Mark Latham Commodity Equity Intelligence Service

Friday 11th November 2016
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    Steel, Iron Ore and Coal


    China Jan-Oct power consumption climbs 4.8pct on year, NDRC

    China's power consumption climbed some 4.8% from the year prior in the first ten months, compared with a year-on-year growth of 4.4% over the same period last year, said Li Pumin, spokesman of the National Development and Reform Commission, in a press conference held on November 11.

    Li didn't give figures of actual power consumption, which is expected to be announced late next week.

    The electricity use by residential segment gained 11.7% over January-October from a 4.6% increase in the corresponding period last year.

    For the non-residential segment, the primary industries – mainly the agricultural sector – reported a 5.1% growth of power consumption in the first ten months, compared with a growth of 3% a year ago.

    The secondary industries – mainly the industrial sector saw power use climb 2.3% on year, up from a year-on-year drop of 1% in the same period last year.

    Power consumption by tertiary industries – mainly the service sector – increased 11.6% on year, compared with a 7.1% rise from the previous year.

    Over January-October, China's output of hydropower, nuclear and thermal power increased 7.3%, 23% and 1.9% from a year ago, respectively, according to preliminary statistics.
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    Noble Group reports loss as debt pile shrinks $503mn

    Noble Group Ltd., the commodity trader backed by China’s sovereign wealth fund, reported another loss in the third quarter as the Hong Kong-based company pressed on with efforts to pay down debt, boost liquidity and focus on its most profitable businesses.

    The net loss was $28.1 million in the three months to September compared with net income of $24.7 million a year earlier as sales shrank 38 percent to $11.6 billion, the company said in a statement on Thursday. Liquidity headroom expanded to $1.2 billion at the end of September from about $800 million in the previous quarter, as net debt dropped by more than $500 million.

    Noble Group has been divesting assets and cutting costs to bolster its balance sheet after the company was roiled by a share price collapse, a full-year loss and a downgrade to junk. Chairman Richard Elman reaffirmed plans to regain profitability in the next one or two years when the trader secured approval from shareholders last week to sell a U.S. energy unit, which largely caps a drive to raise $2 billion.

    “We have made significant progress on our initiatives to raise capital and rationalize our businesses,” Noble Group said in the statement. “Our 2016 results have been significantly impacted by our conservative approach to liquidity management. Businesses continued to be constrained in the latest quarter and are operating well below optimal earnings’ capacity.”

    Noble Group’s shares advanced 13 percent to close at 20.5 Singapore cents on Thursday before the earnings report. While the stock has rebounded from a low of 11.2 cents in September, it remains 32 percent lower this year after plunging 65 percent in 2015.

    The company lowered net debt by $503 million to $3.42 billion by Sept. 30 from the previous quarter, and $551 million over the first nine months. Noble Group said it sees further deleveraging after the completion of capital-raising initiatives, including proceeds from the sale of the U.S. energy unit, which is expected to close in December.

    Noble Group’s net debt to capital declined to 47 percent at the end of September from 54 percent three months before, according to the statement. That would drop to 40 percent should the sale of Noble Americas Energy Solutions generate net proceeds of about $1 billion, it said. NAES is being sold to Houston-based Calpine Corp.

    While soaring coal prices contributed to stronger profitability into the end of September, Noble Group said hedges had prevented a material boost to the third-quarter earnings, according to the statement. The trader expects to benefit from the improving environment over the rest of the year.

    The third-quarter result follows a loss of $54.9 million between April and June. When announcing the second-quarter results in August, Chief Financial Officer Paul Jackaman said there’d been greater emphasis on liquidity over profitability, with a focus on deleveraging and that had affected results.

    On Thursday, Jackaman said together with co-chief executive officers Jeff Frase and Will Randall the company was in talks with lenders to decide how to divide the new liquidity between further debt payments and working-capital needs. Banks remained supportive and Noble Group was in compliance with financial covenants during the quarter, he said on a call with analysts.
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    U.S. forecaster sees La Niña likely to persist in coming months

    A U.S. government weather forecaster on Thursday said that La Niña conditions are present and slightly favored to persist into the Northern Hemisphere winter 2016-17.

    The Climate Prediction Center (CPC), an agency of the National Weather Service, in a monthly forecast said it observed La Niña conditions during October and sees a 55 percent change they will persist through the winter.

    Last month, the agency pegged the chance of La Nina developing this fall at 70 percent.
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    Vedanta narrows interim losses

    Diversified global natural resources group Vedanta Resources has posted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $1.2-billion, with a margin of 33% for the first six months of the 2017 financial year, ended September 30.

    While this was a 4% decrease on Ebitda for the prior year, the company still considers it a strong performance, noting that it was driven by commodity prices recovering from the lows of early 2016.

    The company also generated positive free cash flow of $166-million, as a result of operational expenditure and working capital optimisation.

    While its revenues for the six months fell 15% to $4.9-billion, the company saw a substantial increase in its operating profit to $720-million from $578-million in the six months to September 30, 2015.

    Vedanta also managed to narrow its losses, with an underlying loss a share of $0.18 compared with the prior comparable period’s $0.57, and a basic loss a share of $0.23 compared with a loss of share $1.17 in the prior comparable period, reflecting the benefits of cost optimisation.

    “Operationally, we had a strong first half, during which we delivered on our guidance of ramping up production of aluminium, power and iron-ore, and we continued to drive down costs at all our businesses,” chairperson Anil Argawalsaid in a statement.

    It in its aluminium division, Vedanta achieved its highest-ever interim production of 541 000 t, with output partially impacted by pot outages. However, these have not led to any significant change to its full-year production guidance of 1.4-million tonnes.

    While its Zambian copper operations have also steadily improved with significant cost reductions, the company was adversely affected by average copper prices falling 16% to $4 751/t, resulting in the operation’s profit dropping by $44-million.

    At its zinc international operations, prestripping work at the Gamsberg zinc mine in South Africa is progressing well, with major contracts currently being finalised.

    “We plan to produce the first tonnes from this project in mid-2018. We will ramp up to the full capacity of 250 000 t in 9 to 12 months. We are also working on extending the mine life for Skorpion by two years,” Argawal noted.
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    Brazil police carry out two detention orders in corruption probe

    Brazilian federal police said they had served two detention orders and executed 16 search and seizure orders on Thursday as part of a new phase of a corruption probe into the state oil company Petrobras.

    The new phase concerns dealings between building firms and executives at the oil giant known formally as Petróleo Brasileiro SA, according to a police statement.

    Prosecutors said the targets were businessman Adir Assad and lawyer Rodrigo Tacla Duran, who were accused of helping to launder money for the homebuilders involved in the scheme. Neither man is a current or former Petrobras employee. Assad has been under arrest since March.

    A lawyer for Assad was not immediately available for comment. Efforts to contact Duran's lawyer were unsuccessful.

    The prosecutors they suspected Duran of laundering "tens of millions" of reais for the firms UTC Engenharia and Mendes Júnior Trading Engenharia, which were then funneled into bribes.

    "Investigations uncovered evidence that the operators used sophisticated money-laundering mechanisms, including bank accounts in the name of offshore companies abroad, front companies and fake contracts," prosecutors said.
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    Reversing Iran sanctions deal ‘very difficult’ for Trump

    A sanctions expert has said it would be “very difficult” for US-President elect Donald Trump to re-impose restrictions on Iran without Europe’s agreement.

    Patrick Murphy, partner at Clyde & Co, said unilateral action by the Trump administration could spark a row with the EU.

    Mr Trump previously said the Joint Comprehensive Plan of Action (JCPOA) that lifted sanctions on Iran – opening the doors to western investment − was the “worst deal ever negotiated”.

    But Mr Murphy does not expect Mr Trump to nullify the pact.
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    China scales back renewables, increases coal use

    China has reduced its solar and wind targets but plans to increase the use of coal by 2020.

    The National Energy Administration (NEA) has cut solar capacity from 150GW to 110GW and slashed wind targets from 250GW to 210GW, according to Asia Europe Clean Energy Advisory (AECEA).

    However the nation’s new Five-Year Plan states China would boost coal capacity – from 920GW to 1,100GW in 2020.

    The plan spans from 2016 to 2020 and insists the country will focus on increasing renewable energy capacity and promoting innovative, green industrial practices.

    The NEA adds it would increase non-fossil fuel sources to provide 15% of the energy mix by 2020 but coal would still make up around 55%.

    Considering China installed 43GW of solar in 2015 and 27GW so far this year, with another 8GW possibly on the way, the target doesn’t leave much room for renewable growth between now and 2020, states AECEA.

    It adds that would mean Chinese solar capacity could only grow from 78GW to 110GW over this time frame, “signalling a huge slowdown in pace from the country’s rapid adoption in recent years”.
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    Dr Copper speaks!

    Mr Market in action:

    Image title

    Missed this!

    Explanation: Trump is pro-growth. Leftist anti-growth agenda being torn up. Tax cuts are #1 on the agenda. Tax simplification on the agenda. Trump has no special interest groups to pander too. You could see something really radical hit the deck. (Paris is going to have a complete hernia. )

    Meanwhile: marginal Chinese metal beneficiation capacity under all sorts of stress here. (Trucks+ Smog)
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    China jails 49 for catastrophic Tianjin factory blasts

    Courts in north China's Tianjin Municipality on Wednesday sentenced 49 people to prison, including 24 company managers and staff members as well as 25 government officials found guilty of various crimes that led to the city's warehouse blasts, which killed at least 165 people in August 2015.

    The suspects were tried by The Second Intermediate People's Court of Tianjin and nine other grass-roots courts from Nov. 7 to Nov. 9. As the rulings were made on Wednesday, all suspects agreed with the verdicts and expressed remorse, sources with the Higher People's Court of Tianjin said.

    On Aug. 12, 2015, a series of explosions ripped through a warehouse of Ruihai Logistics Co. Ltd. (Ruihai Logistics) in Tianjin Port, leaving 165 people dead, eight missing, and 798 injured. The blasts also damaged 304 buildings, 12,428 cars, and 7,533 containers, incurring economic losses amounting to 6.87 billion yuan (1.01 billion U.S. dollars).

    The court found Yu Xuewei, chairman of Ruihai Logistics, guilty of bribing port administration officials with cash and goods worth 157,500 yuan (23,333 U.S. dollars) to obtain a certificate to handle hazardous chemicals at the port.

    Yu was convicted of illegal storage of hazardous materials, illegal business operations, causing incidents involving hazardous materials, and bribery. He was sentenced to death with a two-year reprieve.

    The deputy chairman and general manager of Ruihai Logistics and three other employees of the company were sentenced to prison terms ranging from 15 years to life. Seven Ruihai Logistics staff members directly responsible for the incident were sentenced to between three and 10 years in prison.

    Eleven people with a safety evaluation company that provided Ruihai Logistics counterfeit safety reports were also jailed.

    Twenty five officials, including head of Tianjin Municipal Transportation Commission Wu Dai, were sentenced to prison terms lasting from three to seven years for dereliction of duty, abuse of power, and accepting bribes.
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    Dutch rightist Wilders expects Trump boost for Europe's populists

    Dutch far-right politician Geert Wilders said Donald Trump's victory in the U.S. presidential election was a sign that the West was living through a "patriotic spring" that would boost support for populist parties in Europe like his own.

    Wilders, whose anti-immigration, anti-Muslim Freedom Party tops polls ahead of next year's parliamentary elections, said mainstream politicians had lost the trust of voters in the West by ignoring the issues they cared most about.

    "Trump winning proved to me that people are fed up with politically correct politicians who are concerned and involved with issues that regard themselves but not those that are important to the public," he said.

    German AfD Leader Petry Says Trump Vote ‘Encouraging’ for Europe
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    Another poll: Italy referendum

    Oh look, another poll: Italy Referendum: ‘Yes’ 47.9%, ‘No’ 52.1%: Euromedia Poll

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    The press takes him literally, but not seriously; his supporters take him seriously, but not literally.

    For the first time since before World War II, Americans chose a president who promised to reverse the internationalism practiced by predecessors of both parties and to build walls both physical and metaphorical. Mr. Trump’s win foreshadowed an America more focused on its own affairs while leaving the world to take care of itself.

    The outsider revolution that propelled him to power over the Washington establishment of both political parties also reflected a fundamental shift in international politics evidenced already this year by events like Britain’s referendum vote to leave the European Union. Mr. Trump’s success could fuel the populist, nativist, nationalist, closed-border movements already so evident in Europe and spreading to other parts of the world.

    In Germany, where American troops have been stationed for more than seven decades, the prospect of a pullback seemed bewildering. “It would be the end of an era,” Henrik Müller, a journalism professor at the Technical University of Dortmund, wrote in Der Spiegel. “The postwar era in which Americans’ atomic weapons and its military presence in Europe shielded first the west and later the central European states would be over. Europe would have to take care of its own security.”

    Which brings us to an important question: Was Donald Trump just good enough to beat a bad Democratic opponent on Tuesday, or does he deserve far more credit? Could he, for instance, have competed with the vaunted Obama machine? The answer, somewhat shockingly, is yes. A review of vote totals in the past two elections reveals that Trump 2016 would have defeated Obama 2012 in the electoral college.

    Read more at:
    Image title(MGL: The result is profoundly shocking to those outside the US, mobile outages in the UK surged.)

    Image titleRural vs Urban divide.
    MogIA, an artificial intelligence system and election predictor, has successfully predicted its fourth election in a row.

    Pollsters and election modelers suffered an industry-shattering embarrassment at the hands of Donald Trump on Tuesday night.

    Attached Files
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    India abandons large bank notes.

    India Surprises with a Wealth Tax on the Black Market

    by  on November 8, 2016at 12:01 pmin Current Affairs, Economics | Permalink

    TheEconomicTimes: In a move to curb the black money menace, PM Narendra Modi declared that from midnight currency notes of Rs 1000 and Rs 500 denomination will not be legal tender.

    In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.”

    This is a big deal as these notes account for at least 80% of all cash in circulation! Ken Rogoff has argued for eliminating cash but this doesn’t seem to be a move in that direction since the notes will be replaced with new Rs 500 and Rs 2000 notes. Rather it seems to be a wealth tax on the black market. Old notes can be turned into a bank for replacement so ordinary people won’t lose money. People in the black market, however, probably have a lot of cash that they are unwilling to turn into a bank because they don’t want to reveal their wealth. Imagine walking into a bank and depositing a million dollars in cash–that is going to create a record that the tax authorities can follow. The wealth tax on the black market interpretation is consistent with the surprise–if people knew that this was coming they could have laundered the money but that is going to be more difficult and costly now.

    It’s impressive that a government could pull off this level of secrecy. Good for Modi’s image as competent, uncorrupt and technocratic. Indians are calling it a “surgical strike on black money” which is the imagery Modi wants. But what will happen tomorrow when people don’t have enough cash to buy goods and services?

    And there is another issue. Why is the black market so large to begin with? The wealth tax will punish current holders of cash but if the policies that generate the black market aren’t addressed the black market will grow again perhaps using gold, USD or bitcoin (see my addendum). It would be better to reduce barriers to entry and encourage more economic activity to move out of the black market and into the formal sector.

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    Energy impacts of Trump's surprise US presidential victory

    Republican Donald Trump has won the US presidential election in a surprise upset after polls had predicted a comfortable lead for his Democratic opponent, Hillary Clinton, the Associated Press is projecting.

    While Trump has given few concrete details about his energy plans, his statements during the campaign indicate he would likely adopt policies that attempt to expand fossil fuel production, ease regulations on industry and roll back President Barack Obama's clean air policies.

    Here is a snapshot of some of Trump's energy-related statements:


    Trump has said he supports all forms of energy and wants the market to decide which ones succeed. He has promised to open all federal lands and waters to fossil fuel production, in contrast to Clinton, who had called for new, stricter limits on oil and gas production on public lands and indicated she wanted US offshore production confined to only the Gulf of Mexico.

    Analysts say it is impossible to determine just how much of an impact a Trump administration may have on domestic supply because of a number of shifting factors, particularly prices.

    Article Continues below...

    Platts US Election Webinar
    Nov. 11, 2016 • 1 p.m. Eastern

    How will the newly elected president impact policies, and how will these policies impact commodity markets? Please join S&P Global Platts for a free webinar, Platts US Election Webinar: What to expect in petroleum, natural gas, power, and metals, on Friday, November 11 at 1 p.m. EDT as we take a deep dive into these issues.


    But Trump, widely seen as a far bigger supporter of the oil and natural gas industry, will likely rebuff any environmentalist attempts to curb domestic fossil fuel production and will likely give US producers access to far more on and offshore plays than Clinton would have.

    "I think it's like the production of anything, if you have access to more of it, you're going to have more," North Dakota Representative Kevin Cramer, a Republican and top Trump energy adviser, told S&P Global Platts. "In fact, whether it correlates to more overall production or not, it certainly provides a diversity of opportunities for producers so that, with a low market price, they can pick the most productive places to drill with the greatest efficiencies."


    Trump has said he will pursue a policy path to open up more US lands and waters to drilling and, in turn, boost consumption of even cheaper domestic oil and other fossil fuels. Analysts say his broad plans to boost US production and eliminate many of President Obama's regulatory efforts to combat climate change may result in less demand reduction than if Clinton were elected.

    Trump would likely quash efforts to institute new greenhouse gas performance standards for petroleum refineries and may push to weaken future fuel economy standards for light-duty vehicles, but those possible moves would not necessarily correspond with an increase in demand, particularly since efficiency gains already in place in the US vehicle fleet are already forecast to cut gasoline demand as much as 500,000 b/d by 2020.

    At the same time, oil demand is driven by a country's gross domestic product and will likely be defined by economic factors largely outside the new president's control, said Stewart Glickman, head of energy equity research for S&P Global Market Intelligence. In spite of any policy changes, if GDP goes up, people will likely drive more and demand will increase, Glickman added.


    Trump has promised to either dismantle or overhaul the Environmental Protection Agency and roll back Obama administration regulations to curb coal industry pollution. Cramer said Trump believes EPA needs to return to its core mission of protecting clean water and clean air, and that Congress has granted it too much leeway in interpreting legislation.

    Trump is expected to try to scrap the Clean Power Plan. He questions the widely held scientific consensus that human activity is causing climate change.

    Trump is expected to abandon, or at least weaken, efforts by EPA and the Department of the Interior to regulate methane emissions from oil and gas operations and also could weaken future car and truck fuel-economy standards.


    Trump has not addressed the Dakota Access Pipeline controversy, but he holds personal investments in project sponsors Energy Transfer Partners and Phillips 66. He has said that, if elected, he would urge TransCanada to renew its Keystone XL permit application, which the Obama administration rejected in late 2015 after years of debate.

    Aside from those high-profile pipeline controversies, it's unlikely the next president will have a big impact on future midstream projects, since authority over most oil and gas pipelines falls outside the administrative branch. But LNG export facilities and cross-border oil and gas pipelines must receive a presidential permit, and Trump's appointees will be weighing those applications.

    Trump has said he would spend "at least double" what Clinton planned on infrastructure, funding it with new debt to take advantage of still-low interest rates.


    Trump's possible efforts to end incentives for alternative energy development would boost near-term demand for fossil fuels. For example, a potential cut in the Investment Tax Credit to 10% from the current 30% would slash solar installation demand by 60%, according to S&P Global Market Intelligence.


    Trump has offered broad public support to the Renewable Fuel Standard, but in September he unveiled an economic policy package that included a statement that the market underpinning the RFS, the EPA's Renewable Identification Number program, "penalizes" refiners for not meeting "impossible" requirements. After these statements were criticized, they were removed from Trump's campaign website and staffers claimed they were posted in error.
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    U.S. says it has established WTO panel over Chinese trade of 11 raw materials

    The United States has successfully established a dispute-settlement panel at the World Trade Organization to examine China's "unfair export duties and quotas" on 11 raw materials, U.S. Trade Representative Michael Froman said on Tuesday.

    "We will aggressively pursue this challenge on behalf of U.S. steelworkers, auto workers, aerospace workers, and the many Americans whose businesses, jobs, and livelihoods depend on the strength of these and other industries," Froman said in a statement.

    The raw materials include antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum, and tin. Froman had said last month that he had asked the WTO to establish the panel.
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    The Economy.

    Today, I’m going to outline a plan for American economic revival – it is a bold, ambitious, forward-looking plan to massively increase jobs, wages, incomes and opportunities for the people of our country.

    My plan will embrace the truth that people flourish under a minimum government burden, and it will tap into the incredible unrealized potential of our workers and their dreams.
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    Democrats leaving the US?

    Canada immigration website apparently crashed on Tue night as Donald Trump’s prospect of winning Election 2016

    @PDChinaImage title
    EU Reactions.

    Attached Files
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    Foreign Policy.

    • Peace through strength will be at the center of our foreign policy. We will achieve a stable, peaceful world with less conflict and more common ground.
    • Advance America’s core national interests, promote regional stability, and produce an easing of tensions in the world. Work with Congress to fully repeal the defense sequester and submit a new budget to rebuild our depleted military.
    • Rebuild our military, enhance and improve intelligence and cyber capabilities.
    • End the current strategy of nation-building and regime change.
    • Ensure our security procedures and refugee policy takes into account the security of the American people.

    Read Donald J. Trump’s Plan to Make America Safe and Respected Again, here.

    • Work with our Arab allies and friends in the Middle East in the fight against ISIS.
    • Pursue aggressive joint and coalition military operations to crush and destroy ISIS, international cooperation to cutoff their funding, expand intelligence sharing, and cyberwarfare to disrupt and disable their propaganda and recruiting.
    • Defeat the ideology of radical Islamic terrorism just as we won the Cold War.
    • Establish new screening procedures and enforce our immigration laws to keep terrorists out of the United States.
    • Suspend, on a temporary basis, immigration from some of the most dangerous and volatile regions of the world that have a history of exporting terrorism.
    • Establish a Commission on Radical Islam to identify and explain to the American public the core convictions and beliefs of Radical Islam, to identify the warning signs of radicalization, and to expose the networks in our society that support radicalization. 

    Read Donald J. Trump’s Detailed Plan to Defe

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    1. Withdraw from the Trans-Pacific Partnership, which has not yet been ratified.

    2. Appoint tough and smart trade negotiators to fight on behalf of American workers.

    3. Direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers, and also direct all appropriate agencies to use every tool under American and international law to end these abuses.

    4. Tell NAFTA partners that we intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. If they don’t agree to a renegotiation, we will submit notice that the U.S. intends to withdraw from the deal. Eliminate Mexico’s one-side backdoor tariff through the VAT and end sweatshops in Mexico that undercut U.S. workers.

    5. Instruct the Treasury Secretary to label China a currency manipulator.

    6. Instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO. China's unfair subsidy behavior is prohibited by the terms of its entrance to the WTO.

    7. Use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets - including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

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    President Trump and Energy.



    • Make America energy independent, create millions of new jobs, and protect clean air and clean water. We will conserve our natural habitats, reserves and resources. We will unleash an energy revolution that will bring vast new wealth to our country.
    • Declare American energy dominance a strategic economic and foreign policy goal of the United States.  
    • Unleash America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves.
    • Become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests.
    • Open onshore and offshore leasing on federal lands, eliminate moratorium on coal leasing, and open shale energy deposits.
    • Encourage the use of natural gas and other American energy resources that will both reduce emissions but also reduce the price of energy and increase our economic output. 
    • Rescind all job-destroying Obama executive actions. Mr. Trump will reduce and eliminate all barriers to responsible energy production, creating at least a half million jobs a year, $30 billion in higher wages, and cheaper energy.

    Attached Files
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    Iranian miner seeks up to $4 bln for copper, steel projects

    A private Iranian company is seeking joint venture partners to help develop copper, steel and other projects in the country, managing director Ebrahim Sadeghi of Mahan Company for Mines and Industries Development (MACMID) said on Tuesday.

    MACMID has two copper mines already under development, the Chah Firuzeh mine and the Daralou mine, both of which are being developed with a conglomerate that includes state-owned National Iranian Copper Industries.

    The group is seeking $600 million from one or more international joint venture partners to help develop the two copper mines and associated processing plants, each aiming to produce about 26,000 tonnes of copper a year by about 2019.

    "We are looking to bring in international partners to jointly develop local deposits," Sadeghi said through an interpreter on the sidelines of a mining conference. "Iran has some of the richest deposits in the Middle East. Gold, copper zinc."

    Construction of the Chah Firuzeh mine is about 20 percent complete, and Daralou is around 35 percent complete, he said.

    MACMID was set up in 2013 as a private joint stock company, backed by Iran's Tourism Financial Group.

    It eventually aims to put in place a range of projects, including production of steel slab and a fertiliser business, and hopes to raise $4 billion in foreign investment after having secured $1 billion from local investors, Sardeghi said.

    MACMID had a mandate to use European technology only in its developments.

    Sardeghi said the investment climate in Iran had improved since the lifting of a range of international sanctions in mid-January.

    "The climate is not cold, the process just takes time," he said.

    MACMID expected commodity prices to increase, while the copper projects would break even at prices as low as $4,000 a tonne, he said. Copper is currently above $5,000.

    "In 2018, it is going to be a better market for iron ore and steel. It won't be a return to the golden age, but it won't be as bad as 2016, 2017," he added, due to capacity cuts in China and a global recovery.
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    Incitec Pivot posts lower profit, warns 2017 will be challenging

    Australian explosives and fertiliser maker Incitec Pivot warned on Tuesday it expects markets for its key products to remain weak in 2017, after reporting a 26 percent drop in annual underlying profit on Tuesday, in line with analysts' forecasts.

    The world's No. 2 maker of commercial explosives behind Orica has been hit by a mining slump - especially in the coal industry - which has resulted in less demand for ammonium nitrate.

    The company said miners' focus on cost-cutting was also biting.

    "The explosives sector is expected to remain challenged through 2017 largely due to regional oversupply of ammonium nitrate and ongoing customer cost focus," Incitec Pivot said in a statement.

    It said fertiliser demand may increase in the year ahead following wetter- than-average conditions in the second half of 2016, but warned that "depressed global fertiliser prices may persist in the short term."

    Net profit before one-offs fell to A$295.2 million ($228 million) for the year to September from A$398.6 million a year earlier, which was a touch better than analysts' forecasts of around A$289 million.

    Analysts are forecasting 18 percent growth in underlying profit for the 2017 financial year.

    Incitec's full-year dividend of 8.7 cents a share was slightly below forecasts for 9 cents.

    Attached Files
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    China Oct exports, imports fall more than expected

    China's exports and imports fell more than expected in October, with weak domestic and global demand adding to doubts that a pick-up in economic activity in the world's largest trading nation can be sustained.

    October exports fell 7.3 percent from a year earlier, while imports shrank 1.4 percent, official data showed on Tuesday, raising fears that a broader recovery seen in recent months could falter.

    While recent data had suggested the world's second-largest economy was steadying, analysts have warned that a property boom which has generated a significant share of the growth may be peaking, dampening demand for building materials from cement to steel.

    Indeed, China's imports of iron ore, crude oil, coal and copper all fell in October, after its robust demand drove global prices of many major commodities higher this year.

    Though some analysts argued the decline may be seasonal, data from industry consultancy suggested steel mills have been cutting output and even starting maintenance work earlier than usual as soaring costs for raw materials such as iron ore and coal squeeze profits.

    Analysts polled by Reuters had expected October exports to have fallen 6 percent from a year earlier, compared to a 10 percent contraction in September. Imports had been expected to drop 1 percent, after falling 1.9 percent in September.

    "Our conclusion is that external demand remains sluggish but it has not worsened significantly. Although both exports and imports have fallen short of expectations, they have improved on a year-on-year basis," economists at ANZ said in a note, noting the rate of decline in October had moderated from September.

    Still, China's exports in the first 10 months of the year fell 7.7 percent from the same period a year earlier, while imports dropped 7.5 percent.

    Exports have dragged on economic growth this year as global demand remains stubbornly sluggish, forcing policymakers to rely on higher government spending and record bank lending to boost activity. Weak exports knocked 7.8 percent off the country's GDP growth in the first three quarters of this year.

    Imports fell for the second month in a row in October after rising for the first time in nearly two years in August.

    That left the country with a trade surplus of $49.06 billion for the month, versus forecasts of $51.70 billion, and September's $41.99 billion.

    In yuan-denominated terms, the trade numbers weren't as bad, indicating that the currency's slide to six-year lows has provided some support for exporters. Yuan-denominated shipments have only fallen 2.0 percent this year, with imports down 1.8 percent.

    "Yuan depreciation should be positive for exports, but it only provides some support for exporters when they convert dollar income into yuan, but cannot reverse the trend," said Merchants Securities economist Liu Yaxin in Shenzhen.

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    Tangshan orders emergency production halt to tackle air pollution

    The city government of Tangshan in northern China's smog-ridden Hebei Province had on November 4 ordered local coke, steel-rolling, casting, cement and glass factories to halt production immediately in an emergency response to the country's lingering air pollution.

    All coking plants were asked to halt production and delay the coking time to 48 hours immediately from 15:00 November 4, said an official statement released on November 4.

    Analysts expected coke production to cut by 50% due to the increase of coking time, putting pressure on coke and steel producers' replenishing activities.

    Meanwhile, the Tangshan government asked all steel enterprises to stop sintering machines and damping down furnaces.

    According to the municipal government, all coal-fired boilers except those for heating must be turned off, production and transportation in all surface mines will be stopped. Construction sites and concrete mixing plants across the city were also ordered to stop work.

    The decisions were made as China renewed its orange alert for air pollution that has lasted for days.

    Hebei is China's biggest steelmaking region, accounting for a quarter of the country's steel output.

    The province has already pledged to impose what it called "special emission restrictions" on local mills by setting up tough standards for sulphur dioxide and other pollutants.

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    Too close to call.

    Image title
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    French power 'most likely' to hit Eur3,000/MWh this winter: Engie trader

    French power prices hitting the Eur3,000/MWh maximum price cap this season has become "almost a certainty" amid the current environment of low nuclear availability as France braces itself for imports from more expensive neighbours such as the UK, Nicolaj Janss Lafond, senior cross-border trader at Engie, told the audience at the Emart conference in Amsterdam Friday.

    "That this winter we will hit that price cap in France is almost a certainty," Lafond said during a power trading panel at Emart. "At some point this winter France is going to have the need to import from the UK in the most expensive hours."

    UK network operator National Grid's Strategic Balancing Reserve, a tool that allows the TSO to ensure lights stay on at times of high demand, can only be used when power prices hit GBP3,000/MWh.

    In France, power prices are capped at a maximum of Eur3,000/MWh and a minimum of -Eur500/MWh, according to the Epex Spot power exchange.

    The interconnection capacity between France and the UK currently stands at only 2 GW and can flow both ways.

    "How is it going to work if the cap is Eur3,000/MWh and we will not be able to extract the strategic reserve from the UK which stands at GBP3,000/MWh," Lafond said.

    The UK's electricity margins will be "tight but manageable" for winter 2016-17, with an improved de-rated margin expectations of 6.6%, which includes the 3.5 GW of contingency balancing reserve services procured for the period, National Grid said last month. National Grid said in October that it expected a total maximum technical capacity of 73.7 GW of generation, with a de-rated generation capacity of 55 GW, after accounting for any unplanned outages, breakdowns and/or any other operational issues that might stop the plant from producing power.

    "I believe the French cap is too low and should be much, much higher," Lafond said.

    Asked by S&P Global Platts what would be a more appropriate French power price cap, he said: "Let's start at Eur10,000/MWh and see where that takes us."

    Lafond said the cap should increase in future to reflect that conventional power generators will have to cover their costs even running only "a few hours a year."

    "In the future more and more capacity will go down and we will have more situations when we will hit these prices," he said.

    Lafond acknowledged that the current French tightness is a unique situation, but said the market is not ready to face uncertainty.

    "You can have these kind of accidents, like in France, and in Switzerland we will see with the referendum -- are we actually planning for these events?"

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    China's top polluter Hebei to adjust mills' production in winter

    China's smog-ridden Hebei province has asked steel, cement plants and utilities to adjust their production schedule between November and January as part of its battle against pollution, the Xinhua News Agency reported on Wednesday.

    Companies ranging from petrochemical firms to metal producers will reduce output or shut down on heavy pollution days, Xinhua reported, citing the environmental watchdog of Hebei province.

    There are no details on how the provincial government will implement the policy or the companies involved.

    Hebei is China's biggest steelmaking region, accounting for a quarter of the country's steel output.

    The province has already pledged to impose what it called "special emission restrictions" on local mills by setting up tough standards for sulphur dioxide and other pollutants,a policy document seen by Reuters showed.

    Hebei is expecting weather conditions that will help trap pollutants and worsen its problems in winter, Xinhua said.
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    China Prepares To Impose Curbs,

    Last September, when we predicted that Chinese consumers, investors and savers would flock to bitcoin as a medium of facilitating capital outflows (it was trading at $230 then, it is now three times higher), we also warned that bitcoin's upside would ultimately be capped by Beijing, when China's authorities realized how the digital currency was being used to bypass capital controls, and launch a crackdown on bitcoin, as they have with most other capital outflow measures .

    It appears that the time has come because, as Bloomberg reports, China’s regulators are studying measures to limit transactions that use bitcoins to take funds out of the country, citing people familiar with the matter.

    According to Bloomberg sources, Chinese officials are considering policies including restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad. Further indicating that Chinese regulators were "just a little behind the curve", they allegedly noticed only recently that some investors bought bitcoins on local exchanges and sold them offshore, evading rules on foreign exchange and cross-border fund flows, the report further reveals.

    A quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls.

    As we have repeatedly noted, and as BBG repeats, "Bitcoin has surged 21% since the end of September as the yuan’s declines accelerated, boosting speculation Chinese investors were buying the cryptocurrency as a hedge against further weakness. With the risk of quicker depreciation rising along with the odds of an impending U.S. interest-rate hike, policy makers are seeking to restrict outflow channels. Just a week ago, China limited the use of China UnionPay Co.’s cards to purchase insurance products in Hong Kong -- another way of taking cash out of the country."

    In intraday trading, bitcoin erased a gain of as much of 2.6% overnight which had taken it to the highest level since June, before rebounding, although it now appears that news of the report is starting to spread.

    As a reminder, back in 2013, the government classified bitcoin as a commodity and not currency, placing it outside the purview of the foreign-exchange regulator, the people said.  That does not mean, however, that China is powerless at limiting bitcoin's upside.

    Several Chinese government bodies including the People’s Bank of China and the financial regulators said in a joint notice that year that bitcoin functioned like a digital commodity without the legal status of a currency. The central bank said in January it is studying the prospects of issuing its own digital currency and aims to roll out a product as soon as possible.

    While China dominates bitcoin mining and trading, the government has shown caution over its spread in the nation. In 2013, the PBOC barred financial institutions from handling bitcoin transactions.

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    Oil and Gas

    Shell to invest $10 bln as Brazil expands private role in oil industry

    Nov 10 Royal Dutch Shell Plc will invest $10 billion in Brazil over five years now that the country has increased opportunities for foreign companies in its oil industry, its chief executive officer said on Thursday.

    Already the largest foreign investor in Brazil, Shell is particularly encouraged by recent legislation that increases the role of private oil companies in the tapping of vast off-shore oil deposits in the subsalt layer, Chief Executive Officer Ben van Beurden said.

    "This was a good move by the government and it will open up opportunities for more players to invest in Brazil," Van Beurden told reporters after meeting with President Michel Temer.

    Temer took office this year after the impeachment and removal of leftist Dilma Rousseff, whose Workers Party was opposed to reducing the central role of state-controlled oil company Petrobras in the subsalt region.

    Shell is already a major subsalt player as a Petrobras partner in the massive Libra oil field, and acquired more assets in Brazil through its merger with rival BG Group.

    New investments could be made by Shell in oil industry auctions planned next year, Van Beurden said, and the company will look at opportunities in distribution at a time that Petrobras is considering selling a big stake in its subsidiary BR Distribuidora.

    "If there are opportunities, we will also look at the possibility of deepening our portfolio in the downstream area, he said.
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    Petrobras posts surprising loss amid massive asset impairments

    Brazilian state-controlled oil company Petróleo Brasileiro SA posted an unexpected third-quarter loss on Thursday after drastically reducing the value of oil fields and other assets amid a severe downsizing and weak oil prices.

    Petrobras lost a net 16.458 billion reais ($4.9 billion) last quarter, five times more than a year earlier. Despite that, operational and cash flow trends improved and, without an impairment, profit could have totaled 600 million reais, Chief Financial Officer Ivan Monteiro told reporters.

    The numbers came as Chief Executive Officer Pedro Parente cleaned up a balance sheet with unrealistically priced investments, whose losses were magnified by a stronger currency and a rising cost of capital. The company shaved the value of assets by 15.292 billion reais and of investments by 417 million reais last quarter.

    "The message we want to convey is that these impairments are non-recurring, and that we don't expect them to happen, not at least in this magnitude, in the coming future," Monteiro said at an event to discuss the results in Rio de Janeiro.

    Petrobras, the world's most indebted major oil firm, faces several hurdles including the lowest oil prices in a decade, a corruption scandal highlighting governance flaws and losses incurred over many years because of government-mandated fuel subsidies and money-losing investments.

    Analysts expected on average profit of 1.517 billion reais. U.S.-traded common shares in Petrobras (PBR.N) slumped on the news, shedding 8.7 percent and reaching their lowest level since June.

    Management will further discuss results on Friday in a conference call with investors.


    Parente's steps to grow output in some offshore fields, cut debt and keep expenses in check helped mitigate the company's loss. Asset sales and a sharp reduction in capital spending commitments also allowed Petrobras to cut gross debt by about 19 percent since the end of last year to 398.2 billion reais.

    According to Monteiro, progress in a voluntary dismissal plan for workers, as well as a faster pace of divestitures, could help recoup part of the ground lost with the impairment. At this point, it is uncertain whether Petrobras will lose money for a second straight year or if dividends will be paid, he said.

    Net revenue fell 1 percent to 70.443 billion reais on a quarterly basis, missing consensus estimates of 74.520 billion reais.

    Capital spending fell 9 percent, in line with the 8 percent that analysts estimated for the quarter. Gross profit rose above expectations, while operational profit suffered as a consequence of the impairments.

    Free cash flow, the money left for holders of bonds and shares after all operating and financial expenses are paid, posted positive readings for the sixth straight quarter. Free cash flow generation is key for Petrobras's goal to reduce debt.

    Monteiro reiterated that Petrobras is committed to meeting a $15.1 billion two-year goal for asset sales by the end of this year, even if only 65 percent of it has been completed so far.
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    Oil company WildHorse Resource files for IPO of up to $650 million

    Independent oil and natural gas company WildHorse Resource Development Corp filed with securities regulators on Thursday to raise up to $650 million in an initial public offering.

    The company, which operates in the Eagle Ford basin in southeast Texas and the Terryville Complex in North Louisiana, said it intends to list its common stock on the New York Stock Exchange under the symbol "WRD". (

    Houston-based WildHorse said proceeds from the offering will be used to fund the remaining portion of the Burleson North acquisition.

    The company did not mention the size of the offering.

    Barclays, Bofa Merrill Lynch, BMO Capital Markets, Citigroup and Wells Fargo Securities are the lead underwriters, the company said.

    The amount of money a company says it plans to raise in its first IPO filing is usually a placeholder.
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    IEA Raises Forecast for Non-OPEC Oil Output Growth Next Year

    The International Energy Agency increased its estimate of oil production from countries outside OPEC next year, citing an improved outlook for Russia.

    Supply growth from nations outside the Organization of Petroleum Exporting Countries will be “just shy” of 500,000 barrels a day, an increase of 110,000 from the agency’s forecast last month, it said Thursday. Russian production is likely to grow by 190,000 barrels a day, building on a 230,000-barrel increase in 2016.

    Swelling output from non-OPEC countries including Russia, Brazil and Kazakhstan presents a challenge for the 14-member exporters’ group, which meets at the end of November to hammer out the details of a production cut to buoy prices. While Russia has said it will consider joining an OPEC agreement, its own output has climbed to a post-Soviet record.

    Brazil is set to increase production by 280,000 barrels a day next year, while Canadian output will rise by 225,000 barrels and Kazakh supply by 160,000, the Paris-based IEA forecast in its monthly report. Non-OPEC supply will total 57.2 million barrels a day.

    “This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016,” IEA said.

    While non-OPEC production is likely to drop by 900,000 barrels a day this year, it rose by almost 500,000 a day last month as new fields started, according to the agency. Maintenance and unscheduled shutdowns, especially in the North Sea, had curbed production in September. Kazakhstan’s giant Kashagan field boosted output in October after coming online the previous month, and oil-loading schedules suggest North Sea production also rebounded.

    OPEC Policy

    OPEC, led by Saudi Arabia, decided in November 2014 against curtailing production to support oil prices and instead pump at capacity to increase market share. This drove crude to a 12-year low in January this year and pushed high-cost U.S. production down. Following more than two years of low prices, OPEC reversed its policy in September, saying it would cut production for the first time in eight years.

    The consequent rally in prices brought back some U.S. drilling. In October, 14 out of a total 25 oil rigs returning to service were added in the Permian shale basin, where production rates are beating expectations, the IEA said. Output in the Bakken and Eagle Ford shales isn’t as strong, and the IEA sees U.S. crude supply declining “modestly” in 2017.

    Total U.S. oil and natural-gas liquids production will shrink by 465,000 barrels a day this year to 12.5 million barrels, and stay around this level in 2017, the agency forecasts.
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    Interview: Trump advisor sees end of federal oil, gas overreach

    Following Donald Trump's victory in Tuesday's presidential race, Congressman Kevin Cramer, a North Dakota Republican and a top Trump energy advisor, spoke with S&P Global Platts about what impact the election will have on US oil producers, energy markets and stalled pipeline projects.

    Cramer has called for a federal government probe of potential oil price manipulation by OPEC and said that he plans to re-introduce a bill in the next Congress to mandate that investigation.

    Here's a partial transcript from the interview which took place late Wednesday:

    Q: What impact do you think the Trump victory will have on US oil and gas producers?

    A: Well, there's tremendous renewed optimism, I can tell you that. The commitment to rolling back regulations and returning more oversight back to states, things like the fracking rule, methane emissions rules, for example. There's just a renewed optimism that [US producers] are going to be unshackled from over-regulation. It doesn't do much for the price [of oil] but it does reduce the cost of doing business.

    Q: What does the Trump White House plan to do about OPEC?

    A: That fits right in with [Trump's] 'America first' energy policy and he has spoken a little bit of the concept of making sure that we're less dependent... on OPEC for oil. He likes to use the word independent, I tend to use the term security. I would expect a little more proactive engagement from the White House and the new administration.

    Q: What do you mean by that? Would Trump try to put import restrictions in place?

    A: I don't want to say no because I don't know and he's talked about tariffs on manufactured products so I suppose it's possible. That's not something I would advise. I'm more interested in a close observation and oversight of potential unfair trading practices by OPEC and whatnot so that we can attempt to avoid doing anything proactive on our side. Q: Now that US oil is so entrenched in the global market how much could the White House do, though?

    A: What they could do is, they could unleash some of the production potential of our federal resources on our federal lands and, obviously, offshore and [Trump's] talked pretty openly about that. Now, that still means that the producers themselves that have to have markets to sell to, it would just open up more opportunities for them to choose the best play. I think that's all good because it just gives more options on the supply side. It is somewhat limited about what [Trump] could do about price, but making more of it available and reducing the cost of getting it by rolling back some regulations could go a long ways to more production.

    Q: How much of Obama's efforts to combat climate change will Trump try to weaken or eliminate?

    A: I think he'll be able to do a lot, hopefully, and return that kind of oversight to states where it belongs. Some of that he can do, maybe, by simply eliminating certain rules or regulations or taking them back from the courts where they're in limbo.

    Q: You've said that you don't even know if Trump is aware of the controversy surrounding the Dakota Access Pipeline. Is Trump aware of it now?

    A: He may be, I know it's got a lot more publicity... but I still don't know for sure if he's been talked to about it. I certainly haven't spoken to him about it because so much of the focus the past couple weeks has been on, obviously, these battleground states. I'm of the opinion that this thing's going to be permitted, finished off. I don't mean the pipeline completely built, but I believe that the permit that was issued and rescinded at the Missouri River will be reissued and I think the easement to work there will be as well and I think that's going to all happen under Barack Obama. And I don't have any special insights into that other than just looking at the law and looking at the objections and realizing there's just no legal reason for the court to withhold this any longer or at least much longer. The president said that the [Army Corps of Engineers] is looking at potentially rerouting it, but the Corps doesn't have any authority to reroute a pipeline. They don't do routing for pipelines, they do permits. And they've done 230 permits on this pipeline and it'd be pretty difficult to reroute a pipeline they've already permitted all over the country. I just think that's an issue that's going to resolve itself before Donald Trump becomes president. And if it doesn't he'll become very aware of it.

    Q: And you think Trump will approve it?

    A: I do and, again, I haven't talked to him about it, but he's been so clear about his commitment to transportation infrastructure and to energy infrastructure development... not just to move product, which is the fundamental purpose, but to getting America back to work. I just don't see him letting the federal government continue to slow walk something that should have been done a long time ago.

    Q: What about Keystone XL?

    A: That ball is going to be in the hands of TransCanada obviously. He's been very clear that he'd like it to be reapplied for and he'll issue the permit. As long as it's the same route and corridor and whatnot... there's no real reason not to do it. I expect that will be done very, very quickly.

    Q: Do you see other energy legislation now moving through this Republican Congress now that we have a Republican president?

    A: I think there will be a real collaborative effort with the White House to determine what requires legislation and what can be done with better administrative policy. How do we legally deal with, for example, the Waters of the US or the Clean Power Plan, given where they are in the legal process? Not to mention the [Paris climate change agreement]. There are a lot of these kinds of things that may not require a lot of legislation. Whatever the outcome of that process of reviewing all the regulations which Mr. Trump has been very clear about and doing what can be done with executive orders and doing what needs to be done with promulgation of rules and legislation and whatnot. Then we need to take a good, hard look at the big laws, like Clean Water Act, like Clean Air Act and then say what was Congress' intent? What is the appropriate modern application of those bills? What kind of proscriptive things should be added so that we don't run into this kind of confusion... like what exactly is the definition of the waters of the US or what exactly is the definition of a pollutant and what do we intend and not intend? Some of those kinds of things require a real good, detailed look at the broad authorizations in those kinds of bills. I see that as very important for Congress to be doing.

    Q: What will his administration look like? Who will make up his cabinet?

    A: I don't know any specific people, but Mr. Trump's been very clear that he likes very successful business people serving in high positions with close access to him and I think that would certainly apply to places like [the Department of] Interior and [Department of Energy]. He obviously is going to have a good policy team around all that and I would hope people with technical experience as well. So, I think he's been pretty clear he's looking to the business community to help him shape a government that runs a little bit more like a business and understands the ramifications and the consequences of regulation on business. I think it's a noble goal.
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    Traders Betting on Another Historic Winter for Gas

    The big trade in natural-gas is looking like a big bust.

    The market has long been notorious for a trade called the “widow maker.” It is a bet on whether the difference between March and April natural-gas prices at the end of heating season will widen or narrow. Playing it wrong can help sink a fund, as it did with Amaranth Advisors LLC when it lost more than $6 billion in 2006.

    That spread for 2017 has lost 87% in less than a month, falling to an all-time low of just 3.8 cents at Tuesday’s settlement. When the March and April 2017 futures contracts debuted in 2008, that spread quickly reached a high of 93 cents, but the world of natural gas has changed since then.

    The shale-gas boom has kept supplies heavy even during the height of winter-heating demand. If supplies are still healthy at the end of winter, there is little reason to pay more for winter gas than spring gas. Production to start this month is holding at a near-record pace of about 71 billion cubic feet a day that is common for this time of year. And extreme temperatures have become a norm, with many traders now fearing a second exceptionally warm winter in a row will kill heating demand.

    That flipped the gas market in recent weeks. Weather has been historically warm in both October and November, and meteorologists say it could continue. That has forced traders out of speculative bets the market might have a supply shortage this winter. Both the widow-maker spread and futures had hit nearly two-year highs before recent collapses, with futures losing 21% in less than a month.

    Data provider Genscape Inc. on Tuesday said natural-gas stockpiles are likely to end the upcoming winter at 1.64 trillion cubic feet, about in line with recent averages. Production is likely to keep growing through the winter, despite a fleet of working rigs that had fallen to historic lows in recent months.

    Storage levels are already nearing a record above 4 tcf, still bloated from last winter’s record warmth and low demand that sent Nymex gas prices to their all-time, inflation adjusted low. Enough gas is in storage that prices could keep falling unless cold weather arrives, said J. Alexander Blackman, an executive at Standard Delta LLC, a commodities trading company.

    “There is no floor here,” he added.

    Many gas traders are waiting for next week when two-week weather forecasts start to cover early December and the government releases its official 30-day forecast going into that month, too, said Teri Viswanath, managing director, natural gas, at PIRA in New York. It becomes harder to stay bullish without a burst of winter cold by the end of November, said Tim Pickering, president at Auspice Capital Advisors Ltd., which manages $250 million in assets.

    One of the widely-watched private forecasters, Commodity Weather Group LLC in Bethesda, Md., has been talking to clients about possibly warming up its forecast, which had been among the coldest. It had predicted a cold winter would start this month and last through March, but conditions have clearly changed.

    A strong Pacific jet stream is blocking Arctic air from flowing south into the U.S., sweeping it instead off toward Europe, said Matt Rogers, Commodity Weather Group’s president and a meteorologist. And it is rare that extremely warm Novembers precede cold winters, he added.

    “Things have changed dramatically in the last two weeks. And everything is becoming uncertain,” Mr. Rogers said.

    Mr. Pickering, however, still believes the long-term trend for natural-gas prices is going higher. Weather-adjusted demand is outpacing supply now, from increases in both industrial consumption and from a power grid becoming more reliant on natural gas as coal-fired power plants close.

    “While November may be a write off, there’s a lot of winter left in play,” Mr. Pickering said.
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    ConocoPhillips trims 2017 budget as cost cuts offsets cheap oil

    ConocoPhillips, the largest U.S. independent oil producer, said on Thursday it would reduce its capital budget by 4 percent to $5 billion next year due to technology gains, cost cuts and other improvements.

    The cut reflects not only the energy industry's increasing push for efficiency gains that reduce the cost of drawing oil and natural gas from the earth but also low commodity prices, which have hampered Conoco and peers over the past two years.

    The spending reduction comes after the company more than halved its budget last year. Indeed, Conoco's 2015 capex had eclipsed $10 billion.

    "During the past two years, we have significantly transformed ConocoPhillips to succeed in a lower, more volatile price environment," Chief Executive Officer Ryan Lance said in a statement.

    Most of the budget next year will be spent on shale projects in the contiguous United States, with some focus on Alaska and Europe, as well as maintenance of existing operations.

    The spending should result in 2017 production of 1.54 million to 1.57 million barrels of oil equivalent per day, which would be a slight increase from 2016 estimates, executives said.

    The company also announced a $3 billion share repurchase program and said it would sell $5 billion to $8 billion in assets, mostly from its North American natural gas operations.

    Conoco is set to host analysts and investors on Thursday morning at a presentation in New York.

    Shares of the Houston-based company have fallen about 2 percent this year, closing on Wednesday at $45.73.
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    Rosneft announces results for the third quarter of 2016

     - Growth in daily hydrocarbon production by 1.4% to 5.21 mmboe for 9M 2016
     - Daily liquid hydrocarbon production increased by 1.0%, compared to Q2 2016 positive dynamics of cumulative production for 9M 2016
     - Planned launch of new production facilities at the East Messoyakhskoye field
     - Growth in development drilling by 42% over 9M 2016
     - Gas production increased by 7.4% to 49.3 bcm for 9M 2016 due to the commissioning of new capacities
     - Refining depth increased by 5 pp to 71% followed by the 21% reduction in fuel oil output for 9M 2016


    Hydrocarbon production continued improving steadily in Q3 2016. Average daily hydrocarbons production grew by 1.4% to 5.21 mmboe for 9M 2016.

    Development drilling footage increased by 42% to 7.0 mln meters for 9M 2016. The number of new wells commissioned grew by 49% compared to 9M 2015 to reach 1.9 thousand wells, while the share of horizontal wells remained at c. 30% in line with the annual target. The share of in-house services in the total drilling volumes consistently exceeds 50%.

    Average daily liquid hydrocarbon production in Q3 2016 grew by 1.0% vs. Q2 2016 and by 1.3% vs. Q3 2015 to 4.15 mmbpd despite ongoing turnarounds at production projects in Sakhalin. First of all, it is worth highlighting the successive improvements at Yuganskneftegaz (+4.2% vs Q3 2015 and by +1.8% vs Q2 2016), advances at Samaraneftegaz, Tomskneft and projects of the Vankor group vs. Q2 2016, as well as the start of production at the East Messoyakhskoye field. By the end of 9M 2016, the average daily liquid hydrocarbon production grew by 0.3% to 152.2 mbpd

    In preparing for the 1st phase of the Suzun field development, the Company started comprehensive testing of oil treatment and transportation facilities: final operations at the 1st Start Up Complex of Oil Treatment Facility with a rated capacity of 4.5 mmtpa, pipeline from Suzun OTF to Vankor OTF, and continued infrastructure setup at 6 well pads. In September, production reached 243 kt of oil (c. 60 kbd), thus improving the overall dynamics of the Company's liquid hydrocarbon production in Q3 2016. This year oil production forecast of the Suzun field is c. 1.2 mmt (expected oil production in 2017 - 4.5 mmt).On September 21, the East Messoyakhskoye field (the northernmost onshore Russian field) was put on stream. The command to start oil shipment from the East Messoyakhskoye field was given by the President of the Russian Federation Vladimir Putin, via video link-up. Thanks to the implementation of modern technical and engineering solutions, the East Messoyakhskoye field infrastructure was built within less than 3 years. The operating stock of producing wells at the end of Q3 was 65 units, a supply pipeline of 98 km connects with the main pipeline Zapolyarie-Purpe, a gas turbine power plant (GTPP) with a capacity of 84 MW was put into operation.

    As part of new program to introduce new technological solutions, the Company is successfully implementing a program of drilling multilateral wells (MLW). Thus, 4 MLWs were commissioned at the Samotlor field with an average initial flow rate of over100 tpd of oil, which is 1.5 times higher than the average flow rates of new wells of the field since the beginning of the year. At the Yurubcheno-Tokhomskoye gas condensate field, the first multilateral well was completed with an expected production rate of about 200 tpd. MLW construction is aimed at obtaining additional oil production by increasing productivity and reducing projected well stock by increasing the reservoir sweep area. This technology enables us to put on stream a greater volume of reserves per well and increase the economic benefit.

    Gas production for 9M 2016 amounted to 49.33 bcm, 7.4% up from the same period of 2015. Production growth was mainly due to running in comprehensive testing mode in Q4 2015 of the 2nd stage of Rospan's Novo-Urengoy gas and condensate treatment plant, launch of the 4th and 5th wells in the northern tip of Chayvo, offshore Sakhalin, the commissioning of a gas treatment facility in December 2015 at Barsukovskoye field of Purneftegaz, and execution of the project to increase gas production at Sibneftegaz's Khadyryakhinskoye field.

    In Q3 2016 gas production declined by 2.5% against Q2 2016 and amounted to 16.10 bcm. The production decrease was a result of the planned preventive maintenance and was partially offset by increased production at Rospan.

    Associated petroleum gas (APG) utilization rate over 9M 2016 rose to 89.8% compared to 86.8% over 9M 2015).

    In the 9M 2016, over 2,500 km of onshore 2D seismic surveys and over 5,900 sq km of onshore 3D seismic surveys were acquired, exceeding the results of 9M 2015 by 17% and 10%, respectively. 30 E&A wells were tested with a success rate of 83%. 47 new deposits and 7 new fields were discovered with ??1?1+B2?2 reserves of about 47 mmtoe.

    Following the drilling of exploratory wells in Verkhneichersky license area in the Irkutsk region, Rosneft discovered a deposit with 61 mmtoe of C1 + C2 reserves.

    The Company has a large-scale program underway for offshore seismic exploration. 2D seismic acquisition was completed in the Pechora Sea covering 1,150 km, 2D and 3D offshore seismic surveys are continuing in the license areas of the Barents, Kara, East Siberian, Chukchi and Laptev seas. Over 9M 2016, about 22 thousand km of 2D seismic acquisition and more than 1,600 sq. km of 3D seismic surveys were completed, which is more than twice those in 9M 2015.


    In Q3 2016, the oil refining throughput at Russian refineries rose by 11.1% to 21.55 mmt compared to Q2 2016 caused by seasonal demand increase on the domestic market. Meanwhile, the Company continues to optimize refining capacity utilization in order to ensure an efficient level of feedstock processing taking into account the capacity of secondary processes to minimize the output of heavy oil products. As a result, in 9M 2016, the oil refining throughput of Russian refineries declined by 5.9% to 60.42 mmt, while fuel oil output dropped by 20.9%.

    Thanks to improved efficiency and optimized operation of Russian refineries, light product yield increased by 0.8 pp reaching 56.1% in 9M 2016, while the conversion rate increased by 5 pp reaching 71.3% compared to the respective period of 2015, The Company built up the production of Euro-5 gasoline and diesel fuel to 20.8 mmt for 9M 2016 exceeding the level of 2015 by 1.5 times.

    Rosneft continues to successfully implement the refinery upgrade program in Russia: new FCC and MTBE units' construction were completed at the Kuibyshev refinery in 2016. The new facilities will enable the refinery to meet the demand for high-octane components for gasolines by producing them at their own facilities, and to increase the production of high-quality motor fuels.

    As part of the import substitution program undertaken by the Company in Q3 2016, an improved catalyst produced by the Angarsk Catalysts and Organic Synthesis Plant was launched for the kerosene fraction hydrotreatment unit, which will enable the Company to meet the requirement for the catalyst by own production.

    The company successfully continues to diversify supplies between the western and eastern routes. Supplies eastwards grew by 8% to almost 31 mmt for 9M 2016 compared with the same period of 2015.

    In 9M 2016, small wholesale and retail sales of refined products remained almost unchanged compare to the level of last year. The main focus in the retail business is to improve the efficiency of operations, i.e. optimize assets, reduce losses and cut costs. Thanks to these efforts, the segment's sales profit margin grew by 6% in the reporting period compared to the same period last year. As part of the effort to expand the retail business, a new loyalty program continues for customers of the retail network, which is already in operation across 20 regions of Russia, covering more than 1.5 million active members.

    International operations and asset acquisitions

    On October 12, Rosneft completed the acquisition of the Government stake in Bashneft. The Company as well as the market in general highly values the potential synergies from the transaction, including optimization of mutual oil supplies, transportation and logistics costs, reduced drilling costs, joint use of production assets infrastructure, advanced technologies and know-how. Rosneft's successful track-record in the integration of major oil and gas assets is a guarantee of its speedy and efficient monetization. Following the transaction, the liquid hydrocarbon production of the combined company will grow by 10%, refining - by 20%, strengthening its position as the largest publicly traded oil and gas company globally.

    With the signing of the sale and purchase agreement for 49% stake in Essar Oil Limited, Rosneft has entered the Indian market, one of the world's most promising and fastest growing. Upon the deal completion, the Company will get a stake in the Vadinar refinery with a 20 mmtpa capacity and a comprehensive infrastructure, which is one of the largest and most technologically advanced refineries not only in India but also in the world, as well as a large retail network with 2,700 gas stations in India. The company expects to gain synergies from processing heavy Venezuelan crude and cross-supplies of petroleum products to the Asia-Pacific markets that will enhance the refinery's economic efficiency.

    Within short timeframes Rosneft completed the creation a unique international energy hub on the basis of the Vankor cluster: in October, the Company successfully closed the deal to sell 23.9% of Vankorneft shares to a consortium of Indian companies, consisting of Oil India Limited (the leader of the consortium), Indian Oil Corporation Limited and Bharat PetroResources Limited, as well as an additional 11% to the Indian ONGC Videsh Limited. As a result, ONGC Videsh Limited increased its stake in Vankorneft to 26%, while the share of the Indian state-owned companies as a whole increased to 49.9%. Meanwhile, Rosneft retained a majority equity stake, the majority on the Vankorneft board of directors, control over the company operating activities, as well as a 100% control of the overall infrastructure of the cluster.

    Furthermore, with a consortium of Indian companies consisting of the Oil India Limited (leader of the consortium), Indian Oil Corporation Limited and Bharat PetroResources Limited, a deal was closed to sell a 29.9% stake in Taas-Yuryakh project. With the deal close the consortium of Indian companies has entered the joint project between Rosneft and BP on the basis of Taas-Yuryakh Neftegasodobycha. The share of Rosneft will remain at 50.1%.

    In order to implement the project for the construction of the Tuban refining and petrochemical complex with a starting capacity of 15 mmtpa in the eastern part of Jawa (Indonesia), Rosneft and Pertamina signed a Joint Venture Agreement. The parties are currently developing a feasibility study of the project. The final investment decision on the project will be made upon the results of the feasibility study, basic engineering design (BED) and front-end engineering design (FEED). Besides, the companies Signed Memorandums of Understanding for cooperation within the northern tip of Chayvo project (Sakhalin island) and Russkoye Field Development project, including a possible acquisition by Pertamina of 20% and 37.5% stakes in these projects, respectively.

    As part of the Head of terms crude and oil products supplies, Rosneft and Hellenic Petroleum reached an agreement for the first direct deliveries to Greece refineries in the amount of 85 th. tons of CPC blend and up to 90 th. tons of fuel oil produced by the Tuapse refinery in September-November.

    Rosnefteflot, a Rosneft subsidiary, and Zvezda Shipyard signed the contracts for the supply of tankers. These tankers will be of a new type of vessels operating on gas motor fuel, meeting high environmental standards and new rules for the limits of emissions of sulfur oxides and greenhouse gases in the area of the Baltic and North Seas, which will be introduced starting from 2020.

    Furthermore, Rosneft and the Far Eastern Shipbuilding and Ship Repair Center (FESRC) have signed contracts for the delivery of two unique multi-purpose supply vessels of reinforced ice-class Icebreaker 7. The document provides that the first two ships built by the Zvezda shipyard will be delivered at the end of 2019 and during the first half of 2020.

    Rosneft and PDVSA expand their strategic cooperation. The Parties concluded an agreement on the feasibility study of the project for the development and operations at the Patao, Mejillones, and Rio Caribe Blocks offshore Venezuela. New key contract terms were also signed for cross-deliveries of crude and products, based on which the necessary binding documents will be executed for Rosneft to supply crude and products in exchange for Venezuelan crude and products produced by PDVSA. The parties expect that supplies will start as soon as 2016.

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    OMR: Holding the line

    Investments ensure that the market remains close to balance and that prices are as stable and as fair for both producers and consumers as can ever be possible in such a dynamic industry (image © Graphic Obsession)

    The issue that currently dominates the outlook for the oil market is the outcome of OPEC’s ministerial meeting in Vienna on 30 November. It has only been two months since OPEC last met in Algiers and announced it would examine how to set up a production ceiling of between 32.5 mb/d and 33.0 mb/d. OPEC also said it would seek to bring leading non-OPEC producers into the process. We can’t predict the outcome of the 30 November meeting, but we can see the scale of the task ahead. In this report we estimate that OPEC members pumped 33.8 mb/d in October, well in excess of the high end of the proposed output range. This means that OPEC must agree to significant cuts in Vienna to turn its Algiers commitment into reality.

    Whatever the outcome, the Vienna meeting will have a major impact on the eventual - and oft-postponed - re-balancing of the oil market. But it is not the only factor at play. Unfortunately for those seeking higher prices, an analysis of the other components provides little comfort. The world’s biggest crude oil producer Russia will see its output increase by 230 kb/d in 2016, and sustained production at current record levels would result in growth of nearly 200 kb/d next year. With production also expected to grow in Brazil, Canada and Kazakhstan, total non-OPEC output will rise by 0.5 mb/d next year, compared to a fall of 0.9 mb/d in 2016. This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016.

    On the demand side of the oil balance, our outlook for world oil demand growth at 1.2 mb/d in 2016 and 2017 remains unchanged. There is currently little evidence to suggest that economic activity is sufficiently robust to deliver higher oil demand growth, and any stimulus that might have been provided at the end of 2015 and in the early part of 2016 when crude oil prices fell below $30/bbl is now in the past.

    If the OPEC countries do implement their Algiers resolution the resultant production cut will see the market move from surplus to deficit very quickly in 2017, albeit with a considerable stock overhang that will take time to deplete. On the other hand, if no agreement is reached and some individual members continue to expand their production then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly higher. Indeed, if the supply surplus persists in 2017 there must be some risk of prices falling back.

    It is not the role of the IEA to urge any oil industry player to take one course of action rather than another, and we are not doing so now. Over time, market forces will do their job and the oil price will respond to the signals provided by demand and supply. What the IEA has argued for consistently is the need for investments necessary to meet rising oil demand. Such investments ensure that the market remains close to balance and that prices are as stable and as fair for both producers and consumers as can ever be possible in such a dynamic industry.
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    Kogas Oct sales rise 10 pct YoY

    South Korea’s Kogas, the world’s second-largest buyer of LNG, said its sales volume rose 1o percent in October as compared to the corresponding month a year ago.

    Kogas sold 2.43 million mt of LNG in October, it said in a filing to the stock exchange on Thursday.

    Sales into the power sector were at 1.35 million mt, a rise of 17.3 percent as compared to October last year.

    City gas sales increased by 2 percent to 1.08 million mt, Kogas said.

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    Japan LNG buyers pay average $6.10/MMBtu for spot cargoes contracted in Oct

    Japanese LNG buyers paid an average $6.10/MMBtu for spot cargoes contracted in October, up 7% from $5.70/MMBtu in September, data released by the Ministry of Economy, Trade and Industry showed Thursday.

    The ministry gathers data from utilities and other LNG buyers in Japan to publish a simple average of contract prices. The delivery months of the cargoes are not disclosed.

    METI also said the average price of cargoes delivered to Japan in October stood at $5.70/MMBtu.

    The ministry last month did not publish the delivered price for September.

    Platts JKM averaged $6.535/MMBtu in October, reflecting spot deals concluded for November and December deliveries to Japan and South Korea.

    The Platts JKM for October delivery averaged $5.470/MMBtu.

    The assessment period for cargoes to be delivered in October ran from August 16, when the JKM was $5.45/MMBtu, to September 15, when it was again at $5.45/MMBtu.
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    Cheniere authorized to advance Sabine Pass Train 3 commissioning

    Cheniere’s Sabine Pass liquefaction project has been authorized to introduce feed gas and refrigerants into Train 3 and stage 2 OSBL facilities for commissioning.

    However, the US Federal Energy Regulatory Commission noted in its letter on Tuesday that this authorization does not grant introduction of natural gas or process fluids into areas not identified in the request.

    In a recent report, Cheniere informed that the construction of Sabine Pass trains 3 and 4 is 91.8 percent complete and ahead of contractual schedule, with substantial completion expected in 2017.

    Following the completion of maintenance and repair works at Sabine Pass that began in September, Cheniere restarted liquefaction activities at both Train 1 and Train 2.
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    Summary of Weekly Petroleum Data for the Week Ending November 4, 2016

    U.S. crude oil refinery inputs averaged over 15.8 million barrels per day during the week ending November 4, 2016, 369,000 barrels per day more than the previous week’s average. Refineries operated at 87.1% of their operable capacity last week. Gasoline production increased slightly last week, averaging about 10.5 million barrels per day. Distillate fuel production increased last week, averaging 4.8 million barrels per day.

    U.S. crude oil imports averaged over 7.4 million barrels per day last week, down by about 1.6 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.6 million barrels per day, 5.3% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 500,000 barrels per day. Distillate fuel imports averaged 107,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week. At 485.0 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.8 million barrels last week, but are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 1.9 million barrels last week but are well above the upper limit of the average range for this time of year. Propane/propylene inventories fell 1.3 million barrels last week but are near the upper limit of the average range. Total commercial petroleum inventories decreased by 7.0 million barrels last week.

    Total products supplied over the last four-week period averaged about 20.1 million barrels per day, up by 1.5% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.1 million barrels per day, down by 2.1% from the same period last year. Distillate fuel product supplied averaged above 4.0 million barrels per day over the last four weeks, up by 1.0% from the same period last year. Jet fuel product supplied is up 5.1% compared to the same four-week period last year.

    Cushing unchanged

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    Large increase in US lower 48 oil production

                                                            Last Week  Week Before  Last Year

    Domestic Production'000............... 8,692            8,522           9,185
    Alaska .................................................. 517              510               526
    Lower 48 ................. ......................... 8,175           8,012            8,659
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    OPEC Deal Becomes More Urgent, Harder to Agree After Trump Win

    OPEC was already struggling to finalize a deal on production cuts this month. And then Donald Trump was elected President of the U.S.

    The Organization of Petroleum Exporting Countries faces increasing urgency to take measures that will support oil prices as Trump’s surprise victory threatens to deepen a market sell-off, said UBS Group AG. Yet the uncertainty arising from the President-Elect’s policies -- from climate change to the U.S. shale industry and sanctions on Iran -- will make resolving differences between producers even harder.

    “The pressure on OPEC to come up with a deal only increases in the wake of Trump’s victory,” said Giovanni Staunovo, an analyst at UBS in Zurich. “Even though the oil market is rebalancing, the political uncertainty in the short term leaves oil prices vulnerable to downside, that makes it more urgent for OPEC to act.”

    Oil prices had already retreated 15 percent since late October on growing doubts that OPEC can finalize the Algiers accord at its Nov. 30 meeting while almost a third of its members refuse to lower their output. Crude prices initially slumped to near $43 a barrel in New York on Wednesday after Trump, a real-estate mogul and reality television star, was elected, but later erased losses as a global selloff of risky assets abated.

    Policy Questions

    The result is “bearish for the emerging markets, which drive oil-demand growth” because Trump has vowed to scrap international trade agreements in Latin America and Asia, according to consultant FGE. His surprise win could also weaken prices by aiding a revival in U.S. shale oil production. Harold Hamm, the chief executive officer of Continental Resources Inc. who has advised Trump on energy policy, is “solidly pro-domestic oil and gas development,” FGE said.

    Trump’s various policy positions could either support or weaken oil prices, making it more complicated for OPEC to conclude a deal, said David Hufton, chief executive officer of brokers PVM Group Ltd. in London.

    The next U.S. president is likely to treat climate change agreements “skeptically” and moves towards limiting carbon dioxide output are “likely to slow or reverse,” potentially boosting demand for fossil fuels, according to FGE. Trump has also said he would undo last year’s nuclear accord with Iran, potentially reversing increases in the Islamic Republic’s oil exports, said RBC Capital Markets.

    OPEC Disputes

    Equally, Trump’s election may have little impact on either the market or OPEC’s negotiations, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. The new president won’t take office until January, and any new policies will first need to be approved by Congress, he said.

    “The pressure to reach a deal was there ahead of the U.S. presidential election,” Tchilinguirian said. “The outcome of the race doesn’t change that.”

    OPEC aims to finalize how much each member should reduce output after agreeing in principle to a joint cut to between 32.5 million and 33 million barrels a day in September. The accord already faced a number of hurdles, with key producers including Iran and Iraq arguing they should be exempt because of their production losses in recent years from war and sanctions. Both have disputed the output estimates OPEC intends to use as the basis for any accord.

    The complications only increase with Trump on the way to the White House, according to PVM’s Hufton.

    “There’s a bit of fog coming down -- it just adds a bit more uncertainty, for OPEC and everybody else,” Hufton said.
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    Iran crude, condensate exports to hit 4-mth low in Nov -source

    Iran's crude oil exports are set to fall 7.5 percent in November to a four-month low, a source with knowledge of its preliminary tanker schedule said, as low seasonal demand in Europe takes the edge off its post-sanctions export bonanza.

    Iran's oil exports typically hit a low around October or November each year, reflecting peak refinery maintenance seasons in Europe and in Asia.

    Overall, OPEC's third-largest producer has been regaining market share at a faster pace than analysts had projected since sanctions were lifted in January, with its exports of crude and condensate hitting a five-year high of at least 2.60 million barrels per day (bpd) in September.

    Iran's sales of crude and ultra light oil condensate are set to fall for a second straight month to 2.37 million bpd in November from 2.56 million bdp in October, according to the source who is familiar with Iran's export situation.

    Compared with a year ago, Tehran's November crude exports are set to rise 118 percent, according to the source.

    Iran's current oil output is almost 4 million bpd, and its exports have reached 2.4 million bpd, the managing director of the National Iranian Oil Company was quoted as saying by the oil ministry's news agency last week.


    Iran's crude and condensate exports to Asia this month are likely to total 1.93 million bpd, up nearly 100,000 bpd from October, but exports to Europe look set to fall to 433,000 bpd from 613,000 bpd in October.

    Usually, the United Arab Emirates loads around 50,000 bpd to 145,000 bpd of Iranian condensate each month, but there are no loadings for the Middle East this month, the first time in at least two years.

    Loadings headed for China will jump 35 percent from October to 669,000 bpd. But India will load slightly more at 674,000 bpd, retaining its status as Iranian oil's top buyer for the second straight month.

    South Korea is set to take 368,000 bpd in November, down from 379,000 bpd in October. Japan is lifting 156,000 bpd of crude, down 31 percent. Taiwan, which has been buying from Iran every other month, will lift about 2 million barrels in November.

    Turkey is lifting 133,000 bpd in November, down 31 percent from the previous month. Greece is lifting around 2 million barrels, and Spain and Italy are loading about 1 million barrels each.

    Iran is also pushing about 2 million barrels of crude into its offshore storage this month, the source said.
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    PetroChina starts up new LNG storage tanks

    According to Reuters, PetroChina has started up new LNG storage tanks at two receiving terminals in preparation for winter demand.

    Reuters reports that the company recently began operating a tank with a capacity of 200 000 m3 – in addition to pipelines and regasification facilities – in Rudong, eastern Jiangsu province, China.

    These new facilities in Rudong are reportedly part of a second phase expansion project, which has increased the company’s handling capacity from 3.5 million tpy to 6.5 million tpy. Following the expansion, Rudong has a total of 680 000 m3 of storage capacity.

    In addition to this, Reuters reports that PetroChina has started test running a new storage tank at its Dalian terminal. This is expected to double the facility’s receiving capacity to 6 million tpy.

    The company reportedly said that it would increase its gas supply this winter by 7% compared to the year before. It said that it would do this by slightly increasing imports, as well as by pumping more from onshore domestic fields, such as Longwangmiao.

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    Oklahoma regulators target more disposal wells following Cushing quake

    The Oklahoma Corporation Commission (OCC) on Tuesday said it was implementing an action plan that shuts or reduces volumes from 58 wastewater disposal wells in the Arbuckle formation of Oklahoma following Sunday's magnitude 5.0 earthquake.

    In a statement, the state's oil and gas regulator said that under the new directive, it will require seven wells to shut by Nov. 14 with an additional 47 more to reduce volume by Nov. 21.

    Four wells in the impacted area have already been shut as part of an October directive. The 47 wells that must reduce volume had already made a 40 percent reduction following an earlier directive.

    Wastewater injection wells have been tied to a massive increase in seismic activity in the oil and gas producing state, which has naturally occurring fault lines.

    The wells are needed to dispose of saltwater, a normal byproduct of drilling.

    According to the Oklahoma Geological Survey (OGS), the state has been recording 2-1/2 earthquakes daily of magnitude 3 or greater, a seismicity rate 600 times greater than before 2008.

    The regulator said that Tuesday's plan was only an initial response, and that a broader plan is underway that will encompass more disposal wells in the Arbuckle. The current plan focuses on areas six, 10 and 15 miles (9.5, 16 and 24 km) from the location of the quake.

    The latest earthquake occurred just two miles (3.2 km) west of Cushing, Oklahoma, a small city of 8,000 people that is also the largest oil hub in the United States. It came just two months after a 5.6 quake, the strongest on record in the state.

    The increased frequency of earthquakes in the state has raised concerns about the safety of hub's pipelines and tanks, which holds some 60 million barrels of oil and is the delivery point for the West Texas Intermediate (WTI) futures contract, making it a crucial fixture of the U.S. oil market.

    Some terminal operators, including Enterprise Products Partners and Magellan Midstream Partners, briefly suspended operations following Sunday's tremor but were up and running normally by Monday and reported no damage.

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    Rosneft sells 20% of huge field to Beijing Gas

    Rosneft PJSC agreed to sell 20 percent of its Verkhnechonsk oil and gas field in Siberia for about $1.1 billion to Beijing Gas Group Co in a deal that may give the Russian producer access to China's natural-gas market.

    "The competences and capabilities of our partner in the key distribution market will generate significant synergies from our joint operation," Rosneft Chief Executive Officer Igor Sechin said in a statement on Monday. Sechin and Beijing Gas Chairwoman Li Yalan signed the agreement-outlined back in June-during a meeting in St. Petersburg.

    The sale will help Rosneft manage the largest debt load in Russia's oil industry. It has accumulated total debts of more than $40 billion, mainly from its $55 billion acquisition of TNK-BP in 2013.

        This year it also agreed to buy Russian oil producer Bashneft PJSC and Indian refiner Essar Oil Ltd. While the Verkhnechonsk deal will bolster the balance sheet, it also helps Russia boost energy ties with China, after trade between the two countries declined last year.

        This deal, with one of China's largest distributors of natural gas, gives Rosneft a strategic partner in exploiting the unit's reserves of the fuel. Rosneft gains the possibility of accessing China's local gas market, including end-customer
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    Libya’s Largest Oil Port May Be Ready Next Week for Shipments

    Libya’s largest oil export terminal may re-open as early as next week in a move that would provide relief for the cash-strapped country holding Africa’s largest crude reserves.

    Tankers may be able to load at Es Sider port by next week as maintenance work at the terminal is almost complete, a National Oil Corp. official said by phone on Tuesday, asking not to be identified because he’s not authorized to speak with news media. Es Sider hasn’t exported crude since force majeure, a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control, was declared on loadings almost two years ago.

    Libya currently produces 2the official said. This compares with production of about 1.6 million barrels a day before the 2011 uprising that ousted longtime leader Moammar Al Qaddafi. Output withered after international oil companies withdrew amid the conflict between rival governments and armed groups over the nation’s oil fields, ports and pipelines.

    Libya, a member of the Organization of Petroleum Exporting Countries, is struggling to boost crude production and exports since the NOC reached an agreement in September with Khalifa Haftar, the commander of forces controlling important oil ports. As a result of the deal, the country was able to ship 781,000 barrels from the port of Ras Lanuf on Sept. 21, the first international cargo from that terminal since force majeure was declared in December 2014.

    Loading Plan

    The North African producer plans to ship nine cargoes this month from the eastern port of Brega, according to a loading program obtained by Bloomberg. The shipments will total 6.87 million barrels, or the equivalent of 229,000 barrels a day, the plan showed.

    Es Sider is ready to export as much as 1.5 million barrels and has storage capacity of 2.5 million, the NOC official said. The terminal has yet to receive formal instructions from NOC to re-start, Ghaith Abdul Qader, an official in Es Sider’s control department, said in a phone interview.

    Al-Waha Oil Corp., which operates Es Sider, resumed production last month and currently pumps 65,000 barrels a day, Abdul Qader said. Al Waha is storing its crude in storage tanks belonging to Harouge Oil Operations Co., he said.

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    U.S. crude output in 2016, 2017 to fall less than expected - EIA

    The U.S. Energy Information Administration expects U.S. crude oil productionfor 2016 and 2017 to fall by less than previously expected, according to its monthly short term energy outlook released on Tuesday.

    The statistical arm of the U.S. Department of Energy said 2016 oil production will fall by 580,000 barrels per day (bpd) to 8.84 million bpd. Last month, it had forecasted a 690,000 bpd year-over-year decline.

    Crude production in 2017 will fall by 110,000 bpd to 8.73 million bpd, compared with last month's forecast of a decline of 140,000 bpd.

    The declines were expected to be sharper in certain regions, EIA administrator Adam Sieminski said after the data was released.

    "Although average annual U.S. crude oil production is expected to be slightly below this year's level in 2017, increased drilling activity in West Texas and southeastern New Mexico, along with rising oil output in the Gulf of Mexico, are expected to partially offset lower production in other areas of the country and make the decline smaller than previously forecast," Sieminski said.

    Oil production onshore has declined more rapidly than in the Gulf of Mexico, where expensive deepwater drilling often requires a multi-year commitment, and is less reactive to price fluctuations.

    The EIA increased 2016 U.S. oil demand growth to 110,000 bpd from 70,000 bpd previously. For 2017, the EIA said U.S. oil demand will grow by 260,000 bpd from 230,000 bpd previously.

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    YPF posts $1.97 bln Q3 net loss, $3.64 bln revenue

    Argentina's state-controlled oil firm YPF recorded a net loss of 30.26 billion pesos ($1.97 billion) in the third quarter and revenue of 55.8 billion pesos ($3.64 billion) during the three-month period, the company said on Tuesday.
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    OMV's Q3 adjusted operating profit above expectations

    Nov 9 Austrian oil and gas group OMV's adjusted operating profit in the third quarter was above expectations at 415 million euros ($466 million), but down 16 percent from the same period last year, it said on Wednesday.

    To balance low oil prices, OMV is cutting costs and investments, which it has reduced to 2 billion euros this year and 2.2 billion in 2017 - less than a previous estimate of 2.4 billion.

    The average estimate in a Reuters survey of analysts for clean current cost of supplies (CCS) earnings before interest and tax (EBIT) was 376 million euros, while a company poll said 330 million. This measure strips out special items and inventory holding gains or losses.
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    Japex to delay Canada oil sands expansion project to mid-2017

    Japan Petroleum Exploration (Japex) said on Tuesday it plans to delay the launch of its Hangingstone oil sands expansion project in Alberta, Canada, by a few months to mid-2017, a move that also pushes up costs by C$250 million ($187 million).

    The oil and gas developer said investment by a subsidiary in the expansion project is set to rise to C$1.5 billion from C$1.25 billion.

    Japex aims to produce 20,000 barrels per day of bitumen from the project, where a subsidiary owns a 75 percent stake, while Nexen Inc holds the rest.

    The company also said on Tuesday it will keep the Hangingstone oil sands concession known as 3.75 section closed, after shutting down production in May due to low prices, even after devastating fires in the area were brought under control.
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    Another Niger delta bombing

    Oil pipeline bombed Tuesday in Niger Delta, security sources say. 2nd attack in < wk on pipelines feeding Nigeria's Forcados line

    @HermsTheWord  1m
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    Canning Basin shale gas in Fortescue’s sights

    Operations off Australia’s North West Shelf. Facilities there are close to the Canning Basin.

    One of Australia’s iron ore magnates has made a pre-emptive move into Western Australia’s (WA’s) onshore gas sector, taking a punt on the region’s rich untapped reserve base in the hope gas demand will rebound.

    Western Australian entrepreneur Andrew Forrest, the chief executive of Fortescue Metals Group (FMG), announced last week that he will apply for state government permits to explore for gas across 40% of the onshore Canning Basin through Squadron Energy, a wholly owned subsidiary of FMG’s Minderoo Group.

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    Saudi private sector dues to be cleared by Dec. 31; signing of SR1 trillion mega projects halted

    A package to clear all the government dues owed to private sector firms before the end of 2016 has been announced.

    This is part of a raft of measures and procedures approved during a meeting of the Council of Economic and Development Affairs (CEDA), chaired by Deputy Crown Prince Muhammad Bin Salman, second deputy premier and minister of defense, at Al-Yamamah Palace in Riyadh on Monday night.

    The meeting has authorized the Deputy Crown Prince, who is also chairman of CEDA, to present the package to Custodian of the Two Holy Mosques King Salman.

    The measures include reviewing a number of projects and rearranging priorities of spending, in addition to halting the signing of several mega projects amounting to a total of SR1 trillion.

    The meeting came out with a package of solutions and procedures for the settlement of dues that fulfilled the requirements. The package entails quick start of settling the dues and complete them before Dec. 31, the last day of the current fiscal year, the Saudi Press Agency reported.

    The meeting discussed a number of economic and development issues including complete payment of amounts owed to the private sector, while noting that this has been delayed in light of a sharp decline in oil revenues.

    The Council discussed the mechanism for the disbursement of these dues based on rearranging priorities of spending by achieving the highest degree of transparency through an electronic portal so as to become a tool to provide accurate information about public expenditure.

    The Council discussed the state of completed government projects, associated measures taken by the state to review a number of projects and rearranging priorities of spending, according to their significance and efficiency, including the application of procedures by overcoming operational obstacles.  

    The meeting also discussed the reports of government agencies as well as that of the Office to Raise Efficiency of Spending about the actions taken to raise the efficiency of government spending, including orders and decisions of restructuring some government sectors and the actions taken for reviewing the amounts approved for a number projects in alignment with the priorities, developmental needs and standards of efficiency in spending.

    These included a review of hundreds of contracts so as to re-schedule execution of some of them, modify contractual formulas and technical specifications for others, in accordance with the statutory regulations and the terms of the contract that contributed to the savings of tens of billions of riyals.
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    Australia set to boost imports of diesel to power coal mines

    Australia set to boost imports of diesel to power coal mines

    Australian imports of diesel are set to grow as miners in the country rev up generators used to power pit operations following a resurgence in coal markets, trade sources said on Tuesday.

    Prices for coal have more than doubled this year after China moved to buy more overseas, with miners in top producers such as Australia pushing to meet demand.

    That is expected to ramp up appetite for the diesel they need to power mines, stoking the amount of profit made on refining the fuel, which in early November had already hit its highest in nearly a year.

    "Demand (for diesel) is better this year than last year ... the (coal) mines are restarting slowly," said a trader who supplies diesel to Australian mines. He declined to be identified as he was not authorised to speak with media.

    A second trader added that the increased Australian demand would likely result in about one additional medium-range diesel cargo every two months, or about 300,000 barrels.

    He added that the increase in imports would take about 6 to 12 months to kick in as it would take a while to restart shuttered coal mines.

    Australia imported 1,457 megalitres, or about 9.2 million barrels, of diesel in August, the highest since May, according to the latest government data.

    The country imported a total of 11,601 megalitres from January to August in 2016, up from 10,872.90 megalitres over the same period last year.

    The uptick comes as appetite for diesel is also growing in other major coal mining nations, with diesel used in Indonesia's mining sector estimated to have risen by 5 to 10 percent over July-September.

    The first trader said that about 30 percent of Australia's diesel imports are used in mining, with the rest going to the transport sector.

    "Diesel demand in retail is (also) good because local car manufacturers are shutting down and the cars (Australia is)importing are all mainly diesel," said another trader.

    Motorists are switching from locally made, big passenger cars to overseas-made small cars and sports utility vehicles which typically use diesel, he added.
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    Qld permanently bans UCG, publishes gas discussion paper

    The hunt for underground coal gasification (UCG) in Queensland is now a thing of the past after legislation was introduced into the state Parliament to ban the operations.

    Minister for State Development and for Natural Resourcesand Mines, Dr Anthony Lynham, said on Tuesday that amendments to the Mineral Resources Act would implement an April decision to prohibit UCG in Queensland.

    “The government has carefully considered the results of trials at two UCG pilot projects undertaken to establish the commercial and environmental viability of this potential industry,” Lynham said.

    “The government has concluded that with the potential impacts of UCG activities and the issues associated with the trial projects to date, the risks of allowing UCG projects to grow to commercial scale are not acceptable and outweigh the foreseeable benefits.

    “Accordingly, the government had decided not to allow the development of a commercial-scale UCG industry in Queensland.”

    Lynham said that the ban would also apply to the in-situ underground gasification of oil shale. The legislation also provided for the necessary work involved in decommissioning Queensland’s remaining existing UCG pilot project.

    “While UCG activities will be prohibited in Queensland, the remaining existing UCG pilot project will still need to carry out those activities necessary for environmentalrehabilitation, and the decommissioning and removal of plant and equipment related to carrying out UCG activities.

    “Regulation and monitoring of the UCG decommissioning and rehabilitation activities are being undertaken by the Department of Environment and Heritage Protection.”

    The ban on UCG comes just days after the state government launched its first industry-wide gas discussion paper, filled with 29 reform ideas expected to spark debate.

    “The gas sector is critical to the Queensland economy for the jobs, revenue, regional growth and significant economic benefits it delivers,” Lynham said.

    “Gas helps fuel our homes, businesses and industry and our growing liquefied natural gas (LNG) exports will increasingly deliver important royalties to fund Budget initiatives.”

    He noted that although there was strong demand, and solid foundations for reliable supply for the next 30 years, there were challenges to the industry.

    “That’s why we are developing a Gas Supply and Demand Action Plan to tackle the challenges and maximise supply, economic and job benefits for Queensland. We will deliver an overarching strategy to maximise domestic and industrial supply at affordable prices.”

    Lynham said the discussion paper’s 29 recommendations focus on supply and the gas sector’s “social licence”, the community’s general acceptance of the resources sector and its activities.

    “Building community understanding and confidence in the gas sector and striking the right balance between environmental protection, health and safety and social performance will be critical for its ongoing growth,” he said.

    The Australian Petroleum Production and ExplorationAssociation (Appea) has welcomed the action plan, with CEO Malcolm Roberts noting that with A$70-billion invested in local LNG projects, Queensland was now a world leader in the sector.

    “The industry congratulates the state government for recognising the need for regulatory reforms to boost local exploration and development. It is heartening to see the government accept the need to reduce the regulatory costs of doing business in Queensland, industry has already sharply cut its own operating costs to stay competitive in a depressed global market.

    “The problem is acute for the smaller explorers that play a vital role in finding and developing new gas reserves. They battle to attract investment capital and can face high upfront regulatory costs,” Roberts said.

    He said that reforms in this area would give industry the confidence to boost its needs to turn exploration into production.
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    OPEC Raises Oil-Demand Forecast on Outlook for Cheaper Crude

    OPEC raised its forecast for global oil demand next year and through the end of the decade, anticipating that cheaper crude will spur consumption even as economic growth slows.

    Demand will reach 95.3 million barrels a day in 2017, according to the producer group’s annual World Oil Outlook report released Tuesday. That’s an increase of 300,000 barrels a day from last year’s forecast. The Organization of Petroleum Exporting Countries also raised its outlook for oil use in 2018, 2019 and 2020, when it sees demand reaching 98.3 million barrels a day, or 900,000 more than the group projected in its previous annual outlook.

    OPEC cut its estimates for crude prices by $20 a barrel for each year from 2016 to 2020, compared with its previous outlook. The group assumes crude will average $40 a barrel in 2016, and it raised its projected price by $5 a barrel in each of the following years through 2020. Brent has averaged about $44 a barrel so far this year.

    OPEC’s upward revision for demand “is the result of a lower medium-term oil price assumption, which is expected to have a stronger influence than assumptions of lower medium-term economic growth and expanded energy efficiency policies,” the report’s researchers said. Global economic growth will be 3.4 percent a year for 2015 to 2021, compared with an annual 3.6 percent that OPEC forecast last year for 2014 to 2020, due to slowdowns in China and Latin America, it said.

    The group’s 14 members are in talks with each other, and with non-member producers including Russia, to complete an initial agreement OPEC reached in September to limit its collective crude output in an effort to support prices. Benchmark Brent crude tumbled from more than $115 a barrel in June 2014 amid a supply glut and ended last week trading 8.3 percent lower at $45.58. Exploration for new crude deposits has declined with prices, prompting concern that producers may not be able to meet future demand.

    Future Shortage

    Royal Dutch Shell Plc, the world’s second-biggest energy company by market value, predicts demand for oil could peak in as little as five years. “We’ve long been of the opinion that demand will peak before supply,” Shell Chief Financial Officer Simon Henry said on a conference call on Nov. 1.

    “While the recent oil market environment has been one of oversupply, it is vital that the industry ensures that a lack of investments today does not lead to a shortage of supply in the future,” OPEC Secretary-General Mohammed Barkindo wrote in a foreword to the report.

    Demand for oil in the rich nations of the Organization for Economic Cooperation and Development will begin to fall after 2017, due partly to an increase in supplies of natural gas and nuclear and renewable energy, OPEC said. Oil consumption in developing nations will continue to rise, however, driving overall demand growth until at least 2040, it said.

    Demand in India will grow to 5.4 million barrels a day by 2021, a 32 percent increase from 2015, OPEC said, raising its forecast from last year by 470,000 barrels a day due to the Asian nation’s improving economy. The group reduced its growth forecasts for oil demand in Latin America and China.

    Road transportation will account for 6.2 million barrels a day of new demand arising between 2015 and 2040, or more than a third of the total increase for that period, according to OPEC. The number of vehicles on the roads will double over those same 25 years to more than 2.5 billion, with developing nations accounting for most of the increase.

    While the number of cars will also increase in OECD countries, related oil demand will drop by 30 percent as a result of of improved fuel economy and the growing use of electric and hybrid vehicles, OPEC said.

    World oil outlook:
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    Iran to Sign $6 Billion Gas-Field Deal With Total, CNPC

    Iran plans to sign a preliminary $6 billion deal with Total SA on Tuesday to help develop an offshore gas field, potentially the first Western energy investment there since international sanctions were lifted this year, an oil-ministry official in Tehran said.

    The agreement with the French oil giant could be a harbinger for the return of more Western companies to Iran’s vast petroleum industry and represents a step forward for the Islamic Republic’s goals of ramping up production of oil and gas over the next several years.

    European oil companies have been slow to return to Iran since the Persian Gulf country secured an end to sanctions on its energy industry by agreeing to curbs on its national nuclear program in January. American sanctions related to terrorism and weapons remain in effect on Iran.

    Total, China National Petroleum Corp. and Iran’s state-owned Petropars will develop part of a giant gas field in the Persian Gulf known as South Pars, a press official at Iran’s oil ministry said. It wasn’t clear how much of the $6 billion investment would come from Total, or how the deal would be structured for Total to steer clear of American sanctions still in effect.

    The deal is a draft that still must be completed over the next six months, the official said, but it gives Total and CNPC a head start over competitors.

    Representatives for CNPC and Petropars didn’t immediately respond to requests for comment. Total said representatives weren’t available to comment on Monday.

    The agreement marks the first time a Western oil company has been contracted under the new terms for foreign firms working in Iran. The terms still haven’t been publicly released, but Iranian oil officials have said they foresee allowing oil companies to make more money and work for longer than previous deals that were seen as onerous and loss-making.

    Total was long one of the most active Western oil companies in Iran, and its executives have said they were eager to return to a country with the fourth-largest reserves of oil in the world. Total kept an office open in Iran throughout sanctions and was the first European oil company to buy Iranian oil and ship it to Europe after the restrictions were lifted.

    But actually setting up shop in Iran and drilling has been a riskier proposition. Total Chief Executive Patrick Pouyanne has said he was in no rush to return to Iran until the terms of working there were better understood.

    Total and CNPC both signed deals years ago to develop the South Pars project before sanctions forced them to pull out. The South Pars field, which is shared by Iran and Qatar in the Gulf, contains 14,000 billion cubic meters of gas—8% of the world’s known reserves.

    Total and CNPC have been leaders among oil companies in finding ways to do business in countries under U.S. sanctions. Both companies were key players in developing a $27 billion natural-gas field in Russia with a company, OAO Novatak, hit by sanctions, a deal largely financed by Chinese banks.

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    Trafigura Says Not Party to Storage Contracts in Petrobras Probe

    Trafigura Group distanced itself from a board member arrested in Brazil over allegations of involvement in bribery and money laundering at state-run oil company Petroleo Brasileiro SA, saying the contracts at the heart of the case didn’t involve the commodity-trading house.

    The “substantive allegations” made by Brazil’s public prosecutor against management board member Mariano Marcondes Ferraz “relate to certain storage contracts entered into between Petrobras and Decal do Brasil at the Porto de Suape,” Trafigura wrote in a letter sent to its banking partners on Nov. 2. Ferraz was a founding partner of storage and bunkering firm Decal and retains an equity interest in the company, Trafigura said in the letter seen by Bloomberg News.

    “We note that Petrobras has (via its legal department) informed the public prosecutor that Trafigura was not party to these contracts,” Trafigura said.

    The trading house dispatched the letter to its banks several days before the office of the Swiss attorney general said a “criminal case” had been opened involving a Trafigura executive and the Petrobras corruption probe known as Carwash. A spokesman for the attorney general declined to comment further on the investigation, first reported by Swiss newspaper Le Temps.

    “From what we can gather from reading the prosecution documents and press articles, it seems that the substantive allegations against Mariano Marcondes Ferraz are arising from his private business relationship with Decal do Brazil,” a spokeswoman for Trafigura said in an e-mailed statement. “Trafigura has not been approached by the Swiss authorities in relation to these allegations.”

    Setting Bail

    Following a hearing on Nov. 3, Ferraz agreed to pay bail and remain in Brazil while authorities investigate his alleged involvement in the bribery scheme.

    A judge in Curitiba, Brazil, accepted that Ferraz be released upon paying bail of 3 million reais ($930,000), according to the ruling made last week. Ferraz will have his passports withheld to prevent him from leaving the country, can’t change his address in Brazil and must cooperate with the investigation as part of the agreement, according to the ruling.

    Ferraz, a management board member at Singapore-based Trafigura since 2014 and the CEO of company affiliate DT Group, was detained Oct. 26 on suspicion that he collected bribes and participated in corruption and money laundering. Federal police detained him at Sao Paulo’s Guarulhos International Airport as he prepared to board a flight to London.

    Ferraz was taken the following day to Curitiba, the base of the Carwash probe investigating a pay-to-play scheme where Petrobras executives accepted bribes, funneling money to politicians in exchange for favors. The judge and federal prosecutors overseeing the case are based in the city.

    Bribery Allegations

    A former executive with Marc Rich and Glencore Plc in Brazil, Ferraz joined Trafigura in 2007, according to his biography on Trafigura’s website. The Brazilian national has a residence in Geneva, according to website

    With major trading operations in Geneva, Singapore and Houston, Trafigura is the second-biggest metals trader and third-largest independent oil trader, handling more than 4 million barrels of crude and petroleum products a day. Relationships with banks via short-term financing arrangements to fund operations are the lifeblood for trading houses.

    Former Petrobras executive Paulo Roberto Costa has told investigators that Ferraz paid more than $800,000 in bribes from 2011 to 2013 to obtain contracts with the oil company, according to a statement issued by federal prosecutors when Ferraz was arrested.

    A lawyer for Ferraz declined to comment on the case.

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    Oil investor impatience grows over global surplus

    Oil investors are growing increasingly disgruntled with the pace at which supply and demand are rebalancing, cutting their bullish bets and pushing the benchmark priceto its biggest discount relative to future prices in nine months.

    The premium of Brent crude futures for delivery in six months over those for prompt delivery, one measure of confidence in the market outlook, on Monday shot to its largest since February, the point at which OPEC first floated the idea of a possible deal on output to erode a two-year-old global surplus.

    The spread, or contango, is now at $3.51 a barrel, up from $2.30 at the end of September, when OPEC announced its intention to strike a deal to cut production when it meets in Vienna later this month.

    Generally, a widening in this spread can indicate one of two things: either investors have grown more pessimistic over the prospect of a rally in prices for prompt delivery, or they are more optimistic over the likelihood of a longer-term rally.

    In this case, the prompt Brent contract has led the move, having fallen by 5.2 percent since the end of September, compared with a fall of 2.6 percent in the price of oil for delivery in six months.

    "The increasing contango is really about the physical side of the market," SEB chief commodities strategist Bjarne Schieldrop said.

    "We've had an increase in inventories rather than a decrease that has coincided with refinery outages. It's not a pretty sight."

    The most recent Reuters survey estimated OPEC supply hit a record high of 33.82 million barrels per day (bpd) in October, up 130,000 bpd from September and up 2.2 million bpd from October last year. [OPEC/O]

    Since announcing their intention to cut production to a range of 32.5 to 33 million bpd following a meeting in Algiers, the discord among the world's largest exporters has grown. Libya, Nigeria, Iraq and Iran have clamored to be exempt from any reduction as they recover market share lost to civil unrest and, in the case of Tehran, international sanctions.

    Those four already represent a third of OPEC output and an exemption would increase the pressure on Saudi Arabia and its Gulf neighbors to deliver the bulk of the cuts.


    Highlighting the increasingly uphill battle to achieve consensus, OPEC sources told Reuters last week that Saudi Arabia had warned it could raise output steeply if rival Iran refused to limit supply.

    Despite OPEC Secretary-General Mohammed Barkindo attempting to soothe concerns about the group's ability to cut meaningfully, oil prices are at their lowest in nearly two months, having unwound the gains made since late September.

    "The problem in a nutshell is that too many members want higher prices without making any sacrifices and the market is losing patience," PVM Oil Associates analyst David Hufton said in a report on Monday.

    "Confidence in a successful OPEC outcome has evaporated."

    Investors have cut their net long holdings of crude oil futures and options by around 100 million barrels in just two weeks. [O/ICE] [CFTC/]

    Another question hangs over non-OPEC members, specifically Russia, the world's largest producer of crude, and their willingness to join in an effort to freeze or cut output.

    Russia set a new post-Soviet record high in October of 11.2 million bpd, underscoring the challenge the government might face in agreeing to freeze output.

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    Genscape see Cushing inventory down

    Genscape Cushing inventory week ending 11/4: -442,076 bbl w/w.

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    International offshore rig count down by 70 units YOY

    Oilfield services provider Baker Hughes informed on Monday that the international offshore rig count in October 2016 was down by 70 units when compared to the same period in 2015.

    Namely, according to the report, the international offshore rig count for October 2016 was 200, down 21 from the 221 counted in September 2016, and down 70 from the 270 counted in October 2015.

    The international total rig count for October 2016 was 920, down 14 from the 934 counted in September 2016, and down 191 from the 1,111 counted in October 2015.

    The average U.S. rig count for October 2016 was 544, up 35 from the 509 counted in September 2016, and down 247 from the 791 counted in October 2015.

    The average Canadian rig count for October 2016 was 156, up 15 from the 141 counted in September 2016, and down 28 from the 184 counted in October 2015.

    The worldwide rig count for October 2016 was 1,620, up 36 from the 1,584 counted in September 2016, and down 466 from the 2,086 counted in October 2015.

    The worldwide offshore rig count for October 2016 was 225, down 15 from 240 counted in September 2016, and down 79 from 304 counted in October 2015.
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    Future of Gas Called into Question at London Conference

    The future of gas was called into question at a recent energy conference in London by Tara Schmidt, principal consultant at Environmental Resources Management.

    The future of gas was called into question at a recent energy conference in London by Tara Schmidt, principal consultant at Environmental Resources Management.

    In a panel discussion at London Business School’s 13th Global Energy Summit, focusing on the energy mix of the future in the wake of the Paris Agreement, EDF’s corporate policy and regulation director Angela Hepworth was optimistic about the role of gas contribution.

    “You need a diverse balance mix of different types of generating capacity and you need that because different types of generating capacity have got different characteristics,” Hepworth said.

    “Renewables…[are] great sources of renewable low carbon energy, but the problem is they’re intermittent. You can’t guarantee that they’ll be there when you need them…Gas capacity is not low carbon but it is very flexible. So gas is a really valuable contributor to the generation mix to provide the flexibility we need to balance the system,” she added.

    Following Hepworth’s comments, Schmidt said the future of gas contribution could go one of two ways.

    “The big question for gas is if we’re going to see that golden age of gas, as the IEA called it so many years ago, or if we’re actually going to see gas impacted as we’ve seen in some markets for renewables growth and also from energy storage as technology starts to advance,” stated Schmidt.

    Earlier this month, an International Energy Agency report stated that technological improvements are required if gas is to serve as a long-term fuel.

    The IEA states that gas-fired power generation in the 2DS (two degrees) plan will increase through the 2030s, and will rise rapidly in China and India from 2015 to 2040. This form of power is scheduled to gradually decline to 2050 though, unless technological advancements can be made.

    These improvements include the application of CCS (carbon capture and storage), which reduces the carbon intensity of generation and would allow gas to remain a low-carbon choice relative to the increasingly stringent requirements of the 2DS well beyond 2040, the IEA said.

    The Paris Agreement, reached at COP21 in December 2015, aims to limit global warming to ‘well below 2 degrees celsius’ by phasing out inefficient and emission-heavy fuel sources. The agreement became effective November 4, 2016.
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    Eni to BP CEOs Limit Oil Spending for 2017 to Cope With Glut

    From Eni SpA to BP Plc, the biggest international oil companies are reining in capital spending for 2017 and possibly longer as they try to squeeze profits from a crude market battered by a global glut.

    Eni, which posted a greater-than-expected third-quarter loss, is reducing capital expenditure at least through next year, CEO Claudio Descalzi said Monday in a Bloomberg TV interview from Abu Dhabi, where energy companies are meeting to discuss the industry’s future.

    BP is holding outlays to about $16 billion this year compared with a previous estimate of less than $17 billion, its CEO Bob Dudley said in a separate interview at the conference. Many other companies in the industry were doing the same, “bolting” down their capital spending, he said.

    Energy majors are putting limits on expenditures as OPEC, which agreed in September to trim output for the first time in eight years, struggles to persuade Russian and other producers from outside the group to join the cuts. OPEC, which pumps about 40 percent of the world’s oil, wants to put the changes into effect when it meets in Vienna on Nov. 30. The agreement is to last one year starting in January, state-run news agency APS reported Monday, citing Algeria’s energy minister, Noureddine Boutarfa.

    Price Floor

    Brent crude, the international benchmark, has dropped below $50 a barrel since last month on concern that OPEC won’t be able to reach an accord with non-OPEC producers. Futures rebounded 1.1 percent to $46.10 a barrel by 2:54 p.m. in Dubai, the first advance in seven sessions.

    Rome-based energy producer Eni could still make a profit, maintain spending and pay a dividend with crude at $50 a barrel, Descalzi said. Oil at $50 “is OK,” he said. “Looking at our break-even price, that is enough.”

    Eni wants to maintain production while reducing capital expenditure at least through next year, Descalzi said. “2017 will still be a very low capex year, and we have to try to optimize, and we have to reduce capex but be able to maintain production.”

    Capital spending was static across the industry, due largely to cost savings and deflation, BP’s Dudley said. “I think we’re going to be about the same level next year as we have been this year,” he said.

    ‘Supply Overhang’

    With demand rising and investment dropping off, crude could “easily” reach $55 a barrel next year, Dudley said.

    Exxon Mobil Corp. CEO Rex Tillerson, speaking on the sidelines of the Abu Dhabi conference, declined to give an estimate of his company’s expenditure. Capital spending will be “highly variable” from one producer to the next, he said.

    There’s still a significant supply overhang and inventory overhang that needs to be worked through,” Tillerson said.

    Energy investment will be 44 percent lower than expected from 2015 to 2020, compared with expectations before crude prices collapsed about two years ago, author and energy consultant Daniel Yergin said in an interview in Abu Dhabi. “‘When you look at all the postponements and cancellations, that will add up later in this decade,” he said.

    Eni is among major oil producers that are under pressure since crude prices plunged to less than half their 2014 peak levels. The company pumps crude in Iraq and is developing offshore natural gas fields in Egypt and Mozambique.

    Eni’s Descalzi said oil prices would be high enough over the next three years for his company to maintain investment spending and its dividend. “Our number that’s good to cover our investment, and our operating cash flow is $50.” Price

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    Italgas promises higher dividends on its return to stock market

    Italy's biggest gas distributor Italgas pledged to pay higher dividends as it returned to the Milan stock market on Monday after a 13-year absence.

    Italgas, first traded in 1853 on the bourse in Turin and delisted from the Milan exchange in 2003 by oil company Eni , started trading at 4.062 euros per share giving it a market value of about 3.3 billion euros ($3.7 billion).

    Italian gas company Snam spun off its domestic distribution business earlier this month as part of plans to focus on energy transmission and storage across Europe.

    Snam, which distributed Italgas shares to its shareholders, has kept a 13.5 percent stake.

    Speaking at the ceremony to mark the company's bourse debut, Chief Executive Paolo Gallo said Italgas would increase its dividend by 2-3 percent per year in 2017 and 2018.

    "From 2019, when we have a clearer picture of the gas concession situation, we might be able to remunerate shareholders more," he said.

    Italy's gas distribution sector is highly fragmented but new rules cutting concession areas to just 177 from almost 7,000 are expected to streamline the industry.

    Italgas, the third biggest gas distributor in Europe, is hoping to lift its share of the Italian market to about 40 percent from 30.3 percent now.

    Gallo said it would invest some 1.3 billion euros to take part in the new gas zone tenders which would be on top of other planned capital expenditure of 2 billion euros over the period to 2020.

    Italgas will post revenue of more than 1 billion euros this year, 98 percent of which will be from regulated tariffs.
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    Saudi oil shipments to Egypt halted indefinitely, Egyptian officials say

    A Saudi Aramco employee sits in the area of its stand at the Middle East Petrotech 2016, an exhibition and conference for the refining and petrochemical industries, in Manama, Bahrain, September 27, 2016. REUTERS/Hamad I Mohammed

    Saudi Arabia has informed Egypt that shipments of oil products expected under a $23 billion aid deal would be halted indefinitely, suggesting a deepening rift between the Arab world's richest country and its most populous.

    Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years in April, during a visit by King Salman.

    The cargoes stopped arriving at the start of October, as festering political tensions burst into the open, but Egyptian officials said the contract remained valid and had appeared to hold out hope that oil would start flowing again soon.

    Saudi Arabia's state oil firm Aramco has not commented on the halt. But on Monday, Egyptian Oil Minister Tarek El Molla confirmed it had halted the shipments indefinitely.

    An oil ministry official told Reuters: "They did not give us a reason. They only informed the authority about halting shipments of petroleum products until further notice."

    The move comes as a source in Molla's delegation said late on Sunday evening that he would visit Iran, Saudi Arabia's main political rival, to try to strike new oil deals.

    Egypt and Iran's diplomatic relations have been strained since the 1970s. An Egyptian official visiting Iran would cement a break in its alliance with Saudi Arabia and mark a seismic shift in the regional political order.

    The oil ministry spokesman declined to confirm or deny whether Molla was scheduled to visit Iran, saying he had gone to Abu Dhabi to attend a conference. Foreign Ministry spokesman Ahmed Abu Zeid said he had no information on the visit.

    Speaking to reporters in Abu Dhabi, Molla said he was not going to Iran.

    But two security sources and a source in Molla's delegation said the minister had been scheduled to go though the low-key visit was now likely to be delayed after the news became public.

    Gulf Arab countries, led by Saudi Arabia, have pumped billions of dollars into Egypt's flagging economy since mid-2013, when general-turned-president Abdel Fattah al-Sisi seized power, ending a year of divisive Muslim Brotherhood rule.

    But with the Brotherhood threat diminished, Gulf rulers have grown disillusioned at what they consider Sisi's inability to reform an economy that has become a black hole for aid, and his reluctance to back them on the regional stage.

    Egypt has been reluctant to provide military backing for Riyadh's war against the Iranian-backed Houthi group in Yemen.

    In Syria, where Saudi Arabia is a leading backer of rebels fighting against Iranian-backed Bashar al-Assad, Sisi has supported Russia's decision to bomb in support of the president.

    A deal to hand over two Red Sea islands to Saudi Arabia, made at the same time as the oil aid agreement, has faced legal challenges and is now bogged down in an Egyptian court.

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    Chevron pledges to share North Sea Alder learnings to help unlock small pools potential

    Chevron has pledged to share some of the “learnings” of the Alder project with the wider industry to exploit small pools in the North Sea.

    The subsea technology employed on Alder could be important to the development of so-called small pools, oil and gas fields that might otherwise not be exploited unless the required technology is developed and deployed to link them to existing platforms.

    Exploiting small pools in the North Sea is a key focus of the Oil and Gas Authority (OGA) as part of its “maximising economic recovery” (MER) strategy as well as a main area of research for the newly established Oil and Gas Technology Centre (OGTC).

    Greta Lydecker, managing director of Chevron Upstream Europe, said: “Maybe the general view of small pools is that they will never be profitable.

    Mr Hinkley said that technology could reduce costs of subsea development up to 25% which would make developments feasible. : “There is no doubt the industry has come together to look at subsea solutions. They have looked at the savings that are out there. You start talking those kinds of cost saving numbers, it becomes the trigger between go or no go for some of these small pool opportunities.”

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    Militants pull out of Nigeria oil talks

    Nigeria's bid to ramp up oiloutput back to pre-January 2016 levels of 2.2 mil b/d comes under threat as militants back out of peacetalks.

    @PlattsOil  22m
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    UAE's ADNOC cuts Murban crude premiums for Q1 2017

    Abu Dhabi National Oil Company (ADNOC) has finalised the sale of some Murban crude supplies for the first three months next year at lower premiums than the second half of 2016, four sources familiar with the matter said on Monday.

    The price cuts came after the producer shortened the duration of its sales period to accommodate ongoing oilfield concession talks and as traders suffered losses for most of 2016 when they re-sold the cargoes.

    "The market situation is very bad. It's oversupplied and there's high stocks, one of the sources said.

    ADNOC has reached an agreement with some buyers to sell Murban crude in the first quarter at 17-19 cents a barrel above the grade's official selling price (OSP), the sources said.

    The premiums for the cargoes, which do not have a fixed destination, are down from the 20-cent premium for second-half 2016 supplies, they said, without indicating the volumes being sold under that pricing.

    "Everyone is complaining that OSPs are too high. Based on OSPs, traders are not making money," another source said.

    ADNOC could not be reached for comment.

    The producer has been selling a portion of its Murban output via six-month agreements after concessions at the field operator Abu Dhabi Company for Onshore Petroleum Operations (ADCO) expired in January 2014.

    To accommodate the ongoing talks, ADNOC shortened the duration of its Murban sales by three months, the sources said.

    Separately, ADNOC is in talks to sell first-quarter Upper Zakum crude supplies.

    It last offered Upper Zakum at 20 cents a barrel above the grade's OSP, but some traders said it would be tough to make a profit over the short period.
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    Blast-damaged Colonial gasoline line back in service

    A gas pipeline that exploded in Alabama last week is back in service, the pipeline company said Sunday.

    Service was restarted at 5:45 a.m. Sunday on the pipeline that transports gasoline from the Gulf Coast to New York City, according to Colonial Pipeline Co.

    The pipeline exploded Monday while a crew was making repairs related to a September gas spill, killing one person and injuring four others. It may take several days for the fuel delivery supply chain to return to normal after the service restoration, the company said.

    Government officials and Colonial Pipeline have said a piece of excavation equipment hit the pipeline, causing the explosion, but further details haven't been released. Anthony Lee Willingham, 48, of Heflin, Alabama, died in the blast. Four other people were injured and remained hospitalized.

    Colonial said it began excavating Wednesday night at the site, located about 25 miles southwest of Birmingham, Alabama.

    The National Transportation Safety Board is investigating the pipeline rupture, conducting interviews, documenting the site and surrounding area and collecting physical evidence, the agency said in a news release. The investigators also plan to travel to Colonial's office in Alpharetta, Georgia, to speak to operations and engineering staff, review control room operations and collect data and documents.

    Since Monday's explosion, gas prices had rose 7 cents in Georgia and 2 cents in Tennessee, Garrett Townsend with AAA in Georgia said in an emailed statement, but that restarting the line would help ease concerns about supply.
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    Earthquake Rocks Central Oklahoma Oil Town of Cushing

    A sharp earthquake centered near one of the world's key oil hubs Sunday night triggered fears that the magnitude 5.0 temblor might have damaged key infrastructure in addition to causing what police described as "quite a bit of damage" in the Oklahoma prairie town of Cushing.

    City Manager Steve Spears said a few minor injuries were reported and questioned whether some of the community's century-old buildings might be unsafe. Police cordoned off older parts of the town to keep away gawkers.

    "Stay out of the area," Spears told residents during a late-night news conference.

    Emergency officials evacuated an assisted living center catering to the elderly in Cushing.

    Assistant City Manager Jeremy Frazier said that while damage was reported at the Cimarron Tower after the quake, no injuries were reported among the home's residents.

    It wasn't immediately known how many people lived at the building in downtown Cushing. Tulsa television station KOTV said some of those taken from the home were moved to the Cushing Youth Center.

    Frazier said the temblor caused the most damage in and around Cushing's century-old downtown. A number of brick facades had collapsed, and window panes in several buildings shattered. Frazier said city leaders could do a better assessment after sun-up.

    Cindy Roe, 50, has lived in Cushing all her life and said she's never felt anything like Sunday's quake.

    "I thought my whole trailer was going to tip over, it was shaking it so bad," she said. "It was loud and all the lights went out and you could hear things falling on the ground.

    "It was awful and I don't want to have another one."

    Megan Gustafson and Jonathan Gillespie were working a shift at a McDonald's in Cushing when the quake hit.

    "It felt like a train was going right through the building, actually," Gustafson, 17, said Sunday night as she and her co-workers stood behind a police barricade downtown, looking for damage. "I kind of freaked out and was hyperventilating a bit."

    Gillespie, also 17, described the building as shaking for about 10 seconds or so.

    But he said he wasn't as alarmed as Gustafson because he lives in an area that has experienced multiple earthquakes, especially in recent years.

    "I didn't think it was anything new," he said.

    The Oklahoma Corporation Commission said it and the Oklahoma Geological Survey were investigating after the quake, which struck at 7:44 p.m. and was felt as far away as Iowa, Illinois and Texas.

    "The OCC's Pipeline Safety Department has been in contact with pipeline operators in the Cushing oil storage terminal under state jurisdiction and there have been no immediate reports of any problems," the commission's spokesman, Matt Skinner, said in a statement. "The assessment of the infrastructure continues."

    Assistant City Manager Jeremy Frazier said two pipeline companies had reported no trouble but that the community hadn't heard from all companies.

    The oil storage terminal is one of the world's largest. As of Oct. 28, tank farms in the countryside around Cushing held

    58.5 million barrels of crude oil, according to data from the U.S. Energy Information Administration. The community bills itself as the "Pipeline Crossroads of the World."

    The Cushing Police Department reported "quite a bit of damage" in the town of 7,900. Spears said some damage was superficial — bricks falling off facades — but that some older buildings might have damaged foundations that would be difficult to assess until daylight.

    Fearing aftershocks, Police Chief Tully Folden said people needed to stay out of downtown, where photos posted to social media showed piles of debris at the base of commercial buildings.

    The Cushing Public School District has canceled classes Monday in order to assess the earthquake damage.

    Oklahoma has had thousands of earthquakes in recent years, with nearly all traced to the underground injection of wastewater left over from oil and gas production. Sunday's quake was centered one mile west of Cushing — and about 25 miles south of where a magnitude 4.3 quake forced a shutdown of several wells last week.

    Spears said at the news conference that earthquakes are no longer out of the ordinary.

    "I was at home doing some work in my office and, basically, you could feel the whole house sway some. It's beginning to become normal," Spears said. "Nothing surprises you anyway."

    The U.S. Geological Survey said initially that Sunday's quake was of magnitude 5.3 but later lowered the reading to 5.0.

    According to USGS data, there have been 19 earthquakes in Oklahoma in the past week. When particularly strong quakes hit, the Oklahoma Corporation Commission directs well operators to seize wastewater injections or reduce volume.

    A 5.8 earthquake — a record for Oklahoma — hit Pawnee on Sept. 3. Shortly afterward, geologists speculated on whether the temblor occurred on a previously unknown fault.
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    Apache CEO says Alpine High will transform company

    John Christmann, chief executive of Houston’s Apache Corp., said this week that the company’s top priority next year is the newly discovered Alpine High oilfield in West Texas.

    Alpine High, Christmann said, is transformational to Apache and will provide incremental earnings by the end of 2018 that the company has never before seen.

    “Things will change significantly for us in the back half of ’18,” he said. “It’s going to be a different profile than we’ve probably had in our history.”

    Christmann, speaking to investors during Apache’s third-quarter earnings call, said he was aiming to run four to six rigs in the oilfield next year and build out a pipeline system. The region, surrounding the small town of Balmorhea, has no such infrastructure now.

    But Christmann also said that he didn’t want the company to get ahead of itself. Investment, he said, should not outpace a “comprehensive understanding” of the geology nor the company’s ability to get oil and gas to market.

    Analysts on the call were skeptical of the company’s ability to pump as much oil and gas as it expected.

    Christmann insisted test wells have confirmed that oil and natural gas liquids are present in as much as 5,000 vertical feet of rock, he said, in five underground ribbons — the Bone Springs, Wolfcamp, Pennsylvania, Barnett and Woodford formations. “It’s such a thick column, all we have to do is move up hole and we’ll have more oil,” he said.

    The chief executive hinted that Apache may drill more than the 2,000 to 3,000 wells it first anticipated. The company’s initial estimates of well counts only considered two of the five formations, he said. The company also has about 20,000 more contiguous acreage now.

    Apache, one of the largest oil and gas companies in the U.S., narrowed losses in the third quarter thanks largely to the increase in oil prices.

    It reported on Thursday losses of $607 million, 85 percent or $3.5 billion better than losses in the third quarter last year. The company posted $1.60 in losses per share, in comparison to $10.95 in losses per share over the same period last year.

    Revenues dipped 6 percent or $88 million to $1.4 billion. Expenses fell dramatically: Apache cut 60 percent or $3.6 billion to end the quarter spending $2.3 billion, largely because it did not have to write down oil reserves.

    Oil production fell 7 percent or 20,000 barrels per day to 271,000 barrels per day. Gas production fell 8 percent or 90 million cubic feet per day to 1.1 trillion cubic feet per day. Total production, including natural gas liquids, fell 6 percent or 30,000 barrels of oil equivalent per day to 520,000 barrels of oil equivalent per day.
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    Exxon's bid for InterOil in doubt after Canadian court ruling

    Exxon's bid for InterOil in doubt after Canadian court ruling

    InterOil Corp said on Friday an appeals court in Canada had overturned approval of the natural gas producer's $2.5 billion sale to Exxon Mobil Corp, throwing the deal's viability in doubt.

    The Supreme Court of Yukon ruled for Phil Mulacek, InterOil's founder and second-largest shareholder, who had objected to the all-stock deal announced in July.

    The Supreme Court approved the deal in early October, but Mulacek filed an objection saying it did not properly remunerate InterOil shareholders.

    InterOil is incorporated in Yukon, Canada, with operations in Papua New Guinea and headquarters in Singapore.

    An InterOil representative said on Friday that Canadian approval was all that remained to close the deal.

    Exxon representatives were not immediately available for comment. A representative for Mulacek was not immediately available for comment.

    InterOil said it still believed that the Exxon deal represented "compelling value" for its shareholders and was considering options to close the deal.

    Shares of InterOil fell 5.8 percent to close at $45.75, and Exxon edged down 0.1 percent to $83.57.

    InterOil owns a 36.5 percent stake in Papua New Guinea's Elk-Antelope gas field, which is operated by Total

    The acquisition would give Exxon interests in six licenses in Papua New Guinea covering about four million acres and help the world's largest publicly traded energy company supply liquefied natural gas (LNG) to Asian markets.
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    Woodfibre set to build Canada's first LNG export project

    Woodfibre LNG will start building British Columbia's first liquefied natural gas processing and export terminal in 2017, it said on Friday, a project that would grant Canada a long-awaited opportunity to enter the global market.

    The facility near Squamish, north of Vancouver, will export 2.1 million tonnes a year once it is operational in 2020, according to a company statement.

    However, Woodfibre is relatively small compared to other proposed LNG projects in the province and will have little impact on weak Canadian natural gas prices, said Samir Kayande, a director at research group RS Energy.

    More than a dozen LNG projects have been proposed for British Columbia, but the global slump in energy prices has undermined their feasibility and delayed investment.

    In September, Canada approved a proposed C$36 billion, 12-million-tonne-a-year LNG project by Petroliam Nasional Berhad. But Petronas, as the Malaysian state-owned oil company is known, has yet to give the final go-ahead, and Canadian aboriginal and environmental groups have filed lawsuits to stop it.

    Privately held Woodfibre said its Singaporean parent authorized funds for the facility after British Columbia offered a competitive electricity rate for LNG projects.

    Woodfibre, based in Vancouver, is a subsidiary of Pacific Oil & Gas Ltd, which is part of the Singapore-based RGE Group of companies.

    Byng Giraud, country manager for Woodfibre, said in a statement the cheaper rates were what allowed the "go forward" decision to happen. The plant will be powered using electricity rather than natural gas.

    The British Columbia government, which is keen to develop an LNG industry, welcomed the green light for the C$1.6 billion project and said it would be one of the largest private sector investments in the southern part of the province.

    Gas for the facility will come from northeastern British Columbia via Spectra Energy and Fortis Inc-owned pipelines.

    Environmental group the Pembina Institute warned the project would make it harder for British Columbia to meet its 2050 carbon emissions targets.

    Squamish Mayor Patricia Heintzman said the announcement was somewhat "jumping the gun" as there are 25 environmental conditions put forward by the Squamish First Nations still being worked out.

    Squamish Chief Ian Campbell could not be immediately reached for comment.

    Woodfibre has legally committed to and will continue to work to meet those obligations, said company spokeswoman Jennifer Siddon.

    Attached Files
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    Four years after rescue, U.S. refinery reels as investors profit

    A deal struck in 2012 to save the U.S. East Coast's oldest and largest refinery seemed to have all of the right elements for success: private investors, big oil and taxpayer funding, and the promise of a private-public partnership that would help job growth and consumers.

    Four years after private equity firm Carlyle Group and a partner purchased Philadelphia Energy Solutions, the refinery faces another existential crisis.

    A sharp decline in the price of oil sourced in North Dakota has hammered profits across the sector with layoffs mounting. Capital projects are now on ice after an industry-wide earnings slump.

    Over this period, Carlyle Group and its partner - Sunoco parent Energy Transfer Partners - have banked hundreds of millions from the refinery in the form of dividend-style payouts, funded in part from a loan that put the refinery's future on less-solid footing, an analysis of corporate filings shows.

    These moves, along with the saturated state of the energy sector, have burdened Philadelphia Energy Solutions' (PES) refinery with a huge debt load and a dwindling cash buffer. (For a graphic, click Plans to sell stock in an initial public offering were scrapped in September.

    The stakes are high. The refinery is one of the region's largest employers, and U.S. energy officials have warned that its closure would lead to price spikes at the pump and even threaten the nation's national security interests.

    Carlyle officials say the refiner's misfortunes are not related to its stewardship. They point to macroeconomic factors, including the narrowing discount for domestic crude oil and the rising costs of U.S. renewable fuel regulations.

    "With Carlyle's support, PES has invested nearly $750 million to upgrade the refinery, preserve 900 jobs and create hundreds more, and ensure the integrity of the fuel supply on the east coast," Carlyle spokesman Christopher Ullman said in a statement.

    Energy Transfer Partners, which merged with Sunoco in 2012 around the time of the deal, declined to comment.

    Carlyle put up $175 million in 2012 in exchange for two-thirds of the new company and full responsibility for day-to-day operations. Sunoco agreed to contribute the refinery’s assets and be a non-controlling partner.

    For a region contending with global competition, the deal offered potential relief, but the measures have failed to act as a long-term solution that could withstand pressure from fluctuating oil prices and policies.

    To be sure, more favorable oil prices and improved demand could boost profits for U.S. independent refiners.

    "We are committed to the long term success of PES even in challenging markets," Ullman said.


    In early 2013, Carlyle took out a $550 million loan for capital projects, as well as payouts to itself and Sunoco parent Energy Transfer Partners, according to filings. In total, between 2013 and 2015 payouts and tax advances reached $480.9 million, all but guaranteeing Carlyle's venture would be profitable.

    About $121 million of the loan proceeds were paid as distributions to Carlyle and to ETP. The loan also funded a $25 million payment to preferred unit holders at Carlyle, filings show.

    Carlyle said it took out the loan because the firm had confidence that the business plan would be successful, adding they were proved correct in the subsequent two years. The loan payouts were to help reduce Carlyle’s risk, the private equity fund said.

    The refinery owners enjoyed a taxpayer-funded rescue package, which included the creation of a tax-friendly zone, $25 million in grants and environmental liability waivers.

    A spokesman for Philadelphia Mayor Jim Kenney, who was a councilman when the initial deal was struck, said public support was justified in light of the payouts "because it meant that the refinery remained opened and nearly 1,000 jobs stayed in Philadelphia."

    U.S. Congressman Bob Brady, a Democrat credited for putting deal together, did not respond to requests for comment.

    Proceeds from the loan also helped fund construction of a 280,000 barrel-per-day oil rail terminal in 2013 at the north end of the refinery, which connected the refinery to cheap crude oil flowing out of North Dakota. The terminal helped PES generate $210.8 million in net income in 2014, filings show.


    The boom turned to bust by the end of 2015, as the supply of cheap crude disappeared and margins shrunk. The timing was poor for Carlyle, as it was preparing to take PES public in August of 2015 just as the downturn worsened. The IPO valued the refinery enterprise at $1.3 billion.

    Expecting a boost in cash from an IPO, Carlyle, ETP and other smaller investors took out an additional $260 million in payouts in 2015, regulatory filings show.

    But public investors offered to pay “less than half” of the $15 to $18 per share PES was seeking, according to a person familiar with the offering. Investors were wary of PES’s debt load and long-term contracts, two sources familiar with the offering said, and the IPO was eventually scrapped.

    PES recorded a $65.7 million loss in its cash balance in 2015, due in large part to the payouts, filings show.

    The company’s ratio of net debt to earnings before deducting items such as depreciation and taxes was 1.0 in September 2015, in line with the industry, regulatory filings show. By year’s end, the most recent figures available, it nearly doubled, climbing to 1.9, a Reuters analysis shows.

    Moody's Investors Service warned in an April note - its most recent on the company - that "additional aggressive distributions" to Carlyle and ETP posed a risk to the company's B1 credit rating.

    Carlyle said the payouts did not hurt PES’s financial footing.

    "We believe that leverage levels throughout our ownership have been prudent," Ullman, the Carlyle spokesman, said.

    In recent weeks, the refiner has cut about 25 percent of non-union staff, reduced benefits and postponed capital projects, according to sources at the plant. A letter to employees from the company's CEO, Phil Rinaldi, a refinery turnaround specialist, describes the situation in stark terms.

    "The company's finances are significantly stressed," Rinaldi said in the letter, sent to employees in September.
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    U.S. fracking sand firms boost prices in sign of shale recovery

    U.S. producers of sand used to extract oil from shale are raising prices due to stronger demand, a sign higher oil prices are improving the outlook for the domestic fracking industry.

    U.S. shale oil companies, which pump sand into oil wells to make them more efficient, were ravaged by a 2014 global crude glut that hammered prices from more than $100 a barrel to near $26 in February 2016. Dozens fell into bankruptcy.

    However, publicly traded sand companies have pulled thousands of rail cars out of storage after oil hit a one-year high in October, thanks to rising demand, according to recent earnings calls and interviews. Sand companies idled half of the roughly 125,000 frac sand cars they had in service in 2014 after oil plunged, experts said, but nearly all are expected to return to service by 2018.

    Companies including Chesterland, Ohio-based Fairmount Santrol Holdings Inc; U.S. Silica Holdings Inc of Frederick, Maryland; Southlake, Texas-based Emerge Energy Services LP; and Hi Crush Partners LP in Houston all saw increased business in the year's third quarter.

    Smart Sand held its initial public offering on Friday in another sign of industry confidence.

    Rangeland Energy LLC, a privately held logistics company in Sugar Land, Texas, that unloads sand from rail cars to put onto trucks, is eyeing expansion to handle more volumes, said Patrick McGannon, vice-president for business development.

    "We'll have three more sets of three silos," he said of the company's sand storage facilities, which take months to set up. He said that will more than double current capacity, which is 26,000 tons of storage, according to the company's web site.

    Hi Crush had just over 600 rail cars in storage at the end of the year's third quarter, down from about 1,900 six months ago, chief financial officer Laura Fulton said on an earnings call on Nov. 1.

    "What a different picture we see from just six months ago," she said, adding that Hi Crush expects double-digit volume increases in the fourth quarter.

    While the increase in sand volume represents a ramp-up of U.S. activity, it does not necessarily correlate with improved global oil demand, said Credit Suisse analyst Charles Foote. Fracking is unique because the sand is instrumental to the process, unlike other types of drilling.

    "It's a good little pocket of positive activity, but I don't think you can extrapolate it much," he said.

    Still, in increasing prices, sand companies are betting on an improving outlook for the oil industry, said Scott Cockerham, managing director at the consulting firm Huron. "It's a very symbiotic system," he said. However, of late, crude prices have dipped from their recent highs near $52 a barrel; U.S. crude futures on Friday were trading at $43.87 a barrel, a six-week low.

    The United States has 450 active drilling rigs, according to oil services company Baker Hughes Inc. It has been steadily rising from a six-year low of 316 reached in May.

    "Our customers are talking about actually adding some crews even in Q4 and certainly adding crews into Q1 2017," said Rick Shearer, chief executive of Emerge. "We're very bullish, going forward, that our volumes and our pricing will continue to build.”

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    U.S. drillers dispatch 9 oil rigs, with 6 in Permian Basin

    Drillers put nine oil rigs back to work in U.S. fields last week, with the majority heading to the Permian Basin in West Texas, Baker Hughes said Friday.

    The increased drilling activity brings the fleet of U.S. oil rigs up to 450, up by 134 machines since the count fell to its annual low in late May.

    Six oil rigs began work in the Permian Basin; two, in the Bakken Shale in North Dakota, and two others became active in the Eagle Ford Shale in South Texas and the Colorado’s DJ Basin. One oil rig went idle in an unnamed field, the Houston oil field services company said.

    The number of oil rigs working across the nation has increased in 20 of the past 23 weeks, a reaction to the price of U.S. oil climbing to $50 a barrel last month.

    Since reaching an annual peak in mid-October, U.S. crude prices have fallen 15 percent. In mid-day trading Friday, the benchmark price fell 65 cents to $44.01 a barrel on the New York Mercantile Exchange.

    Drillers also dispatched three natural gas rigs last week, one to Oklahoma’s Arkoma Woodford basin, another to the Eagle Ford and a third to the Haynesville in Louisiana. The nation’s total rig count has climbed to 569 units, up from 404 in May.
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    It’s Getting Tougher for Shale Drillers to Impress Investors

    Wall Street’s oil analysts are getting harder to impress.

    After two straight quarters when the U.S. shale industry posted outsized oil production figures that clobbered expectations, explorers are finding it more difficult to be overachievers. Once-innovative engineering tricks such as drilling two-mile long sideways wells and cracking the rocks with mountains of sand are becoming routine, depriving oil companies of methods to deliver shockingly big output numbers.

    For every third-quarter outperformer like Marathon Oil Corp. or Chesapeake Energy Corp., there have been production duds such as Cimarex Energy Co. and Rice Energy Inc., which were slammed by investors on Thursday after their output fell short of analysts’ targets. Cimarex tumbled as much as 7.6 percent for its worst intraday loss in eight months after reporting an output miss; Rice fell as much as 2.6 percent.

    “Whereas in the last couple of quarters, everybody smoked expectations, now we’re starting to see more and more misses,” said Gabriele Sorbara, an analyst at Williams Capital Group LP in New York. “I think these companies are reaching limitations on how long they can drill lateral wells.”

    For the past 2 1/2 years, shale explorers have been retrenching and reinventing their business plans as the worst oil crash in a generation wiped out trillions in market value and made many of their most ambitious drilling prospects worthless.

    As headcounts dwindled and management teams focused on asset sales and keeping lenders at bay, geologists and engineers devised more intensive ways of tapping deep layers of crude, boosting volumes enough in some places to make fields profitable despite low prices.

    Target Miss

    Cimarex disappointed investors when it reported third-quarter output equivalent to 157,768 barrels a day, below the 162,483-barrel average of 19 analysts’ estimates in a Bloomberg survey. The Denver-based driller also lowered its full-year production target by 2.5 percent, assuming the mid-range of the company’s forecast. Cimarex closed 5.3 percent lower in New York at $121.53.

    Rice likewise reported less-than-stellar production numbers, pumping the equivalent of 747 million cubic feet of natural gas a day, below the average estimate of 759.7 million. The shares rebounded somewhat before the close to settle 0.4 percent higher at $21.74.

    Notable Outperformers

    While the underpeformers wallowed, Marathon jumped as much as 15 percent for its biggest intraday gain in nine months. Investors rewarded the company for exceeding financial and production estimates; the 11-cent per-share loss wasn’t as bad as the 20-cent deficit analysts’ foresaw, and the company’s 402,000 barrels of daily output beat every single estimate in the survey.

    Chesapeake surged more than 9 percent after saying it pumped the equivalent of 638,100 barrels of crude a day in the third quarter, exceeding most of the 23 analysts’ estimates in a Bloomberg survey. The Oklahoma City-based shale driller closed 1.7 percent up.

    EOG Resources Inc., the shale driller expanding its footprint in the sought-after Permian Basin, rosefollowing an earnings report that showed it met output targets for the quarter and is increasing its expectations for growth in coming years.
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    U.S. crude oil exports hit record high in September: data

    U.S. crude oil exports rose to about 692,000 barrels per day in September, the highest on record, from about 657,000 bpd in the previous month, foreign trade data from the U.S. Census Bureau showed on Friday.

    Canada took in the most exports at 243,000 bpd, followed by Singapore at 99,000 bpd. Exports to Europe were also high, with Italy receiving some 81,000 bpd and Spain 41,000 bpd. Other prominent destinations included South Korea and the Netherlands.

    The previous record was set in May when the United States exported about 662,000 bpd, according to U.S. government data.

    U.S. crude exports have climbed since the lifting of a decades-old ban late last year.

    The discount of U.S. crude to Brent crude had widened to as much as $2.67 a barrel in late August, the widest since February.

    The U.S. Energy Information Administration will release its closely watched monthly crude figures, which are based on the U.S. Census data, at the end of this month.
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    Prepare for North Sea oil flood as OPEC plans output curbs

    Oil producers in the North Sea, home to one of the world’s key crude-price benchmarks, are poised to ship the most crude in more than four years. The surge takes place just as OPEC tries to contain a global surplus with coordinated output cuts.

    Shipments of North Sea grades will increase 10 percent month-on-month to about 2.16 million barrels a day in December, according to data compiled by Bloomberg. If all the cargoes load as planned it would mark the most crude oil shipments from the region since May 2012. The increase just from September, when there was field maintenance, would be almost 360,000 barrels a day.

    The surge poses yet another challenge to the Organization of Petroleum Exporting Countries as it seeks to curb production to steady markets in a world with plenty of oil. OPEC ministers will meet in Vienna on Nov. 30 to decide how to trim output to a range of 32.5 million to 33 million barrels a day. Libya, Nigeria and Iran are claiming exemption from cuts because of their own circumstances, and Iraq has contested how its output has been measured.

    “Rebalancing the market is going to be an uphill task,” in part because North Sea supplies are adding to the surplus, Ehsan Ul-Haq, senior market consultant KBC Energy Economics, said by phone. “If OPEC is really interested in reducing stocks and bringing the market into balance, they’ll have to make deeper cuts than promised before.”

    Brent crude fell extending its slide to a sixth day. It was down 7 cents at $46.28 a barrel at 8:41 a.m. in London.

    While supplies from some nations outside of OPEC are indeed falling, non-members boosting their crude output include Kazakhstan, Brazil and Russia, which last month pumped oil at a post-Soviet era high. OPEC itself increased production to a record 34.02 million barrels a day in October, according to a Bloomberg survey of analysts, oil companies and ship-tracking data. In addition, the U.S. is now freely shipping its oil across the globe, following the removal of export restrictions last year.

    The wave of North Sea crude will come just as a pile-up of tankers storing or transferring oil in the region dwindles, clearing out a previous surplus. Only one supertanker, Front Ariake, remains floating with North Sea crude off the coast of England. This compares with as many as five Very Large Crude Carriers last month which were holding crude, or preparing to receive it via ship-to-ship transfers.

    While shipments of Brent crude are expected to slow in December — due to maintenance at the Cormorant Alpha platform north of Scotland, scheduled to begin later this month — exports of other grades are set to increase. Loading plans are subject to significant change and reorganization.

    At least 25 shipments from the U.K.’s Forties field are now scheduled for December, the most since February 2011. Loadings from Norway’s Grane field next month are set to rise to 10, the most since Bloomberg began tracking the grade in 2010. The programs show December exports of 483,871 barrels a day for Forties and 193,548 for Grane.

    Further new North Sea oil production may be on the way. Statoil ASA this week submitted to the Norwegian government its plan for development of the Trestakk field. Lower-than-expected costs and a low-risk operating environment are providing a “window of opportunity” for more investment in the region, analysts at BMI Research, a unit of Fitch Group Inc., said Thursday in a note to clients.

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    Alternative Energy

    Sunrun raises full-year 2016 solar installations view

    Sunrun Inc on Thursday reported higher-than-expected third-quarter solar system installations, prompting it to raise its outlook for the year.

    The company's shares rose 3 percent in after-hours trade to $4.85 after closing at $4.71 on the Nasdaq.

    San Francisco-based Sunrun reported total deployments of 80 megawatts, topping its 72 MW forecast. It expects the same level of deployments in the fourth quarter and raised its full year forecast to 285 MW from a range of 270 MW to 280 MW.

    Total revenue rose to $112 million in the quarter, up 36 percent from $82.6 million. The company posted a net profit of 16 cents a share compared with a net loss of 41 cents a share in the same quarter last year.

    Sunrun has a goal of becoming cash flow positive, but will take several more quarters to get there, executives said on a conference call with analysts.

    Sunrun and its competitors, like SolarCity Corp (SCTY.O), must raise large amounts of cash to fund their rapid growth of no-money-down solar systems that are paid for bycustomers over 20-year contracts.

    Residential solar has slowed in the last year, particularly in California, its top market. But Sunrun said it still expects overall industry growth of about 20 percent a year.

    "The fundamentals are sound in this industry," Chief Executive Lynn Jurich said.

    The company said it had succeeded in increasing its market share during the quarter, and added that consumers still overwhelmingly choose leases over owning their own panels.

    Sunrun's percentage of solar system sales fell to 10 percent in the third quarter from 15 percent in the second quarter.

    The company said sales and marketing costs fell 18 percent to 64 cents per watt from 78 cents a watt in the second quarter.

    Sunrun also said it has finance capacity through roughly the second quarter of 2017.
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    Genoil signs $50 billion Letter of Intent to develop and construct upgrading and energy projects in Russia and Chechnya

    Genoil Inc. (GNOLF), the publicly traded clean technology engineering company for the petroleum industry, today announced the signing of a $50 billion Letter of Intent (LOI) to develop oil fields and construct clean technology upgraders, refineries and pipelines in Russia. The project will incorporate Genoil's efficienct clean technology hydroconversion (GHU) process, and mark the first time that Genoil has provided a complete integrated project, from the development of oil fields to the production of cleaner fuels. The scope of the project is to produce 3.5 million barrels per day.

    Genoil's hydroconversion process improves upon the existing data-verified Fixed Bed Reactor technology, which is widely used worldwide. Currently, 85% of all desulphurisation is taking place worldwide via hydroconversion. Genoil's investment into hydroconversion projects can significantly increase the desulphurisation, demetalisation and denitrogenisation conversion rates, and increase operating efficiencies by 75%.

    In addition to the development of the oilfields and construction of the technology, the parties involved will also explore linking this new project to existing pipeline networks in the region. The finance will be provided in full from Chinese banks to the Russian companies involved.

    As agreed in the LOI, Genoil will be responsible for the design and construction of six million tonnes per year of new refinery capacity in Chechnya. To facilitate this, Genoil will organise a large consortium of Chinese engineering and services companies, with many years of operational experience, to provide all the necessary support and project guarantees. In addition to project guarantees, Genoil will arrange for a leading Chinese insurance company to insure the entire project.

    The LOI has been signed by the President of the Board of Directors of Grozneft, a former official in the administrative department of the Russian Federation. The Russian Government and the Ministry of Fuel and Energy of the Russian Federation, as well as other required ministries and departments will give their full support to this project to ensure timely completion. The project will be listed in a trade agreement, pact or cooperation agreement between Russia and China.

    Thomas F. Bugg, Vice President of Genoil Canada, commented: 'The negotiation of this LOI marks an important milestone from Genoil, demonstrating that we can act as a service provider as well as a technology provider. Building on our previous Letter of Intent from a Chinese bank in April of this year, this latest agreement further supports our commitment to develop sustainable energy sources, helping to solve the supply challenges we face now and in the future.'

    As with the project in the Middle East defined in the LOI signed in April 2016, Genoil will be the master contractor in charge and in control of the project. Fuel produced from the projects will be exported to China through secured long-term contracts of up to 30 years.
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    Trump Seen as ‘Wildcard’ for Ethanol Makers as Oil Refiners Jump

    Investors are betting that U.S. President-elect Donald Trump’s surprise victory may herald changes to a contentious law that forces American refiners to use ethanol.

    Shares of U.S. independent refiners surged, including CVR Refining LP, owned by billionaire Carl Icahn, a critic of the biofuel mandate, which climbed the most ever. Meanwhile, renewable fuel producers such as Green Plains Inc. and Renewable Energy Group Inc. tumbled. Credits that regulators and oil companies use to track compliance with the law also plunged.

    The 2007 energy law that calls for escalating amounts of renewables in America’s fuel supply helped to stoke a battle between biofuel, agriculture and petroleum interests, among others. Refiners complained of burdensome compliance costs after an Environmental Protection Agency proposal to increase volumes earlier this year. In September, Trump’s campaign published a fact sheet calling for the elimination of the system of buying and selling the biofuel blending credits, before later re-issuing it with that language deleted. Trump has said that he supports ethanol.

    “I don’t think it’s as crystal clear,” Aakash Doshi, an analyst at Citigroup Inc., said in a telephone interview Wednesday. “We see Trump as a bigger wild card” given his stated support of oil and natural gas, overall, he said.

    RINs Trading

    Icahn, a backer of Trump, has called trading of Renewable Identification Numbers, or RINs, which requires refiners to buy credits to meet biofuel blending requirements, a "rigged" marketplace. The current system has added hundreds of millions of dollars in costs to refiners that don’t own retail arms. There’s also been allegations of malfeasance.

    A group of refiners was said to have warned the Obama administration that plants may be forced to shut because of the burden placed on independent fuel makers.

    "The government shouldn’t be going in and deciding what business should go out of business as the EPA does in the refineries," Icahn said by phone Wednesday, in an interview on Bloomberg TV. "They should not be doing that, but they should be going in and helping you in a lot of ways."

    Shares of CVR Refining jumped 26 percent to $8.55 in New York. Green Plains sank 4.2 percent to $24.

    Credit Costs

    Valero Energy Corp. said last month it expects to spend as much as $850 million this year on RINs. CVR Refining said its cost could be as much as $250 million.

    RINs tracking ethanol use for 2016 have more than doubled to 91 cents in the past year, data compiled by Bloomberg show. Ethanol credits dropped as much as 16 percent Wednesday. RINs tracking biodiesel have increased about 59 percent in the past year to 95.5 cents, data show.

    “RINs continue to be an egregious tax on our business,” Jack Lipinski, CEO of CVR Refining, said Oct. 27 on a conference call with analysts. “I would predict that small refiners, merchant refiners, will be pushed to the brink and maybe even into bankruptcy in the future.”

    CVR Refining declined comment. PBF Energy Inc., Alon USA Energy Inc. and HollyFrontier Corp. were among refiners that saw gains Wednesday.

    Waiver Use

    The Trump administration could use waivers to reduce costs for refiners to comply with the program, said Timothy Cheung, a vice president at ClearView Energy Partners in Washington.

    Growth Energy and the Renewable Fuels Association, both Washington-based biofuel trade groups, cited Trump’s public support of the mandate and said they expect to work with his administration to boost domestic and export demand.

    “Donald Trump’s victory increases the odds that the Renewable Fuel Standard will be reformed,” Rob Barnett, an analyst at Bloomberg Intelligence in Washington, said. “Trump spoke favorably of the RFS during his campaign, but many Republican lawmakers in Congress have been pushing both repeal and reform bills.”

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    SunPower posts smaller quarterly loss; to cut costs

    SunPower Corp, the No. 2 U.S. solar panel maker, reported a smaller quarterly loss, and the company said it would initiate cost-cutting programs.

    The programs are expected to improve margins and reduce 2017 annual operating expenses to about $350 million, SunPower said on Wednesday.

    Net loss attributable to shareholders narrowed to $40.5 million, or 29 cents per share, in the third quarter ended Oct. 2, from $56.3 million, or 41 cents per share, a year earlier.

    The company, majority owned by French energy giant Total SA , said revenue jumped 91.8 percent to $729.3 million, largely helped by higher revenue from its power plant business.
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    SolarCity third-quarter installations top view, costs fall

    A Solar City logo is seen on the side of a company vehicle in San Diego, California, U.S., November 2, 2016.REUTERS/Mike Blake

    Rooftop solar company SolarCity Corp (SCTY.O), which hopes to be acquired by Tesla Motors Inc (TSLA.O), said installations exceeded expectations in the third quarter but would come in at the low end of the company's forecast for the year.

    SolarCity, backed by Tesla founder Elon Musk, said it installed 187 megawatts (MW) in the third quarter ended Sept. 30, exceeding its forecast of 170 MW. For the year, it expects installations of 900 MW, a 3 percent increase over 2015. In August, the company forecast full year installations of 900 to 1,000 MW.

    Revenue rose to $200.6 million from $113.9 million.

    SolarCity is known for its no-money-down financing schemes that allow homeowners to pay monthly fees for solar power and avoid tens of thousands of dollars of upfront costs. But investors have worried that the company has been burning through cash to finance its growth, which has slowed over the last year.

    Yet cash at the end of the third quarter was $259.3 million, up sharply from $145.7 million at the end of the prior quarter. Total liabilities rose to $6.68 billion at the end of September from $6.35 billion at the end of June.

    As the cost of solar panels has plummeted in recent years, consumers have become more interested in owning their solar systems rather than leasing. This allows them to claim a lucrative federal tax credit.

    SolarCity said it struggled earlier this year because it was leasing installations to customers rather than offering loans so that customers could own their systems. The company started offering loans in the second quarter, and said loan and cash system sales represented 23 percent of gross residential MW booked in the third quarter. Loans and system sales are expected to become a larger portion of SolarCity's business heading into 2017, the company said.

    Sales costs per watt, which were stubbornly high at the beginning of this year as the company spent more to win customers, fell 18 percent from the second quarter to 58 cents, a penny below the 59 cents it reported a year ago.

    Net income attributable to shareholders was $53.2 million, or 48 cents per share. The company had posted a loss of $19.1 million, or 20 cents per share, a year earlier.

    SolarCity agreed in August to a $2.6 billion takeover offer from Tesla. Shareholders in both companies are scheduled to vote on the deal on Nov. 17.
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    SMA Solar sees limited impact from Trump victory for now

    SMA Solar, the world's largest maker of solar inverters, sees no immediate impact on its key U.S. business from Donald Trump's victory in the presidential election there, its chief executive said on Thursday.

    SMA Solar makes nearly half of its sales in the Americas region, which includes South and North America, and has steadily grown its local business on the back of incentive schemes that have favoured utility-scale solar installations.

    Renewable stocks declined on Wednesday, hit by concern that Trump's declared focus on fossil fuel-based energy sources will come at the expense of solar, wind and other forms of renewable energy.

    "(Trump) has never made a secret of the fact that he doesn't think much of renewable energy," SMA Solar CEO Pierre-Pascal Urbon said in a statement after presenting forecast-beating third-quarter results.

    Urbon said that the current U.S. incentive programmes were passed jointly by Democrats and Republicans in Congress, adding that the situation should not be overestimated at the moment.

    The company, also Germany's largest solar group, reported third-quarter operating profit (EBIT) of 21.13 million euros ($23.12 million), up 4 percent year-on-year, and also beating the 13.5 million Thomson Reuters estimate.
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    Trump win stokes fears over climate change goals, hits renewable stocks

    Donald Trump's election as U.S. president triggered fears that his view that global warming is a hoax might lead other nations to scale back ambitions under a landmark climate change deal, while renewable energy stocks fell on world markets.

    Trump's victory over Democrat Hillary Clinton cast a dark cloud over delegates attending a 200-nation meeting in Marrakesh being held from Nov. 7-18 to celebrate the start of the 2015 Paris Agreement to limit global warming last Friday.

    Trump has threatened to tear up the Paris accord for cutting greenhouse gas emissions, worked out in two decades of tortuous negotiations by countries as diverse as China, Pacific islands and OPEC oil producers.

    Some delegates expressed concern that Trump, who in the past has dismissed climate change as a hoax, could cause other nations to reconsider their position on global warming. Trump has also said climate change was an invention by China and wants instead to promote jobs in the U.S. fossil fuel industry.

    "We will have a lot more hurdles," said Ian Fry, head of the delegation of Tuvalu, a Pacific island state which fears rising sea levels, adding Trump's victory could have a "domino effect on other nations".

    The Paris Agreement allows all nations to set national targets to slow climate change and some could scale those back. The Marrakesh talks are also meant to start writing a "rule book" to oversee the pact that might be less stringent without the United States. There are no sanctions for non-compliance.

    But many nations vowed to push ahead despite Trump with the sweeping plan to phase out net global greenhouse gas emissions between 2050 and 2100 by shifting from coal and oil to cleaner energies such as wind or solar power.

    "No change," Japan's delegation chief Shigeru Ushio told Reuters of Japan's policies. He noted that the agreement says it will formally take four years for any country to pull out of the agreement - the length of Trump's presidential term.

    On markets, Trump's victory drove down renewable energy stocks. Shares in Vestas (VWS.CO), the world's biggest wind turbine maker, were down 6.2 percent in mid-morning, while German peer Nordex (NDXG.DE) traded 6.6 percent lower.


    Many delegates expressed hopes Trump as president would accept mainstream scientific findings. A U.N. panel of climate scientists says it is at least 95 percent likely that man-made emissions are the main cause of rising temperatures since 1950.

    Average global temperatures this year are set to be the hottest in records dating back to the 19th century, beating 2015. "Even Donald Trump cannot do anything about the laws of physics," Laurence Tubiana, France's climate ambassador, said.

    She told Reuters she was betting "all countries will stick to the Paris Agreement" as rising temperatures were damaging the global economy with more heatwaves, floods and droughts.

    Campaigners for more action on climate change were shocked. The United States is the number two greenhouse gas emitter behind China.

    "This is a dark, dark day," said Jesse Bragg, of Corporate Accountability International. "My heart is absolutely broken," said Becky Chung of SustainUS.

    Among statements about climate change, Trump asked in a January 2014 Tweet amid a cold snap: "Is our country still spending money on the GLOBAL WARMING HOAX?"

    Overnight, at one Marrakesh hotel, environmentalists and climate scientists huddled around a television expecting a Clinton victory. Their mood descended into a stunned silence as the result became clear.

    Other renewable shares were also hit. Spain's Gamesa (GAM.MC), which is being merged with Siemens (SIEGn.DE), and Portugal's EDP Renovaveis (EDPR.LS).

    Still, Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, a European forum for 128 investors with more than €13 trillion of assets, said changes towards greener growth were "irreversible".

    "Renewables have already overtaken coal as a global power source, electric vehicles are the growth segment of the auto industry and jobs are being created in clean energy sectors faster than any other," she said.

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    UK outlines £580m CfD budget plans

    The UK Government has outlined plans for £580 million of funding for its Contracts for Difference (CfD) scheme.

    As part of the auction, low carbon electricity generators are incentivised for the power they produce.

    The application process for £290 million of annual funding will open in April 2017 for projects to be delivered in 2021/22 or 2022/23.

    The second CfD allocation round will support “less established” technologies, including offshore wind, anaerobic digestion (AD) with or without CHP, biomass with CHP, advanced conversion technologies with or without CHP, wave, tidal and geothermal energy.

    The draft strike prices for delivery in 2021/22 per megawatt hour are £105 for offshore wind, £125 for advanced conversion technologies, 140 for AD, £115 for biomass, £310 for wave and £300 for tidal.

    For delivery in 2022/23, the strike prices per megawatt hour are £100 for offshore wind, £115 for advanced conversion technologies and £135 for AD plants.

    For biomass, it is £115, £300 for wave and £295 for tidal power.

    A price for geothermal projects will be set out following a consultation.

    A maximum of 150MW – equivalent to a budget of £70 million – will be applied to “fuelled” biomass technologies.

    The Department for Business, Energy and Industrial Strategy (BEIS) expects the second CfD auction to result in enough renewable electricity to power around one million homes and cut emissions by 2.5 million tonnes a year from 2021/22 onwards.

    Business and Energy Secretary Greg Clark said: “We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure.

    “This is a key part of our upcoming Industrial Strategy, which will provide companies with the further support they need to innovate as we build a diverse energy system fit for the 21stcentury that is reliable while keeping bills down for our families and businesses.”

    Support for remote island wind projects have been left out as BEIS is seeking views on “whether they should be treated differently to onshore wind projects more generally”.
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    Vestas Q3 beats estimates, lifts 2016 outlook

    Nov 8 Wind turbine maker Vestas posted third-quarter results on Tuesday that exceeded expectations, while lifting its forecasts for the year on the back of a 17 percent increase in orders between July and September.

    Vestas said it expected 2016 revenue of 10.0-10.5 billion euros ($11.1-11.6 billion) compared with a minimum of 9.5 billion euros previously.

    It also lifted its guidance for the margin on earnings before interest and tax (EBIT) before special items to 13-14 percent from a minimum of 12.5 percent before, and said it expected free cash flow of at least 1 billion euros compared with a minimum of 800 million euros previously.

    "The upgrades are based mainly on improved delivery visibility for the remainder of the year," the company said in a statement.

    Third-quarter operating profit before special items rose 87 percent to 433 million euros, beating the 312 million expected by analysts in a Reuters poll.

    Revenue for the quarter came in at 2.90 billion euros, also beating expectations of 2.48 billion.
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    Dong Energy earnings increase, surge in wind power demand

    Dong Energy said earnings increased by 7% in its third quarter results driven by a 19% increase in wind power.

    The firm said the move was also supported by the positive effect from a lump sum payment in connection with the completed renegotiation of a gas purchase contract.

    The firm said the increase was partially offset by lower oil and gas prices as well as reduced volumes from the Ormen Lange field.

    Profit for the third quarter was DKK3.3billion, an increase of DKK2.9billion the same time last year.

    Dong said in the third quarter of 2016, free cash flows amounted to DKK -1.9 billion compared with DKK -5.4 billion in the third quarter of 2015.

    Henrik Poulsen, chief executive, said:”The Group continues to develop positively and according to our strategic and financial plans. We maintain our outlook for 2016 of DKK 20-23 billion in EBITDA and gross investments of DKK 18-21 billion.

    “We have decided to initiate a process with the aim of ultimately exiting from our oil and gas business. This should be seen in the context of DONG Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business.

    “There can be no assurance as to the outcome or the timing of the completion of the process.

    “O&G continues the substantial restructuring of the business and delivered a strong operational performance in the first nine months.

    “Cost performance continues to improve, driven by continued renegotiation of supplier contracts, reduced exploration spending and improved operational efficiency, with total cash spend decreasing by 36% compared with the same period last year.

    “We now expect O&G to be cash flow positive in 2016, a year earlier than previously communicated.

    “We currently have seven large offshore wind farms under construction. The construction programme totalling 4.4GW is well on track. In parallel, we continue to shape our pipeline of offshore wind project opportunities for the period beyond 2020.”
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    Tesla just killed one of the biggest benefits for customers

    Tesla's extensive Supercharger network is one of the great benefits of being a Tesla owner, but after January 2017, it will no longer be free for new customers.

    "For Teslas ordered after January 1, 2017, 400 kWh of free Supercharging credits (roughly 1,000 miles) will be included annually so that all owners can continue to enjoy free Supercharging during travel," Tesla said in a statement on Monday.

    "Beyond that, there will be a small fee to Supercharge which will be charged incrementally and cost less than the price of filling up a comparable gas car," the automaker added. "All cars will continue to come standard with the onboard hardware required for Supercharging."

    Tesla said that it would "release the details of the program later this year, and while prices may fluctuate over time and vary regionally based on the cost of electricity, our Supercharger Network will never be a profit center."

    Tesla also said that the change wouldn't affect "current owners or any new Teslas ordered before January 1, 2017, as long as delivery is taken before April 1, 2017."
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    Ireland's Mainstream Renewable to build $2.2 bln of wind farms in Vietnam

    Irish wind and solar firm Mainstream Renewable Power on Monday said it had agreed to build and operate wind projects in Vietnam worth a total of over $2.2 billion, as the country looks for new energy sources to meet soaring demand.

    The announcement came on the sidelines of Irish President Michael Higgins' visit to the Southeast Asian nation. It expands upon, and adds a price tag to, an agreement back in September.

    Countries around the world are coming under increasing pressure to crack down on carbon emissions from sectors such as coal-fired power stations, with the historic Paris climate accord coming into force last Friday.

    Vietnam's electricity demand is expected to grow 10.6 percent annually in the next five years, according to its trade ministry.

    The three wind farms would generate an annual total of 940 megawatts (MW) of power, Mainstream said in a statement.

    It added that it would partner with GE Energy Financial Services and local firm Phu Cuong Group in its main Vietnam project, an 800 MW wind farm worth $2 billion. The first phase of the project, for 150-200 MW, is expected to reach financial close in 2018, it said.

    Mainstream will separately partner with Vietnam's Pacific Corporation in two other projects in the southern province of Binh Thuan, with a combined 138 MW in capacity and $200 million in investment, the statement said. The first phase of these projects is also likely to reach financial close in 2018.

    Vietnam is also looking to join Thailand in blazing a trail for solar power in Southeast Asia, introducing targets to fire up green energy generation.
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    Vast Moroccan solar power plant is hard act for Africa to follow

    On the edge of the Sahara desert, Morocco is building one of the world's biggest solar power plants in a project largely funded by the European Union.

    It is a hard success for other African nations to match as they seek to implement a new global deal to combat climate change.

    The huge 160-megawatt first phase of the Noor plant near the town of Ouarzazate contrasts with efforts by some other nations focused on tiny roof-top solar panels to bring power to remote rural homes.

    At Noor, curved mirrors totaling 1.5 million square meters (16 million square feet) - the size of about 200 soccer pitches - capture the sun's heat in the reddish desert.

    Morocco is showcasing Noor before talks among almost 200 nations in Marrakesh about implementing a global deal to combat climate change that entered into force on Nov. 4 - a day when the Saharan sky was unusually overcast with spots of rain.

    "We hope we can be an inspiration," Mustapha Bakkoury, head of the Moroccan Agency for Solar Energy (Masen), told Reuters. Many African nations are pushing to boost economic growth to end poverty, while seeking greener energies.

    The gleaming concentrated solar power plant is not economically competitive with cheaper fossil fuels, but is a step to develop new technologies as prices for solar power fall sharply.

    "Unfortunately for many, it's thought that renewables are to have a light bulb or light a school ... This is to get away from the caricature of renewables," Bakkoury said.

    Morocco aims to get 52 percent of its electricity from clean energy such as wind and solar by 2030, up from 28 percent now.

    Once completed, Noor will cost 2.2 billion euros ($2.45 billion) and generate 580 MW, enough power for a city of almost 2 million people. Morocco aims to expand at other desert regions to 2 gigawatts of solar capacity by 2020 at a cost of $9 billion.

    On the sprawling site, south of the snow-capped Atlas Mountains, workers clear ground with diggers, build concrete pillars or clean off Saharan dust that dims sunshine. In Arabic, Noor means light.

    By contrast in East Africa, M-KOPA Solar has installed 400,000 tiny rooftop solar panel systems costing $200 each on homes in the past five years to provide power for light bulbs and a radio. That completely by-passes the grid.

    M-KOPA Chief Executive Jesse Moore, whose company focuses most on Kenya, Tanzania and Uganda, said rooftop solar systems were a breakthrough for Africa, where half the 1.2 billion people lack electricity.

    He noted that Tesla founder Elon Musk was trying to sell solar systems to U.S. homes.

    "Elon Musk is trying to get people to leap off the grid in California. Over here on the other side of the planet this is happening already," he told Reuters.

    Unlike Morocco, some nations in Africa find it hard to attract investors to green projects, part of global efforts to limit climate change and more floods, heat waves and droughts that are a big threat to Africa.

    "Morocco is particularly suited for a large-scale project. It may not be suitable for all other countries," Roman Escolano, vice president of the European Investment Bank (EIB), told Reuters.

    The European Union including the EIB has funded about 60 percent of Noor. Masen issued Morocco's first green bond, of 106 million euros, on Friday to help finance Noor.

    Apart from sunshine, Morocco has had relative political stability in recent years and a predictable legal and banking system, helping it attract investors.

    Even so, Morocco has had a week of street protests after the death of a fishmonger, crushed to death in a garbage truck in a confrontation with police, in one of the biggest and longest challenges to authority since the 2011 Arab Spring.

    Unusually for a desert, Morocco has water from the Atlas mountains to help clean off dust. And in some countries, power lines from remote parts of the Sahara could be vulnerable to attacks - Noor's pylons have red spikes to discourage intruders.

    At Noor, the sun's rays bounce off the mirrors, heat a fluid that in turn heats a vast tank of molten salt that can drive a turbine to generate electricity even after dark.
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    Emissions goal implied by Paris Agreement likely to be missed

    Wood Mackenzie's latest analysis and preliminary outlook on energy demand shows the emissions goal implied by the current version of the Paris Agreement is likely to be missed.

    The Paris Agreement comes into force today, imposing greenhouse gas emission limits on countries across the globe.

    According to Wood Mackenzie's study, developed countries have committed to emissions cuts they will be unable to make without additional efforts to decarbonise their economies. Such efforts include increased energy efficiency, greater focus on renewable energy and the trend towards electric vehicles.

    Although developed economies have progressed in addressing greenhouse gases, a lot more needs to be done to boost renewable energy and increase efforts to lower emissions.

    Paul McConnell, research director for global trends at Wood Mackenzie, says: "Emerging markets should meet their Paris Agreement targets with relative ease, given these are in general not much of a constraint on development. Some emerging economies may choose to go further on emission constraints, particularly if there is any political ground to be gained by 'climate leadership'."

    But NGOs and other external actors are certain to demand all parties do more to ensure the Paris Agreement meets its self-proclaimed goal of limiting global warming to 2 °C above pre-industrial levels.

    "Whether more stringent targets emerge now or some years in the future, recent trends suggest continued pressure on emissions growth is a reliable bet," says McConnell.

    "Hydrocarbon fuel consumption is in the firing line, and energy sector impacts are being felt already, despite Paris Agreement targets not kicking in until the end of the decade," he adds.

    Wood Mackenzie's study shows a formalised global policy framework favouring low-carbon energy challenges the traditional business models in oil and gas production, coal extraction and power utilities in the longer run.

    "Judging the pace of transition from old to new is among the big difficulties facing companies as they survey this emerging energy landscape," says McConnell. "Companies will need to change, beginning with understanding their own carbon footprint, then developing strategies to adapt."

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    Tesla’s price shock: Solar + battery as cheap as grid power

    Last week, Tesla launched their Powerwall 2.0 residential battery storage system, a little less than a year after Powerwall 1.0.

    Compared to Powerwall 1.0, peak power has increased by 40 per cent, continuous power by 50 per cent, storage capacity by 100 per cent (to 14 kWh) and an inverter is included. And all this for US$5,500 ($A8,800) – about the same price as Powerwall 1.0.

    In other words, the price per kWh stored and re-used has halved in less than a year. Indicative installed prices in Australia are a little over $10,000. The commonly accepted wisdom was that battery costs would decline more gradually than the precipitate decline seen in solar PV costs. This has been proved wrong.

    Let’s do a solar PV+battery+grid versus grid-only price comparison.

    First, let’s assume a 4,800kWh per year household in Adelaide and that its electricity bill is either the average of all 77 market offers after all conditional discounts, or the average of all 77 Market Offers before all conditional discounts, from the 16 retailers operating in Adelaide (data from MarkIntell).

    For solar PV, let’s take the median installed price of a 5kW system (data from Solar Choice) and let’s assume a 20 year life with zero residual and 20% purchase premium for on-going maintenance. For battery, let’s take the indicative installed price ($A10,300) and assume a 10 year life with zero residual.

    Let’s also assume an operating regime that sets the daily household consumption against solar PV production and battery storage as far as possible. This results in 8,373 kWh per year solar production, 200kWh of grid purchases and 3,773kWh per year of solar PV export to the grid.

    Putting this together and annuitising the capital items at 2 per cent real (the typical mortgage rate), we get the result shown in the chart below: PV+battery+grid is level-pegging with the average grid-only Market Offer (after conditional discounts) and cheaper than the average grid-only Market Offer (before conditional discounts).

    This is astounding.

    A typical household in the suburbs of Adelaide can now meet its electrical needs with solar and battery storage for about the same amount they would pay on a competitive offer from the grid.

    And no need to worry about black outs or bill shock: for an outlay of around $16k and assuming a suitable roof, consumers will be able to reduce their grid bill to almost nothing (revenue from surplus PV exports paying for the grid fixed charge plus the little energy bought from the grid to cover rainy days). And the set-up more than pays its way.

    Of course one can argue with any of the assumptions I have made, but they seem plausible to me and the calculation itself is not tricky.

    Electricity in Australia is deeply interesting at the moment. Of all the fascinating issues competing for attention, this tops my list.

    It has obviously profound implications for consumers, PV and battery producers and installers, electricity retailers, centrally dispatched generators, network service providers, market operators, regulators and governments.

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    Total's Pouyanne says solar industry facing 'a new winter'

    The global renewable solar industry is facing a new crisis due to over-capacity and low demand, Patrick Pouyanne, Chief Executive of French oil and gas giant Total said on Thursday.

    Low prices seen in recent projects and a decline in government support in some countries could make investments in the solar power sector unprofitable, Pouyanne told an energy conference.

    "The solar industry is facing a new winter," he said, adding that the industry had gone through a similar phase in 2011 and 2012. "Today, the segment is facing a double crisis, a crisis of over capacity and a crisis of low demand."

    Pouyanne said he believed long-term prospects looked good but stressed that the industry had to find new ways to make solar energy profitable.

    "There were some very aggressive tenders with very low prices. Frankly, when you see prices under 30 cents per kilowatt hour, I don't understand. It does not cover the amortization of any investment," he said.

    He said it was too early for governments to cut subsidies to the sector, adding that China had decided to change its policy on feed-in tariffs by lowering it, while in the United States the impact of a renewal of tax incentives was not being felt yet.

    Total has gradually increased the share of renewables in its portfolio since its 2011 acquisition of U.S. solar power company SunPower Corp for $1.3 billion.

    It launched a new gas, renewables and power division in September to help drive its ambition to become a top renewables and electricity company within 20 years.

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    Brazil wind power industry fears closures as demand plunges

    Brazil's wind power industry, once one of the fastest growing in the world, faces a challenging outlook as projects are delayed due to sluggish electricity demand while new licensing rounds by the government are in doubt, two industry participants said on Thursday.

    Vestas Wind Systems A/S Brazil head Rogerio Zampronha estimated that Brazil's production capacity for wind turbines is around 3.5 to 4 gigawatts per year, but last year only around 1 gigawatt of new projects was added in the Latin American country.

    So far in 2016, no new licenses have been awarded for wind parks, he said.

    "The current pipeline of orders is too small for the size of the industry," Zampronha told Reuters.

    Brazil was a late entrant to the wind power sector. It had relied on massive hydroelectric dams, which left the country in trouble three years ago after a harsh drought depleted reservoirs.

    The government gave incentives to speed up development of alternative energy sources such as wind, which allowed for a manufacturing base to be quickly formed.

    But the deepest recession in generations sharply reduced power consumption and made credit for new projects scarce and expensive.

    João Paulo Gualberto, wind power director at local wind turbine producer WEG, said the policies of the former government had attracted investment in factories to produce wind power turbines.

    "We invested, our competitors invested," Gualberto told Reuters. "Now the plants are empty."

    Brazil's power demand, which grew on average 4.5 percent per year in the decade until 2014, fell 2 percent in 2015. It is expected to fall another 0.5 percent this year while the country struggles to resume economic growth.

    WEG believes orders will still be low in 2017 and 2018.

    Brazil's Energy Ministry scheduled a new licensing round for wind farm projects for next month, which analysts see as crucial to breathe life into the sector.

    Odilon Camargo, a power sector expert for consultants Camargo Schulbert, expects the round to award licenses for at least 1 gigawatt of new projects.

    While that is not a very large volume, he said, it could guarantee the continuation of several firms in the supply chain.

    "Many in the sector have basically no orders currently," he says.

    Vestas' Zampronha, however, believes foreign companies would lead the bids in the auction, since local builders are struggling to guarantee adequate financing.

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    China uranium demand to double by 2020 but prices seen depressed -CNNC

    Chinese demand for uranium is expected to nearly double to 9,800 tonnes per year by 2020 from the end of 2015, although a near-term supply glut will keep prices depressed, said the head of a unit of state-owned China National Nuclear Corporation (CNNC).

    China is in the middle of a nuclear reactor building programme and aims to have 58 gigawatts (GW) of capacity in full commercial operation by the end of 2020, up from 30.7 GW at the end of July.

    But Wang Ying, chief executive of CNNC International, told the IMARC mining conference in Melbourne, that only around 53 GW of capacity would likely be online by the turn of the decade as not enough construction of nuclear plants had already begun.

    Uranium last traded at $18.75 per pound, down from $67 before Japan's Fukushima disaster in 2011.

    "I think perhaps we have a bottom of around $20 per pound at present. But unfortunately today because of excess supply and storage, I don't think it will be more than $40 by the end of this decade," she said on Monday.

    Prices could recover as more nuclear capacity comes online by 2025, she added.

    Global stockpiles of uranium stand at around 1,427.5 million pounds or some 550,000 tonnes she said, around 6-7 years of supply. That includes stockpiles of nearly 300 million pounds at China's utilities. It also includes China's government stockpiles, which stand at more than 10,000 tonnes, she said, citing data by U.S. based consultancy Trade Tech.

    Meanwhile, she said uranium needed to supply growing global nuclear generating capacity is seen at 80,383 tonnes in 2020, rising to 90,780 tonnes in 2025 and 106,301 tonnes in 2030.

    Estimated total production of uranium is seen at 75,000 tonnes by 2020 and around 85,000 in 2025.
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    EPA approves Monsanto's dicamba weed killer

    U.S. seeds and agrochemicals maker Monsanto Co has secured approval from the U.S. Environmental Protection Agency for a new dicamba-based weed killer designed for its next generation biotech soy and cotton varieties, the company said on Wednesday.

    While approval had been expected, it is seen as a major step forward for the company's newest herbicide tolerant products amid rising problems in the U.S. farm belt with weeds resistant to glyphosate, the main ingredient in Monsanto's Roundup weed killer.

    Environmental groups criticized the EPA approval.

    The Center for Biological Diversity said the ruling would lead to sharp increases in pesticide use that could harm threatened plant and animal species, including the whooping crane.

    "Piling on more pesticides will just result in superweeds resistant to more pesticides," said Nathan Donley, a scientist with the group.

    The EPA signed off on Monsanto's XtendiMax herbicide for in-crop use on Roundup Ready 2 Xtend biotech soybeans, designed to tolerate applications of glyphosate and dicamba, and its Bollgard II XtendFlex cotton, which can tolerate the two chemicals as well as glufosinate.

    The company is still awaiting an EPA ruling on its Roundup Xtend herbicide, a glyphosate and dicamba blend.

    Farmers have used dicamba for years to kill weeds ahead of planting, but until now have not been allowed to use it on growing crops.

    Monsanto has invested more than $1 billion in a dicamba production facility in Luling, Louisiana, to supply demand it expects will blossom in the coming years. The company has said the Xtend platform will be its largest-ever technology launch.

    The company said it expects the soybean variety to be planted on 15 million U.S. acres in 2017 and its cotton to be planted on more than 3 million acres.
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    Precious Metals

    Silver Wheaton sees opportunity as miners restart, expand mines - CEO

    Mining financier Silver Wheaton Corp sees a $2 billion-plus opportunity as mining companies plan to expand or restart their mines, and switch gears from debt reduction, its chief executive said on Thursday.

    Silver Wheaton pioneered the concept of "streaming" deals in the mining industry in 2004, a type of financing where miners receive cash upfront to build mines or reduce debt in exchange for future production at a discounted, fixed price.

    "Up until probably six months ago, we didn't see any investment into the ground," Silver Wheaton Chief Executive Randy Smallwood said in an interview.

    "With the rebound in precious metals prices and a bit of a rebound in base metals prices, we're starting to see companies explore restarting projects or expanding projects and they need capital," he said.

    The bulk of those deals are in the $300 million to $400 million range, with some around $500 million, he said.

    There is more competition from other streaming companies for these smaller-scale deals, he said, but Silver Wheaton hopes to win "a couple" of the transactions over the next year.

    Silver Wheaton's shares slumped just over 15.5 percent on Thursday afternoon, to C$27.20. It reported a profit of 19 cents a share after the market close on Wednesday, 2 cents below expectations, reflecting larger-than-expected inventories.

    The amount of metal produced by miners with streaming deals, but not yet delivered to Silver Wheaton, increased in the quarter. Gold inventory grew by 18,500 ounces to 63,300 and silver increased by 800,000 ounces to 3.8 million ounces.

    Inventory levels had been lower than normal over the last few quarters, Smallwood said, but returned to typical levels this quarter. Inventory, recognized in future sales as it is delivered, typically represents two months of annualized production.

    "We're being set up perfectly for a very good fourth quarter," Smallwood said.
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    Amplats expects to report 20% rise in FY earnings

    Cost saving initiatives, paired with foreign exchange movements will see Anglo American Platinum (Amplats) post a 20% increase in earnings for the year to end December 31.

    The company on Thursday said headline earnings are likely to be R21-million higher than the R107-million posted for 2015, while headline earnings a share are likely to be 8c higher than the 41c recorded in 2015.

    Basic earnings are expected to increase by R2.43-billion year-on-year and earnings a share by 928c year-on-year.

    The company posted a basic loss of R12.13-billion and a loss a share of 4.64c in the prior financial year, owing to asset impairments and write-offs.

    Amplats will publish its financial results on February 15.
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    Row over Romania's land of Dracula and gold spills onto new international stage

    A battle over plans to build a huge gold mine in Rosia Montana, a Romanian village boasting intact Roman mining shafts and 18th century houses, has moved to an international stage, sparking residents' fears that the projectcould be resurrected.

    Sitting atop one of Europe's largest gold deposits, Rosia Montana has for 15 years been at the centre of a battle between villagers and Canada-listed mining company Gabriel Resources.

    Gabriel Resources said the $1.5-billion project to build Europe's largest gold mine would provide a major boost for Romania's lagging economy and create hundreds of jobs for the Transylvania region - the legendary home of Dracula.

    But local residents fear the mine would destroy historic Rosia Montana, surrounding hillsides, and pollute the local environment with cyanide used in the mining process.

    Opposition to the mine sparked nationwide protests in 2013 described as the biggest since the early 1990s anti-communist marches and, facing pressure from locals and international environmentalists, the government blocked the mine.

    Gabriel Resources has now moved the fight to the World Bank's international arbitration tribunal to seek a reported $4-billion in compensation - about 2% of the Romanian economy - for the stalled project.

    Residents struggling to keep abreast of developments fear Gabriel Resources and Romania's cash-strapped government - which faces an election in December and has a minority stake in the project - are working together to keep locals out negotiations.

    Alburnus Maior, the campaign group set up by Rosia Montana villagers, fears Gabriel Resources is using a back door to try to revitalise the project while the government delays decisions that would block the mine.

    "International arbitration breaches the right of local communities to decide for themselves what kind of development they want," said Eugen David, a farmer and head of Alburnus Maior who counts actress Vanessa Redgrave among his supporters.

    "It also ignores the rulings of national courts, thereby creating a parallel justice system that is accessible only to foreign investors," he told the Thomson Reuters Foundation.

    David said the villagers had been unable to access any documents related to the tribunal process, concerned the mining company and government were blocking access.

    But Gabriel Resources Chief Executive Jonathan Henrysaid issues of transparency and production of documents were a matter for the International Centre for Settlement of Investment Disputes (ICSID) which began on September 23 to hear the case. No second hearing is yet set.

    "It is the tribunal that sets up the process regarding transparency after consulting with the parties," Henry told the Thomson Reuters Foundation.

    This is not the first time the massive gold project has hit world headlines.

    The battle first took an international twist about a decade ago when highlighted by Swiss-born journalist Stephanie Rothwho moved to Romania to fight plans for a Dracula theme park.

    She stumbled across Gabriel Resources' plan and alerted the likes of Redgrave with appeals even made to Prince Charles, heir to the British throne, who is a strong supporter of Transylvania's natural environment and heritage.

    But the new international battlefield is the ICSID in Washington, DC, which is empowered to settle international disputes about investment and is underpinned by a multilateral treaty signed by more than 150 countries.

    An ICSID spokesman said the first hearing only involved debate on "provisional measures" and legal process.

    Marcos Orellana, a lawyer from the Centre for International Environmental Law who specialises in international commercial arbitration, was an observer at the first hearing and said arrangements made it hard for the public to follow the case.

    He said the hearing was only transmitted on closed circuit TV inside the building although the tribunal can broadcast hearings live on the internet - if the parties allow - and PowerPoint presentations were not made available.

    "It is reasonable to conclude that Romania agreed with the company that access should be restricted (and) that the Romanian government did not want its citizens to have access to the hearing," he said.

    The hearing comes as Romanian central bank governor Mugur Isarescu this month kept interest rates on hold, warning that the 2017 budget plans were a risk for the economic outlook.

    Earlier this year he said he had never "in 25 years seen bigger dangers to Romania's economic and financial stability".

    The ICSID spokesman confirmed to the Thomson Reuters Foundation that all the arrangements for the hearing, including using CCTV and a prohibition on recording the hearing, were made "in consultation with the (two) disputing parties".

    He said so far the parties involved in the dispute - the miningcompany and the Romanian government - had not "authorised" publication of "any of the documents so far submitted to or issued by the tribunal".

    Alburnus Maior originally requested documents relating to the case from the tribunal, stating it needed to see the papers to submit its arguments.

    The ICSID spokesman said the documents would be published on its website once the two parties agreed to make them public.

    A spokesman for Romania's Ministry of Finance told the Thomson Reuters Foundation it was the ICSID's responsibility to release information and that it could not make a unilateral decision to release the documents.

    This was echoed by Henry from Gabriel Resources.

    Villagers have taken action previously to access documents related to the mining project.

    Alburnus Maior asked the Romanian Ministry of Finance in 2015 to make court documents public with the request lodged in a court in Cluj-Napoca, the unofficial capital of Transylvania.

    The court ruled in favour of the villagers but the ministry has since lodged an appeal and no papers have been forthcoming.

    This start to the tribunal - and several moves by the government to drag its heels on some other key decisions - has made villagers and activists fear the mining project could gain ground again.

    David said villagers' fears were further fuelled when Gabriel Resources issued a press release during the September tribunal hearing welcoming a Romanian decision to withdraw a tax claim for $13 million.

    The Romanian tax authority confirmed to the Thomson Reuters Foundation that it had given up its claim for the money and it would reassess Gabriel's tax records.

    "The company has always stated it remains ready to explore an amicable resolution of the dispute that includes development of the project," Henry said in the statement.

    Residents also say they want to see progress on an official application to make Rosia Montana a UNESCO World Heritage site that would iron clad its protection.

    The government has put the village on a tentative list but confirmed it has yet to complete the official application.

    Activists worry too that legislation to ban cyanide-based mining in Romania, sent by the parliament to the government for a legal opinion last year, has not yet received the green light.

    Roth, who won the Goldman Environmental Prize for her support for Alburnus Maior, said she feared arbitration might conclude with a compromise that would let the mine go ahead.

    "As long as the government refuses to learn by listening to the tens of thousands of citizens who took the streets for Rosia Montana during Romania's autumn, mistrust, injustice and instability will prevail," she told the Thomson Reuters Foundation.
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    Franco-Nevada lifts FY guidance as Q3 results beat several records

    Commodity royalty streaming firm Franco-Nevada reported a stellar performance for the third quarter ended September 30, setting several new production and financial records for the period.

    After market close on Monday, Toronto-based Franco-Nevada reported operating and financial results for the period, lifting net income to $54.4-million, or $0.31 a share, compared with $15.2-million, or $0.10 a share, for the same period a year earlier.

    Excluding special items, adjusted net income was $53.5-million, or $0.30 a share, compared with $19.4-million, or $0.12 a share, beating Wall Street analyst forecasts of earning $0.25 a share, on an adjusted basis.

    Franco-Nevada ascribed the improved performance to higher revenues on the back of the Antamina and Antapaccay streamacquisitions, completed in October 2015 and February 2016, respectively.

    The company reported record revenue of $172-million for the quarter, up 66% year-on-year.

    Franco-Nevada continued to see significant growth in goldequivalent ounces (GEOs), with mineral assets contributing 123 065 GEOs in the period, an increase of 43.7% over the third quarter of 2015. The impact on revenue of the growth in the number of GEOs received was further enhanced by higher average precious metal prices.


    Franco-Nevada also on Monday announced significant increases to its 2016 production guidance.

    The company now expected to produce between 445 000 GEOs and 455 000 GEOs, up from between 425 000 GEOs and 445 000 GEOs forecast earlier this year.

    Expected full-year revenue from its oil and gas assets increased from between $15-million and $25-million to between $25-million and $30-million, which was partially enhanced by a newly acquired oil and gas royalty package.

    Franco-Nevada on Monday announced that it had agreed to acquire a $100-million package of royalty rights in the STACK shale play, in Oklahoma’s Anadarko basin, from a private party. The top two operators of the lands are Newfield Exploration and Devon Energy. The land package will provide an estimated royalty rate of 1.61%.

    Meanwhile, in October Kirkland Lake Gold exercised its option to buy back 1% of an overlying 2.5% net smelter return royalty for $30.5-million on Kirkland Lake's properties. Sibanye Gold also announced on October 27 that it had stopped production at the Cooke 4 underground mine, which the company disclosed it carries at a value of $69-million. This might portend booking a fourth-quarter impairment charge on the asset. Further, construction at First Quantum’s Cobre Panama mine continues to advance on schedule for a phased commissioning in 2018.
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    China's Jan-Sept gold consumption drops nearly 13%

    China's gold consumption in the first nine months of 2016 dropped 12.8 percent from the year before to 720.7 tonnes, China Gold Association data showed on Tuesday.

    The country also cut its production of the precious metal over the period by 2.6 percent to 347.8 tonnes, the industry body said.

    The world's top gold consumer bought 478 tonnes of golden jewellery, down 20 percent year-on-year. Investment gold appetite continued to edge up, with 4.1-percent and 12.9-percent increases in demand for gold bars and gold coins respectively.
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    Base Metals

    Aluminium giant Rusal's earnings growth beats expectations

    Russian aluminium giant Rusal on Friday posted a better-than-expected 22 percent rise in third quarter core earnings and lifted its forecast for global aluminium consumption.

    Rusal's third-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) increased to $421 million from $344 million in the second quarter and $420 million a year ago.

    Analysts at five banks had forecast third quarter EBITDA of $390 million.

    Hong Kong-listed Rusal also said it was raising its forecast for global demand for aluminium by 5.5 percent to 59.5 million tonnes in 2016 due to signs of healthy demand-growth in China, Russia and elsewhere.

    "The Company remains optimistic as we approach the year-end, with aluminium consumption growing at a very healthy pace while supply remains tight due to stronger pressure from increasing cost inflation," the company said in a statement.

    "Domestic demand for aluminium is also growing at a very healthy pace and Rusal intends to boost its domestic sales," it said.

    The average London Metal Exchange aluminium price increased by 3.2 percent in the third quarter to $1,621 a tonne

    The metal reached an 18-month high of $1,783 a tonne this week.
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    Copper Prices Lifted by U.S. Infrastructure Spending Plan

    Copper prices shot to more than one-year highs in London on Thursday, as expectations that a Donald Trumppresidency will boost infrastructure spending lifted the base and industrial metals.

    Copper was leading gains on the base metals complex. The three-month London Metal Exchange contract rose 4.57% in midmorning trade to $5,668 a metric ton, the highest price since July 2015.

    “We believe the rally was primarily driven by bets on Trump’s promise to massively boost U.S. infrastructure spending,” saidCarsten Menke, a commodities research analyst at Julius Baer.

    Mr. Trump has said he would cut taxes and invest in infrastructure spending, which would lift demand for metals used for building and manufacturing.

    The gains also move against a slightly stronger dollar, which is typically bearish for the metal. On Wednesday morning, the WSJ Dollar Index was up 0.03%.

    Thursday’s increases extend a multiweek rally for the metal, which was lifted on rising expectations of Chinese manufacturing growth and falling stockpiles of the metal in Shanghai.

    Copper has lagged behind the other base metals’ gains so far in 2015, but it is now closing the gap, and is up 21% so far this year.

    “We are seeing one of the most unloved and under-owned asset class enter a full-blown bull market whilst equity yields stagnate,” said Matt France, head of institutional sales for metals at brokerage Marex Spectron.

    However, those gains were also swift across the base and industrial metals complex.

    “Sentiment is even more bullish in China’s iron ore and steel markets, despite the threat of increasing protectionism in the U.S.,” Mr. Menke said. Chinese-traded iron ore prices are up almost 17% this week, while steel prices have risen 10%, he said.

    Mr. Trump has said that he would restrict trade with China, the world’s top metals consumer, if he was elected.

    The other base metals were also higher. Aluminum was up 0.86% at $1,769 a metric ton, lead was up 1.56% at $2,179 a ton, zinc was up 1.99% at $2,558.50 a ton, nickel was up 1.59% at $11,840 a ton, and tin was up 1.76% at $21,720 a ton.
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    China inspectors hit Aluminum!

    Chinese Smelters Again Under the Gun as Beijing Launches Second Round of Environmental Inspections

    ·         Business

    ·         China


    09 November 2016 by Staff

    A second round of environmental inspections put China’s aluminium capacity in the state’s crosshairs yet again, resurrecting fears that punitive capacity shutdowns may be in the offing.

    Xinhua reported earlier this week that the Ministry of Environmental Protection of China initiated a new round of inspections in October, sending out ten teams of inspectors to evaluate the progress of clean-up operations and the administration of environmental laws in twenty provinces. The targeted provinces include the homes of China’s aluminium industry – Shangdong, Guangdong, Hunan, and Jiangxi. The inspections are to focus upon plants that are less than two years old (specifically plants that were built before January 1, 2015) and that previously passed environmental inspection.

    Environmental enforcement in China’s industrial sector has been spotty at best, but there are now legitimate concerns that significant swaths of capacity may be in serious jeopardy. Two of Xinfa’s smelters in Shandong province were fined CNY2 million earlier this summer for emissions infractions, and China Hongqiao was issued notices of fines and ordered to cease production on over half of its 5.9 million metric tons of capacity over the course of this year.

    Industry experts have taken notice of the increasing focus on environmental enforcement, and some wonder if this could ultimately lead to significant permanent capacity closure in China.

    “I don’t know exactly what they are looking at this time around, but it’s clear that there will be more inspections and that they will look harder each time,” a seasoned aluminium expert told Metal Bulletin. He went on to say that such actions will put the provincial government in a tight spot as it will be forced to choose between mandates from Beijing and local economic interests.

    In addition, industry associations like the China Nonferrous Metals Industry Association will likely step in and insure that smelters bring down pollution levels and fall in line with environmental standards, he explained.

    “I would call CNIA to lead an audit on emission monitoring equipment to see if aluminium smelters have been equipped with such environment monitors, and if the equipment is operating and finally if it is achieving results,” he concluded.

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    Milpo expects to produce about 260,000 tonnes of zinc this year

    Peruvian miner Milpo expects to produce about 260,000 or 265,000 tonnes of zinc this year, maintaining output levels from recent years, the company's president said on Wednesday.

    Victor Gobitz said the Lima-listed company, controlled by the Brazilian group Votorantim, expects to start producing copper from its $300 million project Magistral in 2021 after receiving a construction permit, likely next year.

    Gobitz said Milpo's production of lead, silver and gold are on track to rise by an unspecified amount from its operations in the region of Pasco as new areas are being tapped. He added that Milpo will likely report better results next year as he expects metal prices to improve.

    Attached Files
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    China copper imports drop to 21-month low in Oct as demand wanes

    China's imports of copper fell 14.7 percent from a month ago to 290,000 tonnes in October, its lowest since February 2015, General Administration of Customs data showed on Tuesday, as demand from the world's top commodities user continued to slow.

    Copper imports to China, the world's leading copper and aluminium consumer, include anode, refined, alloy and semi-finished copper products.

    The country exported 350,000 tonnes of unwrought aluminium and aluminium products, including primary, alloy and semi-finished aluminium products, in October, down from September's 390,000 tonnes. That is the second month of declines and the lowest since February.
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    Japan's JX says will miss output target at Chile copper mine

    Japan's JX Holdings Inc expects to miss the copper concentrate output target at its Caserones mine in Chile in the fiscal year ending next March due to slow output in the first six months, an executive said on Tuesday.

    The company is aiming for output of 97,000 tonnes in the current business year, down from its August outlook of 100,000 tonnes, Katsuyuki Ota, JX Holdings Director and Executive Officer, told a news conference.

    The mine's ramp-up has been repeatedly delayed, weighing on profits at its owners, including JX and Japanese trading house Mitsui & Co.

    The move marks another downward revision after the company in May said it had aimed to more than double Caserones' output to 137,000 tonnes this financial year from 63,000 tonnes the year before.

    The mine produced just 17,000 tonnes of copper concentrate in April-June and 19,000 tonnes in July-September, hurt by heavy snow in June and the frozen equipment in July, Ota said.

    The mine's utilisation rate is expected to rise to nearly 90 percent in October-March, up from around 70 percent in the first half, he said, adding that the company aims to achieve full utilisation rates in February or March.

    The target for the mine's annual output capacity at full production is 150,000 tonnes.

    JX has hired a consultant to help revamp the mine's operations, and expects cost reductions to improve the business, Ota said.

    The firm posted a loss of 22 billion yen ($210 million) at Caserones in the six months ended in September and expects the loss to grow to 31 billion yen for the full year, he added.

    "We expect to narrow the losses more than initially expected in the current business year via cost cuts in the second half," he said.

    For the first half ended in September, JX on Tuesday posted a net profit of 25.4 billion yen, compared with a net loss of almost 45 billion yen a year ago, thanks to inventory gains.

    Caserones is 77.37 percent-owned by Japan's Pan Pacific Copper, a joint venture of JX and Mitsui Mining & Smelting Co Ltd. Mitsui & Co holds the remainder.
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    Base metals come out of LME week with a bullish roar

    Cautiously optimistic. That was the consensus takeaway of the mood at LME Week, the annual shindig of the industrial metals markets.

    Looking at the screens this morning, you could well drop the word "cautiously".

    The LME metals are on a tear. Zinc and tin have both recorded year-to-date highs, nickel is close to doing so and even out-of-favour copper has hit its highest level since March.

    True, this may be down in large part to the Trump effect. The U.S. elections were a hot topic last week, with analysts near unanimous in their view that a Donald Trump win trading strategy would be to buy gold and sell everything else.

    So, with Hilary Clinton getting a weekend poll boost after the FBI cleared her of wrongdoing over emails, this morning's exuberance may be the flip side of that trade. Gold, it is worth noting, has fallen.

    But beyond the U.S. political noise, there was a feeling that the cycle low may have passed for the industrial metals complex.

    China's early-year stimulus has been the big "bull" surprise of 2016 and the tail winds are expected to carry through to next year.

    There is also a hopeful sense that Western investment money is starting to flow again into commodities, joined this time around by Chinese money.

    Hey, and even if neither funds nor fundamentals are looking that great, there is always the reliable fallback of divergence between individual metals to generate a little bit of trading excitement.

    Graphic on LME Index:


    Global growth is expected to accelerate to 2.7 percent next year from 2.2 percent this year, according to Grant Colquhoun, group economist at the CRU research house.

    It will be, he pointed out, the first acceleration since 2014 but, and it's an important but, "we're still stuck in a slow-growth world".

    So it's all down to China. Again.

    The stimulus unleashed at the start of this year does, in hindsight, appear to have coincided with the low point of the LME base metals index in January.

    Renewed economic pump-priming into infrastructure and construction has, once again, turned metals demand expectations on their head.

    First-stage beneficiaries have been steel, iron ore and met coal. The flow-through effects on second-stage metals such as copper are still being felt.

    And the broad view is that the stimulus tail winds will only abate around the middle of next year.

    After that, most analysts get a bit nervous.

    "China is not out of the woods and I think real estate will start to soften in Q2 and we could see lower prices in H2," was the view of Ed Meir of INTL FCStone.

    "Storm clouds are gathering" for 2018 agreed Jim Lennon, consultant at Macquarie Bank.

    "The further out you go, the more concerned you've got to be" was the take of Goldman Sachs' Max Layton, talking specifically about Chinese copper demand.


    While the wheels of global economic growth still grind slowly, a different sort of cycle appears to have passed an inflection point.

    After several years of absence the heavy fund hitters are coming back to town.

    Barclays Capital estimates that $62.3 billion of investment flowed into commodities in the first nine months of this year, exceeding the previous equivalent high seen in 2009.("The Commodity Investor - Flow Analysis", Oct 21, 2016)

    Most of it has hit the precious and oil markets in that order. But in September itself over 80 percent of flows, or around $9.5 billion, went into broad-based commodity indices with a resulting trickle-down effect on base metals.

    Outright price gains, a break-down in correlations between commodities and other parts of the financial universe and inflation hedging are all in the mix.

    Paul Crone, founder of Critine Capital and speaking on the "Investors in Metals" panel at the LME Seminar on Monday, agreed.

    "Investor interest appears to be turning", particularly in the form of indices "as a long play", Crone said, although he added the caveat that heavyweight funds are increasingly looking for personalised investment baskets.

    Chinese money is also on the move in the commodities space, according to Li Gang, co-head of market development at Hong Kong Exchanges and Clearing, speaking on the LME's afternoon Chinese seminar.

    Thwarted by the authorities' clamp down on stock market trading and frustrated by the red-hot property markets in Tier 1 cities, many retail and not-so-retail investors are now looking for a return in commodities, he argued.

    Love them or hate them, and opinion is equally divided in the metal markets, fund money has a track record of being ahead of the curve when it comes to spotting inflection points.

    Its return has, therefore, been taken as another positive sign the worst might be over.


    India's 2016 gold demand seen at 650 T 750 T Vs 858.1 T year ago-WGC
    UPDATE 1-China October iron ore imports lowest since Feb -customs

    Graphic on relative base metals price performance 2016:


    Divergence between individual metals has been an overarching theme this year and looks likely to continue.

    Supply has been the key differentiator in 2016, with metals such as zinc benefiting from raw materials famine and others, particularly copper, struggling to cope with feast.

    Everyone agrees that zinc's fortunes are beholden to Glencore, which suspended 500,000 tonnes of mine capacity this time last year. No-one agrees, however, on when it will reverse those cuts.

    Nickel's fortunes depend largely on the Philippines, where the new administration has suspended several nickel mines and threatened more with closure.

    But given how low the nickel price has traded this year, many will agree with Anton Berlin, marketing manager at Norilsk Nickel, who told Bloomberg's Wednesday seminar that "there is only one way to go, up, it's just a question of when".

    Aluminium, according to Jorge Vasquez, founder of Harbor Aluminum, will suffer from a rising surplus, record high stocks and the increasing forced release of those stocks as financing metrics become strained. Nobody rushed to contradict him when he expressed that view at the LME seminar.

    And as for copper, opinion remains as polarised as ever with Goldman's Layton and Citi's David Wilson doing bear-bull battle during the Bloomberg seminar.

    A more unusual take on divergence was provided by Vanessa Davidson, director of copper at CRU, who argued that demand prospects for individual metals were also potential drivers of divergence.

    The lightweighting of vehicles has already benefited aluminium over other materials and creeping electrification of the global automotive fleet will boost both copper and lead, the latter thanks to stop-start engine technology.

    Zinc, by contrast, risks demand destruction if raw materials constraint feeds through to ever higher prices with die-casting and construction both at-risk sectors.

    CRU's conclusion was that intensity of use becomes a key source of divergence in a slow-growth global economy.

    But then a more divergent commodity market, according to CRU director Paul Robinson, "is good for institutions seeking portfolio diversification."

    In other words, thank heavens the funds are back!

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    Steel, Iron Ore and Coal

    China achieved annual target of cutting steel capacity by end-October

    China's state planner said on Friday that the country achieved its full-year target of cutting 45 million tonnes of steel capacity by the end of October.

    It also hoped to achieve its target of cutting 250 million tonnes of coal capacity this year ahead of schedule.

    China will balance coal supply and demand to ensure stable prices, Li Pumin, the general secretary of National Development and Reform Commission(NDRC) also said in a news briefing.
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    China coal fumble casts doubt on its global commodities pricing goal

    Unprecedented steps by Beijing to snuff out a months-long rally in coal prices are casting fresh doubts on China's drive to become a global price-setting hub for commodities worth trillions of dollars.

    The world's top consumer of many raw materials has been pushing to boost its influence on pricing of everything from iron ore to oil, mainly through steps such as promoting Chinese futures contracts as regional or global benchmarks.

    But analysts and traders said that a wave of moves to cool coal prices, which surged as a side-effect of radical government measures to fight pollution by curbing mining, show that Beijing could be reluctant to let markets trade freely and openly.

    "(Moves like those taken in coal markets) dampen hopes from investors that the government will be transparent," said Wang Fei, a coal analyst in eastern China.

    Soaring coal markets have sparked a weeks-long effort by China's state economic planner, the National Development and Reform Commission (NDRC), to rein in prices, culminating in Wednesday's announcement that two of the nation's top coal miners had signed long-term supply contracts with a utility at a quarter below current spot rates.

    Market sources said the body had ramped up its meetings with coal miners to as many as three a week from the usual monthly gatherings. The latest meeting is scheduled for Friday.

    Adding to its scrutiny over the market, the NDRC also said on Wednesday that it was vetting the sector for hoarding, as well as investigating a coal pricing data firm in the province of Shanxi for "problems" in its data.

    While the NDRC did not give any details, FenWei Energy, a Shanxi-based coal data company, this week suspended its spot physical thermal coal price index - used as the domestic industry benchmark - saying its prices did not reflect the majority of business transacted in the country.

    The NDRC did not respond to requests for comment.

    Meanwhile, China's three main commodity exchanges this week launched a series of fee and margin hikes in a coordinated effort to make it more expensive to trade everything from thermal coal to rubber to ferro-silicon to tame wild price swings.

    With all these steps, the BSPI weekly index published on Thursday fell by 1 yuan per ton to 606 yuan per ton, its first drop in 4-1/2 months. Even so, the price remained close to historic highs supported by robust demand as the first cold spells of winter start to grip the country.


    The government has form when it comes to exerting pressure on financial markets. Past tactics have included halting margin trading in equities last year and changing trading limits and margin requirements for some commodity futures contracts earlier this year.

    And the latest moves come just as the Shanghai International Energy Exchange, known as INE, prepares to launch a crude oil futures contract that will compete with established benchmarks in the United States and Europe. INE did not immediately respond to requests for comment on Friday.

    "If NDRC can do this to the coal industry, it can deploy the same strategy with other commodities," said Lin Boqiang, director at the energy institute at Xiamen University.
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    New laws threaten to delay Australian Queensland coal projects under development

    New laws passed in Australia's Queensland threaten to delay coal mining projects currently under development in the state.

    Any mines currently under development that will have an impact on groundwater will be required to obtain an "associated water licence" under the laws passed early Thursday, the state government said. Environment minister Steven Miles said the Environmental Protection and Other Legislation Amendment Bill 2016 allowed the government to fulfil its election commitment to reverse the previous government's laws which sought to deregulate the mining industry and give them an "unlimited right to take."

    "Queensland's environment has been under threat from a ticking time bomb -- reckless laws passed by the LNP which were left waiting to commence automatically on December 6," Miles said.

    Queensland coal miner New Hope Group said Thursday that the legislation increases the amount of green tape faced by resource companies and is likely to cause at least a further 12 months' delay in getting approval for stage three of its New Acland mine.

    The Queensland Resources Council chief executive Michael Roche on Wednesday said it makes no sense to require another water assessment to the handful of projects which applied for approval years ago, and that the legislation will hand green activists another opportunity to hold up projects for years in the courts.

    "While the QRC supports future projects being assessed under these new laws, making these water laws retrospective will endanger billions of dollars to be invested in a handful of resource projects," Roche said. "These projects, including life extensions for the existing New Acland, Kestrel and Hail Creek mines and the proposed new Carmichael coal mine, have already gone through years of rigorous assessments and approvals, and strict conditions have been applied already to their water use and impacts," he added.

    New Hope had requested that the transitional provisions be modified so that projects that had already been through underground water impact assessment studies, like New Acland Stage 3, would not have to needlessly repeat the process, the company said.
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    Apollo-led buy of Anglo mines is off

    The Anglo board had votes down the deal that valued the assets at more than $2 bln. said one source. The proposed deal had been part cash and partly a mechanism to lock in any future price rises.

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    China may extend coal mine working days to 330

    China may allow advanced coal mines to operate 330 working days untill the end of March, when winter heating ends. previously the extension ended on December 31st


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    China exchanges hike fees for coal coke and coking coal again

    Three commodity exchanges have increased fees to dampen down speculation   

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    NRDC calls for boosting rail coal transport

    China's top planner calls fpr more transport of coal by rail for power generation to guarantee stable power supply.
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    China's steel exports down 14.6% on year

    China exported 7.7 million tonnes of steel products in October, falling 14.6% on year and 12.5% on month, showed the latest data from the General Administration of Customs.

    Total exports of steel products edged up 0.7% on year.

    China's steel exports have been falling since July as domestic consumption increases.

    Trade conflicts have also impacted the numbers.

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    Rio Tinto suspends senior executive after uncovers Guinea payments

    Global miner Rio Tinto said on Wednesday it has suspended a top executive over $10.5 million in payments to a consultant on its Simandou iron ore project in Guinea, and has alerted U.S. and UK authorities. A second senior executive has stepped down.

    Rio Tinto took the steps at a time when mining companies have come under scrutiny in corruption probes, with the world's biggest miner BHP Billiton last year paying $25 million to settle charges that it violated a U.S. anti-bribery law in failing to properly monitor its program sponsoring foreign government officials at the 2008 Olympics in Beijing.

    Rio Tinto said it became aware in August of emails from 2011 "relating to contractual payments totalling $10.5 million made to a consultant providing advisory services on the Simandou project in Guinea".

    An internal investigation led it to flag the issue to U.S. and UK agencies, and it said it was in the process of contacting Australian authorities as well.

    The company has suspended the head of its energy and minerals division, Alan Davies, who was in charge of Simandou in 2011.

    Davies was not immediately available to comment.

    The group's legal and regulatory affairs executive, Debra Valentine, who was due to retire next May, has also stepped down, Rio Tinto said.

    "Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities. Further comment at this time is therefore not appropriate," the company said in a statement to the Australian stock exchange.

    Investors shrugged off the prospect of a bribery probe and the suspension of Davies, whom analysts said is well respected. Rio Tinto's shares rose as much as 1.8 percent in early trade to a more than 16-month high after the announcement in line with gains in the broader market.

    "It's too early to say anything, it's an investigation right now. They're just doing the prudent thing," Macquarie analyst Hayden Bairstow said.

    "With iron ore at $69, met coal (coking coal) at $307, the whole sector is riding the spot price moves," he said.

    Rio Tinto long chased plans to develop Simandou, which it touted as one of the world's most valuable iron ore deposits.

    It even sued rival Vale in the United States, alleging the Brazilian giant had conspired with Israeli billionaire Beny Steinmetz and BSG Resources to misappropriate its rights over half the lode in 2008.

    That case was dismissed a year ago as the judge ruled Rio Tinto had waited too long to file a case under the Racketeer Influence and Corrupt Organizations Act.

    Last week Rio Tinto agreed to sell its stake in the $20 billion project to Chinese state-owned Chinalco, after writing off its investment in Simandou earlier this year on diminished prospects of it being developed anytime soon.
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    Under govt pressure, China's top coal miners to cut long-term prices

    China's state economic planner said two of the nation's top coal mines signed long-term supply contracts with utilities at a quarter below current spot market rates, as the government ramps up its efforts to cool the red-hot market.

    Shenhua Energy Co and ChinaCoal Energy Co agreed to sell their coal at 535 yuan ($79) per tonne under long-term deals which start as soon as Dec. 1, Xu Kunlin, vice secretary general of the National Development & Reform Commission (NDRC), said at a briefing on Wednesday.

    Traders said the price would not necessarily set a trend for the market if other miners do not agree to the terms. One Asian trader said the deals would be "meaningless" without broader industry support.

    While markedly lower than the record-setting spot market, the price is still relatively high historically. However, it does suggest that the months-long rally may not be sustained as more supply hits the market in the new year, three coal traders said.

    "It is still a fair deal for ChinaCoal and Shenhua, even though the spot price is at 700 yuan," said Wang Fei, analyst at HuaAn Futures.

    Coal was being offered as high as 740 yuan per tonne on Wednesday, the traders said.

    This is the first time the NDRC has held a press briefing to discuss this year's historical coal price rally and concerns about tight supplies.

    Thermal coal prices have hit fresh records on an almost daily basis in recent weeks after government-enforced closures earlier this year tightened supplies for electric utilities, triggering a scramble ahead of the winter.

    Getting miners to fix prices has been a key part of the government's effort to tame the price spike that it says is unjustified by fundamentals. The news on Wednesday follows a series of changes to the way China, the world's top energy market, prices the commodity.

    On Tuesday, China's three major commodity exchanges launched a series of fee hikes and margin increases for some of their most volatile, niche contracts, including coal, as authorities cracked down on speculation.

    The NDRC, which has pledged to ensure coal supplies over the winter months, also said at the briefing it was investigating a Shanxi-based coal data firm because its data "has problems".

    While the NDRC did not give any details, FenWei Energy, also a Shanxi-based coal data company, late on Tuesday suspended its spot physical thermal coal price index - used as the domestic industry benchmark - saying its prices did not reflect the majority of business transacted in the country.

    Also at the briefing, the government said it would extend a rule limiting some mines to operate only between 276 and 330 days in a year until the end of spring.

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    Met coal tops $300 first time since 2011 Australian floods

    Spot metallurgical coaltopped $300 a metric ton for the first time since flooding in Australia curbed output from the world’s biggest seaborne exporter five years ago.

    Hard coking coal rose to $307.20/t on Tuesday, extending a surge that has seen the price more almost quadruple since the start of June.

    Miners and Japanese steelmakers agreed to a three-month supply contract at a record $330 for the second quarter of 2011 after heavy rain and flooding crimped production in Queensland. Chinese demand has driven the price surge this year.

    China’s efforts to cut overcapacity in its coal industry have reduced domestic supply and boosted imports of both metallurgical and the variety burned in power stations. While Chinese purchases remained above 20-million tons in October for a fifth month, producers from BHP Billiton to Japan’s biggest trading houses predict prices will ease for coking coal.

    “The impact on Chinese domestic supply has resulted in significant import demand,” said Daniel Hynes, an analyst at Australia & New Zealand Banking Group. “We could see prices slip about $150 lower than where they are at the moment, but I don’t think the market will be pushed in that direction in the short term. We’re just not expecting to see supply adjust that quickly.”

    Spot hard coking coal advanced $17.90, or 6.2%, on Tuesday, according to data from The Steel Index. Monday’s rise was the biggest daily gain since the index was started in January 2013. Newcastle thermal coal increased 34% in October, the most since February 2008. Prices closed at $109.40 on Monday.

    Japanese steelmaker Nippon Steel & Sumitomo Metal agreed to pay $200/t for metallurgical supplies during the fourth quarter, the highest contract price since 2012. Australian miner Whitehaven Coal and consultant Wood Mackenziepredict prices will remain at elevated levels in the short-term.

    “Unless China decides to lift its restrictions and flood the market, you would expect prices to remain around these levels in the short to medium term,” Whitehaven chairperson Mark Vaile said in an interview Tuesday. Shares in the Sydney-based company have more than quadrupled this year.
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    EU investigates tariff avoidance by Chinese steel firms

    The European Union's anti-fraud office (OLAF) is investigating whether Chinese companies shipped steel through other countries to avoid anti-dumping duties, as trade disputes with the world's largest steel producer heat up.

    OLAF is looking into several cases where Chinese steel firms shipped the metal to another country, disguised its origin, and then shipped it on to Europe in a process known as "transshipment".

    The fraud agency would not give any details on its current investigations. But according to a filing on the Vietnamese trade ministry's website, OLAF is investigating 190 cases of Chinese coated steel coils that arrived in Portugal, Spain and Poland from Vietnam in 2013-2014.

    The EU is ratcheting up trade defences against China, under political pressure from a spate of bankruptcies, capacity closures and job losses in the steel sector that have fired up anti-globalization sentiment.

    OLAF estimates the shipments via Vietnam were worth about $19 million and that the steel was given Vietnamese certificates of origin, the Vietnamese trade ministry said on its website. If confirmed, OLAF would apply retroactive duties of 58 percent on the shipments, it added.

    Chinese trade authorities declined to comment. Vietnamese authorities told Reuters they were ready to receive a delegation from OLAF.

    "We will be co-operating actively with the EU to investigate ... and have appropriate measures in place," said the head of the Vietnam Industry and Trade Ministry's European Market Department, Dang Huu Hai.

    Steel is the second largest industry in the world after oil and gas, with an estimated global turnover of $900 billion. Steelmakers face sluggish demand growth, chronic overcapacity what they say is a flood of Chinese steel sold at a loss.

    Beijing denies it is "dumping" or exporting steel at a loss, saying overcapacity is a global problem. Nevertheless it has committed to cutting 150 million tonnes of capacity by 2020.

    "The (EU's) determination to protect the domestic steel industry remains high...There will be more and more hurdles for the Chinese," said Julius Baer analyst Carsten Menke.

    The latest EU investigations follow news that the U.S. Commerce Department on Monday opened an probe into allegations that Chinese steel producers are diverting shipments through Vietnam to avoid tariffs.

    The United States has slapped anti-dumping duties of more than 500 percent on some Chinese steel products.

    "There is no doubt that EU decision-makers look at what the U.S. is doing, and sometimes there is even coordination. It makes sense... because U.S. measures (if effective) can easily lead to the diversion of trade flows to the EU," said Laurent Ruessmann, a partner at lawyers FieldFisher.

    China's steel output rose for a seventh straight month in September and its exports are on track to beat last year's record 112 million tonnes.

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    U.S. probe finds dumping of steel plate from nine exporters

    The U.S. Commerce Department said on Monday it had made a preliminary finding of dumping of certain imports of carbon and alloy steel cut-to-length (CTL) plate from Austria, Belgium, China, France, Germany, Italy, Japan, South Korea and Taiwan.

    The department said in a statement it established preliminary antidumping duties of up to 130.63 percent, on an Italian company. The finding followed an investigation prompted by a petition from Nucor Corp and U.S. subsidiaries of ArcelorMittal SA and SSAB AB, it said.

    In the Austria investigation, the department set a preliminary dumping margin of 41.97 percent for Voestalpine AG and other exporters. In the case of Belgium, the margins ranged from 2.41 percent to 8.98 percent.

    For China's Jiangyin Xingcheng Special Steel Works Co Ltd, the margin was set at 68.27 percent.

    Margins were set at 12.97 percent and 4.26 percent for Dillinger France SA and Industeel France SA, respectively, and for all other French exporters at 8.62 percent.

    Germany's AG der Dillinger Hüttenwerke was assigned a preliminary dumping margin of 6.56 percent, as were all other German exporters of CTL plate.

    In Italy, NLMK Verona SpA and Officine Tecnosider were assigned margins of 12.53 percent and 6.10 percent, respectively. Marcegaglia SpA declined to participate and was assigned a preliminary margin of 130.63 percent. A margin of 8.34 percent was set for all other Italian exporters.

    A preliminary antidumping margin of 14.96 percent was set for Japan's Tokyo Steel Manufacturing Co Ltd, while a margin of 48.64 percent was established for JFE Steel Corp and Shimabun Corp, which declined to participate in the probe. A margin of 14.96 percent was set for all other Japanese exporters.

    For South Korea's POSCO, the margin was set at 6.82 percent.

    Taiwan's Shang Chen Steel Co Ltd and China Steel Corp received preliminary dumping margins of 3.51 percent and 28 percent, respectively, while those for other Taiwanese producers were set at 3.51 percent.

    In 2015, U.S. imports of CTL plate were estimated as follows: from Austria, $14.2 million; from Belgium, $19.8 million; from China, $70.3 million; from France, $179 million; from Germany, $196.2 million; from Italy, $37 million; from Japan, $54.9 million; from South Korea, $210 million; and Taiwan, $21 million.

    It is used in a wide range of applications, including in buildings and bridgework; agricultural, construction and mining equipment; machine parts and tooling; ships, rail cars, tankers and barges; and large-diameter pipe.
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    China Says It's Going to Use More Coal, With Capacity Set to Grow 19%

    China Says It's Going to Use More Coal, With Capacity Set to Grow 19%

    China’s coal power generation capacity will grow as much as 19 percent over the next five years even as the world’s biggest energy consumer expands use of non-fossil fuels.

    While coal-fired plant capacity will increase, it will still remain below 1,100 gigawatts, National Energy Administration Chief Engineer Han Shui said Monday in a webcast posted on the agency’s website. Non-fossil power will increase 48 percent to about 770 gigawatts over the five-year period through 2020 as total capacity expands by 31 percent to 2,000 gigawatts.

    President Xi Jinping’s government is seeking to replace coal with cleaner fuels to help cut pollution that has plagued some of China’s biggest cities including Beijing, Tianjin and Shanghai. The country has said it plans to raise natural gas consumption to 10 percent of its total energy mix by 2020 from around 6 percent now.

    “Coal consumption growth over the next five years is projected to be stronger than previously expected,” Helen Lau, an analyst at Argonaut Securities Asia Ltd., said by phone. “That implies that coal production must not be reduced further, otherwise, the coal market will be in deficit.”

    Confronting Coal

    China will need to cut about 150 gigawatts of coal-fired power from projects that are either approved for construction or already under construction to maintain the 1,100-gigawatt limit, Huang Xuenong, director of the power generation division of NEA said during the webcast. Without restrictions the country’s coal-fired power capacity could reach about 1,250 gigawatts by 2020, he said.

    Hydro-power will account for about 340 gigawatts of the projected 770 gigawatts of non-fossil-fuel generation capacity by 2020. Wind will make up about 210 gigawatts and nuclear power 58 gigawatts, according to the NEA.

    Global Emissions

    China’s 2015 coal and gas-fired generation capacity was 990 gigawatts, according to the NEA, which didn’t separate the two. Gas accounted for 66 gigawatts that year, according to the China Electricity Council.

    China’s total power consumption may increase to between 6.8 trillion kilowatt hours to 7.2 trillion kilowatt hours by 2020, with an average annual increase of about 3.6 percent to 4.8 percent from 2016 to 2020.

    China and the U.S., the two countries that account for 38 percent of global carbon emissions, ratified the Paris Climate Accord this year, promising to reduce carbon emissions to limit temperature increases.

    Global green power rose by a record 153 gigawatts, equivalent to 55 percent of newly installed capacity in 2015, allowing renewable energy to overtake conventional power for the first time, the Paris-based International Energy Agency said last month.
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    Delay threatens tax benefit as Kemper plant nears $7B

    Mississippi Power Co. now says it won’t complete its Kemper County power plant until the end of the year, a delay of a month that pushes the price tag up by $25 million to nearly $7 billion.

    The company announced the delay Friday as its Atlanta-based parent Southern Co. filed quarterly stock disclosures, saying ratepayers wouldn’t have to pay the $25 million.

    The documents show that if the coal-fueled plant doesn’t start commercial operation by Dec. 31, Mississippi Power would have to repay $250 million of previously received tax benefits. Mississippi Power spokesman Jeff Shepard didn’t immediately respond to questions about the potential repayment.

    The plant and associated coal mine were originally supposed to cost $2.9 billion at most, and earliest estimates were lower. Stockholders have absorbed $2.6 billion in losses, while customers could be asked to pay more than $4.2 billion.

    Mississippi Power said it decided Wednesday that it must shut down one of the two units that turn coal into a burnable gas to improve ash removal systems. The company says that by Dec. 31, it will start the second gasifier, make the improvements on the first one and synchronize them. The plant has been making power using natural gas since 2014 and made electricity by burning synthetic gas for the first time last month.

    Kemper is designed to remove carbon dioxide from the synthetic gas, cutting carbon dioxide emissions to the level of a similarly sized natural gas plant. That’s why the federal government has given what Mississippi Power calls Plant Ratcliffe hundreds of millions of dollars in aid.

    Brett Wingo, an engineer who formerly worked at the plant, claims Southern has misled investors and others about previous schedule delays. Southern said Friday that the U.S. Securities and Exchange Commission continues to investigate those claims. Wingo has told The Associated Press that internal schedules had at one time called for six months between first production of synthetic gas and full operation. Southern Co. CEO Tom Fanning told investors in July that integrating the plant’s systems would be more complicated than a typical power plant startup.

    In December, the Mississippi Public Service commission agreed to let Mississippi Power raise rates on its 186,000 customers by $126 million a year to pay for $1.1 billion worth of Kemper equipment already generating electricity by burning conventional natural gas.

    Mississippi Power has lost $222 million on Kemper this year alone, far outweighing the $40 million profit the company has posted.

    The company says further delays would cost $25 million to $35 million a month that the company would pay, plus $18 million or more monthly in interest and other costs that customers could be asked to pay. The company has taken on a heavy debt to build Kemper, and its liabilities currently outweigh its assets by $411 million, in part because of $300 million in borrowing that came due Oct. 15.

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    ArcelorMittal sees weak last quarter as coal spike hits margins

    ArcelorMittal warned of slower earnings this quarter citing higher coal prices and lower U.S. steel prices after the world's largest steel producer missed core third-quarter profit expectations on Tuesday.

    ArcelorMittal shares, which have risen by about a quarter since September, were down some 4 percent in early trade.

    "We're all surprised by the rapid and unexpected rise of coking coal," Chief Financial Officer Aditya Mittal told a conference call.

    Mittal said coal prices have risen due to some U.S. mines stopping operations and a cap on production imposed by the Chinese government as part of a shift to clean power.

    Prices for Australian premium hard coking coal .PHCC-AUS=SI have surged to $250 per tonne from around $75 in February.

    Core earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter rose 40 percent to $1.90 billion but missed the $1.97 billion expected by 11 analysts polled by Reuters.

    Mittal has forecast a fall in core profit this year to above $4.5 billion from $5.2 billion in 2015.

    ArcelorMittal increased its forecast for working capital to $1 billion from $500 million previously, adding it still expected to have positive cash flow for the year.

    It said average prices for steel rose 7.4 percent in the third quarter, mainly driven by better prices in North America, Brazil and Europe.

    ArcelorMittal also slightly improved its market outlook for China, where it now expects some growth in steel consumption.

    Chinese prices for reinforcing bars used in construction SRBcv1 rose this month to their highest level since September 2014 amid tightening supply.

    Overcapacity in the Chinese steel sector has led to a surge in exports which steelmakers in Europe and the United States have sought to counteract by lobbying for anti-dumping duties.

    Last week, China's Baosteel Group said it would cut steel production capacity by 11 million tonnes over 2016 and 2017, more than it had previously indicated.

    Despite these announcements, Mittal said Chinese exports had so far not decreased and said China was not doing enough to lower exports.

    "There is some progress but not enough. China imposed production limitations on the coal industry. They have the tools but are not acting as aggressively in the steel business," CFO Mittal said.

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    China Oct coal imports post sharpest YoY growth this year

    China imported 21.58 million tonnes of coal in October this year, posting the sharpest rise of 54.58% year on year in 2016, showed data from the General Administration of Customs (GAC) on November 8.

    The increase was mainly because lots of downstream users turned to imports amid contracting output and rallying prices in China.

    The volume, however, was 11.7% lower than September, as buying interest for imported coal was hit by rising international prices and growing supply from domestic mines.

    In October, the Chinese government allowed more efficient mines to boost output to guarantee supply in northern China's heating season and stabilize prices.

    The value of coal imports in October stood at $1.31 billion, rising 78.52% on year and up 6.39% on month. That translated to an average price of $60.7/t, climbing $8.14/t on year and up $10.32/t from the previous month.

    Over January-October, coal imports of China totaled 201.74 million tonnes, rising 18.5% on year, data showed. That valued $10.18 billion, a year-on-year decline of 1.8%.

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    Shaanxi Coal & Chemical lowers thermal coal prices by 10 yuan/t

    Shaanxi Coal and Chemical Industry Group on November 5 cut prices of rail-delivered coal by 10 yuan/t for sales to six major power companies including Huaneng Group and Huadian Group, in response to the government's call for stabilizing the market and ensuring supply.

    The six power companies account for 70% of the miner's customers.

    As supply falls short of demand under the nationwide supply-side structure reform, coal stocks at utilities in Shaanxi fell to a record low in the middle of the year while coal prices have been on a rally since then.

    In Yulin, one major producing area in the province, the mine-mouth price of 5,800 Kcal/kg NAR coal rose 40 yuan/t from a month ago to 390 yuan/t with 17% VAT on November 7, a surge of 235 yuan/t from the start of this year.

    Though large miners including Shaanxi Coal and Chemical Industry have been making efforts to boost supply, utilities still have urgent demand to build up stocks to meet use in the peak demand winter season.

    "This year's coal price surge is mainly attributed to the government-led overcapacity cutting policy," said Wang Zengqiang, vice general manager of the company.

    "The price rally lacks continued momentum, and in the long term too fast rise in prices will do no good to either the supply or demand side," Wang added.

    Other miners in Shaanxi may follow Shaanxi Coal and Chemical Industry, the bellwether of the province's coal industry, to cut prices in the near future.

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    Glencore coal output drops 11pct in Jan-Sep

    Anglo-Swiss multinational Glencore produced 91.9 million tonnes of coal over January-September, down 11% from the comparable 2015 period, showed data from the company's third quarter production report released on November 3.

    The decline was mainly attributed to the divestment of Optimum Coal, closure of various South African operations, maintenance sequencing in Australia and adverse weather conditions in Colombia.

    Of the total production, 49.1 million tonnes was produced by Australian coal assets, including 42.4 million tonnes of thermal coal, 3.6 million tonnes of coking coal and 3.1 million tonnes of semi-soft coal, down by 0.6 million tonnes from the year-ago period.

    Glencore's Australian thermal coal output edged up 2% year on year in the first three quarters, with export thermal coal dropped 3% on the year to 37.8 million tonnes, as operational difficulties relating to ground conditions at Bulga Underground earlier this year were offset by increased production at Ulan and Mangoola.

    The miner's Australian coking coal production fell 14% from a year prior to 3.60 million tonnes in the first nine months, reflecting various operational and geological challenges at a number of mine sites, the company reported.

    Glencore's South African coal mines produced 21.9 million tonnes of thermal coal during the nine-month period, down 9.9 million tonnes on the comparable period, due to Optimum Coal movements and the scheduled closures of the Middelkraal and South Witbank mines.

    Besides, its Golumbia-based Prodeco produced 13.0 million tonnes of coal, 0.9 million tonnes below the comparable period, due to adverse weather conditions and some proactive supply reduction earlier in the year in response to market conditions.

    Glencore's share of production from Cerrejón was 7.9 million tonnes, 6% lower than the comparable period, reflecting some restrictions implemented to mitigate dust emissions during a protracted drought in the region, and then, conversely, higher than average rainfall during May and June, which hampered production.
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    China October iron ore imports lowest since Feb -customs

    China imported 80.8 million tonnes of iron ore in October, the lowest since February and down 13 percent from the previous month, official data from China's customs showed, as steel mills curtailed output amid tightening profits and soaring costs.

    Compared with a year ago, shipments of the steelmaking ingredient were still up 7 percent.

    Imports of steel products fell 4.4 percent to 1.08 million tonnes while exports fell 12.5 percent to 7.70 million tonnes, data from the General Administration of Customs showed.

    Febuary and October wre both holiday months

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    China Sep rail coal transport up 2pct on year

    China's rail coal transport increased 2% on year and up 1.9% from August to 158 million tonnes in September, the first monthly increase on a year-on-year basis this year, showed the latest data from the China Coal Transport and Distribution Association.

    Of this, 110 million tonnes or 69.6% of the total were railed to power plants, a yearly increase of 1.4% and steady on month, data showed.

    In the first three quarters, China’s railways transported a total 1.37 billion tonne of coal, falling 9.1% year on year, with thermal coal transport contributing 960 million tonnes or 70.1% of the total, down 6.7%.

    Coal-dedicated Daqin line transported 241.73 million tonnes of coal during the same period, down 20.8% on year, with September volume down 4.8% on year but up 2.2% on month to 29.71 million tonnes.
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    Glencore to extend life of Australian coal mine to 2031

    Glencore, the world's biggest coal exporter, said on November 4 it has won approval from the New South Wales state government to extend the life of its Mount Owen coal complex in Australia by 12 years to 2031.

    The complex, which includes the Mount Owen and Glendell mines, produced 8.07 million tonnes of saleable thermal coal for power stations and semi-soft coking coal for steel mills last year.

    The miner plans to dig coal reserves that are within the land the mine owns for the extension, but will not be expanding output. The mine would have had to close in 2019 if the approval had not been granted, said a spokesman of the company.

    "Construction work associated with the approval is expected to start around March 2017," Glencore said, yet it declined to comment on the cost of the mine extension.
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    South African Sep thermal coal exports hit a 12-month high

    South Africa exported 6.96 million tonnes of thermal coal in September, gaining 15.89% year on year and up 20.49% from August, hitting a new high since October last year, showed latest data from customs.

    Over January-September, the country's thermal coal exports totaled 52.47 million tonnes, down 5% on year, data showed.

    India remained the largest taker of South African thermal coal in September, with its exports increasing 56.47% on year and up 44.07% from August to 3.28 million tonnes.

    Shipments to Europe came to decline 31.06% on year and down 28.02% on month to 1.09 million tonnes.

    Shipments to the Netherlands plummeted 51.65% on year and down 39.94% on month to 394,800 tonnes in September, while those to Spain more than doubled both from a year ago and last month to 324,600 tonnes, hitting a new high since August last year.

    French received 203,000 tonnes in September, more than quadrupling from August.

    Exports to Pakistan surged 96.1% on year and up 69.37% from August to 431,900 tonnes. Shipments to Sri Lanka increased 53.7% on month to 247,000 tonnes, up from zero in September 2015.

    The United Arab Emirates imported 149,600 tonnes of thermal coal from South Africa in September, dropping 49.87% on year and down 35.01% on month.
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    Starved of coal, China steel mills opt for output cuts and early repairs

    Stunned by soaring raw material costs, some Chinese steel mills have cut output and even started maintenance works earlier than usual as state-enforced mine closures continue to choke off the supply of key production ingredients, coke and coking coal.

    Prices of coke and coking coal, that typically account for 20 percent of steel production costs, have rallied more than two-fold this year amid Beijing's big push to curb overcapacity and pollution, hurting profits for mills.

    Blast furnaces in the world's top producer and consumer of steel are as a result operating at their lowest rate in about four months, data from industry consultancy shows, in contrast to earlier this year when robust demand and prices prompted mills to operate at nearly full capacity.

    Furnaces across China are running at 86 percent, their lowest since June, according to the data.

    In Tangshan, a major steel-producing city in China's Hebei province, furnaces were running at 84 percent of capacity last week, versus around 90 percent in August, the data shows. Hebei accounts for a fifth of the country's steel output.

    While a seasonal weakness in demand for rebar, or reinforced steel used in construction, during the colder months may have been a reason for the output cuts, analysts said critically low raw material supplies were a major factor.

    "The severe shortage of coking coal and coke has largely lifted steelmakers production cost, forcing some to cut output," said Jin Tao, an analyst with Guotai Jun'an Futures in Shanghai.

    According to, Jiangsu Shagang Group, China's top private steelmaker, has suspended a rebar production line, while Zenith Steel, also based in eastern Jiangsu province, is set to start a 10-day overhaul this month, said.

    Maintenance typically takes place in December.

    Shagang declined to comment and calls to Zenith went unanswered, although said the moves could reduce output by about 40,000 tonnes over Nov. 10-27 for the former and by 25,000 tonnes for the latter.

    Any prolonged output cuts would add to the rally in steel prices, but remove some of the upward pressure on the prices of steelmaking ingredients and curb the impact of seasonally slower demand on mills' margins.

    Earlier in the day, coking coal futures on the Dalian Commodity Exchange climbed by their 10 percent limit and coke hit its strongest since 2013, extending their months-long rally on tightening supplies. [IRONORE/]

    Coke inventory among steel mills has dwindled to 2-10 days, versus the usual 15-30 days of production, said analyst Jin.

    Some steel mills located far from coal production bases, such as Shanxi and Shaanxi provinces, have been hit particularly hard by the tight raw material supplies, traders said.

    Several small mills in the western and southwestern regions have also cut output for the same reason, they added.

    Exacerbating steelmakers' woes are China's stricter rules on truck transportation since September that have cut trucking capacity, adding to mills' high costs.

    "It's not one simple reason, but complex factors including a shortage of coking coal and coke, surging prices, slower demand that has hurt rebar producers' profit, dragged some to losses and forced some to cut output," said Xia Junyan, investment manager at Hangzhou CIEC Trading Co in Shanghai.

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    Brazil environmental agency to fine Samarco daily over dam spill response

    Brazil's federal environmental agency IBAMA said on Friday it is fining Samarco Mineracao 500 000 reais ($154 693) per day for not complying with directives related to a 2015 tailings dam spill.

    Samarco, an iron-ore joint venture between Vale and BHP Billiton, must increase the height of a dike that was built to contain the continuing runoff from the dam spill and effectively treat the mining waste, known as tailings, IBAMAsaid.

    Samarco said it was working to increase the capacity of the dike to 2.9-million cubic meters at the mine in Minas Gerais, a state in south eastern Brazil. It did not say when this work would be completed.

    Environmental bodies, including IBAMA, have expressed concern that the oncoming rainy season could cause further mining waste to run into rivers and surrounding ecosystems.

    Samarco says it is working to ensure environmental impacts from the rains are kept to a minimum.
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    Shandong sees Oct coal output down 35pct on yr on capacity cut

    Eastern China's Shandong province produced 10.01 million tonnes of raw coal in October, plunging 34.57% year on year, showed preliminary data released by the Shandong Administration of Coal Mine Safety on November 4.

    The output in October however, rose 21.22% from September, as the government eased production control at mines to boost coal output and cool down prices.

    Over January to October, raw coal output of the province totaled 106.67 million tonnes, falling 14.39% from the corresponding period last year.

    Of this, 81.98 million tonnes were produced by provincial-owned mines, down 11.47% on year, with that from mines owned by municipal and lower-level government stood at 24.69 million tonnes, down 22.84% from a year ago.

    The province aimed to slash 16.25 million tonnes per annum (Mtpa) of coal capacity during 2016. And it planned to slash 64.6 Mtpa of surplus coal capacity by closing 114 mines over 2016-2020.

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    US Sept coal exports fall 20.7pct on year

    US exported 3.88 million tonnes of coal in September, down 14.6% from the prior month and 20.7% from the year-ago level, showed the latest data from US Census Bureau on November 4.

    The decline was mainly attributed to this year's rally in seaborne prices for both thermal and metallurgical coal.

    The country's bituminous coal exports in September totaled 1.1 million tonnes, up 30% on month but down 21.9% from a year prior. But its metallurgical coal exports in the month dropped 26% from the previous month to 2.57 million tonnes, down 17.7% from the year-ago month.

    Sub-bituminous coal exports from the US totaled 117,125 tonnes in September, of which nearly all went to Mexico.

    During the first nine months of this year, US exported 8.42 million tonnes of bituminous coal, down 46% compared with the year-ago period. And its metallurgical coal exports totaled 26.58 million tonnes, falling 19.9% on year.

    Meanwhile, the country imported 1.17 million tonnes of sub-bituminous coal from January to September, compared with no imports during the same period last year.
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    Japan Sept thermal coal imports up 23.4pct on year

    Japan's thermal coal imports (including bituminous and sub-bituminous coals) stood at 10.12 million tonnes in September, up 23.4% year on year and up 3.5% month on month, the latest customs data showed.

    In September, Japan imported 9.36 million tonnes of bituminous coal, up 4.2% on year and up 31.6% on month.

    Australia remained the largest supplier to Japan with 7.81 million tonnes of the material, up 37.9% on year and up 7.6% on month.

    This was followed by Russia at 877,600 tonnes, dropping 14.3% on year but edging up 1.47% on month.

    Imports from Canada stood at 228,100 tonnes, climbing 2.6% year on year and against none in August.

    Imports from Indonesia dropped 53.6% on month and down 44.2% on year to 227,300 tonnes in the month.

    Imports from China surged nearly 200% on month to 148,500 tonnes in the month, against none in September last year.

    Meanwhile, Japan imported 761,100 million tonnes of sub-bituminous coal in September, down 4.7% on year and down 30% on month.

    Indonesia, the top supplier of this material, shipped 392,100 tonnes to Japan in September, falling 36.2% on year and down 41.7% on month.

    Russia followed with 218,700 tonnes, surging 106.3% on year and roaring over 400% on month.

    Japan imported 86,800 tonnes of sub-bituminous coal from China in September, up 12.9% on year and up 28.2% on month.

    Imports from Australia dropped 55.1% on month to 63,400 tonnes, compared with only 100 tonnes from the same month last year.

    Additionally, Japan imported 484,800 tonnes of anthracite coal in September, dropping 12.3% from a year ago but up 24.3% from August.
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    Roy Hill mine to reach full operations in Jan-March - Marubeni CFO

    Japanese trading house Marubeni Corp expects its Roy Hill iron-ore mine in Australia to reach full operations in the January-March quarter, CFO Nobuhiro Yabetold a news conference on Friday.

    The mine, jointly owned by Marubeni, Hancock Prospecting, South Korean steelmaker Posco and Taiwan's China Steel, shipped its first iron ore cargo in December last year, marking the start up of the last of the mining-boom era mega projects in the country.

    Roy Hill has capacity to produce and ship 55-million tonnes of high grade iron-ore a year.
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    China's 90 large coal producers Jan-Sep raw coal output down 11.9pct

    China's 90 large coal producers produced a total 1.64 billion tonnes of coal in the first nine months this year, falling 11.9% from the year prior, showed data from the China National Coal Association (CNCA).

    The top ten coal enterprises produced a total 1 billion tonnes of raw coal over the period, accounting for 61.1% of the total output produced by 90 coal producers, data showed.

    Output of the top ten was also some 40.72% of China's total raw coal output of 2.46 billion tonnes in the first nine months, down from a share of 43% over January-February this year, according to data from the National Bureau of Statistics.

    Of this, raw coal output of Shenhua Group, China National Coal Group and Shandong Energy Group stood at 306.54 million, 97.45 million and 97.21 million tonnes during the period.

    Shaanxi Coal & Chemical Industry Group, Datong Coal Mine Group and Yankuang Group followed with raw coal output at 87.66 million, 84.71 million and 83.96 million tonnes.

    Shanxi Coking Coal Group, Jizhong Energy Group, Kailuan Group and Yangquan Coal Industry Group produced 67.33 million, 63.86 million, 56.3 million and 55.82 million tonnes, respectively.

    China plans to further enhance concentration in the coal industry over the next five years, with the 14 large coal production bases expected to take 95% of the national total coal capacity by 2020 and the top eight producers accounting for some 40% of the country's total coal capacity, according to a notice released previously by CNCA.

    By 2020, China will cut the number of coal mines to 6,000 or so, and advanced coal capacity will account for some 40% of the total.

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    China's Baosteel increases steel capacity cuts

    China's Baosteel Group said it would cut steel production capacity by 11 million tonnes from 2016 to 2017, according to an announcement posted on its website on Friday, ahead of an earlier target.

    The company had previously set a goal of cutting 9.2 million tonnes of excess capacity between 2016 and 2018.

    Baosteel Group has taken over Wuhan Iron & Steel Group to form the country's top steelmaker Baowu Steel Group and also the world's second-largest maker after ArcelorMittal.

    The China Iron & Steel Association (CISA) said last week that China is on track to hit its 2016 target for crude steel capacity cuts of 45 million tonnes by late October, with extra reductions expected in the last two months of the year.

    Overcapacity in China's steel sector has created trade tensions, with India, Australia and the United States imposing duties on Chinese steel exports amid allegations of dumping.

    Dai Zhihao, president of Baoshan Iron & Steel said in August that its parent Baosteel Group would cut 12.20 million tonnes of capacity through 2018, in line with Beijing's efforts to curb oversupply.
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    India sets coal-import deadline for govt-owned power producers

    Having already announced a stated policy to reduce coal imports to nil, India has directed government-owned thermal power plants to stop coal imports from April 1.

    In advisory to thermal power plants owned and operated by the federal or provincial government companies, the Coal Ministry has said that coalcontracts and shipment from overseas have to be concluded by start of the next financial year, adding that Coal India Limited (CIL) will supply thermal power producers’ coal demand.

    No advisory was officially issued to private power producers, although CIL and the Coal Ministry have been in touch with these utilities to convince them of increasing off-take from the domestic miner, particularly at a time when international coal prices are rising, a senior government official said.

    “We have discussed separately with every public sector powercompany and have made sure that their imports turn to zero by April 1, 2017,” Coal Secretary, Anil Swarup said on Thursday.

    He stated that State-owned companies’ coal imports would decline from 40-million tons in 2015/16 to 15-million tons in 2016/17.

    Taking a lead, the country’s largest power producer, NTPC, has already stopped contracting for imported thermal coaland all shipments scheduled to come in over the next few months of currently financial year were on account of contracts signed last year.

    NTPC’s peak level imported coal was estimated at 16-million tons a year.

    However, the coal supply glut in the domestic market stems more from demand crunch, than supply side easing and, as such, shortages in future may be a distinct possibility.

    In a veiled acknowledgement, Swarup said, “at present, the coal stock situation looks like there is a surplus. However it is not enough to give coal to everyone and we are not fully comfortable about making coal available to everyone at this level of stock position.”

    CIL is carrying estimated pit-head stocks of 50-million tons, while each thermal power plant has an average stock of about 15-tons of coal.

    According to the Coal Secretary, the apparent surplus coalavailability could quickly reverse into a shortage situation with just a bare 6% to 7 % rise in average plant load factor (PLF) of thermal power plants.

    According to one analyst’s report, thermal power generation was up a mere 0.3% year-on-year during the July-to-September 2016 period.

    As a result of slowdown of the industrial sector, average PLF of thermal power plants during two quarters of the current financial reduced to 54.6%, from 60% during corresponding period of previous year and the lowest in the last 15 years.

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    Indonesia's November HBA thermal coal price hits multi-year high

    Indonesia's Ministry of Energy and Mineral Resources has set its November thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $84.89/mt, a jump of 23% from October and the highest level seen in more than 3 1/2 years.

    November HBA also represents a 56% surge from a year ago. The HBA was last set higher at $85.33/mt in May 2013.

    The rally in HBA prices since May this year has been largely driven by a mix of supply cuts and strong demand from China.

    The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg GAR assessment; 25% on the 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.

    In October, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $72.27/mt, up from $62.14/mt in September, while the daily 90-day Platts Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $93.17/mt, up from $72.90/mt in September.

    The HBA price for thermal coal is the basis for determining the prices of 75 Indonesian coal products and calculating the royalty producers have to pay for each metric ton of coal they sell.

    It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.
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