Mark Latham Commodity Equity Intelligence Service

Thursday 3rd March 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files






    Macro

    Emerging: Positive signs.

    London’s Market for ‘Super Houses’ Slumps

    While less-expensive homes in London continue to sell well, the market for 20,000- to 40,000-square-foot properties loaded with amenities is now languishing.



    BANGALORE, India—Last year, Abhinandan Balasubramanian quit his job at a London-based financial-technology company. The startup scene in his native India was booming, and he wanted in.

    The 25-year-old Mr. Balasubramanian moved to Mumbai and in December launched his own business there: Altflo, a global online marketplace for assets such as real estate and shares in investment funds.

    Basing Altflo in India was an easy decision, Mr. Balasubramanian said. “The cost of scaling the company is much lower in India,” he said. Office space and talent are “multiples cheaper than in the U.K.”


    Back to Top

    Beijing Smog back.

    Image title
    Back to Top

    Oil and Gas

    Saudi Arabia raises crude prices for Asia, cuts for US


    Saudi Arabia, the world’s largest crude exporter, raised the price formula for shipments of its benchmark grade to Asia for April to the highest since October, while lowering prices for all cargoes to the U.S.

    State-owned Saudi Arabian Oil Co. set the official selling price for Arab Light crude shipments to Asia at a 75 cent-discount to the regional benchmark, the company said in an e-mailed statement. That’s more expensive, by 25 cents, than March shipments. The decision is the reverse of that predicted by local traders and refiners: six surveyed had expected the exports to be made cheaper, by 50 cents.

    The differential on Arab Light to Asia hasn’t been higher since October, when it was set at a premium of 10 cents.

    The company cut differentials for all four of the grades it sells to the U.S., lowering Arab Light, Arab Medium and Arab Heavy by 20 cents each.

    Prices for the four grades sold to northwest Europe were all increased, by as much as 35 cents for Arab Light. For buyers in the Mediterranean, prices for two grades were lowered and for another two kept unchanged.


    http://www.ft.com/fastft/2016/03/02/saudi-arabia-raises-crude-prices-for-asia/

    Attached Files
    Back to Top

    Putin says Russian oil producers agreed to freeze output in 2016


    Russian President Vladimir Putin said on Wednesday that domestic oil producers have agreed to keep this year's oil output in line with January levels, the first time he had given his view in public on a production freeze.

    "On the whole, an agreement was reached that we will keep (2016) oil output at the January level," Putin said about the outcome of a gathering he chaired on Tuesday with Russian oil producers in the Kremlin.

    After months of falling world oil prices, a preliminary agreement was reached in Doha in mid-February for Russia and several other major crude producers to freeze production, but until now Putin had not said publicly where he stood on the question of Russia steadying its output.

    That had left markets uncertain about the extent to which Russia's oil industry - in which the Kremlin wields outsize influence - would throw its weight behind a deal.

    Oil prices have plunged more than 70 percent from a peak in June 2014, driven by global oversupply exceeding 1 million barrels per day.

    The Russian economy shrank by 3.7 percent last year mainly due to cheaper oil, which together with natural gas accounts for half the state budget. International sanctions over Moscow's role in the Ukrainian crisis have also hurt the economy.

    Data showed on Wednesday that Russia's oil output in February was unchanged month on month, at 10.88 million barrels per day.

    Oil markets gave a lukewarm reaction on Wednesday to Russia's pledge to freeze output. [O/R]

    Even after Putin's comments, uncertainty remains because Iran has not signed up to a production freeze, and a Putin aide said more work was needed to get all the big producers lined up.

    "It was stressed that work with other large producing nations needs to be continued," Kremlin spokesman Dmitry Peskov said of the Kremlin meeting with top energy firms.

    "There is still uncertainty about some other producers - some have joined (the Doha group) but there are countries which have not made their intentions clear enough," Peskov told a teleconference with journalists.

    Iran is an obstacle to a global deal because it wants to ramp up production, capitalizing on the lifting earlier this year of international sanctions that had been imposed over Tehran's nuclear program.

    Russian Energy Minister Alexander Novak said on Tuesday that Iran may be treated separately, on an individual basis, in terms of commitments to production.

    Novak also said Russia planned to negotiate with other non-OPEC and OPEC nations for a potential meeting in March to try to agree a final decision on a freeze.

    http://www.reuters.com/article/russia-oil-kremlin-idUSL8N16A1W9
    Back to Top

    Gazprom's Medvedev, EU's Vestager to hold antitrust settlement talks next week


    Gazprom's deputy chief executive will meet the EU competition chief next week, three people familiar with the matter said on Wednesday, signalling progress in resolving antitrust charges against the Russian gas giant without a regulatory fine.

    The Russian state-controlled company is fighting accusations of overcharging customers and blocking rivals in eastern Europe, practices which the European Commission say breach the bloc's rules ensuring a level playing field.

    It is seeking to avoid a fine, which under EU rules could be up to $7.6 billion, equal to 10 percent of its 2014 revenue, and settle the charges with concessions.

    Both Gazprom and the European Commission have narrowed their differences on the issue and may soon find a solution, one of the sources said.

    Gazprom supplies around a third of the 28-member EU's gas and a decision in the case, which has dragged on for nearly five years, comes amid continuing tension between the European Union and Russia over Ukraine, Syria and the proposed Nord Stream gas link to Germany.

    Gazprom's deputy chief executive Alexander Medvedev will meet EU competition chief Margrethe Vestager in Brussels on March 9.

    "The meeting will take stock of the settlement discussion. A certain degree of progress has been made which warrants another discussion. Things are going well but still far from a deal," said one of the sources.

    A source at Gazprom Export confirmed the meeting plans. A Gazprom spokeswoman and European Commission spokesman Ricardo Cardoso both declined to comment.

    Medvedev met Vestager in December and both sides agreed to continue talks aimed at resolving the case.

    http://www.reuters.com/article/us-eu-gazprom-antitrust-idUSKCN0W41QC
    Back to Top

    Novatek Said to Seek Permission to Export Gas to EU Via Gazprom


    Novatek OJSC, Russia’s second-biggest natural gas producer, renewed attempts to get the right to export its gas to Europe, according to a government official.

    Novatek seeks to ship fuel to Europe, paying a commission to state-run gas export monopoly Gazprom PJSC, in a plan to compete with Norwegian gas in the region, the official said, asking not to be identified as the information isn’t public. No decision has been made, Kremlin spokesman Dmitry Peskov told reporters on a conference call. Novatek and Gazprom declined to comment.

    The request was sent to President Vladimir Putin, Vedomostireported earlier Wednesday. Novatek could boost the nation’s gas exports by 2.4 billion cubic meters (85 billion cubic feet) a year, or about 1.5 percent of Gazprom’s current supplies to the European Union, worth about 9.4 billion rubles ($127 million) in export duties for the budget, the newspaper said, citing a letter from Energy Minister Alexander Novak to Putin Feb. 18.

    German Supplies

    Novatek proposed to let it export gas produced by a Russian joint venture with Gazprom’s oil arm Arktikgaz OJSC, the official said. The company has a contract to supply German utility EnBW Energie Baden-Wuerttemberg AG since 2012, sourcing fuel in Europe.

    Novatek Gas & Power GmbH, the company’s trader, contracted 3.1 billion cubic meters of gas last year, with only 0.7 billion of gas initially produced in Russia, Vedomosti reported. Novatek’s exports from Russia could compete with Norwegian fuel supplied to German gas trader Verbundnetz Gas AG, 74 percent of which EnBW agreed to acquire late last year, the paper said.

    Novatek and other Russian gas producers, including state-run Rosneft OJSC, have challenged Gazprom’s decade-long monopoly on gas exports. They partially succeeded in 2013 when Putin allowed other companies to ship Russian liquefied natural gas abroad. The government is concernedending the pipeline monopoly would cut prices amid competition between Russian suppliers and cut budget revenue from gas exports, which was about $10.3 billion last year.

    Officials in Moscow are discussing options to meet the interests of Gazprom and its domestic rivals. They include obliging the monopoly to buy some fuel from other producers at a price close to the export alternative, at least for a planned link to China, the Energy Ministry said last year. The government will prepare proposals on the issue by May 15.

    http://www.bloomberg.com/news/articles/2016-03-02/novatek-said-to-seek-permission-to-export-gas-to-eu-via-gazprom
    Back to Top

    Gazprom Neft'S 2015 crude oil output up on Arctic, Orenburg, IRAQ


    Russia's Gazprom Neft said Wednesday that it increased its crude output last year due to higher production from its Arctic projects SeverEnergia, Prirazlomnoye and Novoport as well as continued growth at projects in the Orenburg region and Iraq.

    As Russia's fourth largest crude producer, Gazprom Neft's steadily increasing crude output played a role in boosting overall Russian output to post-Soviet record high levels last year. The company's crude output rose by 6.9% to 55.67 million mt, or around 1.1 million b/d in 2015, according to financial and operational results for the fourth quarter and 2015.

    Whether this growth trend will continue remains unclear, with low oil prices persisting, and Russian officials considering a coordinated production freeze at January 2016 levels with other key oil producing countries, which could limit Gazprom Neft's ability to increase production.

    The company has already indicated it is scaling back its plans for hydrocarbon output growth over the next decade. At the beginning of last month it said it has postponed by five years its plan to produce 100 million mt of oil equivalent, or 2 million boe/d, by 2020.

    Data published in a corporate magazine late Tuesday showed forecast crude output growth in Russia of 33% by 2025 to 78.6 million mt.

    Analysts see the impact of long-term low oil prices and the possibility that the government will increase taxation on producers to cover the state budget as further risks which could mean Russian producers scaling back output plans in the future.

    Gazprom Neft's crude output growth in 2015 contributed to a 20% increase in hydrocarbon production, which reached 79.7 million mtoe, or 1.6 million boe/d, according to the results.

    Gas output increased by 69.3% year on year, primarily due to higher production at the Urengoyskoye field, as well as startup of the Yaro-Yakhinskoye field and the Yuzhno-Priobskiy gas processing plant (UGPZ), as well as consolidation of 50% of Northgas volume, the company said.

    Output growth was underpinned by increased drilling in 2015, with production drilling up 5.9% year on year, despite a 5.7% drop on the quarter in Q4. Additional drilling included wells at Novoport, increasing the share of horizontal drilling and a 13.7% year-on-year increase in production drilling by proportionally consolidated subsidiaries, the company said.

    http://www.platts.com/latest-news/oil/moscow/russian-gazprom-nefts-2015-crude-oil-output-up-26385469?hootpostid=f622ded1642e46082424ee71cd2642b3
    Back to Top

    Exxon Mobil sees production up slightly as spending stalls


    Exxon Mobil Corp , the world's largest publicly traded oil company, said on Wednesday its output would rise slowly through 2017 as it continues cutting costs.

    But Chief Executive Rex Tillerson said the company, which raised $12 billion in the debt market earlier this week, could increase its spending if the right opportunities arose.

    "We have the financial flexibility to pursue attractive opportunities and can adjust our investment program based on market demand fundamentals," Tillerson said.

    The company, which is meeting with analysts in New York, said it expects its 2017 capital spending to be below its planned spending of $23 billion this year.

    It also said it is on track to start up 10 new oil and gas projects through the end of next year, adding 450,000 barrels of oil equivalent per day to its production capacity.

    Oil prices have fallen some 70 percent since mid-2014, prompting major companies to slash budgets for expensive projects designed to bring hard-to-find new discoveries online.

    Exxon's oil and gas production rose 3.2 percent in 2015, as the company's downstream refining unit provided some insulation against falling oil prices that have hit its upstream exploration and production unit.

    The company's spending peaked at $42.5 billion in 2013 and has been falling since then. In early 2015, it said its average annual spending would be around $34 billion over the next several years.

    In February of this year, it slashed planned spending for this year to $23.2 billion, a 25 percent drop from final 2015 outlays of $31.1 billion.

    http://www.reuters.com/article/us-exxon-mobil-outlook-idUSKCN0W41PI
    Back to Top

    Shell Said to Mull Sales From U.S. to India in $30 Billion Plan


    Royal Dutch Shell Plc is lining up assets for a $30 billion divestment program that may extend from the U.S. and Trinidad to India following its record takeover of BG Group Plc, according to people with knowledge of the matter.

    Assets linked to Shell’s interests in Trinidad & Tobago and stakes in oil and gas fields in India may be on the block, two of the people said, asking not to be identified because the plans are confidential. Pipelines in the U.S. are also high on the list, they said, adding that disposal plans aren’t final and will depend on demand.

    Raising money through divestments is crucial for Shell after the BG purchase wiped out more than $10 billion of its cash, prompting a credit-rating cut from Fitch Ratings Ltd. as debt-to-equity levels rose. Oil’s collapse over the past 20 months has eroded balance sheets across the industry and the outlook for a sustained market rout may hinder Shell’s efforts to find buyers for the assets.

    The Anglo-Dutch company entered Trinidad’s Atlantic liquefied natural gas project in 2014 with the purchase of stakes from Repsol SA. The BG deal raises its interests in the facility’s four units and gives it control over gas fields in the country, as well as the pipelines that transport the fuel to the plant.

    In India, Shell has gained operatorship of the Tapti and Panna-Mukta fields off the country’s west coast. It also got BG’s 49.75 percent stake in Mahanagar Gas Ltd., which supplies the fuel to homes and vehicles in Mumbai. In Myanmar, it has interests in four exploration blocks in the offshore Rakhine Basin.

    In the U.S., Shell’s interests in a network of pipelines that carry both crude and oil products will be a focus for divestments, the people said. Some of the stakes are held through Shell Midstream Partners LLP, which started trading in 2014 in New York. The business is likely to account for as much as 15 percent of the $30 billion sale target over three years, Shell Chief Executive Officer Ben Van Beurden said on a Feb. 4 conference call.

    The price of Brent crude, the international benchmark, has tumbled almost 70 percent since mid-2014. That’s wiped out profits across the industry and sapped cash for acquisitions. The Hague-based Shell is the only major oil producer to have used the downturn to make a large purchase, the biggest in its history. The company says the BG deal will add to cash flow at any oil price and increase its production and reserves.

    Europe’s largest oil company by market value sold $20 billion of assets in 2014 and 2015 combined, Van Beurden said last month. Of the $30 billion in disposals targeted for 2016-18, less than $10 billion will come in this year while the market remains weak, he said.

    Sales are more likely to be “backend-loaded than frontend-loaded” over the three years, Van Beurden said. The first $10 billion to $15 billion will focus on “downstream and midstream,” according to the CEO. That includes oil terminals, refineries and pipelines.

    There’s interest in assets particularly in the downstream industry and “some local gas markets,” as well as among private-equity investors, he said. “The buyers are there.”

    http://www.bloomberg.com/news/articles/2016-03-02/shell-said-to-mull-sales-from-u-s-to-india-in-30-billion-plan
    Back to Top

    Petrobras Needs Cash Injection of Up to $26 Billion, Maua Says


    Brazil’s state-run oil producer Petrobras needs a capital injection of as much as 100 billion reais ($25.5 billion) to balance its finances, even if it takes three years to complete, said Luiz Fernando Figueiredo a former central bank director and Chief Executive Officer of Maua Capital.

    “Everyone knows that Petrobras needs to be capitalized at some moment, and every day that passes this gets more expensive,” Figueiredo said Tuesday at an event in Sao Paulo organized by Bloomberg and the capital markets association known as Anbima. “It needs a capitalization soon, even if it is a plan for the next one, two or three years.”

    The injection could be done by development bank BNDES, which is already a shareholder, he said. While Rio de Janeiro-based Petrobras is making efforts to cut costs amid the low oil price environment that has made many of its projects uneconomical, this hasn’t been enough to lower its enormous debt load and reduce leverage, Figueiredo said.

    Petroleo Brasileiro SA saw its leverage explode during the commodities boom when it borrowed heavily to expand oil production into deeper waters of the Atlantic Ocean and build refinery projects that went over budget. It then became the focus of Brazil’s biggest corruption scandal known as Carwash. The company’s refining division also lost tens of billions of dollars during the commodities boom because it was subsidizing fuel imports as part of a wider government effort to curb inflation.

    http://www.bloomberg.com/news/articles/2016-03-02/petrobras-needs-cash-injection-of-up-to-26-billion-maua-says
    Back to Top

    Petrobras loses Brazil tax case that could cost $1.9 bln


    Brazil's state-run oil company, Petrobras, will have to pay 7.3 billion reais ($1.9 billion) in back taxes and fines, the country's tax authority, Carf, has decided.

    Petrobras has not made provisions for the tax case, which related to deductions on its 2007 and 2008 filings, and can still be appealed before Carf and the courts. Carf reported the decision on Wednesday.

    Carf said Petrobras could not take certain corporate income tax reductions related to its restructuring of Petros, its employee pension fund. The corporate income taxes in question are known in Brazil by their Portuguese initials IRPJ and CSLL.

    Petroleo Brasileiro SA, as Petrobras is formally known, faced 19 potential federal, state and municipal tax liability cases totaling 93.5 billion reais ($23.7 billion), according to its third-quarter 2015 financial statements.

    Of that amount, Petrobras has provisioned 3.38 billion reais to pay them, an amount less than half the latest judgment against it and below the average 4.92 billion reais for each of the 19 cases.

    In the last year, Petrobras has been forced to pay more than 2 billion reais in tax judgments that it had been fighting.

    Of the 19 cases listed in the third quarter financial statements, the 7.3 billion real tax judgment against Petrobras was the third-largest potential tax liability.

    Petrobras has classified the case, which is awaiting final judgment of appeals under the country's tax system, as a "possible" liability and not a "probable" liability, meaning it does not have to make a provision for the case.

    Petrobras said it would wait for formal publication of any Carf decision before it makes any decision on how to deal with it.

    http://www.reuters.com/article/petrobras-taxes-idUSL2N16A11K
    Back to Top

    Genel Energy announces full year 2015 results


    - 2015 revenue of $344 million, down 34% due to the fall in the oil price more than offsetting higher production volumes
    - 2015 production of 84,900 bopd, an increase of 22% on 2014
    Impairment expense of $1,038 million recognised in relation to the Taq Taq PSC
    - 2015 capital expenditure of $157 million, a reduction of 77% year-on-year
    - KRI cash proceeds of $148 million during 2015
    - Cash balances at 31 December 2015 stood at $455 million (2014: $489 million)

    Outlook

    Production and revenue guidance for 2016 is maintained at 60-70,000 bopd, and $200-275 million assuming a $45/bbl Brent oil price and at $160-220 million assuming a $35/bbl Brent oil price
    KRI capital expenditure guidance for 2016 is unchanged at $80-120 million
    The KRG Ministry of Natural Resources' statement of 1 February 2016 commits to regular and predictable oil export payments, based on monthly production entitlement
    Additional monthly payments, initially equivalent to five percent of the gross monthly netback revenue of fields and set to rise as the oil price rebounds, will be made towards the recovery of the receivable
    Regarding the gas development, contract awards are expected in April 2016 for the midstream pre-FEED, technical consultancy study package, and the upstream development plan

    Murat Özgül, Chief Executive of Genel, said:

    'We recognise and share the disappointment of the recent Taq Taq reserves update. Both Taq Taq and Tawke remain low-cost oil fields by any global benchmark. The fields are set to be significantly cash generative going forward, with a discretionary investment programme aiming to maximise the value of the remaining reserves. Our 264 million barrels of net 2P reserves comprise a robust oil business well positioned in the current oil price environment.

    The instigation of the new payment mechanism by the KRG Ministry of Natural Resources in February 2016 provided clarity over the timing and quantum of our monthly receipts for export payments, recognising our receivable and putting in place the process through which it will be recovered.

    We are now starting to make real progress in the development planning for our KRI gas business. It remains a unique opportunity underpinned by a government signed gas sales agreement.'

    http://www.oilvoice.com/n/Genel-Energy-announces-full-year-2015-results/d6c99ff68818.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29
    Back to Top

    Police warn North Sea oil firms of organised crime threat


    Police have warned the slump in the oil industry could lead to gangsters muscling in on hard-hit Scottish firms.

    Oil and gas companies have been laying off thousands of workers in the North Sea industry and looking for new deals on contracts.

    And police are now working with some of Aberdeen’s hardest-hit firms amid concerns gangsters could undercut legitimate businesses with their front companies.

    In a report, Chief Constable Phil Gormley of Police Scotland said they were warning the industry’s main body of the dangers of being dragged into the criminal underworld.

    said: “An initial approach has been made to Oil and Gas UK to discuss potential threats to the energy industry from serious organised crime.”

    Chief Inspector Kevin Wallace, of Police Scotland’s North East division, confirmed there was a threat of gangland contractors muscling their way in to the industry.

    He said: “Serious organised crime targets legitimate businesses across a wide variety of industries, which impacts on communities throughout Scotland.

    “Police Scotland will be meeting with Oil and Gas UK to ensure legitimate businesses can understand how serious organised crime attempts to target them and how they can work with law enforcement agencies to prevent criminals procuring services connected to the North Sea industry.”

    Dr Alix Thom, of Oil and Gas UK, said: “We are in regular communication with Police Scotland via the Energy Industry Liaison Unit and our Security Committee.

    https://wpcluster.dctdigital.com/energyvoice/oilandgas/north-sea/103125/police-warn-oil-firms-of-organised-crime-threat/
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending February 26, 2016


    U.S. crude oil refinery inputs averaged about 15.9 million barrels per day during the week ending February 26, 2016, 167,000 barrels per day more than the previous week’s average. Refineries operated at 88.3% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.3 million barrels per day. Distillate fuel production increased last week, averaging 4.8 million barrels per day.

    U.S. crude oil imports averaged 8.3 million barrels per day last week, up by 490,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.8 million barrels per day, 7.2% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 454,000 barrels per day. Distillate fuel imports averaged 306,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.4 million barrels from the previous week. At 518.0 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 1.5 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 2.9 million barrels last week and are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 3.7 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 9.9 million barrels last week.

    Total products supplied over the last four-week period averaged about 19.7 million barrels per day, down by 1.1% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.3 million barrels per day, up by 6.9% from the same period last year. Distillate fuel product supplied averaged over 3.4 million barrels per day over the last four weeks, down by 18.8% from the same period last year. Jet fuel product supplied is up 6.1% compared to the same four-week period last year.

    Genscape was right: CUSHING STOCKS +1.2M TO 66.3M BARRELS IN FEB 26 WK

    http://ir.eia.gov/wpsr/wpsrsummary.pdf

    Attached Files
    Back to Top

    US oil production slips again


                                                 Last Week   Week Before  Year Ago

    Domestic Production '000....... 9,077             9,102           9,324

    http://ir.eia.gov/wpsr/overview.pdf
    Back to Top

    Consol Energy is getting deleted from the S&P 500


    American Water Works will replace Consol Energy on the benchmark S&P 500 index.

    According to a statementfrom S&P Dow Jones Indices on Tuesday afternoon, Consol Energy will then replace Solera Holdings in the S&P MidCap 400.

    The changes will be effective after the market close on March 3.

    "Additions to and deletions from S&P Dow Jones Indices do not in any way reflect an opinion on the investment merits of the companies involved," S&P Dow Jones Indices noted.

    http://uk.businessinsider.com/american-water-replaces-consol-energy-on-sp-500-2016-3?r=US&IR=T
    Back to Top

    McClendon dies in fiery car crash, a day after indictment


    Former Chesapeake Energy Chief Executive Aubrey McClendon, a brash risk-taker who helped transform the U.S. energy industry with shale gas, died when his car slammed into an overpass on Wednesday, one day after being charged with breaking federal antitrust laws, police said. He was 56.

    McClendon was alone in his 2013 Chevy Tahoe when it sped into an embankment along a remote two-lane road in Oklahoma City, where it burst into flames, a police spokesman said. The cause of death will be determined later by a medical examiner, the spokesman said.

    The crash occurred less than 24 hours after the U.S. Department of Justice announced that McClendon had been indicted for allegedly colluding to rig bids for oil and gas acreage while he was at Chesapeake. He had denied the charges.

    At a press briefing in Oklahoma City, Captain Paco Balderrama said McClendon was traveling at “well above” the 40 mile per hour speed limit before he "pretty much drove straight into the wall." He was not wearing a seat belt.

    “There was plenty of opportunity for him to correct or get back on the roadway and that didn't occur," Balderrama said.

    Industry executives and state officials remembered McClendon as a "visionary" who ushered in a new era of U.S. energy abundance by pursuing the hydraulic fracturing technology that would unlock decades' worth of domestic natural gas and oil resources.

    Over more than two decades, he built Chesapeake from a small wildcatter into one of the world's biggest natural gas producers before resigning in 2013, after a corporate governance crisis and investor concerns over his heavy spending

    It may take one to two weeks to complete an investigation into the accident, which occurred about 8 miles (13 km) from American Energy Partners, the company that McClendon founded shortly after leaving Chesapeake.

    Tuesday's indictment followed a nearly four-year federal antitrust probe that began after a 2012 Reuters investigation found that Chesapeake had discussed with a rival how to suppress land lease prices in Michigan during a shale-drilling boom. Although the Michigan case was subsequently closed, investigators uncovered evidence of alleged bid-rigging in Oklahoma.

    http://www.reuters.com/article/us-chesapeake-enrgy-mcclendon-idUSKCN0W42ME
    Back to Top

    Alternative Energy

    Sichuan to build China’s largest hydropower base in 2016-20


    Southwestern China’s Sichuan province planned to build the largest hydropower base in China during the 13th Five-Year Plan period (2016-2020), in a bid to further push for clean and efficient energy consumption, sources learned from a local energy meeting.

    Sichuan province witnessed clean energy spring up during the 12th Five-Year Plan period (2011-2015). During the period, its installed capacity of hydropower generation increased 18.1% on average each year to some 70 GW by end-2015.

    Besides, new energy boosted from scratch, and its installed capacity stood at 1.23 GW by end-2015.

    By 2020, consumption of non-fossil energy is expected to reach a share of 34.2% in the province’s total energy use, with energy consumption per unit of GDP aimed to fall 18.7% from 2015.

    http://en.sxcoal.com/0/141892/DataShow.html
    Back to Top

    U.S. hi-tech energy agency chief aims to outperform Tesla


    A wing of the U.S. Department of Energy focused on breakthrough technologies may soon give billionaire entrepreneur Elon Musk's most recent foray into energy storage a run for its money, the unit's director said.

    Advanced Research Projects Agency-Energy, or ARPA-E, which funds projects meant to transform energy markets, has made huge strides over the last few years on next-generation batteries that could make electric cars and renewable energy cheaper and more accessible, Ellen Williams said in an interview this week.

    The battery division of Musk's Tesla Motors turned a profit in the fourth quarter, after the first shipments of its rechargeable products helped to reduce losses from the company's auto business. Its Powerwall batteries store energy that homes and small businesses generate with solar panels. The Powerpack model is designed for large commercial facilities.

    Williams said her agency has helped kickstart a dozen high-risk projects based on newer technologies that could soon outperform Tesla batteries.

    "What Musk has done that is creative and important is drive the learning curve. He's decided to take an existing, pretty powerful battery technology and start producing it on a very large scale," she said.

    "But it's not technology innovation in the sense of creating new ways of doing it. We are pretty well convinced that some of our technologies have the potential to be significantly better," Williams said.

    Batteries are in a "Wild West" phase, said Colin Wessells, chief executive of Alveo Energy, a San Francisco area startup developing a high power, long lifecycle battery technology for renewable energy and microgrids, or localized groupings of energy providers.

    Only five energy grid storage batteries have been commercialized as researchers and budding entrepreneurs race to bring new technologies to market, he noted.

    Wessells, whose company has ARPA-E support, said huge manufacturing advances will speed up the commercialization of battery products.

    "We are in a burst of innovation right now," he said at his exhibition stand at the ARPA-E conference outside of Washington this week. "Five years from now there will be a few technologies out there that nobody saw coming."

    ARPA-E is set to get a huge boost after the United States and 19 other countries launched Mission Innovation at the United Nations climate summit in Paris late last year. The governments pledged to double spending on clean energy research and development over the next five years. The United States will boost its overall energy research and development budget to $12.8 billion by 2021.

    ARPA-E was launched in 2009 with a budget of $400 million and a mandate to fund the most cutting edge technologies. President Barack Obama's budget request for 2017 would increase its allocation to $1 billion in five years.

    "With that increased budget we can definitely make a difference," said Williams.

    STAYING FOCUSED

    ARPA-E funds projects for three years at a time, focusing on commercializing new and exciting ideas and training researchers to pitch them in ways investors can understand.

    This differs from traditional academic research, which tends to take too long, Williams said, noting that scientists "always focus on the next problem."

    "What we do that is very different is we really set a target to get something specific done in a specific period of time," she said.

    Williams said ARPA-E aims to steer projects away from what Microsoft Corp founder Bill Gates called a "valley of death" of failures between the early promise of a new energy concept and commercializing it into a viable technology that exists in the clean energy sector.

    Gates, who launched a multibillion-dollar clean energy research initiative alongside Mission Innovation in Paris, said last week the money that he and other entrepreneurs will invest in clean energy R&D will "complement government research" to deliver "energy miracles."

    Some of these miracles may come out of ARPA-E supported labs and workshops, Williams said.

    Besides energy storage, ARPA-E's research projects include using robots and drones to help develop more sustainable sorghum-based biofuels, and using sensors to make heating and air conditioning systems more energy efficient.

    The agency has funded projects in all 50 states.

    "These concepts are way out-there now, but in a few years from now they may be the way things work," she said.

    http://www.reuters.com/article/usa-energy-technology-idUSL2N1691F7
    Back to Top

    SunEdison suspends quarterly dividends on preferred stock


    SunEdison Inc said on Wednesday it suspended payment of quarterly dividends on its preferred stock, two days after the embattled solar company delayed filing its annual report amid an internal investigation into its financial position.

    The company's shares were down 11.7 percent at $1.58 after the bell. They had closed up 19.3 percent in regular trading.

    SunEdison said it suspended payment of quarterly dividends on its 6.75 percent series A perpetual convertible preferred stock.

    Earlier on Wednesday, the Wall Street Journal reported that Goldman Sachs, Barclays, Citigroup and UBS have balked at providing loans they had committed to fund TerraForm Power Inc's , SunEdison's yield company, takeover of some of Vivint Solar Inc's assets. (on.wsj.com/218xkl1)

    The banks have told SunEdison its failure to provide them with up-to-date financial statements means it hasn't fulfilled a condition of the loan agreement, the Journal reported, citing sources.

    SunEdison said on Monday the internal investigation is based on allegations by formerexecutives concerning the company's anticipated financial position disclosed to the board.

    http://www.reuters.com/article/sunedison-inc-dividends-idUSL3N16A5MY
    Back to Top

    Agriculture

    Monsanto slashes forecast on strong dollar, pricing pressure


    Monsanto Co, the world's largest seed company, slashed its earnings forecast for the year, hurt by a strong dollar and low prices for its seeds as farmers curb spending.

    Monsanto's shares were down 5.3 percent at $87.60 in premarket trading on Wednesday.

    The company is also under pressure due to the ongoing merger between DuPont  and Dow Chemical Co, a deal that could shake up the industry.

    Monsanto had warned in January that souring farm economy and currency woes would push its 2016 earnings to the lower half of its original forecast in December.

    Monsanto said on Wednesday it now expects adjusted earnings per share of $4.40-$5.10, compared with the $5.10-$5.60 it had forecast in December.

    About 25-30 cents of the reduction in the earnings per share outlook is due to the impact of the stronger dollar, Monsanto said.

    The St. Louis-based company also trimmed its cash flow forecast for the year to $1.4 billion-$1.6 billion from $1.6 billion-$1.8 billion.

    Monsanto said it now expects full-year net earnings per share of $3.42-$4.29, down from its previous forecast of $4.00-$4.66.

    http://www.reuters.com/article/monsanto-outlook-idUSL3N16A45M
    Back to Top

    Base Metals

    World’s top copper miner says rally to fade as gluts persist


    Codelco chairman says market may swing to a deficit in 2018.
    Danielle Bochove and David Stringer (Bloomberg) | 2 March 2016 11:51

    Codelco, the world’s biggest copper producer, said that a global surplus will persist through this year and next, and dismissed suggestions that a recent gain in prices was likely to endure.

    The metal will probably fluctuate at around $2 to $2.10 a pound for a couple of years, with extreme volatility, chairman Oscar Landerretche said in an interview in Florida. After the gluts this year and in 2017, the market may swing to a deficit of 50 000 to 100 000 metric tons in 2018, with the shortfall expanding to 300 000 to 400 000 tons in 2019, he said.

    Copper has rebounded from a six-year low in January after sinking 25% last year as slowing growth in China hurt demand in the largest user and spurred a global surplus. The rout forced miners including Santiago-based Codelco to rein in costs, while others such as Glencore shuttered mines to curb supply. Glencore chief executive officer Ivan Glasenberg said on Tuesday that he now sees commodity prices bottoming.

    Those in the market who believe that copper will rise above $3 a pound “must have some secret information that we’re not aware of,” Landerretche said on Tuesday. “It doesn’t look very plausible.”

    Copper for delivery in three months rose 0.5% to $4 716 a metric ton on the London Metal Exchange on Tuesday, equivalent to $2.14 a pound, and extended that advance on Wednesday to $4 786. Prices are 11% higher than the low of $4 318 touched on January 15, after rising 2.9% in February to post the biggest monthly gain since April.

    The pricing of recent mine deals implied that some producers expect copper to be significantly higher in the longer term, Landerretche said. Sumitomo Metal Mining Co’s $1 billion deal last month to raise its stake in a Freeport-McMoRan mine reflected an implied price in excess of the current spot prices, according to Sanford C. Bernstein.

    Goldman Sachs Group has forecast more losses for copper this year, saying last month it didn’t expect a material recovery in Chinese metals demand growth. A deficit is likely to develop toward the end of the decade, BHP Billiton said last week, as copper output is constrained at existing mines on lower grades.

    While some small miners with higher costs may need to close down to stabilise prices, a large proportion of producers have cash costs that put them “right on the fence,” Landerretche said.  “So that makes for this sort of agonising situation,” with miners continuing to attempt to avoid shutting operations completely, he said.

    By the end of 2016, Codelco will have lowered operating costs by $2.5 billion in two years and is continuing to seek savings, he said.

    http://www.mineweb.com/news/base-metals-and-minerals/worlds-top-copper-miner-says-rally-to-fade-as-gluts-persist/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A%20MasterGold%20%28Gold%20News%29&utm_term=MasterMetals
    Back to Top

    Steel, Iron Ore and Coal

    Marubeni plans Egyptian coal plant


    Japan's Marubeni Corp and Egypt's El Sewedy Electric have agreed with Egypt's state-run electricity utility to conduct a feasibility study into the construction of a coal-fired power plant in Egypt.

    The move comes as part of the Japanese trading firm's drive to boost its power infrastructure business worldwide and follows its announcement on Tuesday to build a 400 megawatt gas-based combined cycle power station in Bangladesh.

    Earlier this week, Japanese Prime Minister Shinzo Abe said after meeting with Egyptian President Abdel Fattah al-Sisi in Tokyo that Japanese companies were set to take part in Egyptian projects worth about 2 trillion yen ($17.5 billion) in the electricity and other sectors.

    Under the memorandum of understanding signed on Wednesday, Marubeni and Egyptian electric equipment manufacturer El Sewedy will conduct a feasibility study into building an ultra-supercritical coal-fired power plant for the state-owned Egyptian Electricity Holding Company in the West Mattrouh region, 450 km northwest of Cairo.

    The Nikkei business daily reported on Tuesday that Marubeni might help build a 4 gigawatt (GW) coal-fired power station, which could cost more than 400 billion yen ($3.50 billion).

    However, a Marubeni spokesman said on Wednesday the size and cost of the plant had not been decided, adding the feasibility study would be done within two years.

    To meet rising power demand and diversify energy resources, Egypt has announced plans to install about 12.5 GW of coal-fired power stations by 2022, according to Marubeni.

    Marubeni has won engineering, procurement and construction contracts for more than 100 GW of power plant projects globally, of which coal-fired power plants account for 40 GW.

    http://www.reuters.com/article/marubeni-egypt-plant-idUSL3N16A3LG
    Back to Top

    US tariffs hit Chinese steel industry


    The latest US tariffs imposed on steel from China could hurt the Chinese steel market as the sector continues to see declines in demand and is suffering from a supply glut, industry observers said.

    The US Department of Commerce announced in a preliminary decision on Tuesday that it had placed tariffs on cold-rolled steel from China and several other countries. China received the most punishing tariff, 266 percent. Cold-rolled steel is used in automobile parts and appliances.

    It was the second high tariff the Commerce Department has levied against China in several months, the other one a 256 percent tariff on corrosion-resistant steel, which is used in automobiles and air conditioners.

    According to the Commerce Department, China exported more than 790,000 metric tons of cold-rolled steel to the US in 2014, and is the biggest exporter of the commodity among the countries with the newly imposed tariffs.

    "At this point I would doubt that there would be any steel coming in from China to the United States," said John Packard, president and publisher of the trade publication Steel Market Update.

    "The Chinese were already blocked from shipping hot-rolled from a past ruling from many years ago, and this will essentially stop them from being able to ship cold-rolled and [corrosion-resistant] products to the United States," he said.

    Domestic steel producers in the US filed petitions accusing several international competitors of dumping their products in the US and receiving subsidies from their governments.

    China was shipping from 130,000 to 275,000 metric tons of steel a month to the US, which has dropped to around 83,000 metric tons a month, according to figures compiled by Steel Market Update.

    In early 2015, China was averaging about 60,000 metric tons of cold-rolled steel exports to the US monthly, but that declined to less than 40 tons in January and February 2016. "These are not insignificant numbers," Packard said.

    China's steel industry is already facing a slowdown due to decline in demand that has led to large supplies of cheaply priced steel. The government announced earlier this week that roughly half a million steel workers will be laid off.

    Adam Hersh, senior economist at the New York-based Roosevelt Institute, said that China has overinvested resources in steel capacity and is now cutting back, and the tariffs will pressure producers.

    "What it does is that it's going to financially squeeze the producers in China who have not responded to market signals when prices were low to pull back on investments and increasing production. So they're going to find themselves with a lot of product that's worth less and less," he said.

    The steel industry is also affected by the country's shift from a manufacturing-led economy to a service-based one, and a desire to curb pollution caused by heavily industrialized sectors like steel.

    http://en.chinamining.com.cn/News/2016-03-03/1456986005d75493.html

    Attached Files
    Back to Top

    Major countries post decrease in Jan crude steel output


    Major steel-producing countries around the world including China posted a decline in crude steel output in January, indicating stagnant demand amid a slowing economy.

    Globally, a total 66 countries produced 128 million tonnes of crude steel over January, falling 7.1% on year, the biggest decline since July 2009, showed data from the World Steel Association.

    In January this year, China saw its crude steel slide 7.8% on year to 63.2 million tonnes, while Russia, America, South Korea and Japan reported a yearly reduction of 10.6%, 8.8%, 4.5% and 2.8%, respectively, the association data showed.

    China has vowed to implement the supply-side structural reform this year, which mainly targets capacity cut in coal and steel sectors.

    The Chinese government’s move may lead to production cutbacks in other countries, as an international oversupply seems urgent to address.

    Japan-based Nippon Steel & Sumikin Stainless Steel Co., Ltd (NSSC) announced to close a furnace in June this year and another in the next year.

    "A positive impact of China’s energy reform could be expected on the global steel market, which may see a shrink in capacity and bolster up prices," said Song Zhiyu, president of Taiwan-based China Steel Corporation (CSC).

    The demand may remain a bit resilient for steel products from CSC, which has forecasted sales orders of 3.35 million tonnes in the second quarter of the year, up 3-4% from the 3.27 million tonnes in the previous quarter.

    http://en.sxcoal.com/0/141894/DataShow.html

    Attached Files
    Back to Top

    China Feb steel sector PMI further rebounds to 49


    The Purchasing Managers Index (PMI) for China’s steel industry further rebounded to 49 in February, a rise of 2.3 from last month, showed the latest data from the China Federation of Logistics and Purchasing (CFLP) on March 2.

    It was the third consecutive monthly increase and the highest level since May 2014, which signaled a better condition in steel industry last month. However, it was still the 22th straight month below the 50 threshold.

    The supply and demand situation has improved last month, owing to the government’s efforts of cutting steel capacity and destocking real-estate inventory.

    The output sub-index saw a third straight increase of 3.9 from January to 49.5 in February, indicating a higher production enthusiasm from steel makers due to the improvement of profits.

    Domestic steel output will continue to increase in later period as steel mills gradually resume production in March. However, the rise may be rather limited, because many steel enterprises are still in losses and restricted by tight working capital.

    Daily crude steel output of key steel mills in mid-February averaged 1.56 million tonnes, edging down 0.33% from ten days ago but 1.52% higher than January, according to China Iron and Steel Association (CISA).

    The average crude steel output may see a limited monthly rise in February. But the rise will not last long if prices go down, analysts said.

    The new order sub-index also saw a third straight increase on month to 50.9 in February, the first time above the 50-point threshold in 19 months since June 2014, which indicated a persisting growth in market demand.

    While the new export order index decreased 4.7 on month to 46.2, due to the narrowing of price gap between domestic and abroad products amid weak demand and intensified international anti-dumping activities.

    The sub-index for steel products stocks stood at 44.8 in February, up 10.4 from January. That was mainly impacted by the weak demand in February, when purchasing activities largely halted for the Chinese Lunar New Year.

    Steel products stocks in key steel mills stood at 14.62 million tonnes on February 20, a ten-day rise of 5.62% and 16.96% higher than January, showed data from CISA.

    Domestic steel prices are expected to see more rises together with fluctuations in March, the traditional busy season. And the supply side may face more pressure as steel mills accelerate production amid the uptick of steel prices.

    http://en.sxcoal.com/0/141853/DataShow.html
    Back to Top

    Xinjiang steel collapse casts shadow over China's western ambitions


    As China slims down its bloated steel sector, the western region of Xinjiang is feeling the pain even more than the industry's heartland to the east, threatening efforts to develop a restive area that is home to the mostly Muslim Uighur people.

    Over 10 million tonnes of steel production capacity in Xinjiang - enough to produce about a tenth of annual U.S. output - has shut in an area where Beijing has encouraged investment in industries ranging from steel to textiles, in the hope of stimulating growth and curbing unrest by boosting jobs.    

    The decline in the fortunes of Xinjiang's steel sector highlights the challenge Chinese policy makers face ensuring job cuts do not strain social cohesion or undermine stability.

    China aims to lay off 5-6 million workers over the next two to three years in the country to curb industrial overcapacity and pollution, and will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors, sources told Reuters.

    "The situation is very severe. There are many newly built steel mills being closed and steel prices have tumbled," saida sales official at a unit of Xinjiang Ba Yi Iron and Steel Co., Ltd, noting the unit was losing 300-400 yuan ($45.95-$61.27) a ton.

    The official declined to be named because he was not authorized to speak to media, but at least seven mills were built in western regions under Beijing's investment drive.

    Thousands of steel jobs are estimated to have gone in Xinjiang after some "irrational" investments from 2010, said Chen Ziqi of China International Engineering Consulting Corporation.

    Human resources' minister, Yin Weimin, said on Monday that China expects to lay off 1.8 million workers in the steel and coal sector, or 15 percent of total.

    But Xinjiang is particularly vulnerable given its relatively sparse population and limited export opportunities, even with China's ambition to create a new Silk road and economic belt stretching from Western China to Central Asia and Europe.

    "Xinjiang's location is a big problem. Its internal demand hasn't picked up sufficiently to match the expanded capacity," said Jiang Feitao, a policy researcher at the China Academy of Social Sciences, a state thinktank.

    http://www.reuters.com/article/us-china-steel-xinjiang-idUSKCN0W42XF
    Back to Top

    15 specs addition to India's Steel & Steel Product Quality Order to become effective this month

    15 specs addition to India's Steel & Steel Product Quality Order to become effective this month

    From March 18, Bureau of Indian Standards will make ISI certification mandatory for 15 more steel products. Inclusion of these specs in Steel & Steel product Quality Control Order means that the overseas mills have to ship steel items into India under BIS certification, for which the mills have to be pre-approved with BIS plugging cheaper imports for a while and it is likely that only serious players will remain in fray in long term.

    http://steelguru.com/steel/15-specs-addition-to-steel-steel-product-quality-order-to-become-effective-this-month/447565#tag
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

    The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.