for Lula to accept, if offered, a post in Rousseff's government.

    Brazilian media reported on Wednesday that Workers Party members were pressuring Rousseff to offer its founder Lula a ministerial portfolio that would shield him from possible detention.

    If appointed, Lula could only be tried in the Supreme Court, placing him out of the reach of the federal judge investigating kickbacks at Petrobras.

    Rousseff's minister in charge of legislative affairs, Ricardo Berzoini, said on Wednesday that Lula could join Brazil's government if he wishes.

    "The ball is in his court," Berzoini told Reuters. "The government is good with it," he said.

    According to two sources close to Lula, he was reluctant to join the government but pressure from his party has had some effect.

    "The best chance that he has is to accept a ministry and for the trial to go to the Supreme Court so he receives a fair hearing," said one of the sources, who requested anonymity to discuss Lula's legal strategy.

    The snowballing scandal puts Rousseff in a tough spot as she promises independence for investigators while trying to contain the political fallout in her Workers' Party.

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    Noble Group seeks $2.5 billion in borrowing base facility: sources

    Global energy firm Noble Group (NOBG.SI) is in the market with a $2.5 billion, one-year borrowing base revolving credit facility that will refinance existing debt due later this year, banking sources told Thomson Reuters LPC.

    The renewal of Noble loans is eagerly watched by the market as the most important development this year for the embattled trader of commodities from iron ore to oil, which suffered a dip in investor confidence over the past year.

    The loans that have Noble Americas as borrower include a $1.5 billion committed loan and a $1 billion uncommitted loan, which lenders can refuse to provide.

    The facility that is being arranged by MUFG was offered to bank investors in New York on March 7. It will refinance and combine two existing loans including a $1.1 billion letter of credit facility and a $1 billion existing revolver. Investors have until March 25 to commit to the transaction.

    The loans can be increased by $750 million, to $3.25 billion, and are available for the purchase, storage and sale of crude oil, base metals, natural gas, power, biodiesel, biofuel and other raw materials.

    A borrowing base is the amount of money that can be borrowed under a revolving credit facility based on the value of the company’s assets. Noble’s loans will be secured by a first priority preferred security interest in all of the personal property assets of the borrower and subsidiary guarantors subject to certain exclusions.

    Noble has mostly borrowed on an unsecured basis. Adding the borrowing base to its loans signals that given the current slump in raw material prices, the company had to come up with additional protection for lenders in order to access credit.

    Noble is attempting to refinance its debt as it battles to boost investor confidence after Standard & Poor's and Moody's Investors Service cut the company's investment grade ratings to junk in January and in December 2015, respectively, following accusations on accounting irregularities and weak markets.

    Both agencies downgraded the ratings by two additional levels in February.

    The fact that banks are prepared to lend again, and in larger amounts, will likely be seen as a positive breakthrough for the commodity merchant.

    Pricing on the uncommitted portion is based on Noble's current credit ratings of BB-/Ba3. It starts at 160 basis points over Libor and climbs to LIB+185 if ratings drop to B+/B1.

    Pricing on the committed portion opens at LIB+170 and changes based upon utilization of the revolving credit. If the company uses more than 50 percent of the credit, pricing moves to LIB+210. If the company uses less than 50 percent, pricing climbs to LIB+215. If ratings drop to B+/B1, pricing on the committed portion climbs to LIB+195, and paying LIB+235 and LIB+240, based on utilization.

    As an incentive to participate in the financing the company is offering fees of 75bp for commitments of or greater than $300 million, 70bp for commitments of or greater than $200 million, 65bp for commitments of or greater than $100 million, 62.5bp for commitments of or greater than $50 million, and 57.5bp for commitments of less than $50 million.

    In January, the company said it expected to refinance its revolving credit facility and reported its first annual loss in nearly 20 years, battered by a $1.2 billion writedown for weak coal prices.

    S&P said the loss was credit negative and could complicate refinancing a credit facility in May.

    "The downgrade shouldn't come as a surprise to anyone, but it is a major issue for the refinancing," Robert Southey, managing partner at London-based boutique firm Trench Capital Partners, told Reuters ahead of Noble's results.

    Hit by the collapse in commodity markets, Noble's shares have plunged about 55 percent in the past 12 months, and its bonds have sold off over the past year after Iceberg Research alleged it was inflating its assets by billions of dollars.
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    The march of the zombies

    “OVERSUPPLY is a global problem and a global problem requires collaborative efforts by all countries.” Those defiant words were uttered by Gao Hucheng, China’s minister of commerce, at a press conference held on February 23rd in Beijing. Mr Gao was responding to the worldwide backlash against the rising tide of Chinese industrial exports, by suggesting that everyone is to blame.

    Oversupply is indeed a global problem, but not quite in the way Mr Gao implies. China’s huge exports of industrial goods are flooding markets everywhere, contributing to deflationary pressures and threatening producers worldwide. If this oversupply were broadly the result of capacity gluts in many countries, then Mr Gao would be right that China should not be singled out. But this is not the case.

    China’s surplus capacity in steelmaking, for example, is bigger than the entire steel production of Japan, America and Germany combined. Rhodium Group, a consulting firm, calculates that global steel production rose by 57% in the decade to 2014, with Chinese mills making up 91% of this increase. In industry after industry, from paper to ships to glass, the picture is the same: China now has far too much supply in the face of shrinking internal demand. Yet still the expansion continues: China’s aluminium-smelting capacity is set to rise by another tenth this year. According to Ying Wang of Fitch, a credit-rating agency, around two billion tonnes of gross new capacity in coal mining will open in China in the next two years.

    A detailed report released this week by the European Union Chamber of Commerce in China reveals that industrial overcapacity has surged since 2008. China’s central bank recently surveyed 696 industrial firms in Jiangsu, a coastal province full of factories, and found that capacity utilisation had “decreased remarkably”. Louis Kuijs of Oxford Economics, a research outfit, calculates that the “output gap”—between production and capacity—for Chinese industry as a whole was zero in 2007; by 2015, it was 13.1% for industry overall, and much higher for heavy industry.
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    Odebrecht, OAS ex-CEOs mull collaborating in Brazil probe: paper

    The former chief executives of major Brazilian builders Odebrecht SA and OAS Empreendimentos SA could strike plea bargain deals with prosecutors in the Petrobras probe, newspaper O Globo reported on Tuesday.

    Marcelo Odebrecht and Leo Pinheiro are discussing the possibility of collaborating simultaneously with Brazilian authorities investigating a bribery scheme that involved state-run oil firm Petroleo Brasileiro SA, the newspaper reported, citing a source close to one of the executives.

    Odebrecht has been in jail since July on suspicion of corruption and Pinheiro is underhouse arrest. Both could seek lighter sentences if they agree to a plea bargain deal.

    Odebrecht and Pinheiro are some of highest-profile executives ensnared in the probe, with links to politicians, mostly from the governing coalition, according to prosecutors.

    Newspaper Folha de S.Paulo last week reported former Brazilian President Luiz Inacio Lula da Silva could be named by Pinheiro in a possible plea bargain testimony. Lula was briefly detained for questioning on Friday.

    Spokeswomen for Odebrecht and OAS did not immediately respond to requests for comment. Plea bargain deals are strictly confidential until the testimonies are collected by prosecutors and accepted by a judge.

    The strategy has been widely used in the sweeping corruption investigation that threatens to topple President Dilma Rousseff. Economists said uncertainty generated by the probe has helped to deepen Brazil's worst recession in decades.

    Marcelo Odebrecht, former chief executive of Latin America's largest engineering and construction conglomerate Odebrecht SA, received a 19-year sentence from federal court on convictions for bribery, money laundering and organized crime related to Brazil's massive corruption scandal, a court statement said on Tuesday.

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    The Reprehensibles: After the credit rally.

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    China Trade Balance Plunges To 11-Month Lows As Exports Crash Over 25%

    Worse than expected is an understatement.

    Things are not getting better in China as Exports crashed 25.4% YoY (the 3rd largest drop in history), almost double the 14.5% expectation and Imports tumbled 13.8%, the 16th month of YoY decline - the longest ever. Altogether this sent the trade surplus down to $32.6bn (missing expectations of $51bn) to 11-month lows.

    So much for that whole "devalue yourself to export growth" idea...

    As Bloomberg notes,

    China’s exports in yuan terms fell 20.6% year on year in February, down from a 6.6% drop in January, and missing expectations of an 11.3% fall. Imports were down 8.0%, an improvement from January’s 14.4% drop. The trade surplus came in at 209.5 billion yuan ($32 billion), down from 406.2 billion yuan.

    The Chinese New Year holiday, which fell at the start of February in 2016 and in the middle of February in 2015, distorts the data in unpredictable ways.Holiday effects mean the outsize drop in February exports overstates the weakness in China’s factory sector.

    Even so, looking at a year-to-date figure for the first two months of the year, the picture is only slightly less gloomy. In the year through February, exports are down 13.1%.

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    China and Oil: front and centre ..again!

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    China to cap energy consumption in 2016-2020 period

    China will put a cap on annual energy consumption between 2016 and 2020 to promote energy saving, a draft outline of the country's five-year development plan said on Saturday.

    China's energy consumption will stay below 5 billion tonnes of standard coal, according to the draft outline of the 13th Five-Year Plan on national economy and social development, which is presented to the National People's Congress annual session for review.

    The country consumed 4.3 billion tonnes of standard coal of energy last year, official data showed.

    China will push forward an energy consumption revolution in industries, construction, transportation and public institutions in the five-year period, and actively promote energy-saving technologies, the draft said.

    Given a continued economic downturn, the country is seeking to make its economy grow in a cleaner and more efficient manner.

    China aims to lower its energy consumption per unit of GDP by 15 percent by 2020, the draft said.

    The country is also promoting the use of clean energy, including wind, solar and nuclear power, to restructure energy consumption currently dominated by coal.
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    China to launch mixed ownership pilot programmes in oil, gas, rail sectors

    China plans to launch several mixed ownership pilot programmes in the oil, natural gas and rail sectors as it deepens reforms of state-owned enterprises, the country's top economic planner said on Sunday.

    As China restructures its state-owned companies, it will also moderately increase investment in infrastructure and public services, Xu Shaoshi, head of the National Development and Reform Commission (NDRC), told reporters at a briefing in Beijing.

    In September last year, China issued guidance on reforming state-owned enterprises, including the introduction of so-called mixed ownership of state firms, as part of the most far-reaching reforms of its sprawling and inefficient state sector in two decades.

    China has about 150,000 state-owned enterprises, managing more than 100 trillion yuan ($15.37 trillion) in assets and employing over 30 million people, according to the official Xinhua news agency.

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    German Banks Told To Start Hoarding Cash

    German newspaper Der Spiegel reported yesterday that theBavarian Banking Association has recommended that its member banks start stockpiling PHYSICAL CASH.

    Europe, of course, has been battling with negative interest rates for quite some time.

    What this means is that commercial banks are being charged interest for holding wholesale deposits at the European Central Bank.

    In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic.

    They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow.

    This is the sort of theory that works really well in an economic textbook. But it doesn’t work so well in a history textbook.

    Cheap money encourages risky behavior. It gives banks an incentive to give ‘no money down’ loans to homeless people with no employment history.

    It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).

    Banks are supposed to be conservative, responsible managers of other people’s money.

    When central bank policies penalize that practice, bad things tend to happen.

    Traditionally when a commercial bank in Europe wants to play it safe with its customers’ funds, they would hold excess reserves on deposit with the European Central Bank.

    In the past, they might even have been paid interest on those excess reserves as an extra incentive to be conservative.

    Now it’s the exact opposite. If a bank holds excess reserves on deposit at the ECB to ensure that they have a greater margin of safety, they must now pay 0.3% to the ECB.

    That’s what it means to have negative interest rates. And for the bank, this eats into their profits, especially when they have tens of billions in excess reserves.

    Talk about being between a rock and a hard place.

    On one hand, banks stand to lose a ton of money in negative interest. On the other hand, they put their customers’ deposits at risk if they don’t hold extra reserves.

    Well, the Bavarian Banking Association has had enough of this financial dictatorship.
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    China's premier says economy faces greater difficulties in 2016: state radio

    China's economy is facing greater difficulties and challenges in 2016 as the government forges ahead with structural reforms, state radio on Friday quoted Premier Li Keqiang as saying.

    The government will keep economic growth within a "reasonable range" this year, Li said.

    China's top economic planner has said the government would target economic growth of 6.5 percent to 7 percent this year, confirming a Reuters report, and sources said the money supply and inflation forecasts were in line with that target.
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    Slashing overcapacity indispensable for China recovery

    The central government has put de-capacity as this year's top priority for the first time in years, followed by destocking, deleveraging, lowering costs and improving weak growth areas. It shows its urgency and complexity.

    China's economy has entered a new normal. Given the mounting downward pressure, cutting excessive capacity is crucial for three reasons.

    First, as demand in some sectors is close to or has already reached a peak level, industrial development can only be achieved through cutting overcapacity. China is in its late stage of industrialization, after its tertiary sector surpassed secondary sector in 2012. Such transition is often accompanied by a shift of leading industries from garment manufacturing, mining and building materials to high-tech and services.

    For instance, as demand for heavy chemicals already peaked, overcapacity is in absolute sense instead of cyclical, therefore it can no longer be dissolved through demand expansion or the next economic cycle. According to industry sources, domestic consumption in crude steel peaked at 764 million tons in 2013 and fell 3.4 and 5.5 percent in 2014 and 2015 respectively. Such downward trend is expected to continue this year. In a longer term, as China's railway construction nears completion and the growth in real estate and auto industries slows, a drastic recovery in the steel demand will be less likely.

    Second, overcapacity is the major reason behind China's economic slowdown. Excessive capacity is to blame for the slump in industrial products, corporate earnings as well as fiscal revenue, while increasing the risk. Sectors suffering severe loss are those plagued by overcapacities. According to statistics by the industry, 90 major mining groups reported 91 percent decline in their profit and the loss among registered steel companies totaled 64.53 billion yuan. Profit margin in mining sector was merely 1.76 percent, way below the industrial average 5.76 percent.

    Third, only through cutting capacity, can the economy return into a better shape. Excessive capacity can lead to vicious competition, let alone the structural transformation and innovation. What's more, such unhealthy situation can have a ripple effect on the supply chain, causing financial and credibility risk. Therefore, if there is no real progress in cutting capacity, the whole economy will fall into deflation, low efficiency and low growth. It is therefore crucial to get the corporate profitability and development back to normal and ward off financial risks.

    Addressing the overcapacity issue may cause some pain in the short term such as putting local economy and job market under pressure, however we should have no illusion. Sooner beats later. We have to choose between strangling the whole industry and allowing the bankruptcy of a few.

    Cutting capacity should be government-led and market-driven

    The State Council recently put forward a general layout for de-capacity, stating that such task should combine the market mechanism with government's support.

    Market should play a crucial role in cutting excessive capacity. According to market mechanism, price would fall in sectors faced with overcapacity, and some companies would suffer a loss and finally go bankrupt and the demand and supply would reach a balance. Such case has already been seen in sectors such as consumption, garment and photovoltaic.

    However, government should also strive to maintain a healthy and fair business environment. The reason behind the current overcapacity issue is unfair competition. For instance, due to the weak enforcement of regulation, some firms known for causing high energy consumption and pollution didn't pay for the environmental cost. In these situations, bad money could drive out the good ones.

    Therefore, the government should enhance enforcement of laws and regulations, and punish unsafe production or other wrongdoings. For sectors plagued by severe overcapacity such as steel and coal, it should also take necessary steps to alleviate the issue.

    First, the government should launch clear guidance on withdrawal. Companies should hold accountable to their own investment decisions. Specific supporting guidance can help ease the exit process and ensure social stability. Such consideration is already underway.

    Second, multiple measures can be used to address re-employment issue. Amid capacity slash, how to allocate laid-off workers is the key. The government should enhance training service and basic social security coverage, and encourage employment across the region.

    Third, the government should adopt fiscal and financial measures to address zombie companies that consume a large amount of capital and land resources but actually are no longer sustainable on their own. They should be cut off from any fiscal or financial support and roll out liquidation plan.

    Fourth, the government should push ahead industrial transformation and updates, along with de-capacity. The "Made in China 2025" and the Internet Plus drive will help companies move up the industrial chain and improve their competitiveness
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    Brazil Labour Minister calls detention of ex-president Lula "violence"

    Brazil's Labor Minister Miguel Rossetto said on Friday the detention of former President Luiz Inácio Lula da Silva for questioning in an anti-corruption probe was not "justice" and described it instead as "violence."

    "The act is a clear attack on what Lula represents, as a political and social leader," the minister said in an emailed statement.
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    Oil and Gas

    IEA Says Oil Price May Have Bottomed as High-Cost Producers Cut

    Oil prices may have passed their lowest point as shrinking supplies outside OPEC and disruptions inside the group erode the global surplus, the International Energy Agency said.

    Production outside the Organization of Petroleum Exporting Countries will decline by 750,000 barrels a day this year, or 150,000 barrels a day more than estimated last month, the agency said. Markets are also being supported by output losses in Iraq and Nigeria, and as Iran restores production more slowly than planned following the end of international sanctions, it said.

    “There are signs that prices might have bottomed out,” the Paris-based adviser to 29 countries said in its monthly market report on Friday. “For prices there may be light at the end of what has been a long, dark tunnel” as market forces are “working their magic and higher-cost producers are cutting output.”

    Oil prices have recovered 50 percent from the 12-year lows reached in January as U.S. shale production retreats and as some OPEC members led by Saudi Arabia reached a tentative accord with Russia to maintain output at current levels. This “freeze” deal, while currently supporting prices, is unlikely to have a substantial impact on markets in the first half of the year, the IEA said.

    The agency’s view on prices is a shift from last month’s report, in which it said that crude could sink further as the market remained “awash in oil.” Brent futures traded at about $40 a barrel in London on Friday.

    The outlook for the balance of supply against demand in the first half is “essentially unchanged” from last month, the IEA said. World oil consumption will increase by 1.2 million barrels a day, helping to reduce the global surplus from 1.7 million barrels a day in the first half to 200,000 a day in the last six months of the year. Last month it projected the second-half surplus would be 300,000 a day. The agency repeated that it could lower the demand estimate as the price recovery curbs U.S. appetite for gasoline.

    Inventories in the developed world contracted last month for the first time in a year from the “comfortable” levels recorded in January, according to the report.

    The return of Iran after January’s nuclear agreement lifted sanctions on its oil trade “has been less dramatic than the Iranians said it would be” and further recovery will be “gradual,” the agency said. While the OPEC member vowed to restore 500,000 barrels a day as soon as sanctions ended, it instead boosted output by 220,000 barrels a day in February to 3.22 million, the highest in four years.

    Production from OPEC’s 13 members slipped by 90,000 barrels a day to 32.61 million a day in February as the increases in Iran were countered by declines in Iraq, Nigeria and the United Arab Emirates. OPEC is still pumping 700,000 barrels a day more than the average amount required from the group this year, the IEA’s data shows.

    About 600,000 barrels of Iraq’s exports have been halted by the closure of its northern export pipeline, while the suspension of Nigeria’s shipments of the Forcados grade -- amounting to 250,000 barrels a day -- “may be in place for some time.”

    U.S. oil production will decline by 530,000 barrels a day this year as the price rout takes its toll on investment and drilling, the IEA said. The agency also lowered its supply outlook for Brazil and Colombia.

    “Without an increase in demand expectations high cost oil suppliers will continue to bear the brunt of the market-clearing process,” the agency said. “It is clear that the current direction of travel is the correct one, although with a long way to go.”

    Before it's here, it's on the Bloomberg Terminal.

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    Yamal LNG’s Train 1 to start without additional financing

    Yamal LNG’s first liquefaction train will be launched without additional financing, according to Novatek’s department head Stanislav Shevkunov.

    The company intends to bring the first train, with the capacity to produce 5.5 million tons of LNG per year, online in 2017 as planned, Shevkunov told the media on Thursday, Reuters reports.

    Novatek, together with its partners Total of France, and China National Oil & Gas Exploration and Development Corporation is looking to add an additional US$12 billion loan from Chinese banks in order to close the project’s financing.

    The company’s CEO Leonid Mikhelson was reported as saying on Wednesday that the company expects to have the external financing secured in the next two to three months.

    The project will have three trains with a total production capacity of 16.5 million tons per year.
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    Keystone Pipeline Operator TransCanada in Takeover Talks

    TransCanada Corp., the company behind the controversial Keystone XL oil pipeline project, is in takeover talks with Columbia Pipeline Group Inc., a U.S. natural-gas pipeline operator with a market value of about $8 billion.

    The companies could reach a deal in the coming weeks, according to people familiar with the matter. Details of the possible deal—including the role of Columbia Pipeline Partners LP, a publicly traded affiliate of Columbia Pipeline Group—couldn’t be learned. The negotiations could still break down, the people cautioned.

    With a typical takeover premium and including Columbia Pipeline Group’s debt load of nearly $3 billion, a deal could be worth well over $10 billion.

    TransCanada has struggled to build new oil pipelines amid public and government concern that the projects would harm the environment and foster reliance on fossil fuels. The U.S. in November rejected the Calgary, Alberta, company’s proposed Keystone XL pipeline, which would have transported oil from Canada’s landlocked oil sands to Gulf Coast refineries.

    Meanwhile, TransCanada’s proposed C$15.7 billion ($11.85 billion) Energy East pipeline, which would carry crude from the western Canadian provinces of Alberta and Saskatchewan to refineries on the country’s east coast, also faces hurdles after the province of Quebec said this month that it would seek an injunction to ensure the project meets environmental guidelines. Energy East, even if approved, isn’t scheduled to go into service until 2020.

    TransCanada, which also has power operations, had revenue of C$11.3 billion last year, up about 11%, and a net loss of more than C$1 billion. It currently has a market value of about $26 billion.

    Houston-based Columbia Pipeline Group owns about 15,000 miles of gas pipelines from New York to the Gulf of Mexico, together with one of the country’s biggest underground storage systems and related gathering and processing assets. Most of its assets overlay the Marcellus and Utica shale formations beneath Pennsylvania, West Virginia and Ohio.

    It had net income of $307.1 million last year, up about 15%. Revenue declined slightly to $1.33 billion.

    The company was spun off from NiSource Inc., a natural-gas utility operating in seven eastern states, in the middle of last year. Shares of both Columbia Pipeline Group and Columbia Pipeline Partners have fallen sharply since then.

    Columbia Pipeline Group owns the general partner of Columbia Pipeline Partners, a master limited partnership that holds a stake in Columbia Pipeline Group’s operating assets through an entity called Columbia OpCo. Columbia Pipeline Partners went public early last year.
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    U.S. Shale Firms Set to Go ‘DUC’ Hunting to Shave Costs

    The number of drilled but uncompleted wells in the U.S. is set to fall in 2016, according to Bloomberg Intelligence, as DUCs provide struggling exploration and production companies a less capital-intensive way of bringing new wells online.

    Since the oil price began its descent in June 2014, DUCs have doubled to about 4,000.

    “Inventory changes will likely vary by region, such as in North Dakota, where operators such as Continental Resources are expecting to see DUC levels grow as they continue to drill faster than they complete wells,” said Bloomberg Intelligence energy analyst William Foiles.

    “Abnormal horizontal DUCs located in fringe acreage will almost surely remain uncompleted in 2016 without a substantial increase in oil and/or gas prices,” said Bloomberg Intelligence energy analyst Andrew Cosgrove. "The inventory will also work to provide a ceiling on prices should they spike, as operators would likely move quickly to complete DUCs should prices experience a significant rally," he said.
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    Oil falls after report March Moscow meeting is off

    Oil prices extended losses on Thursday following a report a meeting between oil producers to discuss a global pact on freezing production is unlikely to take place in Russia on March 20.

    Sources familiar with the matter say the meeting was likely to be scuttled, as OPEC member Iran is yet to say whether it would participate in such a deal.

    "They are not agreeing on the meeting. Why would the ministers meet again now? Iran says they will not do anything," said an OPEC source from a major producer. "Only if Iran agrees, things will change."

    OPEC officials including Nigeria's oil minister have said a meeting would take place in Moscow on that date, potentially as the next step in widening an agreement to freeze output at January levels struck by OPEC members Saudi Arabia, Venezuela and Qatar plus non-member Russia last month

    "Fundamentally you would expect prices to weaken from here because we're about to head into peak refinery turnaround season," said Virendra Chauhan, an analyst at Energy Aspects.

    "We expect weakness in the physical market as demand from refineries comes off."

    Global demand for crude oil typically dips when refineries around the world enter seasonal maintenance in spring, ahead of peak summer demand.

    The focus lies on a potential agreement to rein in output between producers from the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and non-OPEC exporters including Russia.
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    Canacol Energy announces combined test rate of 66 MMSCFPD from Oboe-1 well in Colombia

    Canacol Energy Ltd.  is pleased to announce that Oboe 1, an appraisal well drilled in its Clarinete gas field on the VIM 5 Exploration and Production Contract, has tested at a final rate of 13 million standard cubic feet per day (2,281 barrels of oil equivalent) of dry gas with no water from the third and shallowest test interval within the Cienaga de Oro ('CDO') reservoir.

    This flow test is the third of three separate tests executed on three separate gas bearing reservoir intervals within the CDO reservoir encountered in the Oboe 1 well.

    The first test interval deeper within the CDO tested at a final rate of 26 MMscfpd (4,561 boepd) as reported on February 25, 2016, while the second test interval flowed at a final rate of 27 MMscfpd (4,737 boepd) as reported on March 2, 2016. Canacol, through its wholly owned subsidiary CNE Oil & Gas S.A.S., holds a 100% operated interest in the VIM 5 E&P contract.
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    Indian reforms aim to unlock $40 bln of oil and gas output

    Energy demand in India far outstrips consumption, but regulated low prices for gas from prolific but challenging deepwater fields have deterred investment in the sector.

    Under the reforms, companies will have more freedom to set the price of gas from new discoveries and existing finds not yet in production. But they will be subject to a ceiling price set according to the landed price of alternatives such as fuel oil, naphtha, coal and liquefied natural gas, Oil Minister Dharmendra Pradhan told a news conference. The ceiling price would be reviewed every six months. 

    This will help boost gas output by at least 35 million cubic metres a day (mmscmd) for 15 years, equivalent to a total of 6.75 trillion cubic feet over that period, Pradhan said. India's current gas production is about 90 mmscmd.

    The move will benefit companies like Oil and Natural Gas Corporation, the country's top explorer, and Gujarat State Petroleum Corp, a government-run firm in the home state of Prime Minister Narendra Modi.

    ONGC said last month it wanted higher gas prices before it starts production from its east coast deepwater block.

    Reliance Industries, currently in a legal battle with the government over gas pricing, will have to either withdraw its case or wait for it to conclude before it can benefit from the new rules.

    An oil ministry official said there would be no immediate output increase as production from these difficult fields would take at least three years to come on stream.

    India, which imports two-third of its oil needs, will also offer a common exploration licence for different hydrocarbons like oil, natural gas, shale oil and gas and coal bed methane, in order to more quickly tap its vast resources.(

    Pradhan said the new proposal would help reduce government intervention and could boost foreign investment in Indian oil and gas when global oil prices recover.

    India has also decided to extend the exploration licences of 28 discovered oil and gas fields, awarded mainly to ONGC and Oil India, without bidding.

    The cabinet granted control of the western offshore Ratna and R-Series oil and gas fields to ONGC. The fields stopped production in 1996, when they were awarded to the Essar Group controlled by India's billionaire Ruia brothers.

    "Resource worth 2.61 trillion rupees ($38.92 billion) will be brought to production as a result of today's decision," Pradhan said.
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    Shrinking oil reserves crimp Iraqi Kurdistan's allure

    A string of downgrades to Iraqi Kurdistan's oil reserves is a fresh blow to the autonomous region's fledgling oil industry already crippled by conflict, political strife and low crude prices.

    The revisions - resulting from a closer inspection of oilfields after drillers hit more water than expected - take the shine off one of the world's largest oil and gas reserves, which had drawn investors such as Exxon Mobil.

    A further loss of faith in the region's oil bonanza also pressures the debt-ridden Kurdistan Regional Government (KRG), which has struggled to ramp up production and exports due to pipeline outages and conflict with Islamic State militants.

    "The recent reserve downgrades are another blow to optimism about Kurdish oil production," said Richard Mallinson, geopolitical analyst at consultancy Energy Aspects.

    "While there are substantial amounts of oil in this underexplored province, companies are finding it is not as easy to find or produce in the quantities initially expected."

    Among the handful of producers still operating in the region, three have in recent months reviewed their estimates of proven oil reserves or reduced output due to geological problems.

    Several fields in different areas have, nevertheless, been unaffected by the revisions. For example, Shaikan, operated by Gulf Keystone in the north of the region, saw its reserves upgraded last year to 639 million barrels (mmbbls).

    The region still boasts one of the world's lowest production costs, at around $20 a barrel.

    Genel Energy lost more than a third of its market value last month after the London-listedcompany halved the reserves estimate for Kurdistan's largest operational field, Taq Taq, to 356 mmbbls and wrote down its value by $1 billion.

    The revision means more than half of the 80,000-barrels-per-day field's reserves have been produced. Genel also operates a second field, Tawke, whose reserves were little changed at 631 mmbbls.

    Water levels in the six-year-old Taq Taq started rising rapidly in the second half of last year, prompting a study by consultancy McDaniel & Associates that revealed the porosity of the rock - the ability to access oil - was overstated, leading to the revision, Genel said.

    Tony Hayward, Genel's chief executive and a former boss of BP, said in an analyst call that the downgrade was "clearly very disappointing for ourselves and the Kurdistan Regional Government".
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    Oil prices edge closer to hedging territory

    Three weeks ago, the CEO of a major domestic oil producer lamented the U.S. oil industry has been “disproportionately” slammed by the oil-market crash.

    North America has sustained the bulk of the energy world’s job cuts, investment reductions, bankruptcies and rig closures since late 2014, and the United States is expected to bear most of the oil-production decline needed to correct the oil-market oversupply. In a year and a half, 70,000 U.S. oil and gas jobs have been lost and 1,400 drilling rigs have been sidelined.

    “Our activity level is bare minimum,” Hess CEO John Hess had said at the IHS CERAWeek energy industry conference in downtown Houston.

    Still, if not for the U.S. shale oil industry’s ability to act quickly, the oil glut might not have been corrected for years, energy research firm Wood Mackenzie says in a new report comparing the ongoing downturn to the mid-1980s oil bust.

    Some analysts believe U.S. crude production will drop this year by 600,000 barrels a day or more, which may be enough to realign supply and demand late this year or early next year.

    In the 1980s, crude production outpaced supply for four years in a row, and the market was still oversupplied by nearly 3 million barrels a day in 1988, long after crude prices were in free fall in 1986, according to Wood Mackenzie.

    “This time, it should be different because by 2017, the projected decline in non-OPEC supplies will occur more quickly than in the 1980s,” Wood Mackenzie said.

    That’s because U.S. shale oil production, which didn’t exist in the 1980s, can theoretically respond much more quickly to a lower price signal than conventional oil production.

    Wood Mackenzie believes crude prices could begin recovering in 2017 after the market rebalances and starts working through high oil-inventory levels, though it noted China’s oil demand and Iran’s return to the market are “key risks” to that forecast.

    The recent oil rally, analysts say, could prevent that U.S. oil-production decline from happening. On Wednesday, U.S. crude edged higher to more than $38 a barrel, creeping closer to levels that could prompt oil drillers to hedge their future production, which could cut into the expected output decline this year.

    “There is no hard and fast rule for industry hedging policy,” analysts at Tudor, Pickering, Holt & Co. wrote in a recent client note. “But recent conversations with management teams suggest that operators would consider hedging out part of their production stream in 2017 above $45 a barrel in order to protect downside risk from a cash flow perspective.”

    Oil futures contracts for February 2017, for instance, are priced at $44.14 a barrel. Tudor Pickering analysts say oil companies will be more aggressive in locking-in future prices when crude prices reach $50 to $60 a barrel, a level drillers could “actually hold production flat with internally generated cash flow.”

    Attached Files
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    Energy XXI says may file for bankruptcy if oil prices stay low

    U.S. oil and gas producer Energy XXI Ltd may seek Chapter 11 bankruptcy protection as soon as next week if oil prices remain low and it fails to refinance its debt, the company said in a regulatory filing.

    Brent crude has rallied in recent weeks to above $40 a barrel, but prices are still far below the $60 per barrel break-even level for the Houston-based company.

    With some $4 billion in liabilities as of Dec. 31, a bankruptcy filing by Energy XXI would be the second biggest energy-related failure since a prolonged slump in oil prices has put a slew of oil and gas producers at risk of default.

    Energy XXI missed an $8.8 million interest payment on senior notes on Feb. 16 and has been trying to reach a deal with debt holders to restructure its balance sheet before a 30-day grace period ends on March 17.

    "Absent a material improvement in oil and gas prices or a refinancing or some restructuring of our debt obligations or other improvement in liquidity, we may seek bankruptcy protection to continue our efforts to restructure our business and capital structure," Energy XXI said in the U.S. Securities and Exchange Commission filing on Monday.

    The company, with oilfields in South Louisiana and the Gulf of Mexico, also said in the filing that it may have to liquidate assets for less than their value on its balance sheet. It had a $1.3 billion loss in the second quarter ended Dec. 31.

    Energy XXI has been working with PJT Partners LP and Vinson & Elkins LLP on restructuring options, according to the filing.

    The biggest energy producer to go bankrupt over the past year has been Tulsa, Oklahoma-based Samson Resources Corp, which filed Chapter 11 in Delaware in September with $4.3 billion of debt.
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    Summary of Weekly Petroleum Data for the Week Ending March 4, 2016

    U.S. crude oil refinery inputs averaged over 15.9 million barrels per day during the week ending March 4, 2016, 59,000 barrels per day more than the previous week’s average. Refineries operated at 89.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day. Distillate fuel production decreased last week, averaging over 4.7 million barrels per day.

    U.S. crude oil imports averaged over 8.0 million barrels per day last week, down by 244,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.0 million barrels per day, 12.3% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 565,000 barrels per day. Distillate fuel imports averaged 133,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.9 million barrels from the previous week. At 521.9 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 4.5 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.1 million barrels last week but are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 0.7 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 0.7 million barrels last week.

    Total products supplied over the last four-week period averaged about 19.9 million barrels per day, up by 1.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.3 million barrels per day, up by 7.0% from the same period last year. Distillate fuel product supplied averaged about 3.6 million barrels per day over the last four weeks, down by 12.8% from the same period last year. Jet fuel product supplied is up 3.5% compared to the same four-week period last year.

    Cushing inventories rose 690,000 bbl rising for the 17th time in 18 weeks

    Attached Files
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    US oil production little changed last week

                                                 Last Week   Week Before     Last Year

    Domestic Production.....'0000. 9,078            9,077               9,366
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    Aramco to double gas production in a decade: CEO

    Saudi Aramco has embarked on a programme to develop gas fields not associated with oil production.

    Saudi Aramco plans to nearly double its gas production to 23bn standard cubic feet (scf) per day in the next decade, its chief executive said on Tuesday.

    "The kingdom has managed to increase gas production from 3.5bn standard cubic feet per day in 1982 to more than 12bn scf now and this figure is expected to double to around 23bn scf during the coming decade," Amin Nasser told an industry conference.

    "Work is under way to execute an ambitious plan to implement this during the coming 10 years," he said, without detailing the plan.

    Saudi Aramco, the world's largest oil and gas company, has embarked on a massive programme to boost gas output for electricity and petrochemical production by developing gas fields not associated with oil production.

    For instance, it is exploring and developing unconventional gas in the north of the kingdom.

    Nasser also said Aramco was moving ahead with its strategy ‘to achieve a better balance between the total exploration and production capacity, which stands at 12 million barrels per day of crude oil, and its refining capacity’.

    The state oil giant plans to raise its refining capacity to 8 to 10mn bpd from around 5.4mn bpd now, he added.
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    YPF boss Galuccio 'quits'

    Miguel Galuccio, chief executive of Argentina's YPF, has quit after the government asked him to resign, according to a report.

    Galuccio has handed in his resignation, which will take effect at the end of the month, Reuters quoted a company spokesman as saying in Wednesday.

    The decision to step aside comes after President Mauricio Macri replaced Cristina Fernandez de Kirchner last year.

    It was Fernandez who had installed Galuccio, a former Schlumberger executive, to the position in 2012, after the company's majority stake was expropriated from Spanish major Repsol the same year.

    Galuccio's position had looked under pressure in late 2013 and early 2014, when the company was forced to deny rumours that his exit was imminent.

    Former Buenos Aires mayor Macri swept to power on a more pro-business ticket, vowing to correct the economic mistakes of his predecessor.

    Before officially taking office he dismissed suggestions that he would reverse the 2012 expropriation of Repsol’s controlling stake in YPF, but did not then state if he would retain Galuccio as chief executive.

    Macri also named Juan Jose Aranguren — a former Shell executive and outspoken critic of Kirchner’s interventionist policies — as energy adviser. He also signaled that steering the country toward self-sufficiency in hydrocarbons, especially gas, would be a priority.

    Argentina relies on gas to satisfy 53% of its energy demand, but output has fallen by about 20% over the past decade, despite bountiful unconventional resources.
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    Parex Resources announces 2015 fourth quarter and full year 2015 results

    2015 Financial and Operational Highlights

    • Achieved annual average oil production in 2015 of 27,434 barrels per day, an increase of 22 percent over 2014;
    • Increased net working capital to $76.7 million at December 31, 2015 compared to a net debt position of $31.7 at December 31, 2014, and exited fourth quarter with no bank debt and available credit facility of $200 million;
    • Released an updated independently evaluated reserves assessment prepared by GLJ Petroleum Consultants Ltd. with proved plus probable ('2P') reserves growth of 19 percent over 2014, increasing to 81.7 million barrels of oil equivalent (98% crude oil) at December 31, 2015 from 68.4 million barrels of oil equivalent (net company working interest) at December 31, 2014;
    • Finding, Development and Acquisition costs ('FD&A') for the year were $2.00/bbl for proved ('1P') reserves and $3.57/bbl for 2P reserves including future development capital;
    • Generated full year 2015 funds flow from continuing operations of $130.3 million ($0.90 (CAD $1.15) per share basic). Funds flow decreased from the comparative period of $293.9 million ($2.44 (CAD $2.69) per share basic) due to lower oil prices partially offset by an increase in sales volumes;
    • Recorded a net loss of $44.6 million ($0.31 per basic share) for the year ended December 31, 2015. The net loss was driven by non-cash impairment charges mainly associated with the decrease in world oil prices and expensed exploration costs;
    • Completed a bought deal financing in April 2015 issuing 14.95 million shares at a price of CAD$9.15 per common share for gross proceeds of CAD $136.8 million;
    • Executed a farm-in agreement with Empresa Colombiana de Petroleos S.A ('Ecopetrol) to operate and earn 50% working interest in the Aguas Blancas light oil field located in the Middle Magdalena Basin of Colombia; and
    • Participated in drilling 12 gross wells in Colombia resulting in 7 oil wells, 2 disposal wells and 3 abandoned wells, for a success rate of 70 percent.

    Fourth Quarter Financial and Operational Highlights

    • Achieved a record quarterly oil production of 28,588 barrels per day, an increase of 8% over the prior year comparative period and 4% greater than the 2015 average oil production;
    • Generated funds flow from continuing operations of $33.6 million ($0.22 per share basic) or $12.16/bbl;
    • Reduced production and transportation costs on a combined basis by 33% to $19.03/bbl from $28.23/bbl in the comparative period; and
    • Generated free funds flow of $10.0 million as a result of funds flow from operations being in excess of fourth quarter capital expenditures.
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    Nigerian state oil company workers strike over proposed changes

    Nigerian oil workers are staging a nationwide strike that has led to a walkout of staff from the state oil company, the head of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) said on Wednesday.

    Lumumba Okugbawa said the action was being taken in response to a restructuring of the Nigerian National Petroleum Corporation (NNPC), announced by the minister of state for petroleum, that will see it divided into five divisions.

    An NNPC spokesman could not immediately be reached to confirm the industrial action but a Reuters reporter said gates to the company's head office in the capital, Abuja, were closed as were seven NNPC fuel stations in the city.
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    Iraqi Kurdish oil pipeline could reopen soon: sources

    Turkey has partly completed a military campaign near its southeastern border, raising hopes an idled Iraqi oil pipeline nearby could soon reopen after a three-week outage that has squeezed the already cash-strapped Kurdistan region's finances.

    It could still be up to a week before oil starts flowing through the pipeline that normally carries 600,000 barrels per day (bpd) to Turkey's Mediterranean port of Ceyhan as the military sweep for mines and unrest in the region persists.

    The longer it takes for flows to resume, the deeper the crisis for Kurdistan, an autonomous region within Iraq that is already on the verge of insolvency and depends almost entirely on revenue from its oil exports through the pipeline.

    The outage, one of the longest in the past two years, was caused by a deteriorating security situation in Turkey's southeast where violence has surged after a two-year ceasefire between the state and Kurdish militants broke down last July.

    Turkey's military launched a large scale campaign in a handful towns in the mainly Kurdish southeast after the youth wing of the Kurdistan Workers Party (PKK) sealed off entire districts of some towns and cities and declared autonomy.

    The Turkish army said late on Tuesday operations in Idil, a town in Sirnak province, through which the pipeline passes, on the border with Iraq and Syria, are complete and 114 militants had been killed. A curfew imposed weeks ago is still in effect.

    "The operation in Idil has been completed last night: this is good news for the pipeline as well," a Turkish energy official said. "Turkish security forces are trying to clean the area from PKK; and they did what was targeted. Turkey will raise some security measures for the pipeline."

    Turkey accused the PKK, considered a terrorist group by Turkey, the United States and the European Union, of blowing the pipeline up on Feb. 25 when pumping had already halted. The group denies the accusation.

    "The explosion on the 25th has apparently caused damage in both of the pipelines, meaning by pass is no more an option and at the moment the teams are continuing their repair work, we have been told," a shipping source said.

    "They are saying it would take at least another week as the mine sweeping work is far from being completed," he added.

    The outage left the Kurdistan Regional Government (KRG) with just $233 million in net revenue from its oil exports in February - less than one third of what it needs to cover a bloated public payroll.

    Even before the pipeline was closed, the KRG was running a multi-million dollar monthly deficit as oil prices plummeted while war with Islamic State and an influx of people displaced by violence in the rest of Iraq have increased the strain.

    Attached Files
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    Crescent Point posts surprise profit as operating costs fall

    Canadian oil and gas producer Crescent Point Energy Corp posted a surprise quarterly profit, helped by lower operating costs, but the company slashed its dividend as it looks to conserve cash after a steep drop in oil prices.

    Crescent Point also said on Wednesday that it expected its capital expenditure and production in 2016 to be at the lower end of its forecasts.

    The company had earlier forecast capital expenditure of C$950 million-C$1.3 billion and production of 165,000-172,000 barrels of oil equivalent per day for 2016.

    Other Canadian oil and gas producers including Encana Corp and Husky Energy Inc have also cut or suspended their dividends and lowered their capital budget.

    Crescent Point slashed its monthly dividend to 3 Canadian cents per share from 10 Canadian cents, which it said was expected to save about C$430 million ($321 million) annually.

    As of March 4, about 39 percent of the company's oil production was hedged for the rest of 2016 at an average price of C$80 per barrel, it said.

    Crescent Point posted a net loss of C$382.4 million, or 76 Canadian cents per share, for the fourth quarter. The Calgary-based company had a profit of C$121.3 million, or 27 Canadian cents per share, a year earlier.

    Excluding an impairment charge of C$829.6 million, the company earned 41 Canadian cents per share.

    Analysts on average had expected a loss of 2 Canadian cents per share, according to Thomson Reuters I/B/E/S.
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    Australian exploration collapses due to low oil prices

    Petroleum exploration activity in Australia has collapsed in the wake of the plunge in global oil prices over the last 18 months, a period in which the country's crude production has fallen to its lowest level in 45 years, according to a report released Wednesday at an industry conference in Sydney. The total number of oil and gas exploration and development wells drilled in Australia almost halved in 2015 to 821 from 1,534 in 2014, the report's author, EnergyQuest CEO Graeme Bethune, told the Australian Domestic Gas Outlook conference.

    The number of exploration wells drilled last year dropped to just 54, down from 119 in 2014, he said.

    The collapsed oil price had its biggest impact on offshore exploration, where activity crashed in 2015 to just three wells, down from 29 offshore wells drilled in 2014.

    Bethune said he believed last year's dearth of offshore drilling was just the beginning of a prolonged period of very low activity in Australia, despite the large take up of new acreage in offshore release programs between 2012 and 2014.

    Work programs proposed to win offshore acreage in that period involved total investment of A$1.105 billion ($822 million) in the first three years, but the headline figure included only 12 wells, Bethune said.

    Winning bidders loaded most of their proposed spending, amounting to A$1.774 billion and 43 exploration wells, into the secondary, non-guaranteed component of their work programs, which covers years four to six of the permits.

    "This effectively gives them, in a low oil price environment, the freedom to severely prune their activity for as long as prices remain low," he added.

    Onshore, the decline in exploration wells was less precipitous but still serious.

    "The number of onshore exploration wells dropped from 90 to 51, with big declines in all states except Western Australia, where exciting results in the Perth Basin are driving activity," he said.

    Exploration spending in Australia fell to A$446 million in the fourth quarter of 2015 from A$1,034 million in Q4 2014, according to Bethune.

    "This is Australia's lowest oil exploration spend in a decade," he added. Low oil prices have also driven significant downward revisions of reserves, leading to negative reserves replacement ratios over last year, Bethune said.

    The price slump did not hit sales, with Australian oil and gas companies' volumes up 6.8% in Q4 2015. However, revenue realized per barrel of oil equivalent fell by an average 29%.

    As a result, Australian companies' total sales revenue, excluding BHP Billiton, plummeted to A$3.3 billion in Q4 2015 from A$4.4 billion in Q4 2014. OIL OUTPUT AT 76.2 MILLION BARRELS FOR 2015

    EnergyQuest estimated Australia produced 76.2 million barrels, or roughly 208,700 b/d, of crude oil in 2015, the country's lowest output since 1970.

    Production was down from 83.8 million barrels in 2014, with the biggest decline seen at the mature Gippsland Basin fields off southeastern Australia. The country's total condensate production fell 8.5% year on year in 2015 to 41.4 million barrels, with lower output recorded in all areas except the Bass and Perth basins.

    Australia's natural gas production increased 12.6% year on year in 2015 to a record 2,634.6 petajoules, and was 26.7% higher in Q4 at 729.4 PJ.

    The increases were due mainly to higher output from the Surat and Bowen basins in the eastern state of Queensland, where extensive resources have been developed to supply three new export LNG projects in Gladstone.

    The 6.6% year-on-year increase was driven by higher LNG output.
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    Imperial Sells Stations to 7-Eleven, Others for $2.1 Billion

    Imperial Oil Ltd. will sell its remaining gas stations to five Canadian distributors for C$2.8 billion ($2.1 billion) as the oil producer focuses on its main oil-sands and refining businesses.

    Imperial will sell 497 company-owned Esso retail stations to distributors including 7-Eleven Inc., according to a statement released on Tuesday. Other purchasers include Parkland Fuel Inc. and Alimentation Couche-Tard Inc., a Laval, Quebec-based convenience store operator.

    “We believe these agreements represent the best way for Imperial to grow in the highly competitive Canadian fuels marketing business," Imperial Oil Chief Executive Officer Rich Kruger, said in the statement. "The Esso brand has a leading presence in Canada through our distributor network and strong prospects for continued growth to the benefit of our customers and shareholders."

    Imperial Oil, whose majority owner is Exxon Mobil Corp., extracts bitumen and crude from its Canadian assets and operates three refineries in Canada. The company is curtailing investment amid weak prices for oil-sands bitumen that is reducing cash flow and production increases and spending cuts haven’t been enough to offset slumping commodity prices, according to Bloomberg Intelligence analyst Michael Kay.

    It took Imperial more than a year to sell the stations after announcing that the remaining sites would be sold to independent third-party operators in January 2015. The Calgary-based company’s Esso retail stations were already operating under the branded wholesaler model, the company said Tuesday.
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    Chevron pivots from big projects to West Texas shale

    After years of spending billions of dollars constructing massive oil and gas projects, Chevron Corp. is planning to pivot to more profitable, shorter-cycle investments like its fields in the West Texas shale-oil plays.

    The No. 2 U.S. oil company says it is winding down long-term investments on big projects as they come into production this year and next, but it’s going to put more of its budget toward the Permian Basin. It believes it can double or nearly triple its oil production there by the end of the decade by doubling its spending from $3 billion, about a tenth of its budget, and boosting its rig fleet there to 14 from seven.

    “Don’t be surprised if by the middle of the next decade 20 to 25 percent of our production is in this short-cycle shale and tight activity,” Chevron chairman and CEO John Watson told investors Tuesday in an annual update.

    In the Permian Basin, Chevron says it has 1,300 drilling locations that can make a 10-percent return at $40 oil; at $50 oil, 4,000 locations can turn a profit; at $60, 5,500 locations. And that’s just assessing a third of its portfolio there.

    It expects to drill 175 wells this year with seven operated rigs and nine non-operated rigs. By 2020, the company projects it could pump up to 350,000 barrels a day out of the Permian, up from its current 125,000 barrels a day.

    The only way to cope with the oil downturn is to get more efficient and productive. Over the past year, Chevron said its cost to drill a horizontal well has fallen 40 percent to about $7.1 million and the time it takes to drill a well has been cut in half to 20 days. By improving its well-stimulation techniques, the company has boosted its returns from the play by 30 percent.

    “When you combine our royalty advantage with the good rocks and competitive execution performance, it translates to compelling economics,” said Jay Johnson, senior vice president of upstream at Chevron.
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    Saipem share price plunges as banks sell rights issue rump

    Shares in Saipem fell sharply on Tuesday after banks underwriting the oil industry service group's 3.5 billion-euro ($3.9 billion) rights issue cleared most of the unsold shares on their books at a discount to the current market price.

    The banks were left with more than 400 million euros worth of unwanted shares last month after the largest financing of its type this year met with weak demand, leaving lenders with around 12 percent of the issue.

    Saipem, like other oil industry contractors, has been struggling to fill its order book and boost margins as falling oil prices cause exploration and production companies to cut their spending.

    Investors had worried the poor demand from existing shareholders could deter banks from backing other European issues related to the oil and gas sector.

    But sources said JPMorgan and Goldman Sachs succeeded in placing around 700 million shares in Saipem on Monday on behalf of the consortium at 0.39 euros each, earning them a profit on the deeply discounted rights issue price of 0.362 euros.

    Saipem shares ended the day down 14.8 percent at 0.3629 euros.

    "The placement drew huge interest and went very fast," one of the sources said.

    A second source said the only bank from the consortium not to have sold was Intesa Sanpaolo unit Banca IMI which held on to its 1.4 percent stake.

    Local broker ICBPI said the placing had raised an overall 273 million euros, with a capital gain of 19.3 million euros.

    "This placement has more or less removed the share overhang on the stock," ICBPI said.

    Originally the banks underwriting the issue had been left with almost 1.2 billion shares.
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    PDC Energy Offers 5.15M Shares of New Stock, Wants to Get $263M

    Something we’ve noticed about energy companies offering more stock as a way of generating cash. Almost always they issue one press release to announce they are offering X shares of new stock. And a few hours later they issue a second press release announcing they’ve “upsized” the offering–offering more shares.

    Are they trying to give the impression that there was “just so much darned demand we simply had to offer even more shares to meet all the demand”? That’s what it looks like. Of course it’s just a marketing tactic (if you ask us). They all seem to do it.

    The latest example is from PDC Energy, a driller in the Wattenberg Field in Colorado and the Utica in Ohio. PDC paused its Utica drilling program in 2015 with plans to do a little more drilling in the Utica in 2016. PDC issued its pair of press releases yesterday, the first saying they will float 4 million new shares of stock, the second saying that number was upsized and they would instead offer 5.15 million shares with hopes to raise $263 million…
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    Marcellus Produces More than EIA Expected

    The U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The March 2016 report shows what the EIA predicts oil and natural gas production will be in April from the seven largest commercial shale plays in the U.S. What does the report show? Yes, natural gas production is down again, including the Marcellus. But in a rare move, the EIA had to revise its Marcellus production data because the play is producing more than the smart folks at EIA figured…

    Total natural gas output is expected to decline for a fifth consecutive month in April to 46.3 billion cubic feet per day (bcfd), the lowest since July 2015, the EIA said. That would be down almost 0.5 bcfd from March, making it the biggest monthly decline since March 2013, it noted.

    The biggest regional decline was expected to be in Eagle Ford, down 0.2 bcfd from March to 6.3 bcfd in April, the lowest level of output in the basin since April 2014, the EIA said.

    In the Marcellus Formation, the biggest U.S. shale gas field, in Pennsylvania and West Virginia, April output was expected to decline by 0.1 bcfd from March to 17.3 bcfd. That would be the second monthly decline in a row and the biggest decline since July 2013. (1)

    On the other hand, the Marcellus is more productive than the EIA previous thought:

    America’s energy explorers have become so good at pulling natural gas out of the ground that government forecasters are having trouble figuring out exactly how much they’re producing.

    This month, the Marcellus shale formation of the eastern U.S., the country’s biggest gas play, will yield almost 2 billion cubic feet more a day than the U.S. Energy Information Administration had previously forecast, estimates the agency released Monday show. It said the field’s output was revised based on more recent production data from Pennsylvania.

    It’s a blow for bullish gas traders who’ve been waiting for drillers to curb output with futures trading near a 17-year low. The agency’s revision suggests that it may take longer than analysts had previously thought to slow the flow from the Marcellus, a scenario that would keep the biggest stockpile glut since 2012 expanding and prices under pressure.

    The changes are also a testament to producers’ ability to “choke” the flow of gas from existing wells in response to changes in the market, Jozef Lieskovsky, a senior analyst at the agency in Washington, said in an e-mail Monday.

    The revision to the EIA’s data is “unusual,” said Lieskovsky. “We believe it is not only a story of higher productivity, but also choking existing wells, and increased production after new pipeline capacity came online.”

    Producers have used this process known as choking to restrict output from a well when prices are low, when there isn’t enough pipeline capacity to carry their gas to market, or to keep a well flowing for longer. They’re turning up the spigots on some wells as new pipelines are placed into service to move fuel once trapped in the Marcellus to demand centers across the U.S.

    Lots more at:

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    Midstream energy industry braces for key bankruptcy court ruling

    The $500 billion midstream sector is bracing on Tuesday for a ruling from a U.S. bankruptcy judge that could determine if energy producers can use Chapter 11 to shed contracts with pipeline operators for transporting oil and natural gas.

    U.S. Bankruptcy Judge Shelley Chapman in Manhattan will read her ruling at 2:30 pm ET on a request by Houston-based Sabine Oil & Gas Corp to reject a contract with an affiliate of Cheniere Energy Inc to gather and process natural gas in Texas.

    Chapman's ruling will be the first major test for using Chapter 11 to shed the contracts, which were seen as a way to protect the midstream industry from the volatility of energy prices.

    Underpinned by the stability offered by the capacity contracts, many midstream companies organized as high-yielding master limited partnerships favored by income-seeking investors.

    Since commodity prices began to plummet in 2014, many producers have cut their drilling, and now the commitments to use pipeline capacity no longer make economic sense.

    Sabine has argued it could immediately save $35 million by ending its contract, while Cheniere has argued the contract is written to be essentially bankruptcy-proof.

    Chapman told a hearing in early February she was inclined to rule in Sabine's favor.

    Sabine has said if it gets its way, it plans to build a pipeline system in southern Texas to replace Cheniere's. The producer's lawyers have also acknowledged a ruling in Sabine's favor may provide leverage to renegotiate with Cheniere.

    Other producers have followed in Sabine's footsteps.

    Quicksilver Resources Inc has filed papers to reject agreements with a unit of Crestwood Equity Partners and Magnum Hunter Resources Corp is seeking to end multiple pipeline deals, including one with an affiliate that is majority owned by Morgan Stanley.

    A ruling on Quicksilver's request is expected later this month. Magnum Hunter's requests will be argued in court in the coming weeks.

    A judge ruled that a bankrupt oil-and-gas producer could shed expensive contracts it made with pipeline companies when energy was booming, rejecting pipeline firms’ claim that even bankruptcies couldn’t break the lucrative agreements apart.

    Sabine Oil & Gas Corp., which filed for bankruptcy protection in July, had asked a New York bankruptcy court to let it out of pipeline agreements with Nordheim Eagle Ford Gathering LLC, an affiliate ofCheniere Energy Inc.

    Under such deals, oil-and-gas producers agree to ship certain volumes of oil or gas every year at set fees, and have to make deficiency payments if they miss their targets.

    Sabine argued it was no longer shipping enough fuel to meet its minimum commitments under the deals and would have to pay Nordheim $35 million over the life of the contract to make up the difference, making the pacts so expensive it would be better off striking a new agreement with another company.

    Sabine also asked to get out of similar agreements with a second pipeline operator—an affiliate of High Point Infrastructure Partners LLC—arguing that it would save as much as $80 million and avoid sinking money into unprofitable wells the company would be required to drill under the agreement.

    Judge Shelley Chapman of the U.S. Bankruptcy Court in Manhattan agreed to let Sabine out of the deals over the objections of the pipeline companies, but said that Texas law wasn’t clear enough to allow her to make a binding decision, potentially setting the stage for another legal battle over the pipeline operators’ argument that the agreements can’t be broken because they are inextricably tied to the land on which Sabine operates.

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    Angola LNG to ship cargo soon, Chevron CEO says

    First liquefied natural gas cargo after a two-year shutdown could be shipped within two weeks from the $10 billion Angola LNG project, Chevron’s CEO John Watson said on Tuesday.

    Watson said this at Chevron’s Security Analyst Meeting in New York just after the companyannounced it is planning more spending cuts to preserve cash in a low oil price environment.

    Jay Johnson, Executive VP, Upstream at Chevronsaid the repairs and design improvements at the company’s LNG plant are complete, with final commissioning ongoing.

    The Angola LNG export plant, which sent its first cargo of liquefied natural gas in June of 2013, was shut down in April 2014 after a major rupture on a flare line.

    The LNG plant, located in Soyo, is a single-train facility able to produce 5.2 million tonnes per year. Angola LNG also has a dedicated fleet of seven LNG tankers.

    Angola LNG is a joint venture between Chevron (36.4%), Sonangol (22.8%), BP (13.6%), Eni (13.6%), and Total (13.6%).

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    The Oil Price Ceiling Has Been Set: "Above $40 And We Start Pumping Again"

    The question is at what "breakeven" price does it make sense for US shale companies to return. As Reuters reports, less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; however in just one year this number has changed and quite drastically at that.

    We hinted at this three weeks ago in an article which many readers had a hostile reaction to: specifically we warned of "Another Leg Lower In Oil Coming After Many Producers Found To Have Far Lower Breakevens." As we reported then, "what many thought would be the "breaking" price point for virtually every shale play has just been lowered, and quite dramatically at that. It also means that algos and traders who had reflexively bought any dip below $30 on expectations this is close to the "sweet spot" and where the Saudis would relent, will have to drop their support levels by as much as a third."

    Today Reuters confirms that this assessment was stpo on with a report that some shale companies say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation.

    Among the companies which are prepared to flip the on switch at a moment's notice are Continental Resources led by billionaire wildcatter Harold Hamm, which said it is prepared to increase capital spending if U.S. crude reaches the low- to mid-$40s range, allowing it to boost 2017 production by more than 10 percent, chief financial official John Hart said last week.

    Then there is rival Whiting Petroleum which may have stopped fracking new wells, added it but would "consider completing some of these wells" if oil reached $40 to $45 a barrel, Chairman and CEO Jim Volker told analysts. Less than a year ago, when the company was still in spending mode, Volker said it might deploy more rigs if U.S. crude hit $70."

    EOG Chairman Bill Thomas did not say what price would spur EOG to boost output this year, but said it had a "premium inventory" of 3,200 well locations that can yield returns of 30 percent or more with oil at $40.

    Apache Corp , forecasts its output will drop by as much as 11 percent this year, but said it would probably manage to match 2015 North American production if oil averaged $45 this year.
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    Seadrill soars on 'bail-out talk'

    Seadrill has seen its shares surge in recent days amid speculation that dominant owner John Fredriksen is set to bail out the debt-laden rig giant as part of a financial restructuring, with dealers in short positions reportedly fuelling the price spike.
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    Iran May Become Gasoline Exporter as Refinery Plans August Start

    Iran, a net importer of gasoline, may start exporting the fuel once the Persian Gulf Star oil refinery begins operating in late August, Fars news agency reported.

    The OPEC member currently imports 9 million liters per day of gasoline, Fars reported Tuesday, citing Naser Sajadi, managing director of National Iranian Oil Products Distribution Co. Iran’s domestic consumption rose 2 percent to 70 million liters (440,000 barrels) a day over the past 11 months compared with the same period in the previous year, according to the report.

    The country needs $1.7 billion to modernize its refineries, the oil ministry’s Shana news service reported Tuesday, citing Amir Hossein Zamaninia, deputy oil minister for commerce and international affairs.

    The Persian Gulf Star facility at the southern port of Bandar Abbas will be Iran’s biggest refinery upon completion, with a planned processing capacity of 360,000 barrels a day. Iran was the third-largest producer last month in the Organization of Petroleum Exporting Countries, a rank it shared with Kuwait. The Islamic Republic is seeking to upgrade its oil industry and boost crude sales since international sanctions constraining exports were removed in January.

    Persian Gulf Star will have a daily production of 36 million liters of gasoline, 14 million liters of diesel and 370,000 liters of aviation fuel, the official Islamic Republic News Agency reported on Sept. 7. Iran will stop importing gasoline once the refinery opens and will export the fuel for at least 10 years, IRNA reported.

    The refinery is to be completed in three phases, each of which will have a processing capacity of 120,000 barrels a day. The first phase had been scheduled to begin operating this month, according to the September IRNA report. The second and third phases are to start at six-month intervals after the first, Saeid Mahjoubi, the product coordination and supervision director at National Iranian Oil Refining and Distribution Co., said on Jan. 28 in Tokyo.
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    Chevron plans to cut capital spending and still produce more oil

    The oil drilling giant announced Tuesday that it is reducing its capital expenditure budget for 2017-2018 to a range of $17 billion to $22 billion from $20 billion to $24 billion.

    Chevron maintained its forecast for production growth this year, as several projects that have been in the works for several years would finally come online.

    In the statement, CEO John Watson said, "Industry conditions are tough right now, with low oil and natural gas prices. We believe markets will improve, and we’ll be well positioned when they do."

    The company is holding its analyst meeting on Tuesday.

    Its shares were little changed in pre-market trading on Tuesday. They have fallen 12% over the past year.

    Last week, ExxonMobil also announced cuts to its capital spending plans, while still planning to launch new drilling projects over the next two years.
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    South Africa to start shale gas exploration in next financial year

    The first exploration for shale gas in South Africa will begin in the next financial year, the government said on Tuesday, following years of postponement. "One area of real opportunity for South Africa is the exploration of shale gas," the statement said. 

    "Exploration activities are scheduled to commence in the next financial year. This will lead to excellent prospects for beneficiation and add value to our mineral wealth." 

    Delays in awarding exploration licenses and lower oil prices led to firms such as Royal Dutch Shell pulling back a year ago on planned shale gas projects in the onshore Karoo Basin.
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    Chevron kicks off production at Gorgon LNG

    Oil and gas giant Chevron said on Monday it started producing liquefied natural gas at its Gorgon LNG project on Barrow Island off the northwest coast of Australia.

    The company said in its statement that the first cargo of chilled gas is expected to leave the US$54 billion project next week.

    “The long-term fundamentals for LNG are attractive, particularly in the Asia-Pacific region,” as Chevron is looking to become a major LNG exporter by 2020, Chairman and CEO John Watson, said.

    Watson noted that 80 percent of Gorgon LNG production as well as the output from its second project under construction, the Wheatstone LNG project, is under long-term contracts.

    The project began the cool-down process in mid-January when the Chevron-operated LNG carrier, Asia Excellence delivered the commissioning cargo.

    It uses gas from the Gorgon and Jansz-Io fields located off the coast of Western Australia. The onshore plant on Barrow Island has the capacity to produce 15.6 million tons of LNG per year and 300 terajoules of gas per day for the Western Australia market.

    The project is operated by Chevron that owns a 47.3 percent stake, while other shareholders are ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent)

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    Clinton Doubles Down Against Fracking in Debate, Raising Alarms

    Hillary Clinton’s promise during a debate Sunday to aggressively regulate fracking deepens the divide between Republican and Democratic presidential candidates on oil and gas development and signifies her continued shift to the left on environmental issues.

    In the Democratic presidential debate in Flint, Michigan against Vermont Senator Bernie Sanders, Clinton said she wouldn’t support fracking in states or local communities that don’t want it, if it causes pollution, or if the chemicals used aren’t disclosed.

    "By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place," Clinton said.

    The comments marked a shift for Clinton, who, like President Barack Obama, has generally supported fracking, while insisting methane leaks must be plugged and steps taken to ensure the practice doesn’t contaminate water. She even highlighted natural gas in a campaign fact sheet last month as lowering energy costs, reducing air pollution and putting people to work.

    But translating Clinton’s debate-stage profession into actual regulation clamping down on the technique would be difficult, if not impossible. There are limits to what a president -- any president -- can do to limit the hydraulic fracturing process now being used to free gas and oil from dense rock formations nationwide.

    Although state and local governments regulate the practice -- and some ban it altogether -- the federal government doesn’t have much authority to directly regulate fracking on private lands. The biggest openings are through laws allowing the Environmental Protection Agency to regulate air and water pollution tied to fracking, said Kevin Book, an analyst with ClearView Energy Partners LLC. "But these controls are both limited and litigable."

    Further, most U.S. oil and gas wells today are stimulated into production using hydraulic fracturing. Shut down fracking, and you shut down the oil and gas boom along with it, said Katie Brown, a spokesman for Energy In Depth, a research program funded by the Independent Petroleum Association of America.

    Clinton has worked to burnish her environmental credentials on the campaign trail, pressed by activists who have embraced Sanders and his clean energy agenda. Unlike Clinton’s nuanced stance, Sanders’ response to the issue Sunday was direct: "No, I do not support fracking."

    Industry officials viewed Clinton’s fracking answer "as a political response to the guy standing to the left of her on the stage," said Neal Kirby, a spokesman for the Independent Petroleum Association of America.

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    China crude import demand may slow after oil rises above $40/bbl - trade

    A rise in the price of global benchmark Brent crude above $40 a barrel could slow down shipments to China in the second quarter, after imports hit a record in February, trade sources said on Tuesday.

    Crude imports by the world's second-largest oil consumer have been supported by low prices that have driven stockpiling, as well as buying by a new group of Chinese refiners who have received import quotas over the past nine months.

    February imports hit the highest ever on a daily basis, customs data showed on Tuesday.

    But trade sources said import momentum has slowed after a $10 a barrel gain in Brent crude futures in the past three weeks, and new buyers - smaller so-called "teapot refiners" - may choose to draw down inventories or carry out maintenance at their plants.

    "Such high outright prices will impact demand," said a source from an independent refiner who declined to be named due to company policy.

    "China's crude inventories are very high so we are likely to draw down stocks first and keep a watch on prices."

    He added that demurrage costs have also risen for shipments to eastern Shandong province where most of the new buyers are located, because of the recent high demand which has strained port facilities. Such costs could run up to $500,000 for supertankers or suezmaxes, he said.

    "It takes 10-15 days to unload at Qingdao and 7-8 days at Rizhao," he said.

    A source at another Chinese refiner said the spot discount over three months has narrowed by about $1 a barrel for May delivery crude from three months ago, making spot cargoes less attractive.

    "We've finished buying for May and are waiting to see if prices will fall before looking at purchases for June," the buyer said, adding that its refinery may undergo maintenance unless China's fuel demand exceeds expectations.

    Strong demand from the new Chinese buyers for Russian ESPO has pushed up the grade's spot premiums in recent months, but premiums for April-loading spot cargoes traded last week have dropped about $1 from the previous month.

    "I didn't see them buying many ESPO cargoes for April," a trader with a major oil firm said.

    A slowdown in China's import demand and peak refinery maintenance season in Asia in the second quarter may weigh on spot prices for Middle East and Asia-Pacific crude when trade for May-loading cargoes starts later this month.

    This was especially after some of the Middle East producers raised their monthly prices in the past week to multi-month highs.

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    China crude oil imports hit record 8 mln bpd in February

    China's February crude oil imports jumped 20 percent on year to their highest ever on a daily basis, as prices at their lowest in more than a decade drove buying from a group of new importers and state and commercial stockpiling.

    The world's second-largest oil consumer imported 31.80 million tonnes of crude last month, or a record 8.0 million barrels per day (bpd), data from China's General Administration of Customs showed on Tuesday. C-CNIMP-PRM

    China's robust crude demand has been supported by independent refiners, also known as teapots, that have been receiving import quotas from Beijing over the past nine months.

    "This is the teapot effect," said Virendra Chauhan, an analyst at Energy Aspects in Singapore.

    "Higher teapot demand and stronger refining margins which encouraged higher refinery throughputs have contributed to increased imports," he said.

    On a daily basis, February's imports also jumped roughly 27 percent from 6.29 million bpd in January.

    Last week, Beijing-based consultancy SIA Energy said it expects China's 2016 crude imports to rise by 860,000 bpd, or nearly 13 percent, boosted by storage needs, robust gasoline demand and fuel exports.

    The country's top energy group state-owned China National Petroleum Corporation (CNPC) forecast in January that the China's net crude imports would rise 7.3 percent this year.

    China's imports reached a previous record of 7.81 million bpd in December, closing out 2015 with an average 6.71 million bpd, according to customs data for the full year.

    The February volumes were more than a million bpd higher than the final estimate by Thomson Reuters Oil Research and Forecasts, which had expected more deliveries to spill over into March. March imports are forecast by the Thomson Reuters analysts at under 7 million bpd.

    Fuel exports in February rose 71.8 percent on a daily basis compared to the same month last year, reaching 2.99 million tonnes, or 721,700 bpd, after hitting a record 975,500 bpd in December, as China continues to export more diesel amid weakening domestic demand for the industrial fuel. C-FUEXP-PRM

    Net fuel exports were 350,000 tonnes in February. C-FUNIMP-PRM

    For a summary of China's commodities trade see. A breakdown of the data will be available later in the month.

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    Oil ETF Holders Withdraw Most Money Since Last October

    Investors in the biggest exchange-traded fund that tracks oil prices last week withdrew the most money in five months as crude rebounded. The U.S. Oil Fund had a weekly outflow of $125.2 million, the biggest since Oct. 2, according to data compiled by Bloomberg. West Texas Intermediate crude settled at $35.92 on March 4, the highest level since January.
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    Shell repays Iran 1.77 billion euros debt for oil deliveries

    Royal Dutch Shell has paid 1.77 billion euros ($1.94 billion) it owed the National Iranian Oil Company, settling debts after sanctions against the country were lifted in January.

    The outstanding debt to Iran was a result of Iranian oil deliveries which Shell had been unable to pay for due to sanctions that were imposed on the country over its nuclear program.

    The Anglo-Dutch company resumed talks with Tehran on the debt after most Western sanctions were lifted in January as part of a deal with world powers. The payments were made over the past three weeks in euros as dollar transactions are still under U.S. sanctions.

    "Following the lifting of applicable EU and U.S sanctions, we can confirm that payment of the outstanding Shell debt to NIOC has now been made," a Shell spokesman said in a statement.

    The debt repayment could lead Shell to make new investments in the resource-rich country that hopes to revive an oil and gas industry that shriveled under sanctions.

    "We remain interested in exploring the role Shell can play in developing Iran's energy potential within the boundaries of applicable laws," the spokesman said.

    Western sanctions cut Iran's oil exports by more than half to around 1.1 million barrels per day from a pre-2012 level of 2.5 million bpd. The Islamic Republic holds the world's largestgas reserves and fourth-largest proven oil reserves.

    Tehran has said it would boost output immediately by 500,000 bpd and by another 500,000 bpd within a year, ultimately reaching pre-sanction production levels of around 4 million bpd seen in 2010-2011.

    The country has indicated it wants billions it is owed by foreign oil companies and governments paid in euros.

    U.S. officials estimate about $100 billion (69 billion pound) of Iranian assets were frozen abroad, around half of which Tehran could access as a result of sanctions relief. It is not clear how much of those funds are oil dues that Iran would want back in euros.
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    5 Key Insights from the 2015 Marcellus and Utica Shale Databook – Vol. 3:

    1. As of the end of 2015 combined production coming from the Marcellus and Utica had peaked and started to decline–but just barely. Production from the two plays combined is still stratospheric compared to just a few years ago.

    2. The cash price for natural gas sold in northeastern PA stayed around the $1 per thousand cubic feet (Mcf) mark for the last half of 2015. The cash price for natgas in the Utica was an average of around $0.50/Mcf higher, and the price for natgas in southwestern PA was an average of around $0.70/Mcf higher for much of the year. By the end of last year, prices in the Utica and SWPA had dropped to be much closer to the price received in NEPA (as it became obvious a cold winter was not going to “save” the price of gas).

    3. WV saw the steepest drop in the number of permits issued over the course of last year. In the first four months, 611 permits for discrete, individual wells were issued. By the last four months, 404 permits were issued (34% drop). There was a drop-off in permits for PA–from 785 in first four months to 633 in last four months (19% drop)–while Utica permits remained steady over the course of the year at around 200 per 4-month period.

    4. The number of rigs steadily declined over the entire year for PA, OH and WV. We entered the year with 123 rigs operating in the three states. By the end of December, there were 59 rigs operating–a 52% drop in the number of rigs operating.

    5. Perhaps one of the most striking things we noticed, when reviewing the Databook’s proprietary Permits by Driller chart for the past three years was this: In the first four months (“trimester”) of 2014, Chesapeake Energy applied for and received permits to drill on 329 discrete/individual wells in PA. In the final four months of 2015, Chessy received 14 permits in PA. The pattern was similar in OH and WV.

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    Total, Eni bet on new finds as rivals cut costs in oil downturn

    As oil firms slash billions of dollars of investment to survive the market crash, France's Total and Italy's Eni are making some of the smallest cuts, gambling in the hope of big-ticket discoveries that will reward them when prices recover.

    Both approaches carry risks. Intensive exploration programmes mean higher costs and lower profits in the short term, with no guarantee of finding new fields. But firms that scale back too far may damage future growth prospects, forcing them to splash out on acquisitions.

    Wood Mackenzie analysts expect this year's exploration spending to fall to just half of a peak of $95 billion reached in 2014. Against that background, Total's 21 percent cut is among the smallest.

    The French company, which pursued a "high risk-high reward" strategy under late chief executive Christophe de Margerie, will still spend $1.5 billion on exploration this year, including off Myanmar, Argentina and Nigeria.

    "Our new exploration manager will be able to explore most of the prospects he wanted to," Total Chief Financial Officer, Patrick de la Chevardiere, told journalists last month.

    "We're giving him a certain budget which leaves him sufficient flexibility to explore what he wants to explore."

    Eni has not published separate exploration budget numbers for 2016 but said it will keep seeking new resources in mature areas where it can use existing infrastructure and know-how to lower costs.

    The Italian group became the first big oil firm last year to cut its dividend in order to navigate the market downturn.

    Its bet on finding new resources was boosted last year when it made the bumper Zohr gas discovery offshore Egypt, the biggest ever in the Mediterranean and its fifth largeoil and gas find in just three years, giving it the best track record in reserve replacement among majors.

    "Many (oil majors) consider that buying smaller companies would now be an investment with a higher return than if the majors were doing the frontier exploration themselves," said Eric Oudenot, a partner specialising in oil and gas at The Boston Consulting Group.

    "Exploration is the one thing I think that we can phase, and we'll just be very cautious and careful around that," said BP Chief Executive Bob Dudley on the company's full-year earnings call in early February.

    Wood Mackenzie analysts say low exploration levels will feed through to lower production in 10 to 15 years' time.

    "Exploration is the easiest cost to reduce for a management team," said BCG's Oudenot. "It only bites you back a few years later."

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    EIA Report Sounds Somber Note For U.S. LNG

    Due to the wonders of hydraulic fracturing (fracking) and horizontal drilling, the U.S. is now on track to join LNG production heavyweights, current LNG leader Qatar – with 77 million tons per annum (mtpa) of liquefaction capacity – and Australia, who by 2018 when all of ten of its LNG projects are in operation with have liquefaction capacity of 85 mtpa, bypassing Qatar.

    The U.S. just entered the global LNG race when Cheniere Energy exported its first cargo from its Sabine Pass export terminal on the U.S. Gulf of Mexico. For years, Alaska has exported LNG, mostly to Pacific Rim countries, but these volumes have been small. Cheniere’s cargo is the first LNG shipment from the Lower 48.

    Moreover, as many as five more LNG projects are in various stages of construction in the U.S. However, plunging oil and gas prices will effectively cut short any celebratory cheers.

    This is the backdrop that the U.S. Energy Information Administration released its report on Friday. The EIA said that the first LNG export shipment on February 24 is “a milestone reflecting a decade of natural gas production growth that has put the United States in a new position in worldwide energy trade.”

    “With the rapid growth of supply from shale gas resources over the past decade, U.S. natural gas production has grown each year since 2006. The resulting decline in domestic natural gas prices has led to rising natural gas exports, both via pipeline to Mexico and, since last week, to overseas markets via LNG tankers,” the report said.

    After touting the remarkable rise of U.S. shale gas production and the highly developed natural gas infrastructure and pipeline system that the country enjoys (one reason U.S. LNG projects have a clear logistical and cost advantage of their Canadian LNG project counterparts), the EIA report sounds a somber note for U.S. LNG.
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    UK’s Grain LNG terminal re-exports cargo

    The UK’s Grain LNG import terminal, operated by National Grid, has shipped a cargo of previously imported liquefied natural gas.

    The 155,000 cbm Gaslog Saratoga LNG carrier reloaded a cargo of the chilled fuel and departed from the terminal on the Isle of Grain last week, a spokesperson from National Grid confirmed to LNG World News on Monday.

    According to shipping data, the vessel is carrying a cargo of LNG to the Penuelas LNG terminal in Puerto Rico.

    Grain LNG started offering reloading services to customers last year, the first time such a service has been offered in the UK.

    The terminal can import 15 million tonnes of gas each year and is the largest importation facility in Europe and the 8th largest in the world, according to Grain LNG’s website.
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    China's CNPC to Cut Capex 23%, Lower Oil Output on Price Crash

    China National Petroleum Corp. said it will cut capital spending this year by more than 20 percent and sees domestic crude production slipping as the country’s biggest oil and gas company looks to shore up profit amid the energy downturn.

    CNPC aims to produce 108 million metric tons of crude domestically this year, a decline from a year ago of about 3.2 million tons, or 2.9 percent, Su Jun, general manager of the production and operation department of the state oil company, said in an interview on Sunday. It has decided to cut capital spending this year by about 23 percent, Su said, without providing a total amount.

    The state-run energy giant is facing “unprecedented” pressure from lower oil prices, according to Su. “We have to cut capital spending and output to sustain profit and maintain positive cash flow.”

    CNPC and listed-unit PetroChina Co. have struggled to survive low oil prices through cutting costs and selling assets including pipelines to strengthen the balance sheet. Brent crude, the global benchmark, has tumbled more than 60 percent since a peak in June 2014. PetroChina warned in January that its 2015 profit may have fallen as much as 70 percent from a year earlier because of the energy slump.

    CNPC is reviewing output at 16 oil and gas fields in China and may further cut targets, Su said. Output from its Daqing oilfield will fall by 1.5 million tons this year while the Liaohe oilfield, also in the nation’s northeast, will also have reduced output, he said.

    “The capex and output cut are prudent decisions by CNPC to survive this oil industry downturn,” Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Hong, said by e-mail. “The strategy is consistent with cost-cutting reforms amid the government campaign to reduce uneconomic production.”

    China’s output in 2016 will decline between 3 percent and 5 percent from last year’s record 4.3 million barrels a day, according to forecasts last month by analysts from Nomura Holdings Inc. and Sanford C. Bernstein & Co. CNPC said in January that it planned to increase natural gas production and maintain crude output near 2015 levels, without providing details.

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    China Delays Emergency Oil Storage Completion to Beyond 2020

    China has pushed back completion of its emergency petroleum stockpiles to beyond the original 2020 deadline.

    The world’s largest energy consumer will finish construction of the second phase of its strategic oil reserves and begin preliminary work on additional sites by 2020, according to the 2016-2020 Five Year Plan released over the weekend. The country’s previous plans called for three phases to be completed by the end of the decade.

    “China may have reached its current storage capacity limit and it takes time to build up new” reserve sites, said Lu Wang, an analyst at Bloomberg Intelligence in Hong Kong. “Some SPR will be stored underground, which might take more time to build and cause the delay."

    China took advantage of falling crude prices last year to build upits emergency reserves, helping to partially mop up a global oil glut. The country increased imports by 8.8 percent to a record 335.5 million metric tons (about 6.7 million barrels a day) in 2015 as oil averaged the lowest annual price in more than a decade.

    China finished building the first phase of its storage with four sites in 2009, totaling 91 million barrels, according to the National Bureau of Statistics. The second-phase, with a designed capacity of 168 million barrels, was to be completed by last year, the state-run China Energy News said in 2014.

    "Completion of the second-phase tanks will probably be delayed for about two years from 2015 while a third-phase program is now quite uncertain,” Li Li, a research director with ICIS China, said by phone.

    China stockpiled 26.1 million metric tons (about 191 million barrels) of crude as of mid-2015 at eight SPR sites and commercial storage tanks, the NBS said on Dec. 11.
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    Indonesia eyes Iran LPG, condensates deal, but crude unlikely

    Indonesia's OPEC governor said on Monday a deal was imminent for importing Iranian condensate and liquefied petroleum gas, but not for crude oil.

    A delegation of Indonesian oil officials will travel to Iran later this week to negotiate a number of energy deals and there had been hopes of finalising a short-term agreement for 120,000 barrels per day (bpd) of Iranian crude for a refinery in Central Java.

    Indonesia's OPEC governor Widhyawan Prawiraatmadja said a crude import deal with Iran was unlikely for now because Southeast Asia's largest economy needed sweet crude for its refineries, not Iran's sour oil grades.

    "We have limited demand for crude," he told reporters, adding Indonesia imports around 400,000 bpd of crude, of which 125,000 bpd was sour crude from Saudi Arabia.

    Before Indonesia can seal the import deal for Iranian LPG and condensates, the government needed to work out how to transfer funds to Iran, Prawiraatmadja said.

    He declined to provide details on the expected agreements.

    "Clearly, Indonesia needs several things and I think its biggest need is LPG. Iran has an LPG surplus and if they can give us a better LPG price, we should automatically buy from Iran," Prawiraatmadja said.

    President Joko Widodo, who met with Iran's foreign minister on the sidelines of a Jakarta conference, said he asked Indonesia's bank regulator to work with Iran to resume banking relations after the lifting of economic sanctions.
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    Pipeline outage almost halves north Iraq oil exports in Feb

    Oil exports from northern Iraq fell by almost half to an average of 350,067 barrels per day (bpd) in February as a result of an ongoing outage of the pipeline to Turkey, the Kurdistan region's Ministry of Natural Resources said on Monday.

    The pipeline, which carries crude from fields in the autonomous Kurdistan region and Kirkuk to the Mediterranean port of Ceyhan has been idle since Feb. 17 due to "circumstances" inside Turkey, the ministry said.

    The nearly three-week outage is a major blow to Kurdistan, which depends on revenue from its exports through the pipeline and is struggling to avert an economic collapse induced by low oil prices.

    Turkey's energy ministry said on Feb. 27 it had begun work to repair the pipeline, and an industry source based in the Kurdistan region told Reuters on Sunday the work would be completed "in a day or two".

    The pipeline runs through Turkey's restive southeast, which has seen the worst violence since the 1990s after a two-year ceasefire between the government and Kurdish militants broke down last July.

    Turkey has accused the Kurdistan Workers' Party of blowing up the pipeline, but the militant group denies responsibility.

    In January, 601,811 bpd were exported through the pipeline.
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    Ecopetrol Reports Loss of $2 Billion on Lower Crude Prices

    Ecopetrol SA, Colombia’s state-controlled oil producer, reported a wider fourth-quarter loss amid low crude prices and accounting impairments.

    The net loss attributable to shareholders widened to 6.3 trillion pesos ($2 billion), from a loss of 2.49 trillion pesos a year earlier, Bogota-based Ecopetrol said Sunday in a statement. That missed the 325.5 billion-peso net income average of five analysts’ estimates compiled by Bloomberg. Consolidated net income was a loss of 6 trillion pesos. The company said no dividend will be paid.

    “2015 was one of the most challenging years for the oil industry,” Chief Executive Officer Juan Carlos Echeverry said in the statement. "Ecopetrol, like many other companies in the sector, executed profound adjustments in its operations to be more efficient and overcome the low crude prices."

    Results were affected by impairments associated with U.S. accounting regulations, Echeverry added in the statement. The company has reduced its investment plan for 2016 by 26 percent, reflecting "discipline of capital and focus in higher value investments."

    Average output in the quarter was 761,300 barrels of oil equivalent per day, a 0.5 percent drop from a year earlier.

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    Iran oil and gas condensate exports to reach 2 million bpd by end-March: Shana

    Iran's oil and gas condensate exports would reach 2 million barrels per day by the end of March, director of international affairs at National Iranian Oil Co (NIOC) was quoted as saying by the oil ministry's news agency SHANA on Saturday.

    "The gas condensate sells more slowly than the crude oil, but we expect its sales to become even faster than the crude oil's in the future," Mohsen Ghamsari added.
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    Saudi foreign minister says 'we will maintain our oil market share'

    Saudi Arabia will maintain its oil market share and the idea that it would cut production, while other countries increase it is "not a realistic one," Saudi Foreign Minister Adel al-Jubeir said on Saturday.

    "Our view is market forces determine the price of oil and we will maintain our market share and markets will recover," he told a group of journalists in Paris.
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    Oil jumps as traders close short positions, U.S. producers cut rig count

    Oil prices jumped on Monday, extending a rally that has lifted crude benchmarks by more than a third from this year's lows, as tightening supply and an improving global outlook strengthened the sentiment for a market recovery.

    Front-month Brent LCOc1 crude futures were trading at $39.49 per barrel at 0400 GMT, up 77 cents or 2 percent from their last settlement. That is up more than a third from a low hit in January, when prices fell to levels not seen since 2003.

    U.S. West Texas Intermediate (WTI) futures were trading at $36.63 a barrel, up 71 cents from the last close and 40 percent above lows touched in February.

    "It looks at this stage as if it (oil) has formed a little bit of a bottom and perhaps we're going to see a sustained price in the $30s, maybe trending back up to $40 dollars at some point," said Ben Le Brun, market analyst at OptionsXpress.

    On the supply side, U.S. energy firms cut oil rigs for an 11th week in a row to the lowest level since December 2009, data showed on Friday, as producers slash costs.

    Drillers removed eight oil rigs in the week ended March 4, bringing the total count down to 392, oil services company Baker Hughes Inc (BHI.N) said. [RIG-OL-USA-BHI]

    Beyond a tightening supply outlook, traders said a shift in sentiment was also lifting prices as they shut down short positions and abandoned bets on further falls in prices.

    Trading data shows that the number of managed short positions on WTI contracts - which would benefit from lower prices - have fallen more than a quarter since mid-February, with many new long positions betting on rising prices being opened.

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    Bumi Armada To Take Legal Action Against Woodside For Termination Of Contract

    Bumi Armada Bhd intends to fully enforce its rights, including initiating legal proceedings against Woodside Energy Julimar Pty Ltd for purportedly terminating its contract.

    Bumi Armada said its wholly-owned unit, Armada Balnaves Pte Ltd received a notice of termination from Woodside over the charter of the Armada Claire Floating Production Storage and Offloading (FPSO) unit, which has been operating in the Balnaves Field, off north-western Australia since delivering first oil in August 2014.

    In a filing to Bursa Malaysia, Bumi Armada claimed that the purported notice of termination was not valid, and instead it was tantamount to a cancellation for convenience or alternatively, was a repudiation of the contract by Woodside, pursuant to which the company was entitled to a compensation.

    The offshore oilfield services provider said the purported termination of the FPSO charter contract is expected to have an impact on its 2016 financial results.

    "(However), the extent of which cannot be conclusively ascertained at this juncture as it will depend on the outcome of the company's legal action against Woodside," it said.
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    Kuwait refines oil pricing in battle for European customers

    Gulf OPEC member Kuwait has changed the way it prices oil for Europe, trading sources said, in a rare tactical move aimed at making its crude more competitive as the battle for customers between OPEC and non-OPEC rivals intensifies.

    The European market, long dominated by Russian oil supplies, has been neglected by major OPEC producers due to poor growth as they focused on expanding Asian markets.

    But as Russia moved aggressively into Asian markets and with the growing global oil glutheating up the fight for customers, OPEC members such as Saudi Arabia and Iraq ramped up sales to Europe, taking on former Russian customers such as Poland and Sweden.

    Large sales from Iraq's Kurdistan into Europe have added to the competition over the past six months and now Kuwait - a usually little-noticed seller in Europe - is both increasing sales and making its crude more attractive.

    "If we want to have a share in any market, we have to have competitive marketing. That's what we are doing ... we have a legitimate market share that we try to protect and develop," a senior trading source familiar with the development said.

    Trading sources said that from late last year the state-run Kuwait Petroleum Corporation (KPC) began pricing its European exports against the dated Brent benchmark after years of following OPEC's heavyweight Saudi Arabia in pricing its oil against the Brent Weighted Average (BWAVE).

    BWAVE is also used by Iran while Iraq is using dated Brent. Over the past year, because of the way they are calculated, barrels priced off dated Brent have on average been cheaper than those priced against BWAVE.

    "All you have to do is just to look at who the customers like from the point of view of pricing. It is pretty obvious that over the past year, they gravitated towards Iraqi and very cheap Kurdish oil," a second trading source said.

    While changing its pricing policy, KPC also started trading more barrels on a spot basis in Europe, following the sale of its Rotterdam refinery to trading house Gunvor.

    Last month, a senior KPC official said Kuwait planned to boost output this year and sign new export deals with European customers despite "fierce competition".

    The company is now estimated to be selling around 500,000 barrels per day in Europe on a term and spot basis, trading sources say, covering some 5 percent of the continent's demand.

    The move comes as Iran, OPEC's third-largest oil producer, is also preparing to sell more crude to Europe after the lifting of international sanctions in January.

    Iran said this week it could consider a pricing improvement for its crude sales to Europe by selling some spot cargoes at the dated Brent benchmark, though it was sticking with BWAVE for its term contracts.
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    Alternative Energy

    Lynas narrows half-year loss

    Rare earths miner Lynas has narrowed its interim loss on the back of higher output and revenue. Its pre-tax loss for the six months to December 31, improved to A$66.1-million, compared with a loss before tax of A$103.5-million in the previous corresponding period. 

    During the interim period under review, sales volumes grew by 62% to 5 773 t, reflecting an improvement in production rates, consistent demand for Lynas’s products and quality improvements for cerium and lanthanum product. Revenue for the period also grew by 43%, to A$93.2-million. Lynas noted that the lower revenue growth, compared with the volume growth, reflected the historically low rare-earth prices achieved during the period, with rare-earth prices remaining some $10/kg to $11/kg lower than average levels experienced in 2014 and early 2015.

     “Despite these extremely challenging market conditions, the company believes that the underlying market dynamics remain favourable to Lynas and the work done to improve production and cost during this time will deliver a robust foundation for future success,” the company told shareholders. Lynas added that further production increases and continuing tight control of costs would be essential to operate successfully in the current difficult market conditions.

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    Vivint Solar terminates $2.2 billion merger with SunEdison

    Rooftop solar panel installer Vivint Solar Inc (VSLR.N) said on Tuesday it had terminated an agreement under which it would have been taken over by solar energy company SunEdison Inc (SUNE.N) after SunEdison failed to "consummate" the deal.

    The cash-and-stock deal, worth $2.2. billion when it was forged last July, had faced criticism from hedge funds and other investors as SunEdison's finances and share price weakened.

    SunEdison shares - which were trading at $31.56 when the deal was set - were up 28 percent at $2.43 in premarket trading, while Vivint's were down 6.9 percent at $4.85.

    Vivint said it intended to "seek all legal remedies available" as a result of the "willful breach" of the merger agreement by SunEdison.

    SunEdison said in December it expected the Vivint deal to close in the first quarter of 2016.

    Like other solar companies, SunEdison has been hit by the drop in oil prices but it has also faced criticism for trying to grow too quickly through acquisitions that it could not afford.

    SunEdison, which has a market value of about $600 million, had long-term debt of $9.77 billion as of Sept. 30. The company said on March 1 that it would delay filing its annual report, citing an internal investigation into its financial position.

    As part of the Vivint deal, SunEdison "yieldco" TerraForm Power Inc (TERP.O) had agreed to buy Vivint's rooftop solar portfolio for $799 million, revised down from $922 million under pressure from activist hedge fund Appaloosa Management.

    Appaloosa Chief Executive David Tepper had called on TerraForm to "resist" the Vivint deal, saying it was a departure from TerraForm's business model and would put shareholders at risk.

    Appaloosa has also sued SunEdison to try to prevent TerraForm Power from buying assets from Vivint, which is controlled by Blackstone Group LP (BX.N).

    David Einhorn's Greenlight Capital said in January it was in talks with SunEdison regarding a board seat and that it was pressing for asset sales or even the sale of the company itself.

    Vivint's decision to terminate the deal came days after SunEdison settled disputes and agreed to pay damages related to its termination of a deal to buy Latin America Power Holding, an owner of wind and hydropower projects in Chile and Peru.

    Up to Monday's close, SunEdison's stock had lost 94 percent of its value since the Vivint deal was announced, while Vivint's stock had fallen 52 percent.
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    Senvion owners aim to net up to $770 mln euros in Frankfurt flotation

    Owners of German wind turbine maker Senvion will offer shares worth as much as 703 million euros ($770 million) in its planned listing on the Frankfurt stock exchange, the company said on Monday.

    It said the private equity owners of the group, Centerbridge Partners and Arpwood Capital, are offering up to 29.9 million shares, or 46 percent of the company, seeking 20 euros to 23.50 euros apiece in an institutional placing which would give Senvion a market value of 1.3 to 1.53 billion euros ($1.42-1.68 billion).

    The sale could show a considerable profit for Centerbridge and Arpwood, which only bought Senvion last year, with Centerbridge paying 1 billion euros, including debt, while media reports said Arpwood subsequently paid Centerbridge the equivalent of $112 million for a 21 percent stake.

    Shares in Senvion's rivals like Vestas, Gamesa , Nordex and Xinjiang Goldwind on average trade on a price multiple, including debt, of eight times expected earnings before interest, tax, depreciation and amortisation, according to Thomson Reuters data.

    Senvion, formerly known as Repower, was owned by Suzlon Energy from 2007 to 2015, when the indebted Indian group sold it on to Centerbridge in a bid to cut debt.

    "Many market participants still link Senvion with overleveraged Suzlon and have shied away from engaging with it.

    "The IPO is a way to let the market know that the ties with Suzlon have been severed and that Senvion now has no debt, but actually net cash," the source said.

    No new shares will be issued in the private placement, meaning Senvion won't raise any money from the sale.

    The first day of trading is planned for 18 March 2016.

    The IPO will also enable Senvion to raise capital on the market should it need to co-finance large new wind farm projects.

    Since Centerbridge's acquisition of Senvion the group has raised spending on research and development as well as expanding into markets where former owner Suzlon prevented it from going, such as Chile.

    In December a new chief executive was appointed, Juergen Geissinger, the former head of German engineering group Schaeffler.
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    German wind boom triggers subsidy cut as govt mulls tighter caps

    Germany's booming onshore wind installations have triggered a further automatic subsidy cut as the government mulls tighter caps in its next reform of the renewable energy bill (EEG) currently under consultation with a planned move to a tender process for most renewable subsidies from 2017 onwards.

    Onshore wind installations over the 12-month-reference period (Feb 2015 to Jan 2016) totaled 3,564 MW, which will automatically trigger a further cut in subsidies by 1.2% from July, the federal grid regulator BNetzA said this week.

    This will be the third quarter in a row that subsidies will be cut automatically as installations remain well above the annual ceiling of 2,600 MW, it said.

    Germany's 2014 reform of the EEG law introduced an annual target corridor of 2.4 GW to 2.6 GW of net onshore wind additions with installations above or below triggering automatic adjustments to the feed-in-tariffs with the grid regulator monitoring additions on a quarterly basis.

    But while deep subsidy cuts and monthly monitoring for solar managed to slow down the speed of solar additions to their lowest level since 2007, wind has boomed since the 2014 reforms with Germany adding a record 11 GW of new wind capacity over the past two years.

    Some 3 GW of this were delayed offshore wind projects finally coming online as grid link bottlenecks eased, but onshore wind alone added over 8 GW, overshooting the annual cap by over 3 GW for 2014/15.

    The government plans to move financial support for 80% of all new renewable power output from the current feed-in-tariff system to annual tenders from 2017.

    According to a framework paper by the economy and energy ministry for the EEG 2016 reform, the move to tenders will reduce the overall cost of Germany's drive to a renewable energy future from a current 33% share for renewables to up to 45% by 2025.

    According to the ministry, the tendering process will also make the expansion more planable by better sticking to annual target ranges after Germany's solar boom (2010 to 2012) and current wind boom (2013 to 2015) doubled its wind and solar portfolio to 85 GW within just over five years, fundamentally changing Germany's power landscape.

    Even on such a trajectory, Germany is set to reach the 100 GW wind and solar milestone by 2018, adding to the existing oversupply and pushing power prices to historic lows with supply cuts from the politically-determined nuclear phase-out and lignite closures only starting to have a real impact in the early 2020s.
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    Hanergy appoints CICC to find strategic investor-sources

    Scandal-hit Hanergy Thin Film (HTF) has appointed China International Capital Corp (CICC) to find a strategic investor, a move it hopes will shore up its finances and help its shares resume trading, two sources with knowledge of the matter said.

    HTF is under investigation by the Securities and Futures Commission (SFC) after its shares crashed suddenly in May, a case that has raised concerns about possible widespread market manipulation in Hong Kong, denting the appeal of the Asian city as a major financial centre.

    In a bid to revive its fortunes, the Chinese solar technology company has been seeking a strategic investor for the past six months, but it has now decided to enlist one of China's oldest investment banks to help it as its uncertain financial future is scaring off investors, one of the sources said.

    "Despite (HTF Chairman) Li Hejun's strong connections, no one would want to put money into this hole now; you don't know when it'll ever start trading again," the source said.

    Both sources declined to be named because the matter remains confidential. HTF and CICC did not respond to repeated attempts by Reuters for comment.

    Hanergy shares staged a spectacular five-fold rally over nine months before suddenly crashing 47 percent in a few frantic minutes of trading on May 20. It was the last day they traded.

    Sources familiar with the SFC probe have told Reuters that the investigation centres on possible market manipulation. The SFC has confirmed it was investigating Hanergy, but has declined to give any details.

    Li, whose share gains on HTF made him one of China's richest men, sold in December a six percent stake in the company at a steep 95 percent discount to HTF's last traded share price, regulatory filings show.

    Several equities analysts who used to cover HTF have long dropped their coverage. "I doubt it will ever trade again," one analyst, who declined to be named because of the sensitivity of the Hanergy case, told Reuters.

    HTF offered in July to severe its links with mainland parent Hanergy Holding, its main source of revenues, and its affiliates in an attempt to address a SFC request for more corporate accounts disclosure.

    But it decided last week to ditch this plan as it needed more revenues.

    "The SFC considered that the restructuring proposal was not able to/failed to adequately address its concerns and accordingly, the company did not implement the restructuring proposal," HTF said in the statement last week, where it also predicted a significant loss for the year.
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    China to boost nuclear fuel reserves to feed new reactors

    China will expand its strategic uranium reserve as part of its "five-year plan" for 2016-2020, with the aim of ensuring it has enough fuel to supply a massive programme of new nuclear reactors.

    Beijing, which began stockpiling uranium in 2007 and is estimated by the World Nuclear Association to have 74,000 tonnes of inventory - or about nine years of current demand - does not disclose details of its reserves.

    However, demand is expected to outstrip domestic supply in coming years and a move to increase reserves could give a boost to depressed global prices.

    "We have been importing over the last few years when the price has been low," said Sun Qin, chairman of the state-owned nuclear project developer, the China National Nuclear Corporation, adding the time was right to build up stockpiles.

    In its five-year plan released this week, the government said it would "expand the scale of natural uranium reserves", likely signalling the construction of new storage facilities as with oil six years ago.

    The Shanghai Nuclear Power Office estimates China's natural uranium demand is likely to reach 11,000 tonnes by 2020, and rise to 24,000 tonnes in 2030, outstripping production from domestic mines and China-owned mines overseas.

    The shortfall was expected to rise from 2,600 tonnes in 2020 to about 10,900 tonnes a decade later, it said.

    Increased uranium stockpiles would ensure China would not be at the mercy of supply disruptions or short-term fluctuations in market prices.

    The latest five-year plan also confirmed the country's intention to double its nuclear generation capacity to 58 gigawatts (GW) by the end of 2020, up from 28.3 GW at the end of last year, slightly less than 2 pct of total generation capacity.

    To meet the target, China, which currently has 30 operating reactors, will need to build around six new reactors a year, although it is expected to build well over 100 new units by 2030 as it tries to ease its dependence on fossil fuels and create a nuclear energy industry capable of competing globally.

    The 58 GW target will raise China's uranium demand to about 15 percent of the global market, according to the World Nuclear Association.
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    Court orders shutdown of Japanese nuclear reactor

    Otsu District Court said the emergency response plans and equipment designs at the two reactors have not been sufficiently upgraded despite the 2011 Fukushima crisis.

    The order requires Kansai Electric Power Co to shut down the No 3 reactor immediately and keep No 4 offline at the Takahama plant in Fukui prefecture, home to about a dozen reactors.

    The two reactors restarted this year after a high court in December reversed an earlier injunction by another court.

    The decision reflects Japan’s divided views on nuclear safety and leaves only two of the country’s 43 reactors in operation.

    The No 3 reactor, which uses a riskier plutonium-based MOX fuel, resumed operation in late January, while No 4 had to be shut down late last month after operating for just three days because of a series of technical problems.

    Judge Yoshihiko Yamamoto said the operator has not fully explained how it upgraded safety features at the two Takahama reactors under post-Fukushima safety standards. The utility has not fully explained its design philosophy or its measures to mitigate power loss and its evacuation plans in case of a severe accident and a massive tsunami.

    Kansai Electric said the decision was “disappointing” and planned to appeal.

    Prime minister Shinzo Abe’s government wants to restart as many reactors as possible. It says nuclear energy should remain a key power source for Japan, which has few natural resources to fuel its economy.
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    China's debut Westinghouse reactor delayed until June 2017: exec

    The world's first Westinghouse AP1000 nuclear reactor will go into operation in June next year, more than three years behind the original schedule, the head of China's leading state nuclear project developer said.

    "We are forecasting that if everything goes smoothly, the first unit will go into operation in June 2017, and the second unit at the end of 2017," said Sun Qin, the chairman of the China National Nuclear Corporation, speaking to Reuters on the sidelines of the annual session of parliament.

    "Construction has been delayed three years. At first we planned on December 2013 but there was just no way, with key pieces of equipment not available," he said.

    The "third-generation" reactor, designed by the U.S.-based Westinghouse, has been plagued by delays brought about by design flaws and problems with key components. Sun said new coolant pumps for the two reactor units only arrived at the end of last year.

    Westinghouse is a unit of Japan's Toshiba Corp.

    A rival third-generation design, the European Pressurised Reactor (EPR), has faced similar problems, with projects in France, Finland and China all delayed.

    But Sun said he was hopeful that China's own third-generation model, known as the Hualong 1, will progress more smoothly.

    China's first Hualong 1 reactor unit, under construction at Fuqing in southeast China's Fujian province, is expected to be completed by around June 2020, he said.

    China has also started construction on an identical Hualong 1 unit in Pakistan.
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    BHP Scales Back Canada Potash Spending Amid Commodities Downturn

    BHP Billiton Ltd., the world’s biggest mining company, is reducing spending on a potash mine in the Canadian prairies by about one-third amid the decline in global commodity prices.

    The Australian company is allocating less than $200 million in capital expenditure in the current financial year to develop and study the feasibility of the Jansen project, down from $330 million in the previous 12 months, said Giles Hellyer, president of BHP’s Canadian unit.

    “We’re doing more with less,” Hellyer said in a telephone interview from Saskatoon, Saskatchewan. “The intent is to be a lot more effective and efficient in what we’re doing and complete the work over a slightly longer time horizon.”

    BHP has so far approve$3.75 billion to a feasibility study and initial construction work on the project, which has yet to get a final go-ahead from the company. Construction crews at the site are excavating and lining two mine shafts, which may be complete in the next two to three years. Commercial production won’t start before 2020.

    Potash prices have tumbled amid increased production. Farmers are spending less on fertilizer amid bumper crops and lower agricultural commodity prices. Rival producer Potash Corp of Saskatchewan Inc. idled one of its mines in January in response to the oversupply.

    BHP remains confident about the long-term demand outlook for potash, seeing growth of about 3 percent a year, Hellyer said. And while BHP reduced the number of workers at Jansen in 2015, it will probably add employees in the next 12 to 18 months, he said.

    Potash prices in the Gulf of Mexico have fallen 44 percent over the past year to $200 a ton, according to data from Green Markets.

    “At the moment we’re focused very much on developing a robust case for Jansen,” Hellyer said. “We continue to believe in those long-term fundamentals in potash and the long-term story around the requirements for new capacity beyond 2020.”
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    K+S flags earnings drop in 2016 due to crimped output

    Salt and fertiliser supplier K+S warned of a significant drop in operating profit this year, citing lower potash prices and output restrictions at its German mines due to stricter regulation of waste water discharge.

    "A significant drop in average prices in the Potash and Magnesium Products business unit, as well as sales volumes slightly below those of the previous year is anticipated," the German company said in a statement on Thursday.

    K+S in December was granted only provisional approval for further discharge of saline waste water in the German state of Hesse and warned that the limits imposed by the regulator could crimp output over the next few months.

    Fourth-quarter earnings before interest and tax, adjusted for currency hedging effects, rose 18 percent to 154 million euros ($169 million), helped by a strong dollar, which was slightly above the average analyst forecast of 147 million euros in a Reuters poll.

    K+S, which fended off a takeover approach by Potash Corp of Saskatchewan last year, stood by plans to bring a new Canadian potash mine known as Legacy on stream by end-2016.

    This will help it reach its goal of 1.6 billion euros in 2020 earnings before interest, taxes, depreciation and amortisation (EBITDA), up from 1.1 billion last year.

    Legacy would be the first new mine in the potash industry in four decades and undermines efforts by potash industry leader Potash Corp and North American export cartel Canpotex to cut output to shore up prices.

    Earlier this year, Potash Corp decided to close its newest potash mine in New Brunswick and to curtail production at two other Canadian mines for four weeks.
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    Canada Pension Plan, Saudi firm leading Glencore unit bids

    Canada Pension Plan Investment Board and state-owned Saudi Agricultural and Livestock Investment Co are among the lead bidders for a minority stake in the agriculture unit of Glencore Plc,.

    The firms are presenting final bids for the unit this month and Glencore is open to selling stakes to more than one party, Bloomberg reported, citing people with knowledge of the matter. 

    Glencore aims to slash net debt to $17-$18 billion by the end of 2016, $1 billion more than previously planned, by offloading more assets amid a prolonged commodities rout.

    Glencore declined to comment. Canada Pension Plan Investment Board and Saudi Agricultural and Livestock Investment Co were not immediately available for comment.
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    Monsanto threatens to exit India over GM royalty row

    Monsanto Co, the world's biggest seed company, threatened to pull out of India on Friday if the government imposed a big cut in royalties that local firms pay for its genetically modified cotton seeds.

    Mahyco Monsanto Biotech (India)(MMB), a joint venture with India's Mahyco, licenses a gene that produces its own pesticide to a number of local seed companies in lieu of royalties and an upfront payment. MMB also markets the seeds directly, though the local licensees together command 90 percent of the market.

    Acting on complaints of local seeds companies that MMB was charging high fees, the farm ministry last year formed a committee to look into the matter.

    The committee has now recommended about a 70 percent cut in royalty, or trait fee, that the seed companies pay to MMB, government sources said. The farm ministry is yet to take a decision on the committee's recommendation.

    "If the committee recommends imposing a sharp, mandatory cut in the trait fees paid on Bt-cotton seeds, MMB will have no choice but to re-evaluate every aspect of our position in India," Shilpa Divekar Nirula, Monsanto's chief executive for the India region, said in a statement.

    "It is difficult for MMB to justify bringing new technologies into India in an environment where such arbitrary and innovation stifling government interventions make it impossible to recoup research and development investments," she said.

    Shares of Monsanto India dropped as much as 7 pct to a near 2-year low before ending down 2.4 pct.

    MMB does not publish revenue figures or say how much it contributes to Monsanto's overall revenue.

    Separately, MMB has filed a case in a Delhi court, challenging the authority of the committee to determine the trade fee agreed upon by MMB and a number of Indian seed companies

    In a partnership with Mahyco, U.S.-based Monsanto launched a GM cotton variety in India in 2002 despite opposition from critics who questioned its safety, helping transform the country into the world's top producer and second-largest exporter of the fibre.

    In a ruling last month, the Competition Commission of India, the antitrust regulator, said there were indications that MMB had abused its dominant position in the country and asked its director general to complete an investigation within two months.

    The government-appointed committee has also recommended cutting Bt cotton seed prices to about 800 rupees for a packet of 400 grams. Currently Bt cotton seeds are being sold between 830 and 1100 rupees in different parts of the country.
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    Precious Metals

    Weak rouble and higher sales lift profit at Russia's Polyus Gold

    A weak rouble and improved sales helped Russia's largest gold producer Polyus Gold post a 47 percent year-on-year rise in adjusted net profit of $901 million last year.

    Reduced costs due to the devaluation of the rouble and increased sales lifted earnings before interest, taxation, depreciation and amortisation (EBITDA) by 25 percent compared to the previous year to $1.3 billion, Polyus Gold said on Thursday.

    "The weaker rouble positively affected the group's operating margins in 2015, due to the majority of its costs being rouble -denominated, and the U.S. dollar being the reporting currency," Polyus said in a statement.

    The results follow a net loss of $182 million in 2014 when the company's bottom line was hit by non-cash write downs. Net profit in 2015 totalled $1.1 billion, Polyus said.

    Revenue slipped 2 percent on an 8 percent fall in global gold prices, it said.

    The company, controlled by billionaire Suleiman Kerimov and his partners, has also been supported by its gold price hedging programme which helped offset lower bullion prices.

    Polyus said it agreed contracts in February to hedge 600 thousand ounces of gold sales over the next four years: 100 thousand ounces annually for the first three years and 300 thousand ounces in the fourth year.

    Polyus, which delisted from the London Stock Exchange in December, said it expects to produce between 1.76 and 1.80 million ounces of gold this year.

    The company said earlier on Thursday its board of directors had recommended no dividend payments for 2015.
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    Rout in global steel prices puts brakes on platinum recycling

    Recycling rates for autocatalyst metals platinum and palladium, have been driven lower in the past year not only by a price slide in the metals themselves, but also by a crash in the value of another raw material - steel.

    With steel prices forecast to remain under heavy pressure this year in the face of over-supply and tepid demand, that could limit an expected rebound in the rate at which platinum group metals are recovered from catalysts.

    Recycling slowed last year as more scrapped cars were stockpiled by recyclers awaiting better prices, and as fewer cars, which use platinum in their autocatalysts, were scrapped.

    "The low steel price has stopped cars from entering the scrap profile in the first place, so there is a direct link between the low price and the amount of PGMs recycling," Johnson Matthey's general manager for market research Peter Duncan said.

    Analysts predict a recovery in platinum recycling volumes this year after they fell as much as 20 percent in some areas in 2015, but that will be tempered by steel's decline.

    A major driver of the drop was a 26 percent fall in platinum prices, partly in response to an uncertain global economic outlook and expectations of plentiful supplies.

    But the overall rate at which cars were scrapped was also depressed by falling prices of steel ST-CRU-IDX, the primary recyclable material in cars, which slid by a third.

    "At the end of the day, processors look at the total package of metal and what value they can derive from that," GFMS analyst Johann Wiebe said.

    The World Platinum Investment Council estimated in a report last month that platinum recycling dropped 15 percent last year. In addition to losses in platinum prices, the lower steel price also negatively affected auto scrappage rates, it said.

    A recovery in autocatalyst recycling this year, which usually accounts for around 15 percent of global platinum supply, is expected to help to offset a drop in output from platinum mines, according to the WPIC's research.

    Processors can only hold on to material for so long before they are forced to get the recycling chain moving again, and this year's more than 10 percent rebound in platinum prices gives them an opportunity to do that.

    "This year we're probably going to see some increase in the first quarter, given platinum is at $1,000. These guys can only hold off from the market for so long," a spokesman for one major U.S. recycler said. "I'd imagine they'll be taking advantage of these prices, and we should see a good bit of material coming out in the second quarter."

    But continued weakness in steel, which remains under heavy pressure despite creeping off its lows, could limit the scope of that recovery.

    "We would expect recycling to pick up a little bit this year, but that's very price dependent," Johnson Matthey's Duncan said. "Platinum group metals prices are more of a determinant of levels of PGM recycling than steel prices, but I do think it's relevant."
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    Base Metals

    Expected shortages boost crowd-pulling power of copper mines

    An expected global shortage of copper in years to come has thrown a spotlight on the value of mines that produce the metal, with scouts from private equity firms, trading houses and miners sniffing out potential targets.

    Strong interest in good quality copper assets was recently highlighted by Sumitomo Metal Mining buying another 13 percent stake in Freeport-McMoRan's Morenci mine for $1 billion.

    Earlier on Thursday, Swedish mining and smelting group Boliden struck a deal to buy the Kevitsa mine in northern Finland for a cash consideration of $712 million.

    "Copper is the most sought after commodity, it's a good time to buy copper assets now, there are some very visible deficits coming up at the end of this decade," said Simon Lovat, a commodity analyst at fund firm Carmignac.

    Forecasts for more than two years out are difficult as much could change, but there are some; Deutsche Bank analysts expect small surpluses this year and next, a deficit of 280,000 tonnes in 2018, 350,000 in 2019 and 280,000 in 2020.

    The problem is mainly on the supply side, partly in top producer Chile, where output has slipped in recent years.

    Chile's copper output last year was 5.76 million tonnes, about 25 percent of the global total, and expectations are for further falls due to deteriorating ore grade and a lack of investment in the mining and power industries.

    Elsewhere around the world, the quality of the ore is not what it was and, despite copper's surge from $1,500 to above $10,000 a tonne between 2002 and 2011, no new, large, game-changing deposits have been found.

    The prospect of deficits has attracted attention.

    "Major Japanese trading houses trade commodities locally and internationally. They have over time been increasing their exposure to mining," said Raj Karia, Head of Corporate, M&A and Securities at Norton Rose Fulbright.

    "Trading houses broadly should be looking to pick up assets to integrate their trading operations with ownership of assets. There is substantial private equity capital available for mining, some estimate about $10 billion globally."

    Private equity firms looking at mining include Madison Dearborn, Denham Capital Management, KKR, Apollo Global management, Resource Capital Funds and Orion Resource Partners, according to data provider Preqin.

    Banking sources say private equity on average accounts for more than 50 percent of participants in potential mining M&A deals. "They are there in case the process fails, they can then scoop up distressed assets for a song," one banker said.

    X2 Resources, a mining venture, supported by Noble Group, TPG Capital, sovereign wealth funds and pension investors, is also in the fray.

    Rio Tinto's Chief Executive Sam Walsh last month said his team was keeping an eye out for top-tier assets, particularly in copper.

    South32 also recently joined the ranks of miners willing to make acquisitions. "Copper is obviously attractive given the supply demand fundamentals," the company's Managing Director Graham Kerr said in February.

    "The Chinese are there too, they need copper, they have to import it," a banking source said.

    Copper mines under the hammer include Glencore's Lomas Bayas mine in Chile and Cobar in Australia.

    But overall, though there are many mining assets up for sale, few produce copper. So, the focus will increasingly turn to smaller copper miners such as First Quantum and Central Asia Metals, with low production costs.

    "Good copper mines are a compelling investment, because they are a depleting asset," said Allianz Global Investors UK equities portfolio manager Matthew Tillett, who recently bought shares in both companies.

    "The supply numbers analysts have in their models are unlikely to happen in reality if prices aren't high enough...My main concern is demand coming in below expectations."

    Others agree much depends on China, the world's largest consumer of the metal used in power and construction, where demand growth slowed to around 2 percent last year and is expected slow further over coming years, possibly towards zero.

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    First Quantum Announces the Sale of Its Kevitsa Mine for US$712 Million to Boliden

    First Quantum Minerals Ltd. today announced that it has entered into a Sale and Purchase Agreement with Boliden AB  to sell its Kevitsa nickel-copper-platinum group elements mine in Finland.

    Under the terms of the Sale, Boliden will acquire Kevitsa for a cash consideration of US$712 million subject to customary adjustments. The Sale is subject to requisite competition approvals and other typical closing conditions and is expected to close during May 2016.

    Philip Pascall, Chairman and CEO noted: "This transaction is one of the initiatives within our plan, announced in October 2015, aimed at strengthening the Company's balance sheet and improving its capital structure to better suit the development and start-up timetable of the Cobre Panama project. We are continuing to advance other strategic initiatives, which are expected to be finalized at various times over the next several months, to meet those objectives."
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    Russia's Rusal to start Boguchansk aluminium smelter in H1

    Russia's Rusal Plc plans to start its new Boguchansk aluminium smelter in the first half of 2016, the company said on Wednesday, after reporting a 53 percent slide in its fourth-quarter core profit.

    Rusal, the world's largest aluminium producer, has been hit by weak metal prices and the start of its Boguchansk smelter in Russia's Krasnoyarsk region has been repeatedly postponed.

    "Everything is ready from the technical point of view, and the first stage is running in a test mode," said Oleg Mukhamedshin, deputy chief executive. The smelter's first stage has a capacity of 147,000 tonnes of aluminium per year.

    The company will announce the start of the smelter's production as soon as it receives approval from Russian authorities, he told reporters.

    Rusal, controlled by Oleg Deripaska and part-owned by Glencore, is also still considering a plan to reduce the company's total output capacity by 200,000 tonnes, excluding the new Boguchansk smelter, Mukhamedshin added.

    Rusal also said it expected global aluminium demand to rise 5.7 percent in 2016 to 59.6 million tonnes as Chinese appetite for the metal expands 7 percent to 31 million tonnes.

    Its fourth-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 27 percent quarter-on-quarter to $306 million, slightly missing an analysts' forecast of $312 million.

    Rusal has been supported by the weak rouble and dividends from Norilsk Nickel, in which it has stake, but these factors have not fully offset a lower aluminium price.

    Its full-year EBITDA totalled $2.0 billion. Sberbank CIB said in a note, with a rouble rate of 73 per dollar and all-in aluminium prices of $1,700 per tonne, it could generate EBITDA of around $1.4-1.5 billion in 2016.

    Rusal's shares fell 2.5 percent in Hong Kong on Wednesday.

    The company also said that its year-end net debt rose 6 percent from the end of September to $8.4 billion, and that it was in talks with Russian and Western banks to raise loans. Talks with the latter are expected to be completed by end-March.

    These loans, if secured, will be used to finance some of Rusal's debt repayments due in 2016, Mukhamedshin said. Rusal should repay $1 billion of its debt in total in 2016.
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    Copper demand to overtake supply in 2017, Freeport official says

    Copper demand won’t catch up with supply until 2017, according to a senior official at Freeport-McMoRan, the largest publicly traded copper producer.

    Demand will increase slightly more than 2% a year on average through 2020, Javier Targhetta, a senior vice president of marketing and sales at the Phoenix-based company, said on Tuesday in an interview. The deficit will widen after 2017 because no new mines will be coming on stream, Targhetta said, and he wouldn’t be surprised to see a 500 000-metric ton deficit by 2020.

    Copper prices fell in the last three years as China, the world’s biggest consumer, headed for the slowest growth in a generation, boosting a supply glut of the metal. Production outpaced demand by about 147 000 tons in 2015, the biggest surplus since 2009, according to the World Bureau of Metal Statistics.

    “This year there is a new wave of copper expansion being started,” but demand will catch up with production in 2017, Targhetta said at Metal Bulletin’s International Copper Conference in Lisbon. “Long term, I am very positive,” he said, because he doesn’t see any new projects after that.

    Copper for delivery in three months slid 2.6% to settle at $4 868 a ton on the London Metal Exchange on Tuesday. The metal, which is up 3.5% this year, last week capped its biggest weekly gain since December 2011 after touching a six-year low in January.

    The metal’s earlier slump wasn’t justified by the fundamentals and was exacerbated by falling oil prices and investors pulling out from investment baskets of commodities, Targhetta said.
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    Rusal Q4 core profit slumps over 50 pct, just misses forecasts

    Russia's Rusal Plc reported a 53-percent slide in fourth-quarter core profit on Wednesday, hit by weak aluminium prices, but said it expects a strong increase in demand for the metal in 2016 and sees Chinese output growth slowing sharply.

    The world's biggest aluminium producer said it expects global aluminium demand to rise 5.7 percent in 2016 to 59.6 million tonnes, while Chinese appetite will expand 7 percent to 31 million tonnes.

    It said Chinese aluminium production, which has weighed on global markets over the past few years, is expected to increase by just 4.8 percent, well below the 12-percent average growth rate seen over the past five years.

    Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $306 million in the final quarter of 2015 from $651 million a year earlier and down from $420 million in the third quarter.

    That was just below an average of six analyst forecasts at $312 million.

    Rusal reported a recurring net loss of $40 million for the December quarter, down from a recurring net profit of $276 million a year earlier, hurt by a revaluation of its stake in Norilsk Nickel.

    Recurring net profit is adjusted net profit plus its share of Norilsk's earnings.

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    Chile's Supreme Court backs workers' right to strike

    Chile's Supreme Court has upheld a ruling that declared it illegal to dismiss workers for striking outside of a formal collective bargaining process, a decision that could have ramifications for future labor disputes.

    The ruling is potentially significant for mining companies in the world's top copper exporter, which in the past have dismissed and replaced workers after unauthorized strikes without legal repercussions.

    It comes at a time when businesses are already girding for increased costs due to a wide-sweeping labor reform making its way through Congress, set to give unions more power.

    In the decision late Monday, the Supreme Court affirmed the judgment of a lower appellate bench that had overturned the dismissal of two call center workers after they led their colleagues in a walk-off.

    "If striking is a fundamental right, then the business measures that limit it, like replacing striking workers...must be seen as schemes that should be eliminated," the appeals court said in its original October ruling.

    One of the most hotly debated aspects of the upcoming labor reform legislation is a provision that would make replacing striking workers more difficult. The bill is opposed by business leaders and the right-wing opposition, and centrist members of the governing coalition have balked at key aspects, repeatedly delaying its passage.

    Multiple sections of the bill are expected to face a legal challenge from a tribunal that rules on the constitutionality of pending legislation, lawyers say.

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    Two dead, five missing in Congo after wall collapse at Glencore mine

    Two workers at Glencore's Katanga Mining copper and cobalt operation in southeastern Democratic Republic of Congo died on Tuesday and five remain missing after a pit wall collapsed, the mine's chairman told Reuters.

    "We have found two bodies," said Gustave Nzeng, chairman of Kamoto Copper Company (KCC), the joint venture that runs the mine. Glencore said earlier that seven workers had gone missing in the landslide.
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    China February copper imports surge 50 pct from a year ago

    China's copper imports in February surged 50 percent from a year ago, the biggest year-on-year percentage gain since April 2014, as favourable import prices prompted traders to increase spot purchases of the metal.

    Arrivals of anode, refined metal, alloys and semi-finished copper products stood at 420,000 tonnes in February, customs data showed on Tuesday. That was down 4.5 percent from January's 440,000 tonnes but a huge jump from last year's 280,000 tonnes.

    "The February imports were lower than January but still quite high given the one-week Chinese New Year holiday," said Peng Sanhao, analyst at Chaos Ternary Futures.

    He added that price differentials between the international and domestic markets had favoured imports in December and January mostly, prompting importers to place some spot orders and the shipments arrived last month.

    Copper imports rose 23.3 percent from a year earlier to 860,000 tonnes in the first two months of the year.

    Still, traders said demand for spot copper in the domestic market had not improved strongly after the Chinese Lunar New Year holidays.

    Copper players were also waiting for signals of the government's macro policies this year from the annual meeting of China's parliament, limiting demand for spot imports, traders said. Factories also appeared to have a cash crunch after returning to work from the holidays.

    A copper buyer for a state-owned rods manufacturing plant in the eastern province of Zhejiang said he had not seen any signs of demand rising for the firm's product after the holiday.

    Peng at Chaos Ternary said production at rods manufacturing plants in the northeastern province of Shandong and southern province of Hunan had been picking up over the past two weeks.

    Copper rods are used in the power sector, the top copper user.

    Imports of raw material copper ores and concentrate in February nearly doubled from a year ago, jumping 92.1 percent, to 1.46 million tonnes, the second-highest after a record in December 2015.

    The ore imports were up 24.8 percent from January.

    Strong treatment and refining charges prompted Chinese smelters to boost orders for imports of copper concentrates in November and December and some shipments arrived in the first quarter, traders said.

    The charges are paid by sellers to Chinese smelters, and then deducted from the smelters' buying price.

    Still, exports of aluminium reflected slow activities at factories in the holiday month. Primary aluminium, alloy and semi-finished aluminium products dived 26.3 percent from January to 280,000 tonnes in February.

    Aluminium exports dropped 33.3 percent versus a year ago. In the first two months, the outflow fell 22.3 percent year-on-year to 670,000 tonnes.

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    Steel, Iron Ore and Coal

    BHP/Vale's Samarco sees mine restarting at 19 million tonnes

    Samarco, joint venture between Brazil's Vale SA (VALE5.SA) and Australia's BHP Billiton (BLT.L), expects to restart production at its iron ore mine in Minas Gerais by the start of the fourth quarter, its chief executive told Reuters on Thursday, less than a year after a burst tailings dam there killed 19 people.

    CEO Roberto Carvalho said iron ore pellet production for the initial two to three years would likely be at a reduced 19 million tonnes per year as the company develops a long-term plan to store the mining waste known as tailings.

    Before the dam disaster, Samarco was producing about 30 million tonnes per year.

    "All our focus is turning to the restart," Carvalho said at the company's headquarters in Belo Horizonte, the capital of Brazil's mining heartland. "We have talked to our clients, they have given us all the help possible and are awaiting the return of Samarco."

    Samarco is an influential miner in the pellet market. Before the dam spill in November, it accounted for about 20 percent of the global market for this high-grade steelmaking raw material that attracts a premium from mills.

    Though the restart depends on authorization from Minas Gerais state environmental body and mining regulator DNPM, Carvalho said the settlement with the government of a 20 billion-real ($5.53 billion) lawsuit for damages caused by the spill has provided positive momentum.

    Brazil's government considers the dam burst the country's worst-ever environmental disaster. The mud flow of mining waste killed 19 people, forced hundreds to leave their homes and polluted one of the country's main rivers.

    Under the government settlement, Samarco must pay 2 billion reais this year for clean up and compensation, an amount Carvalho says the company can afford.

    But payments over the coming years will depend on Samarco returning to production. Any shortfall over the 15 years the accord lasts must be covered by shareholders Vale and BHP.

    Samarco has already taken the first steps towards reopening the mine, applying for permission to use old mining pits to store tailings. This is a temporary solution as the miner awaits results of the investigation into the cause of the dam burst, after which it can develop a long-term production plan.

    The cost of re-opening the mine would not be expensive, Carvalho said. "There's nothing complicated that needs to be installed."

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    Indian state-run ports Apr-Feb thermal coal imports up 13pct

    India's 12 major state-run ports handled 89.5 million tonnes of imported thermal coal over April 2015 to February 2016, up 13% from the same period a year ago, according to latest data from the Indian Ports Association.

    But coking coal imports fell by 3% to 28.3 million tonnes in the 11-month period of the current fiscal year 2015-16, from the corresponding period a year ago, the data showed.

    Paradip port on east coast received the maximum number of shipments of imported thermal coal over April to February, at 28.6 million tonnes, up 4% from a year ago.

    Paradip port also handled the highest coking coal volumes at 8 million tonnes, up 14% from the same period a year ago.

    The 12 ports are Kolkata, Paradip, Visakhapatnam, Kamarajar (Ennore), Chennai, V.O.Chidambaranar (Tuticorin), Cochin, New Mangalore, Mormugao, Mumbai, Jawaharlal Nehru Port Trust, or JNPT, and Kandla.

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    Iron ore futures jump again as Shanghai steel sees rebound

    Iron ore futures in China climbed 4 percent on Thursday and those in Singapore rose as well as Shanghai steel prices recovered to touch an eight-month high, suggesting a recent rally may not be done as yet.

    The renewed strength in ferrous futures could again lift bids for physical iron ore cargoes and push up the spot benchmark, which slid nearly 6 percent on Wednesday after spiking by a record 19.5 percent on Monday. "As long as steel prices keep going up there is always logic for iron ore prices to go up," said a Shanghai-based iron ore trader.

    Chinese steel mills are boosting production ahead of April and May, the months that make up the seasonal peak for steel demand in China, the trader said.

    Those gains bode well for the spot benchmark, which on Wednesday tumbled 5.9 percent to $59.60 a ton, according to The Steel Index (TSI). That followed Monday's 19.5 percent rally that was the biggest single-day percentage gain according to TSI data that dates back to 2008.

    A rebound in Chinese steel futures helped drive the market rally in iron ore prices on Thursday.

    Argonaut Securities analyst Helen Lau said she expected China's crude steel production to have risen by 2 percent to 3 percent from January to February due to a recovery in seasonal demand.

    But Lau was concerned that higher production and declining exports would "worsen domestic oversupply."

    China's steel exports dropped to 8.11 million tons in February, falling for a second straight month.
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    Daqin Feb coal transport down 27.4pct on year

    Daqin Feb coal transport down 27.4pct on year

    Daqin line, China’s leading coal-dedicated rail line, transported 23.21 million tonnes of coal in February this year, sliding 25.5% on month and down 27.47% on year – the 18th consecutive year-on-year drop, said a statement released by Daqin Railway Co., Ltd on March 10.

    In February, Daqin’s daily coal transport averaged 0.8 million tonnes, 20.8% lower than January’s 1.01 million tonnes.

    Daqin rail line realized coal transport of 54.39 million tonnes in the first two months this year, falling 22.5% year on year.

    Over 2015, Daqin transported a total 396.99 million tonnes of coal, down 11.82% on year, accounting for 94.52% of its annual target of 420 million tonnes.

    In addition, Zhunchi rail line (Waixigou, Inner Mongolia-South Shenchi, Shanxi) and Mengji rail line (Ordos, Inner Mongolia-Caofeidian port) were put into commercial operation in September last year and January 2016, respectively, which would effectively help divert coal transport by Daqin line.

    Thus, 20 million tonnes of coal from Shenhua Group and 12 million tonnes of coal from Yitai Group are expected to be transported by Zhunchi and Shuohuang rail lines to Huanghua port this year, and 10 million tonnes of coal from Inner Mongolia is likely to be transported via Mengji line to Caofeidian port.

    Inevitably, the overwhelming advantage of Daqin line may be dented to some degree, and its coal transport is forecast to reach 340-350 million tonnes this year, down 12.8% or so on year.
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    Ex-Hanlong head sentenced to eight years for insider trading in Australia

    An Australian court jailed on Friday the former head of China's Hanlong Mining Investment Pty Ltd for eight years, Australia's corporate regulator said, in one of the country's harshest sentences for insider trading.

    The Supreme Court of New South Wales state handed down the sentence of eight years and three months to Hui Xiao, also known as Steven Xiao, on three charges relating to 102 illegal trades while he was managing director of Hanlong.

    "This sentence demonstrates the seriousness of insider trading," Cathie Armour, commissioner of the Australian Securities and Investment Commission, said in a statement.

    "Maintaining confidence in the integrity of our financial markets is vital," Armour added.

    In September, Xiao pleaded guilty to two charges of insider trading involving 65 illegal trades related to Sundance Resources Ltd and Bannerman Resources Ltd in July 2011, when he was Hanlong Mining's managing director.

    Hanlong made takeover offers for Sundance and Bannerman in 2011.

    Xiao also admitted to a third set of insider trading offences related to 37 illegal trades carried out in 2011.

    He has been in custody since being extradited from Hong Kong to Australia in October 2014.

    Another former Hanlong executive, Bo Shi Zhu, also known as Calvin Zhu, was sentenced to two years and three months in jail in Australia in 2013, having pleaded guilty to three counts of insider trading between 2006 and 2011.

    Hanlong called off a $1.23 billion offer for Sundance in April 2013 after missing funding deadlines. Talks with uranium explorer Bannerman on a A$143 million ($106.76 million) offer ended in late 2011 due to similar funding issues.

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    Algeria in talks with China over iron mining project

    Algeria is in talks with China to exploit one of the North African country's largest mining deposits as the OPEC member tries to diversify its economy away from oil and gas, an industry and mines ministry official said on Thursday.

    Negotiations started last month in Algiers with officials from China Civil Engineering Construction Corporation (CCECC) for a partnership in the Gara Djebilet iron deposit in the southwestern province of Tindouf, the official told Reuters.

    Algeria relies heavily on oil and gas to finance its budget and pay for a growing imports bill. The drop in global crude oil prices almost halved its energy earnings for 2015, forcing the government to cut spending and look to diversify its economy.

    The government has delayed the Gara Djebilet project several times, citing "technical difficulties".

    "This is the first time we talk with a foreign partner about the project," the official said. "Economic feasibility and technical studies were successful."

    Officials have estimated reserves in the Gara Djebilet deposit at around 2.5 billion tonnes of iron ore.

    Talks with China also includes the construction of a 950-km railway line linking Tindouf to the Bechar province to help transport extracted iron to steel plants.

    Steel imports cost Algeria around $10 billion a year due to growing domestic demand from a drive to modernise infrastructures and build thousands of subsidized housing units as part of the government's social spending.

    Algeria imports most of the goods it needs due to insufficient domestic production caused by a lack of investment in its non-energy industries, including mining.

    The industry and mines ministry official gave no details on how the Gara Djebilet project would be financed.

    Officials have said Algeria would turn to China to fund several projects including a $3.2 billion port, the first time it has sought external financing in more than a decade as it looks for alternative funding because of the oil price drop.
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    China steel cut plans not enough to solve sector woes: exec

    China's plan to close 100 million-150 million tonnes of poorly performing steel capacity in the next five years is unlikely to be enough to drag the stricken sector out of the doldrums, a parliamentary delegate and steel mill head told Reuters.

    As it steps up its efforts to deal with price-sapping capacity gluts in industrial sectors, Beijing has promised to force through the closure of hundreds of "zombie" steel mills and will also make funds available to deal with laid-off workers.

    But Zhang Wuzong, head of Shandong province's Shiheng Special Steel Group, said the targets laid out in an action plan in February would not be sufficient to tackle a surfeit of capacity estimated at around 400 million tonnes, especially as domestic steel demand continues to decline.

    "China's steel production is actually 800 million tonnes, and it should be at the 1.1 billion or 1.2 billion level, so getting rid of 100 million or 150 million isn't any good - 300 million or 400 million is more appropriate," he said.

    He said he expected domestic steel production to fall around 5 percent a year in the next five years to end the decade at around 600 million tonnes. Production last year was 803.8 million tonnes after dropping for the first time since 1981, with the sector now acknowledging that output has peaked.

    While urbanization will continue, China's cities already have massive housing surpluses, and infrastructure construction - including roads and railways - is already more or less complete, he said, further limiting steel demand.

    Prices of steel and iron ore have recently shown signs of recovering, driven by post-holiday restocking and the risk of capacity closures in the top steel producing city of Tangshan, but Zhang said that could not be sustained because it was not based on real improvements in underlying demand.

    "My view is that this is temporary and is a bubble," he said. "We shouldn't view this incorrectly. The recent recovery has political reasons and has been brought about by people's emotional needs."

    China has made 100 billion yuan ($15 billion) available to handle layoffs in the steel and coal sectors, with local governments entitled to apply for the funds once "zombie enterprises" have been shut down. But the money would not be used to resolve the thornier problem of bad debts.

    "This will not just be used to solve steel, but also coal and others, so the allocation to steel will be around a third and it won't solve the problems, and it won't solve the problems of asset losses," said Zhang.

    According to the China Iron and Steel Association, the debt ratio of major steel mills rose 1.6 percentage points to 70.1 percent last year, with total debts rising to 3.27 trillion yuan.

    "This debt will be solved gradually, and banks will bear certain losses - this is a certainty."

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    China's Dalian commodity exchange says to combat high volatility

    China's Dalian Commodity Exchange is aiming to curb volatility in iron ore futures trading by removing a 50 percent discount on trading fees for one transaction type and strengthening monitoring, an exchange spokesperson said on Thursday.

    The steps are aimed at preventing huge price swings accompanied by high turnover that has occurred in the Dalian iron ore futures recently, the exchange official said in a statement without giving a name.

    The 50 percent discount on trading fees when opening and closing positions in the same iron ore futures contract within one day will be removed starting on March 14, the exchange said in a separate statement.

    The exchange said it will intensify a crackdown on illegal trading to limit risk and stabilize the market. It will also strengthen monitoring on abnormal trading actions and transactions by affiliated accounts.

    The rapid rise in Dalian iron ore futures this week helped fuel a historic 19.5 percent rally on Monday in spot iron ore prices that many thought was largely driven by speculative buying given there have been no significant changes in supply-demand fundamentals.

    The most-traded May iron ore contract on the Dalian Exchange hit a series of trading limits this week, prompting the bourse to raise the daily trading limit and margins for iron ore futures since Wednesday's settlement.

    The volume of iron ore futures traded on Dalian on Thursday reached 10,458,552 contracts, according to the bourse's website. That number, which is double counted, translates to nearly 523 million tonnes of iron ore, or more than half of China's total iron ore imports last year.

    Spot iron ore .IO62-CNI=SI has gained nearly 40 percent so far this year, making it the best performing commodity so far in 2016.

    Gains in iron ore have been triggered by a rally in Shanghai steel rebar futures which have also hit a series of daily upward limits, as investors bet that low steel inventories and a potential pick-up in demand will lift prices.
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    China is becoming a nation of iron ore traders

    China is becoming a nation of iron ore traders

    With the stock market in a funk and property prices rising so fast that some investors are losing sleep, it appears that an increasing number of Chinese are turning to iron ore futures trading to make their next fortune.

    The chart below, from Westpac’s head of market strategy, Robert Rennie, shows the daily traded volume of Chinese iron ore futures on the Dalian Commodities Exchange going back to late 2013.

    It’s even more amazing than the record-breaking surge in the spot price earlier this week.

    Image title
    Dalian iron ore futures WBC March 10 2016Westpac

    According to Rennie, the equivalent of 977 million tonnes were traded on the Dalian exchange on Wednesday. Not only was it the highest daily turnover on record, it exceeded the entire amount of physical iron ore imported by China over the past year.

    According to Rennie, the equivalent of 977 million tonnes were traded on the Dalian exchange on Wednesday. Not only was it the highest daily turnover on record, it exceeded the entire amount of physical iron ore imported by China over the past year.

    In the 12 months to February, China imported a total of 962.6 million tonnes of ore, the largest year-on-year total on record.

    If the level of turnover recorded in Dalian futures on Wednesday was to be replicated over the course of any one typical trading year, it would equate to around 240 billion tonnes of ore.

    That’s a lot of ore!

    The surge led Sean Callow, currency strategist at Westpac, to muse earlier today whether iron ore futures are the next “new new thing” for Shanghai cab drivers having dabbled in the stock market beforehand.

    Certainly the swings in iron ore futures have been wild of late, suggesting that speculative forces may be building, as was case in the stock market back in late 2014.

    Whoever is responsible, be it taxi drivers or other investors, let’s hope that they’re aware thatiron ore futures are a physically delivered contract, meaning when it expires those who are holding will take physical delivery of the ore.

    That could be an awkward situation to explain to your next door neighbour.

    Midway through Thursday’s trading session the most actively traded May 2016 contract in Dalian is currently up by 4.04%.

    Whether that’s a sign of strong underlying demand, or simply speculation that the gains in the spot price earlier in the week will continue in the days ahead, won’t be truly known until daily spot price data is released at 9.30pm AEDT tonight.

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    Domestic steel price surges on uptick in demand, speculation

    A short-term rebound in demand and market speculation have led to a price surge in the domestic steel market, but the gains will be transitory because overall demand and overcapacity issues persist, analysts said on Wednesday.

    Steel prices in China surged in recent days, despite overcapacity in the industry that the government has vowed to tackle. The price for steel billets in Tangshan, a major city for steel production, in North China's Hebei Province, increased more than 20 percent, or 360 yuan ($55.3) per ton, in the past five days to 2,140 yuan per ton, the Beijing News reported on Wednesday.

    Since the Spring Festival holidays in mid-February, the price of steel billets has risen by 37 percent, or 580 yuan per ton, according to the Beijing News report.

    "This is crazy and unprecedented," said Wang Guoqing, research director at the Beijing Lange Steel Information Research Center.

    "There might be a short-term rebound in steel demand, but this is unusual," Wang told the Global Times on Wednesday.

    "Demand for steel has rebounded in recent days as a traditional peak season for construction during the spring and summer is approaching," said Wu Wenzhang, general manager of Beijing-based industry consulting firm Steelhome.

    The temporary rise in demand partly reflected persistent declines in steel inventories in recent months, which prompted traders to replenish supplies to prepare for the peak season, Wu told the Global Times on Wednesday.

    However, the price surge has mostly been driven by speculators, not fundamental demand, according to Wang.

    "As the country is determined to cut overcapacity in the steel industry by 150 million tons in the next five years, some traders are betting on a decline in steel supply," Wang told the Global Times Wednesday.

    In addition, an international horticultural exhibition in Tangshan, which is scheduled to run from May to October, might be sparking market speculation that steel mills around the city will be closed to ensure better air quality during the event and steel production will decline as a result, Wang noted.

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    Flower Show in Tangshan driving Iron ore?

    A dramatic surge in iron ore prices has been blamed on an upcoming flower show that is designed to showcase green-living in one of China’s most smog-choked industrial cities.

    Steel mills in Tangshan – a city of about 7 million inhabitants in China’s steel-producing heartlands – reportedly sent prices rocketing by nearly 20% on Monday, after going on an unexpected shopping spree for the commodity ahead of an enforced shutdown later this year.

    The partial shutdown is intended to reduce smog during the 2016 World Horticultural Exposition, which the city will host from April until October .

    Speaking at China’s annual rubber-stamp parliament on Tuesday, Jiao Yanlong, Tangshan’s Communist party secretary, told the Financial Times (£) that temporary air quality control measures would see production at the city’s steel mills cut in half until the end of September.

    In an interview with the state-run China News Service the Communist party chief of Tangshan, which produced more steel in 2014 than the US, said the flower show highlighted his city’s determination to pioneer the “green development of this resource-based city”.

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    Iron ore drops back after ‘surprising blip’ that notched record

    Iron ore dropped on Wednesday, eroding Monday’s record surge, amid a revival in concern that global supply is outpacing demand.

    Ore with 62% content delivered to Qingdao fell 8.8% to $58.02 a dry metric ton, according to e-mailed data from Metal Bulletin. The price dipped 0.2% on Tuesday after Monday’s 19% rally to the highest since June. The retreat was preceded by losses on futures in Singapore and China.

    Iron ore powered higher on Monday after China’s government talked up its commitment to sustaining growth, bolstering the outlook for demand and spurring speculation that the advance had been reinforced as some investors rushed to close out bets on losses. The rally prompted banks from Goldman Sachs Group to Citigroup to say that the gains wouldn’t last, citing slowing steel demand in China and rising mine supply. The raw material has slumped for the past three years amid a worldwide surplus.

    “We have seen this surprising blip on Monday into the $60s, we don’t think it will stay there and it will come back,” Morgan Ball, managing director of Australian junior producer BC Iron, told reporters at an industry conference in Perth, Western Australia, on Wednesday. “You may see it settle in that $45-to-$55 range, which is a number that is potentially interesting to us.”

    The global iron ore market remains grossly oversupplied, demand in China is faltering and there’s a severe glut of steel, according to Li Xinchuang, deputy secretary-general of the China Iron & Steel Association. Li, whose group represents the top mills in the country that makes half of the world’s steel, said that the recent gains probably won’t last.

    This week’s gyrations had been driven by shifts in futures in China, according to  Lourenco Goncalves, chief executive officer of Cliffs Natural Resources, the largest US producer. The price is controlled by the futures market and by speculation on the Dalian exchange, Goncalves said in an interview.

    “It has no correlation at this point with the physical market,” said Goncalves, whose company also has mines in Australia that ship output to customers in Asia. On Monday, “money poured into the market and that was it” as investors reacted to the comments from Premier Li Keqiang at the weekend, Goncalves said.
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    Inner Mongolia to cut 100 mln T coal capacity over 2016-20

    Coal-rich Inner Mongolia in northern China has pledged to close 280 coal mines with combined capacity at some 100 million tonnes a year in the 13th Five-Year Plan period (2016-20), said Bater, chairman of the autonomous region, at the fourth session of the 12th National People’s Congress on March 7.

    Most of the mines to be closed have a yearly capacity of below 0.6 million tonnes.

    It is in line with the government-led supply-side structural reform this year, analysts said.

    The autonomous region has been working to lower the share of coal in contribution to the GDP, down to 11% last year, said Wang Jun, secretary of CPC (Communist Party of China) committee of the region.

    "In 2015, Inner Mongolia’s GDP rose 7.7% on year to 1.8 trillion yuan ($276.4 million), ranking 16th across the country," Wang said.

    The mechanization rate in the coal industry of the autonomous region reached as high as 95%, 20 percentage points higher than the country’s average level.

    Meanwhile, the average capacity of a coal mine reached 1.96 million tonnes per year, fivefold of the national average level.
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    Indonesia could deplete coal reserves by 2033, PwC

    Indonesia could exhaust its economically retrievable coal reserves by 2033, a study by Price Waterhouse Coopers released on March 7 showed.

    Indonesia is among the world's top exporters of thermal coal, but its output has slipped in recent years as plummeting prices of the power station fuel have forced miners to cut costs.

    The PwC study is based on information from 25 coal mining companies representing around 80% of Indonesia's output, and looked into the availability of domestic coal for the 35 GW of power stations Indonesia hopes to build by 2019.

    Cost cuts by miners have included reducing exploration and stripping ratios - the amount of dirt removed to expose mineable coal, PwC Indonesian advisory chief Mirza Diran told reporters.

    "Exploration to find new coal reserves has pretty well stopped," Diran said, adding that these two factors had reduced the lifespan of the country's coal mines.

    Based on government data, Indonesia had around 32.3 billion tonnes of coal reserves in 2014. However, declining stripping ratios and profitability have led to a drop in coal reserves of 30 to 40%, Diran said, noting that the survey found coal reserves of between 7.3 billion and 8.3 billion tonnes.

    In these circumstances, Indonesia's coal reserves could be depleted between 2033 and 2036, he said.

    "There is a possibility that national coal reserves ... will not be enough to supply 20 GW of power stations for 25-35 years," Diran said, referring to the portion of the 35-GW program that is expected to be coal-fueled.

    Coal miners' profitability - as reflected in earnings before interest, taxes, depreciation and amortization (EBITDA) - declined by 60% to $2.5 billion in 2014 from $6.5 billion 2011 among the group of miners studied, Diran said.

    As a result, in 2015 the companies' spending had fallen by around 80% to $400 million from the $1.9 billion spent in 2012.

    "Our survey indicates this decline will continue with a further 10 to 20% decline in 2016."

    Responding to the findings, the Indonesian Coal Mining Association urged the government to lock in measures to set coal prices based on miners' costs.

    Association chairman Pandu Sjahrir said he hoped such a pricing policy would help stimulate investment in exploration and stabilize the economy, as well as secure coal reserves for the country's power stations.

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    ArcelorMittal to sell 3 more US steel making facilities - Report

    Scrap Monster reported that ArcelorMittal has decided to sell three of its US steel facilities. The company noted that it is in discussions regarding sale of certain long product mills. It intends to sell LaPlace, Steelton and Vinton facilities. In addition, the company has also decided to permanently shut the Luxembourg Schifflange long products plant.

    According to the company, the US operations have already implemented several cost-cutting measures including restricted purchases and revised health care plan for employees. The company is also in efforts to boost performance improvement and implement asset optimization at its steel making facilities. In March last year, it had idled its Indiana Harbor long carbon facility. Also, it had closed its Georgia wire rod facility in August. The company had reported had reported loss of $8 billion during 2015.

    The company website states that the Steelton facility has an annual production capability of 1 million mt. The mill operates an electric arc furnace, a three-strand continuous bloom caster and an ingot-teeming facility. It also operates a ladle furnace, a vacuum degasser, a 44-inch breakdown mill, 35-inch/28-inch rail mill and a 20-inch bar mill.

    The LaPlace mill has an annual steelmaking capacity of 620,000 mt and annual rolling capacity of 480,000 mt. It produces angles, beams, channel, flats and rebar for light structural shapes and merchant and rebar markets. The facility includes an electric arc furnace, ladle metallurgy station, two four-strand continuous billet casters and a 15-strand Danieli medium section mill.

    The Vinton mini-mill has an annual raw steelmaking capability of 320,000 mt. It produces rebar for the commercial and industrial construction industry, grinding balls for the mining industry, and smooth rounds. The facility includes an electric arc furnace, billet caster, rolling mill and bar mill.
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    China Feb steel exports down 16.7pct on mth

    China’s exports of steel products dropped 16.74% on month but rose 4% on year to 8.11 million tonnes on February, showed the latest data from the General Administration of Customs (GAC) on March 8.

    Total value of the exports slumped 33% year on year and down 19.7% month on month to $3.52 billion. That translated to an average export price at $433.9/t, slumping 35.6% on year and down 3.6% on month.

    Over January-February, China exported a total 17.85 million tonnes of steel products, slipping 1.3% year on year.

    In 2015, China’s steel exports first broke 100 million tonnes, which was mainly due to expanding price gap between domestic and abroad steel products. But the price gap has been narrowing due to a rebound in domestic steel prices since December last year.

    Additionally, the current weak demand from international market and anti-dumping investigations against China’s steel products also negatively impacted China’s steel exports.

    Therefore, it may not be a wise choice to relieve domestic supply pressure by increasing exports volume on the back of a volatile environment, analysts said.

    Meanwhile, China imported 0.93 million tonnes of steel products in February, rising 6.9% year on year and flat on month; the combined imports over January-February stood at 1.86 million tonnes, dropping 8.4% from the year prior.
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    Indonesia’s Mar HBA thermal coal prices up 1.4pct on mth

    Indonesia's thermal coal reference price in March this year, also known as Harga Batubara Acuan (HBA), climbed 1.4% on month to $51.62/t FOB, the first rebound after ten consecutive monthly declines, said the Ministry of Energy and Mineral Resources on March 8.

    It, however, still posted a year on year drop of 23.83%, compared with $67.76 the same month last year.

    The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg gross as received assessment; 25% on Argus-Indonesia coal index 1 (6,500 kcal/kg GAR); 25% on the Newcastle Export Index -- formerly the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy Publishing -- and 25% on the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

    It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash and 0.8% sulfur.

    The HBA for thermal coal is the basis for determining the prices of 73 Indonesian coal products and for calculating the royalties Indonesian producers have to pay for each metric ton of coal they sell locally or overseas.
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    US coal exports declined 25% in 2015

    That’s according to the Energy Administration Information (EIA) which added exports fell for the third consecutive year, with 23 million short tonnes (MMst) compared to 2014.

    Slower growth in world coal demand, lower prices and higher output in other coal-exporting countries are among the reasons for the reduction in the US.

    However, the EIA stated the nation remains a net exporter of coal as it provided 74MMst and imported 11MMst last year.

    India was the country which received a major amount of coal, with almost 2MMst.

    Coal exports to Asia and Europe, which traditionally was a leading destination for these exports, dropped by 28% last year.

    In January, a report from the EIA stated coal production in the US hit lowest level in 30 years.
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    Rio expects 75Mt of new supply to enter iron-ore market this year

    Mining major Rio Tinto expected some 75-million of new iron-ore supply to come into the market during 2016, forcing further high-cost supplies to exit the market. The company’s Pilbara Mines MD, Michael Gollschewski, told delegates at the Global Iron Ore & Steel Forecast  conference, in Perth

    In 2015, about 110-million of new low-cost seaborne supply entered the market, with some 130-milllion tonnes exiting the contestable market, of which 35-million came from China. “Rio Tinto is the lowest cost producer on the curve and the demand for our high-quality product continues to be robust and attracts a premium,” Gollschewski said. 

    “We are continuing to focus on taking the necessary strategic and tactical actions to maintain our position. Complacency is not an option,” he added. Gollschewski noted that in 2015, Rio worked to increase productivity, reduce operating costs and working capital, and to deliver incremental volume expansions from its projects, in an effort to generate free cash flows. 

    Working capital was reduced by some 83% year-on-year, with the miner also delivering a 20% productivity improvement, with the iron-ore division delivering over $428-million in savings over 2015, and $1.1-billion since 2012. “We are not stopping there. Our pre-emptive actions have held us in good stead to date and we will continue to take decisive action. We have announced further cost management measures and significantly reduced our capital expenditure,” Gollschewski said. 

    He added that Rio’s focus was also on deriving full value from its investment in assets and infrastructure. “We adhere to a disciplined capital allocation framework and continually evaluate our portfolio and potential growth options so that we can full utilise our infrastructure when the time is right to invest.”
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    China Feb coal exports up 49.2 pct on mth

    China exported a total 910,000 tonnes of coal in February, soaring 111.6% on year and up 49.2% on month, showed data from the General Administration of Customs (GAC) on March 8.

    It was the third consecutive rise on both year-on-year and month-on month basis, thanks to weak demand and falling prices in domestic market. However, coal exports still stayed at a relatively low level.

    The value of the February exports was $71.07 million, increasing 45.3% from a year ago and up 61.5% from January. That translated to an average price of $78.1/t, falling $35.6/t on year but rebounding $5.96/t on month.

    In the first two months of the year, China’s coal exports surged 129.2% on year to 1.52 million tonnes, with value up 54.4% to $115.08 million.
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    Vale, Fortescue plan tie-up to boost iron ore market share in China

    The world's no.1 and no.4 iron ore miners are in talks that could see Brazil's Vale SA taking a minority stake in Australia-based Fortescue Metals Group and the blending of their iron ore to win market share in China.

    The proposal will help the pair match the quality of iron ore produced by rival Rio Tinto, seen as the benchmark in China, and comes just as beaten-down iron ore prices stage a recovery to eight-month highs.

    The two companies have been in talks for around a year, Fortescue said on Tuesday, for what would be the first deal involving the "big four" iron ore miners following a collapse in the price of the steel-making commodity in recent years.

    The non-binding memorandum of understanding could see Vale buy up to 15 percent of its Australian rival's shares on market, which up to Monday had been sitting not far off seven-year lows. It would also allow Vale to take stakes in Fortescue's existing or future mines, while joint blending operations in China could begin within six months.

    "The key to this agreement is about creating efficiency and supply chain consistency and reliability to our customers," Fortescue Chief Executive Nev Power told reporters, adding the deal would make both companies more competitive.

    Vale produces some of the world's highest grade iron ore, but has long complained it does not fetch the premium its high quality iron ore deserves in the international market.

    Blending Vale's ore with lower quality material from Fortescue would bring down the grade to a more standard quality, and create a better sintering product for Chinese steel mills.

    "What we're trying to do is what some other traders and perhaps some of our customers have had to do internally," Power said.

    Citi analysts said in a research note the deal was aimed at "maximizing the price realizations of Vale's high-grade and Fortescue's low-grade product."

    It also gave Vale the option of buying stakes in Fortescue's mines, protecting itself from potential challenges in securing environmental approvals for new mines in Brazil's south in the wake of the deadly Samarco dam disaster, Citi said.

    Vale is in the process of phasing out higher cost, lower quality production from its older mines in Minas Gerais state.

    Fortescue did not expect to run into any trouble with competition regulators in China or elsewhere, although analysts said opposition in China could be a big hurdle.

    "There is no reduction in competition from this. If anything it improves the competitiveness of supply to the Chinese steel industry," Power said, adding that the companies had already started talks with regulators.

    Fortescue, which has been racing to cut costs and slash debt to help weather the collapse in iron ore prices over the past two years, said it did not consider issuing new shares to Vale despite $6.1 billion net debt.

    The company, controlled by founder and chairman Andrew "Twiggy" Forrest, has long been reluctant to water down Forrest's one-third stake and done everything it could to raise funds without issuing new equity.

    Fortescue's shares rose nearly 7 percent after the announcement to a 16-month high, adding to a stunning 24 percent gain on Monday when iron ore prices soared on expectations of a short-term jump in steel output in China.
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    Iron Ore Jumps Most on Record as Market Goes 'Berserk'

    Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user and igniting speculation that some investors who’d bet against the market had been caught out.

    Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, Metal Bulletin Ltd. data show. That’s the biggest gain in daily data going back to 2009 and the highest price since June. The surge was preceded in Asia by a rally in futures, with the most-active contract on Singapore Exchange Ltd. climbing 21 percent to $60 and prices on the Dalian Commodity Exchange rising by the daily limit.

    “The iron ore and steel markets have gone berserk -- they’ve departed from fundamentals and are heavily driven by sentiment,” Zhao Chaoyue, an analyst at China Merchants Futures Co. in Shenzhen, said before the Metal Bulletin price was published. “Investors are expecting further monetary easing by the Chinese government to boost steel demand.”

    Australia’s Fortescue Metals Group Ltd. jumped 24 percent in Sydney trading, where Rio Tinto Group and BHP Billiton Ltd. also climbed after futures prices jumped. Gains in London were muted. Rio, the second-biggest mining company, rebounded from an earlier decline in London trading and was up 2 percent by 1:04 p.m. local time, while BHP rose 1.1 percent.

    U.S. producer Cliffs Natural Resources Inc. climbed as much as 19 percent and was last up 6.3 percent in New York. Vale SA gained 6.9 percent in Brazil trading.

    Powered Higher

    Iron ore has powered higher in 2016 as steel prices have have strengthened, undermining forecasts for further losses driven by mounting low-cost supply from Australia and Brazil and weakening demand in China. At the annual National People’s Congress at the weekend, the authorities said they’d allow a record high deficit and higher money-supply target to support growth of 6.5 percent to 7 percent. At the same time, they also vowed to help cut overcapacity in steel, potentially curbing demand for iron ore.

    “There may be some short-covering in the futures markets today,” said Xu Huimin, an analyst at Huatai Great Wall Futures Co. in Shanghai, referring to investors closing bets on declines. “The crazy surge in futures prices has surprised traders and steel mills, as they haven’t seen a corresponding increase in physical orders.”

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    Record high coal stocks at Indian power plants show no sign of depleting: CEA

    Combined stocks of thermal coal at 101 Indian power plants rose to a new record high of 36.33 million mt Wednesday, up 4.9% from a month ago and 74.5% higher than at the same time last year, according to data released Friday by India's Central Electricity Authority.

    Stock levels have been climbing to new record highs almost continuously since the end of December.

    The data showed the Indian power plants had enough supply for 26 days of coal burn, up from 24 a month ago and 15 a year ago.

    No plants have had less than a week's supply or less than four days worth of consumption since January 13, which compared to 17 with less than a week's worth of stock a year ago and 4 with less than four days worth of consumption on March 2, 2015.

    The volume of imported coal in the stocks remained above the 2 million mt mark, up 28% from a month ago but down 2.6% from the same time last year.

    Low dry bulk freight rates have helped different origins of coal, such as Russian and Colombian material, become competitive into India, providing buyers with more choice in imported supply.

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    China's steel prices rise over 15 per cent after Beijing vows more easing measures to boost growth

    China's steel prices rise over 15 per cent after Beijing vows more easing measures to boost growth

    Steel prices in China have risen sharply over the past few days, offering signs of economic recovery and positive investor sentiment after Beijing made it clear that more easing measures are on the way to help boost growth.

    Prices of steel billet - a raw steel product that can be processed into bars, wires and sheets ¨C in Hebei province¡¯s Tangshan rose more than 15 per cent over the last three days.

    Tangshan is China's steel production capital.

    The jump prompted steel merchants and plants across the country, from Shanghai to Shenzhen, to raise their prices.

    The price rebound came in tandem with a clear policy message from Beijing that the government would boost fiscal spending and monetary easing to help growth.

    China has targeted at least 6.5 per cent annual growth for the next five years - an ambitious goal that will require strong fixed-asset investment at home as the export engine rapidly loses steam.

    The factory-gate steel billet price in Tangshan was 2,060 yuan (HK$2,450) per tonne on Monday ¨C a hefty increase from the 1,780 yuan per tonne last Friday - according to information on, the Internet portal for China¡¯s steel industry.

    While the present billet price, which is often used as a benchmark for other steel products, is still less than what it was four years ago, it was about one-third higher from last month.

    "Every day, the price is higher than yesterday," said Zhang Mingkun, a sales manager at Xinyong Trade, a steel product merchant, in Tangshan.

    "Market sentiment is completely different from a few months earlier, and everyone is now expecting the prices to go up further."

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    U.S. Commerce Department launches trade probe into stainless steel from China

    The U.S. Commerce Department said on Friday it had launched an anti-dumping and countervailing duty investigation into imports of stainless steel sheet and strip from China.

    The probe was in response to a petition from AK Steel Corp , Allegheny Ludlum (IPO-ALGL.N), North American Stainless, and Outokumpu Stainless USA, it said.

    It added that the U.S. International Trade Commission was scheduled to make its preliminary determination of injury to U.S. producers on or before March 28.
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    China key steel mills daily output down 0.36pct in mid-Feb

    Key steel mills in China saw their average daily crude steel output post a 0.36% ten-day drop to 1.56 million tonnes in mid-February, according to the latest data released by the China Iron and Steel Association (CISA).

    Since February, this figure has been hovering around 1.56 million tonnes, higher than 1.51 million tonnes in late-January, but down 3.70% from the same period the year prior.

    China’s daily crude steel output in mid-February was estimated at 2.06 million tonnes, edging down 0.12% from early-February.

    Steel products daily output in key steel mills averaged 1.47 million tonnes, rising 5.50% month on month, with that of pig iron and coke standing at 1.54 million and 0.32 million tonnes, rising 0.25% on month and up 0.25% from ten days ago, respectively.

    By February 20, stocks in key steel mills stood at 14.62 million tonnes, jumping 4.72% from February 10.

    In the same period, the average price of crude steel in key steel mills was 1,765 yuan/t ($270.6/t), down 5% from early-February; and that of steel products edged down 0.14% to 2,418 yuan/t from early-February.

    Domestic prices of the six major steel products all increased in late-February, with rebar price averaging 1,984.5 yuan/t, up 2.6% from mid-February, showed data from the National Bureau of Statistics (NBS).

    The rise in steel prices, which mainly caused by China’s loose credit policy combined with lower-than-expected stock levels, may continue to rebound in March as entering the traditional busy season.

    In late-February, Shagang Group – China’s largest private steel maker, raised steel prices by 30-50 yuan/t, and will increase 30 yuan/t more in early-March; the future price of carbon sheet from state-run Baosteel climbed 100-260 yuan/t over February-March from January.

    Presently, steel makers are having a good control of steel output and cautious about resuming production. Steel industry may shake off deficits and begin to make profits in March, analyst said.

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    South Korea expects record coal demand in 2016

    An increase in the number of coal-fired power plants starting operations this year will likely drive record coal demand in South Korea, despite the country's pledge to curb greenhouse gas emissions at last year's Paris climate summit.

    The Korea Energy Economics Institute (KEEI), a government-run think tank, forecasts South Korean coal demand will rise 6.3 percent to more than 140 million tonnes in 2016, as 9 new plants with a combined capacity of 7.7 gigawatts come online.

    Coal accounted for nearly 40 percent of South Korea's electricity supply last year, according to data from Korea Power Exchange.

    "It takes about 4 to 5 years to build new power plants and start operations. We just can't cancel the operation of new plants that are already built and ready," said an energy ministry official.

    South Korea has scrapped plans to build four coal-fired power plants and aims to boost its nuclear reactor fleet by two more units in 2028 and 2029 as it looks to increase the share of nuclear and gas for power generation and cut reliance on coal.

    Although Asia's fourth-largest economy still plans to build 19 new coal-fired power plants by 2022.

    Seoul imported nearly 10 million tonnes of coal in January, up 5 percent from a year earlier, customs data shows. Of that, imports of steaming coal used for power generation rose nearly 6 percent year-on-year, reaching 7.7 million tonnes. Imports are mainly from Australia, Indonesia and Russia.

    Hailed as the first truly global climate deal, an agreement reached last December in Paris committed both rich and poor nations to reining in rising emissions blamed for warming the planet.

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    Serbia invites bids for loss-making steel plant

    Serbia has invited bids for its loss-making Zelezara Smederevo steel mill, marking the latest stage in attempts to find a solution to the plant which has been swallowing $120 million a year in subsidies since it was nationalised in 2012.

    In an advertisement in Belgrade's Politika daily, the economy ministry set the starting price for the plant at 45.69 million euros ($50 million) and March 30 as the deadline for binding bids. Offers will be made public on April 1.

    The sale is a part of Serbia's efforts to offload unprofitable state firms as part of its 1.2 billion euro loan deal with the International Monetary Fund. Assets to be sold or made bankrupt include the RTB Bor copper mine, the Galenika drug company and the Resavica coal mine.

    Serbian Prime Minister Aleksandar Vucic had said last November China's Hebei Iron & Steel Group was considering a strategic partnership with the plant, Serbia's only steel mill, and an investment of at least 300 million euros.

    The advert did not say if the Chinese company was still potentially involved and no-one at the ministry could immediately be reached for comment.

    Serbia bought the plant from U.S. Steel in 2012 for $1 to avert its closure and save more than 5,000 jobs. A sale to U.S. steel firm Esmark collapsed last year and Serbia appointed Netherlands-registered HPK Engineering to run it and make it profitable until its privatisation.

    Last October the plant restarted its second furnace, shut down since 2011, to boost output and improve prospects for a sale.
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