Mark Latham Commodity Equity Intelligence Service

Friday 4th March 2016
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    Who's Running Brazil? Chaos Builds as Rousseff Ducks Her Allies

    When President Dilma Rousseff of Brazil extended her visit to Chile last weekend, she was not engaging in an act of international relations but of domestic avoidance. Her Workers’ Party was holding anniversary celebrations in Rio de Janeiro and if she had shown up as planned, there would likely have been more than a few boos.

    All across South America, plunging oil and commodity prices have caused political instability, but Rousseff ranks among the least popular heads of government. Since she began her second term 14 months ago, a wide corruption probe and deep recession have gnawed away at her support, nearly paralyzing the government and causing many now to wonder how she can continue and who is in charge.

    "There is no type of leadership, everyone is pulling in a different direction," Luiz Fernando Figueiredo, former central bank director, said in an interview. "Without a doubt the possibility of impeachment is gaining momentum. Over the past three to four weeks, we’ve reached a boiling point."

    This week, Justice Minister Jose Eduardo Cardozo became the third cabinet member in five months to resign under party pressure, as members express anger with austerity measures and the probe into kickbacks at state-run oil company Petrobras that has locked up several of their former leaders.

    Investigations are even encroaching on former President Luiz Inacio Lula da Silva, with the latest threat coming on Thursday after local media reported a former government leader in the Senate allegedly negotiated a plea bargain that could potentially drag Lula and the president deeper in to the corruption scandal and accelerate her ouster. Investors have actually begun bidding up the currency and stocks -- the benchmark gauge snapped back into bull market territory Thursday after plunging last year -- as a bet that impeachment would resolve the impasse; it’s a curious gamble given that such a development could drag on for months and trigger a battle for power.

    While the rank and file of the Workers’ Party, known as the PT, are still rallying behind Lula in spite of the corruption probe, what they ask of Rousseff is that she scales back on budget cuts and returns to the party’s traditional leftist values. That leaves her stuck between her party and the more pro-market Brazilian Democratic Movement Party, or PMDB, her largest ally in Congress.

    During the anniversary celebrations last weekend, Lula was honored as a hero and figured prominently in the party’s TV ads. By contrast, Rousseff has alienated members for having cut labor benefits, hiked interest rates, and proposing to increase the age of retirement. Moreover, her campaign strategist has been arrested amid reports that her 2010 presidential bid received illegal donations from a construction company.

    Rousseff’s press office declined to comment on this story.

    The president is now so isolated that her ability to stay the course of austerity is severely compromised as are her chances of fending off efforts to remove her.
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    Moody's downgrades BHP Billiton's debt

    Credit ratings agency Moody's Investors Service cut its ratings on BHP Billiton Plc to "A3" from "A1", citing a deterioration in the company's earnings and cash flow, and said the outlook on the ratings was negative.

    A slump in the prices of commodities such as copper and iron ore has put the balance sheets of miners the world over under strain.

    Moody's said it expected BHP's credit metrics to remain substantially weaker as low commodity prices and softer demand fail to offset changes in the company's dividend policy.

    BHP abandoned its progressive dividend policy and slashed its interim dividend by nearly three quarters last week in order to conserve cash.

    The miner has long maintained that a solid "A" level credit rating is its top priority. It said it had $25.9 billion of debt at the end of 2015.

    Last month, Standard & Poor's also cut the company's debt ratings to "A" from "A+".
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    Beijing Smog back.

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    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.”

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    Executives of Brazil's No. 2 building company say it paid Rousseff campaign suppliers -paper

    Executives from Brazil's second-largest building company Andrade Gutierrez have testified to prosecutors that the company paid suppliers for President Dilma Rousseff's 2010 electoral campaign, newspaper a Folha de S.Paulo reported on Tuesday.

    The testimony, as part of a plea bargain by the 11 executives, would be the first direct link between the sprawling 'Operation Carwash' investigation into kickbacks at state oil firm Petrobras and the election of President Rousseff, the paper said.

    A source confirmed the executives had signed a plea bargain deal that is being handled by Federal prosecutors as it involved politicians. The Federal prosecutors' office had no comment.
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    Eskom says low tariff increase could hurt operations

    Electricity supplier Eskom said on Tuesday it would try to minimise the risk of power cuts after South Africa's energy regulator refused to let it raise prices by more than 9.4 percent.

    Eskom, the sole supplier in Africa's most industrialised economy, had asked for much bigger price hikes to recover 22.8 billion rand ($1.45 billion) in costs from 2013/14, when it ran expensive diesel plants and brought in more green power to keep the lights on.

    The regulator, Nersa, said it was allowing the utility to recover 11.2 billion rand by raising the price, or tariff, paid by customers.

    "We are giving them half of what they had asked for," Nersa Chairman Jacob Modise told reporters. "The energy regulator decided that the average tariff for standard tariff customers be increased by 9.4 percent for the 2016/17 financial year only."

    Eskom is scrambling to repair its ageing power plants and grid. Last year, the utility was forced to impose almost daily power cuts, or "load shedding", that hurt economic growth.

    Chief Executive Brian Molefe said in a statement the regulator's decision did not address the question of Eskom's continued financial sustainability.

    "It will have operational consequences," he said. "We will do our best to minimise the risk of load shedding, striking a balance with Eskom's already depleted balance sheet."

    Analysts said there was an increased threat of power cuts now that Eskom had failed to get the requested increase.

    "Eskom's application, if approved in its entirety, would have seen electricity tariffs climb by as much as 16.6 percent," said Jeffrey Schultz, economist at BNP Paribas.

    "South Africa's electricity system remains extremely tight and, therefore, further electricity supply cuts later this year are not out of the question."

    The mining sector, hard hit by weaker metal prices and beset by job cuts and mine closures, said operations would be weighed down further by higher electricity prices.

    "For the struggling mining sector this increase will have a major impact on increasing the industry's cost base," Chamber of Mines CEO Roger Baxter said in a statement.

    "Further pressure on electricity prices will push a number of mining companies further into the red, necessitating further restructuring."
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    Shenyang: buy now, pay later! Property giveaway.

    Real estate is an important pillar of the overall revitalization of the city.Currently, the city's real estate market is generally good, but should pay attention to structural problems. To further improve the real estate supply and demand structure, and promote the healthy development of the city's real estate market, according to the requirements of the Central Economic Work Conference, the provincial government to resolve a number of opinions on real estate inventory, combined with the actual city, we made the following comments.

    First, to maintain the healthy development of the real estate market. 2016 to achieve the city's real estate sales grew 10% target, inventory to cycle control in a reasonable range, prices remain basically stable operation, and strive to 2--3 years to make the city's real estate market supply and demand equilibrium structure.

    Second, strict control of new land supply. On the city's real estate development land supply scale implementation of the total control of the city in 2016 on the principle of supply of land for real estate development area does not exceed 50% of the previous year. The implementation of different land supply policy, in principle, on-demand supply of industrial land, housing stock is too large for the area of supply reduction, in real estate development before the land transfer, by the planning, construction and commercial real estate department in charge of determining the reasonable ratio, ratio of parking spaces, the volume rate . Timely release of urban development planning, construction scale, supply structure, spatial layout, major infrastructure projects and the like progress information to guide rational investment real estate market and consumption.

    Third, increase the idle land disposal efforts. To start development of more than 1 year but less than 2 years of idle land, idle land fee according to the provisions of idle for more than two years to recover according to the law, the market re-configuration.

    Fourth, strengthen urban infrastructure and supporting construction. Accelerate new city and new projects surrounding roads, public transport and other urban infrastructure construction. Supporting individual projects lag, by the authorities agreed to develop businesses can Loaning construction until after acceptance of the payment to be deducted in supporting time-consuming. Improve the allocation of resources to education, health, commerce, etc., in the new city to encourage high-quality primary and secondary schools an additional campus, configure community medical institutions. Optimization of water, electricity, gas, heating and other utilities supporting services, lower fees, regulate the collection of fees and improve efficiency. Through franchising, investment subsidies, government procurement of services and other means to attract social capital to participate in the investment, construction and operation of urban infrastructure projects.

    Fifth, to support projects under construction. Regional governments to serious investigation, to address the impact has started selling land historical issues, to ensure that the transfer of land to achieve net standards. Improve processing efficiency building construction permits, construction permits the city to implement the relevant construction work and final acceptance of the norm views. Increase efforts to promote the construction of key projects, the municipal government on the implementation of key projects to promote the city's policy measures.

    Sixth, support the development of enterprise restructuring. We have been present prior to the transfer of the opinion issued land development companies can apply for adjustment of the ratio of the whole decoration. Have been supplied, undeveloped land for real estate development, development companies can apply for conversion purposes, adjusted commercial scale. For construction of commodity housing projects, real estate development companies can apply for adjustment of dwelling size structure, meeting market demand for housing units to make adjustments. For application development venture, each of the departments concerned under conditions permitting support and simplify work processes, shorten the approval period.

    Seven reward for individuals to purchase housing policy. Where more than 1% of the individuals to purchase housing deed tax rate portion, urban levels of financial subsidies. Housing Fair held during the municipal and off-site exhibitions, the purchase of real estate exhibition of residential and non-residential housing subsidies given to specific allowances will be forthcoming. Meanwhile, the Housing Fair launched "Huimin real estate" will be given to buyers who RATES subsidies, deed tax subsidies and home improvement subsidies none other promotions.Regional governments should actively organized regional fair housing, self preferential policies.

    Eight, increase housing provident fund loans to support. Pre-sale permit has been made, you can apply for housing provident fund loans. Lowest first apply for provident fund loans down payment ratio to 10%. Families or individuals can use the housing provident fund loans to buy two suites at the same time, the minimum down payment ratio of the second home loan is 20%. The implementation of "credit recognition does not recognize room" policy, the previous loan has been repaid, the loan is considered to apply again for the first time to apply. The maximum loan amount to unilaterally raise 50 million, the two sides 700,000 yuan tripartite 900,000 yuan. Primary borrower can their parents or children interoperability housing provident fund loans, housing provident fund account balances interoperability repay the loan. Terms of the employee housing fund into the "labor contract", increase urban private enterprises and practitioners efforts to establish a provident fund system, so that should be built to do to build, payable to make payment, and gradually meet the conditions of migrant workers, and township enterprises individual businesses and employees into the housing accumulation fund system.

    Nine, to reduce second-hand housing transaction taxes and fees. Second-hand housing transfer business tax, personal income tax after the front-end fill. Residents swap housing, "zero tax" policy, free of transaction fees, processing fees property, after paying the deed tax, business tax, personal income tax up front-end. Support residents to improve housing conditions within a year after the first sell or buy first sell to buy a house after the purchase of real estate area more than the sale of real estate area, according to the area of subsidies to 50 yuan per square meter of difference.

    Ten, owner-occupied apartments enjoy housing policy. Residents to buy residential apartments or apartments for owner-occupied, can be regarded as residential housing transaction taxes to pay in accordance with the standard, while settled, regard school, water heating and other civilian price enjoy equal housing policy. We have purchased residential apartments or apartments for owner-occupied from the date of publication of this opinion, and enjoy equal housing policy.

    XI broaden the use of non-residential and residential functions. Encourage commercial building retrofits and idle will meet the conditions for the electricity for commercial use, "a passenger space". Allowed in e-commerce, creative industries small and micro enterprises and freelancers will be residential apartments registered as business premises.

    XII vigorously promote the reform shed monetization. From this year to incorporate the new shed change resettlement residents, and strive to full implementation of monetization.

    XIII, high-end talent buyers enjoy preferential policies. Further implement the "Mukden talent" strategy, and other leaders and outstanding talent, municipal levels, the financial district housing subsidies paid by the policy.

    Fourth, support for universities, secondary vocational school students, new graduates buyers. No more than five years of graduation universities, secondary vocational school graduates in Shenyang to buy real estate, to give policy support to the housing provident fund, provident fund deposit limit of six consecutive months reduced to 3 months, the down payment "zero down payment" policy , the maximum loan amount to unilateral 600,000 sides 800,000 yuan. Universities, secondary vocational school students to buy real estate, to give 200 yuan per square meter incentives. At the same time, colleges and universities, secondary vocational school students, the purchase of new graduates, given the deed full subsidies.

    Fifth, encourage farmers into the city to buy a house to live. Actively explore the homestead farmers voluntarily quit and land value-added benefits paid reasonable distribution mechanism. Implement the "two powers" to the mortgage policy, proof of income requirements and simplify security procedures, etc., to provide loans for the purchase of farmers into the city. Comprehensively promote the residence permit system, promote residence holders enjoy the same housing to protect the rights of local registered population, it will meet the conditions of the agricultural transfer of population into the housing security range. Three counties and one city in the region can be combined with the actual introduction of supporting policies.

    XVI facilitate buyers schooling for their children. Residents schooling for their children purchase of commodity housing, entry requirements will be made "to settle down on the time" to "to live on the time," live time from the date of commercial buyers who handle the filing date of the contract.

    XVII support two separated families, migrant workers and expatriates to purchase a home. Two separated families purchase a home in Shenyang, according to purchase an area subsidy of 100 yuan per square meter of financial relief. Shen purchase children of migrant workers can be accepted compulsory education in the city, the nearest school, can participate in the examination in the city. Shen expatriates in copy number of buyers without restrictions.

    Eighth, to support the development of enterprise mergers and acquisitions, expanding financing channels. To encourage the development of enterprise-scale, intensive, professional development, the introduction of the city to support the development of M & A policies. Support the development of enterprises to broaden the financing channels for coordinating financial institutions lowered mortgage margin ratio good corporate credit, increase brand development enterprise credit support.

    Nineteenth, to reduce the development burden on enterprises. Developing Enterprises unfinished product development tax gross margin was 15%, non-ordinary residential, commercial, warning sings of land value-added tax rate was adjusted to 2% of the garage, warning sings of ordinary residential land value-added tax rate adjusted to 1.5%. Shall be transferred to the development of enterprises approved after the completion of construction and government school sites, urban land use tax shall not be levied. When set to levy for "pre - commercial (sales) sales license" or "building warrant" after urban infrastructure fee. Canceled construction project safety measures costs, social security fee collection and disbursement. Further clean up of unreasonable charges involving real estate, deposit, supervision and funding, no clearly defined laws and regulations should be resolutely abolished, it should be appropriate to reduce the high fees. Further sort of real estate development and construction approval process to the public approval procedures and charges, undisclosed or approval shall not be subject to charges.

    XX, strengthen the supervision of the development of enterprises. Strengthen the development of a dynamic enterprise qualification regulation, improve the exit mechanism, out of "zombie companies." Explore the establishment of real estate sale financial supervision mechanism, to avoid market risks.

    XXI strive to foster the development of the housing rental market. Further deepen the reform of the housing system, the establishment of both buyers and renters, market allocation combined with the Government to protect the housing system. Actively cultivate rental housing operators to promote rental housing scale, professional management. Conduct on the use of self-contained rental housing stock business development companies, and specializes in the rental business enterprises, institutions and individuals, given the financial and taxation support policies. Encouraging all kinds of idle listings into the rental market, more channels to increase supply. Shen support employment, entrepreneurial college graduates rental housing, rental subsidies can receive three years, the standard is: Dr 800 yuan per month, 400 yuan per month Master, Bachelor of 200 yuan per month. To further expand the scope of protection of public rental, reduce the access threshold, to outside workers, graduates of higher education in the tilt, and promote the development of the housing rental market to grow.

    XXII, strengthen leadership over the work of real estate. Government of the regional governments and relevant departments to implement the present observations conducted performance evaluation, set up by government leaders as head of real estate work leading group, responsible for the development of the city's real estate market research planning, objectives, policies and measures to promote the organization jobs. Leading Group Office located in the City Real Estate Board, in charge of the real estate market to find out and analyze the situation, coordinate the promotion of specific tasks. Regional governments to set up corresponding leading bodies and the establishment of evaluation system.

    All units must fully understand and resolve the real estate stock market to promote the healthy development of the real estate of great significance to further deepening the reform, innovative and realistic, as a positive, comprehensive facilities strategy, strengthen their sense of responsibility to this work, initiative, self-awareness. The regional government should bear the responsibility, good net transfer, supporting the construction of idle land recovery, the regional fair housing organizations and other management services. All relevant departments should give full play to the role of joint, improve the coordination of real estate regulation, consistency, complementarity, and actively guide the development of enterprises to adapt to the market situation, with the government policy of benefiting, let promotion.

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    China wants to sack up to 6 million workers from 'zombie enterprises'

    China is planning to overhaul its “zombie enterprises” by sacking 5-6 million workers over the next two to three years according to a Reuters report.

    Citing sources with “ties to the countries leadership” the report says the move is aimed at bolstering “efforts to curb industrial overcapacity and pollution”.

    Coming on the day official and private sector measures of manufacturing and services and purchasing manager intentions suggested China’s economic transition is in trouble this is clearly a sensitive topic.

    Reuters said “both sources requested anonymity because they were not authorized to speak to media about the politically sensitive subject for fear of sparking social unrest.”
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    Glencore takes $5.8 bln of charges, 2015 profit down 32 pct

    Miner and commodity trader Glencore reported $5.8 billion of charges on Tuesday, mostly due to impairments following a slide in commodity prices, and a 32 percent fall in 2015 core profit.

    Group adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $8.7 billion, Glencore said, in line with analysts' expectations.

    Glencore also said in a statement it was confident of achieving $4-5 billion of asset disposals during the rest of 2016.

    Glencore Plc, the commodity trader and miner headed by billionaire Ivan Glasenberg, reported a 69 percent slump in annual profit as prices for metals and oil tumbled.

    Adjusted net income slid to $1.34 billion in 2015 from $4.29 billion a year earlier, the Baar, Switzerland-based company said in a statement Tuesday. That beat the $1.17 billion average of 15 analyst estimates compiled by Bloomberg.

    Glencore is trying to save money and unveiled a plan last year to lower debt as much as 40 percent to $18 billion by scrapping its dividend, cutting costs and selling assets and new shares.

    “Financial market sentiment weakened considerably during the course of 2015 amid concerns over slowing economic growth,” Chief Executive Officer Glasenberg said in the statement. “The commodity sector was particularly adversely affected by a succession of disappointing China macroeconomic data, declining oil prices, and the strong U.S. dollar. As a result, sector focus quickly switched from cash distribution to balance sheet concerns and cash preservation.”

    The commodities slump means Glencore now generates most of its cash from trading as its mines and smelters around the globe struggle for profitability.

    Adjusted earnings before interest and tax from the trading division was $2.46 billion, compared with the company’s forecast of $2.5 billion and $2.79 billion in the previous year. Earnings from the mining unit swung to a loss of $292 million from a profit $3.9 billion in 2014.

    Glencore reduced net debt to $25.9 billion from $30.5 billion, missing its target of about $25 billion.

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    Official and Caixin factory activity gauges slow again in Feb, underlining need for RRR move

    Twin gauges of Chinese factory activity revealed slowing growth in February, underpinning the case for more monetary stimulus a day after the country's central bank moved to improve liquidity conditions.

    Output from large factories contracted for the seventh straight month in February, a government survey revealed on Tuesday. The official manufacturing Purchasing Managers' Index (PMI) came in at 49.0, below Reuters forecasts for 49.3 and January's reading of 49.4.

    A number below 50 points indicates a decline in factory activity, while one above suggests expansion.

    But Chinese government data has long been taken with a pinch of salt so when it comes to assessing the state of factories, investors tend to gravitate towards a private gauge that tracks smaller and medium sized firms, known as the Caixin manufacturing PMI.

    Released 45 minutes following the official report, February's Caixin reading edged down to a five-month low of 48.0, versus 48.4 in January.

    "Companies that reported lower output generally cited weak market conditions and reduced intakes of new work. Furthermore, total new business declined for the eighth month in a row, albeit at a modest pace that was similar to January," Caixin said in a statement, adding that the decline in production was the quickest seen since September.

    Asian equity markets were mixed following both surveys, while theAustralian dollar—widely considered a proxy for China plays—dipped as much as 0.4 percent to $0.7105 U.S. cents.

    Hank Paulson: China needs to let companies fail

    The weak PMI results were partly due to seasonal effects. Much of the country was closed for the week-long Lunar New Year holidays last month and some analysts believe markets should wait until March to get a more precise picture of Chinese production.

    "Anytime during the first quarter, we tend to overlook these figures....It's hard to interpret from one single data point how China's economy is doing," Ken Wong, Asia equity portfolio specialist at Eastspring Investments, told CNBC.

    But a look at the breakdown of Caixin's survey still revealed cause for concern, pointed out Pu Yonghao, partner and chief investment officer at Fountainhead Partners, which has around $600 million assets under management.

    Sharp falls in new orders and the employment index were especially worrisome, he said, with manufacturers shedding jobs at the fastest pace in seven years.

    This is part of a larger employment issue that is becoming apparent as the economy stalls. Beijing said on Monday that 1.8 million coal and steel workers will be laid off from state-owned enterprises as the government addressed over-supply in those areas. The job cuts will now put those workers in competition with other unemployed Chinese for private-sector roles.

    "China's economy is going to continue struggling. Aside from boosting real-estate demand in tier-one cities, authorities are going to find it difficult to manage this downward trend," Pu said.

    Both sets of data will likely reinforce the rationale for the central bank's fresh stimulus moves.

    Late on Monday, the People's Bank of China (PBOC) cut its reserve ratio requirement for banks by 50 basis points to 17 percent, with analysts expecting the cut to release an additional $100 billion in liquidity. Monday's RRR cut, the fifth in a year, was aimed at driving lending and consumption as Beijing experiences its slowest pace of economic growth in more than 20 years.

    Secondary industry, or manufacturing, is no longer the nation's primary economic engine, but it still makes up 40 percent of gross domestic product (GDP). For the first time, services now account for more than half of the economy at 50.5 percent of GDP, according to official 2015 data.

    Separate data out on Tuesday showed China's official services PMI fell to 52.7 in February, from 53.5 a month earlier.

    Despite the modest deceleration, the Lunar New Year holiday was seen as positive for the services sector as it boosted holiday spending and domestic tourism, explained Iris Pang, Greater China senior economist at investment bank Natixis.

    "We keep our call that the services sector will continue to expand in 2016," Pang said.

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    NRG Energy posts $6 billion loss

    NRG Energy reported a $6.4 billion quarterly loss on Monday primarily from write downs, including the loss of value of its struggling Texas coal plants.

    NRG, which is carrying out a restructuring under a new CEO, said Monday it’s slashing its dividend nearly 80 percent.

    NRG also still plans to spin off or sell much of its stake in its home solar and electric vehicle charging businesses in the spring as previously planned.

    Longtime CEO David Crane was pushed out in December amid investor concerns over the company being too complicated and too focused on solar businesses that were not yet profitable. The chief operating officer, Mauricio Gutierrez, took over as president and CEO at that time.

    “I am here to tell you the simplification of our business is an imperative,” Gutierrez said Monday, adding that NRG is focusing on its power generation and its thriving retail electricity businesses.

    NRG posted a net loss of $6.4 billion, down from a $97 million profit from the same time a year ago. For the year, NRG had $6.44 billion loss, compared to a $132 million net gain in 2014. NRG’s losses were primarily driven by more than $5 billion in impairment charges.

    NRG said it’s cutting its dividend nearly 80 percent from 58 cents to 12 cents a share to reallocate about $145 million annually for capital spending and debt reduction.

    NRG will reincorporate its NRG Renew solar business for commercial and industrial customers back into NRG from its previous spin off NRG Yield, which shows NRG is not abandoning renewables, Gutierrez said.

    However, NRG still plans to unload much of its home solar and electric vehicle charging businesses in the second quarter, he said.

    The power sector is depressed overall from natural gas prices near historic lows and NRG’s disadvantaged coal plants are suffering. NRG executives particularly referenced the company’s two, big Texas coal plants: the WA Parish plant southwest of Houston and Limestone plant in Jewett, which is east of Waco.

    The Electric Reliability Council of Texas last yer identified the Limestone plant as one of a handful Texas plants that could be shuttered in the coming years because of anticipated upgrade costs.

    Gutierrez on Monday said such a shutdown is possible, but he said he expects the market to rebound before such action is needed.

    “Right now, still not the time,” he said.

    Gutierrez said the Texas market is “very disappointing” for now, although he sees “strong fundamentals” long term.

    Although NRG suffered a big financial loss, Gutierrez pointed to the company’s operating cash flow for the quarter of $625 million, down from $661 million, as estimated by earnings before interest, taxes, depreciation and amortization, called EBITDA.

    He said such cash flow shows that NRG is still operating very efficiently and poised to rebound strongly as the market recovers.

    The focus will remain on cost cutting, debt reduction and some asset sales moving forward, he said.

    “We are in a period of stay-low natural gas prices,” he said.

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    Standard & Poor's affirms BHP Billiton's credit rating

    Standard & Poor's affirmed its "A" rating on global miner BHP Billiton's debt, citing a change in the company's dividend policy.

    Shares of the company were up 1.3 percent at 725.1 pence at 1405 GMT on the London Stock Exchange.

    S&P said the miner's move to link its dividends to its operating performance materially increased its financial flexibility. (

    The credit ratings agency cut its rating on the company to "A" from "A+" earlier this month due to the challenging commodities market, and said it could further cut the rating depending on BHP's dividend policy.

    BHP said on Tuesday it would pay out at least half of its underlying profit to its shareholders going forward, abandoning its policy of paying steady or higher dividends.

    It said it would pay an interim dividend of 16 cents, down from 62 cents a year earlier.

    "BHP was on notice, it needed to do something, and it did something," Investec analyst Hunter Hillcoat said, referring to the cut in dividend.

    A slump in the prices of iron ore, copper, and oil have hurt the miner, which reported a half-yearly net loss of $5.67 billion last week.

    "Our commitment to maintain a solid A credit rating through the cycle provides us with access to low-cost funding, financial strength and flexibility," Chief Financial Officer Peter Beaven said in a statement on Monday.
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    China slashed its reserve requirement ratio

    China's central bank reduced the amount of cash that banks must hold as reserves for the fifth time since February, 2015, as it seeks to revive a stumbling economy.

    The People's Bank of China said on its website that it would cut the reserve requirement ratio by 50 basis points for all banks, taking the ratio to 17 percent for the country's biggest lenders.

    China last cut the RRR on Oct. 23, when it also reduced interest rates by 25 basis points to rein in financing costs.

    "China's government is pushing forward the 'supply side' reform, and the move needs someone to pay the costs. A loosening monetary environment is what we need," said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai.

    "We believe the central government will keep its loosening policy stance this year to support the economy."

    The cut is effective from March 1, and it comes after signs of increasing tightness in short-term money rates last week, with analysts saying that liquidity worries had begun to affect stock markets, which have slid sharply in recent days. 

    The cut came after the central bank governor Zhou Xiaochuan said on Friday that the PBOC had room and tools in its monetary policy to deal with potential downside risks to its economy.

    Offshore and onshore markets sold yuan on the news.

    China has been pursuing its most aggressive policy easing cycle since the 2008/09 global financial crisis, as it attempts to arrest an economic slowdown in the world's second-largest economy.

    But it had put easing moves on hold to stabilize the currency, relying instead on short-term operations in its money market to maintain liquidity.

    Chinese leaders outlined initiatives after the Communist Party's central committee held a policy meeting in late October, where the Party reiterated its goal of doubling GDP and incomes between 2010 and 2020, and committed to liberalizing its service sector to foreign investment.

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    UK Consumes Less Stuff.

    The amount of stuff the UK consumes has fallen dramatically since 2001, according to official government figures.

    The Office for National Statistics data reveals that on average people used 15 tonnes of material in 2001 compared with just over 10 tonnes in 2013.

    The figures look at the total amount of biomass (crops, wood and fish), coal, oil and gas, metal and non-metallic minerals (such as construction materials) used in the UK every year.Image title

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    Reformist gains in Iran elections clear way for business boom

    Gains by reformist candidates in Iranian elections open the way for changes to economic policy that will boost foreign investment and trade with the West, businessmen and analysts said on Sunday.

    Friday's vote ended more than a decade of conservative domination of the legislature and the Assembly of Experts, a body that oversees the Islamic republic's supreme leader.

    The outgoing parliament, filled with hardliners suspicious of detente with the West, had acted as a brake on President Hassan Rouhani's plans to strengthen the private sector, tackle corruption and welcome foreign investors.

    Rouhani, the architect of last year's nuclear deal with world powers, is now expected to find it easier to push legislative reforms making the economy more attractive to foreign firms.

    "In economic affairs the next parliament will be much better than the current parliament," said Saeed Leylaz, an economist who served as advisor to reformist former president Mohammad Khatami.

    Iran faces deep problems including corruption, a shortage of investment and a lack of productivity, but "all these problems can be solved through liberalizing the economy," he said.

    Iranian investment banker Ramin Rabii said he expected the new parliament to address issues crucial to the business sector such as updating the country's commercial code, modernizing labor laws and improving stock market regulation.

    "If you have a parliament that is friendlier to the executive branch, things tend to move forward more easily," said Rabii, chief executive of investment group Turquoise Partners.

    "When business-related regulations need to be passed, or joint venture agreements are signed with foreign partners and are scrutinized by parliament - it all goes more smoothly."

    One early result of the elections could be to allow the government to offer new oil and gas contracts to foreign firms, a cornerstone of its plans to raise energy production after international sanctions on Tehran were lifted last month.

    Iran had been scheduled to unveil the new contracts to international oil firms at a conference in London on Feb. 22-24. The conference was canceled earlier this month; oil executives blamed political feuding before the elections.

    It is not clear if the election result could affect Iran's willingness to agree in talks with OPEC and non-OPEC oil producers on a proposed output freeze to prop up crude prices. But by giving the Rouhani administration a popular endorsement, the result appears likely to leave the administration with more domestic political freedom to sign a deal if it chooses.

    Early election results on Sunday showed moderates and reformists dominating both elections in Tehran, and making significant gains elsewhere in the country. Full results are expected to be released in coming days.

    The elections do not leave the Rouhani administration with a completely free hand on economic policy. Many powers will remain in the hands of conservatives; the Guardian Council, an unelected clerical body, has the power to vet all laws, and Supreme Leader Ayatollah Ali Khamenei has the last word on all important matters of state.
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    Brazil justice minister to quit as Lula probe tension grows: papers

    Brazil's Justice Minister Jose Eduardo Cardoso plans to resign, fed up with rising attacks from his Workers' Party over a police probe into the activities of former Brazilian President Luiz Inacio Lula da Silva, two Brazilian newspapers reported Sunday.

    Cardoso will quit this week, Folha de S.Paulo said. Cardoso, who took office with Lula's PT successor Dilma Rousseff at the beginning of her first term in 2011.

    Leading members of Cardoso's party, known by its Portuguese initials PT, have raised pressure on the minister in recent days after Lula was notified that Brazilian courts plan to subpoena his bank, telephone and financial records, Folha and the Estado de S.Paulo reported.

    Lula, the PT's historic leader, a five-time PT presidential candidate and two term president from 2003 to 2010, has come under investigation in the wake of a giant and widening corruption scandal at state-led oil company Petroleo Brasileiro SA.

    Lula has already faced police questioning over the financial dealings of his children and friends and now faces questioning of his alleged ownership of a beach-front penthouse triplex and country estate.

    The penthouse and country home were allegedly renovated by construction companies involved in the price-fixing, bribery and political kickback scandal at Petrobras, as the oil company is known. Lula has said the properties don't belong to him.

    On Saturday, Lula lashed out at the subpoenas.

    "If this is the price people must pay to prove their innocence, I'll do it," Lula said referring to the subpoenas. "The only thing I want is that afterward they give me a good conduct certificate, because I doubt there is anyone more honest than I am in the country."

    A justice ministry spokeswoman declined to comment. Aides to Rousseff could not be reached. Cardoso, a lawyer and law professor, is recovering from lymphatic cancer.

    Cardoso is upset over PT allegations that he has failed to control a political witch hunt against Lula and other government allies.

    Cardoso has said he has no authority to restrict investigations without evidence police violated a person's rights, Estado reported.
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    Four Saudi jets arrive at İncirlik base for the fight against Daesh

    Four Saudi F-15 fighter jets have arrived at Turkey's İncirlik airbase on Friday in the fight against Daesh, according to various reports.

    Undersecretary of the Saudi Defense Ministry, Ahmad al-Asiri has confirmed the landing.

    A total of four F-15 E (Strike Eagle) fighter jets arrived in İncirlik, reports have said.

    The arrival of Saudi jets in İncirlik makes the total number of foreign countries having jets at the base to five.

    Turkish officials previously announced that Saudi Arabia would send fighter jets to the İncirlik airbase as part of the U.S.-led coalition forces' operations.

    This is the first time a non-NATO country deployed military forces to İncirlik since the base entered into service in 1955.

    A group of 30 advance guard Saudi Arabia troops had already arrived in the airbase along with C-130 Hercules multipurpose military transport aircraft. The Doğan news agency cited army sources as saying that C-130 cargo planes had been shipping military materials to İncirlik for the last two days.

    Saudi Arabia has also said early in February that it was ready to join any ground operation against Daesh.

    Saudi Arabia and Turkey both staunchly support opposition forces seeking to oust the Assad regime and see his overthrow as essential for ending Syria's five-year civil war that has cost more than 260,000 lives.

    Both are outraged by Russia's military intervention in Syria, which analysts believe has given Assad a new lease on life and has also alarmed the West.
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    Brazilian hydropower sector boosted by rainfall

    Much-needed rainfall is allowing Brazil to deactivate thermal power plants in favour of hydroelectric power.

    An additional 3,000 MW of gas-fired power is set to be deactivated on March 1 as rains improve Brazil’s hydropower system, in a move that will trim electricity tariffs across the country, Energy Minister Eduardo Braga said on Thursday.

    15 thermal power plants are set to be switched off, amounting to 2,000 MW of power.

    Brazil, which mostly relies on hydropower, has had its more expensive natural gas-powered thermal plants running full throttle since a drought hit the southeast region three years ago.

    Attached Files
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    Brazil police widen corruption probe with raids over railway contracts

    Brazilian federal police said they served search and seizure warrants on Friday across six states and in the federal district of Brasilia focused on suspected bribes and overbilling in two large railway projects.

    The warrants were based on testimony in an ongoing corruption probe known as "Operation Car Wash", they said.

    In a statement, police said, "Just in the state of Goias, the embezzlement of 630 million reais ($160 million) was detected, for just the segments under construction for the Norte-Sul Railway" project.

    After federal prosecutors uncovered massive misuse of funds, bribes, kickbacks, over billing and influence peddling in the state-run oil company Petrobras over the past two years, the investigation has spread into other areas of the economy.

    On Thursday, police raided the headquarters of one of Brazil's largest steelmakers Gerdau SA.
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    China: A Week or Weak?

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    Oil and Gas

    Nigerian River Communities to Sue Shell over Oil Spills

    Nigerian River Communities to Sue Shell over Oil Spills
    Tens of thousands of Nigerian fishermen and farmers were given the green light to sue energy giant Shell in a British court on Wednesday for a series of destructive oil spills in the Niger delta over the past decade.
    The action, brought by London-based law firm Leigh Day on behalf of the Ogale and Bille communities, alleges that decades of uncleaned oil spills have polluted fishing waters and contaminated farming land.
    In addition to a compensation package, both groups of people want the Anglo-Dutch oil company to clean up the land devastated by the spills.
    Leigh Day hope to prove that Shell is liable for failing to protect its pipelines in the Bille community from damage caused by third parties extracting oil, which it says could mark a "significant expansion" in the firm's liability.
    The lawyers argued in a press statement that the 40,000-strong Ogale community continues to live with "chronic levels" of land and water pollution, which has had severe impacts on its farming and fishing.
    In hearings expected to take place later this year, Shell will argue that the two cases should be heard in Nigeria, not in Britain, according to a spokesperson for the company's Nigerian subsidiary, SPDC.
    The spokesperson added that both Bille and Ogale are areas "heavily impacted" by oil theft, sabotage and illegal refining, activities which Shell has long argued are the main causes of pollution in the Niger Delta.
    A 2011 report by the United Nations Environment Programme found that decades of oil pollution in Ogoniland region, where Ogale is located, may require the world's biggest ever clean-up and that drinking water had been contaminated by oil products. 
    Leigh Day says spills have meant the communities haven't had clean drinking water since 1989.
    Leigh Day says that Shell, historically Nigeria's largest oil producer, has failed to act on the report despite its promises, a claim that was also leveled last year by Amnesty International.
    An Amnesty International report says Shell promised to clean up the area, yet the fragile ecosystem surrounding the delta remains contaminated.
    Last year Leigh Day won an unprecedented US$83.5m in damages from Shell at the high court in London for the Bodo community, who live in another part of the Niger delta.
    This content was originally published by teleSUR at the following address: 
     "". If you intend to use it, please cite the source and provide a link to the original article.
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    As oil glut swells, Exxon Mobil reportedly joins export race

    Exxon Mobil Corp. has become the first major U.S. oil company to ship American crude overseas, joining a band of independent traders that are trying to ease a glut at home after a 40-year export ban was lifted.

    Exxon Mobil shipped U.S. crude into a refinery it owns in Sicily, according to a person familiar with the matter and three traders and ship brokers. The Maran Sagitta oil tanker sailed in early February from Beaumont, where Exxon Mobil operates a refinery. It recently arrived in the Italian port of Augusta.

    Until now, trading houses including Vitol Group BV and Trafigura Pte and European-based oil companies have shipped U.S. crude overseas. Exxon Mobil is the first American firm that joins the race, which comes as domestic U.S. crude inventories surge to the highest level in nearly 90 years.

    “While we do not comment on the details of proprietary commercial agreements, crude exports from the U.S. are now another commercial option that we may elect to exercise from time to time,” Exxon Mobil said in an e-mailed statement.

    Oil traders are shipping West Texas Intermediate to refiners in the Mediterranean to profit from the difference in crude prices between the two regions. A glut of WTI has pushed up U.S. stockpiles to a record, depressing the price of the U.S. benchmark relative to European Brent crude.

    The exports into Europe follow a congressional deal in December to lift a 1970s-era prohibition on overseas shipments and a movement in relative prices between the U.S. and Europe making exports profitable.

    “The arbitrage to European refiners for WTI loading promptly currently seems to be open,” Ben Luckock, global head of crude oil at Trafigura said on Feb 22. “A number of vessels of WTI crude oil have recently been fixed to Europe.”

    The overseas sales could relieve pressure on storage capacity in the U.S., after stockpiles rose to nearly 518 million barrels last week, the highest level in official data going back to 1930. Inventories at the biggest U.S. oil storage hub in Cushing, Okla., climbed to a record above 66 million barrels last week, according to the Energy Information Administration.
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    Phillips 66 cut fuel production in February, CEO says

    The refining sector is slogging through a weak first quarter after bringing in big refining profits in 2015, Phillips 66 Chairman and CEO Greg Garland said Thursday.

    Several Midwestern refineries cut back production last month because of a lack of profits, Garland said at the Bank of America Merrill Lynch 2016 Refining Conference in New York. He said at one point Phillips 66 also took offline about 400,000 barrels a day of crude processing from its 2.1 million barrels capacity nationwide, although he would not cite specific refineries.

    He said Phillips 66 refineries are now back up to running more than 90 percent of capacity, after dipping down to about 80 percent.

    “We all ran max gasoline (production) in the fourth quarter,” Garland said, and refineries built up too much storage inventory of winter-blend gasoline.

    “Generally, when we look in the mirror, we find the enemy,” Garland said. “We had to work through that overhang in the first quarter.”

    Now, many refineries are about to undergo seasonal maintenance to switch to more expensive summer-blend gasoline, Garland said, which will temporarily lower crude oil demand and drive up crude storage inventories even higher.

    Despite the weak quarter, Garland said he expects good gasoline demand this year moving into the busier spring and summer driving seasons, especially since so many people bought gas-guzzling trucks and sport-utility vehicles last year with low gasoline prices.

    Although the rest of 2016 should make for a pretty good refining year, he cautioned it won’t repeat the high profit margins of 2015.

    Attached Files
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    China 2016 crude oil import growth may exceed 800,000 bpd -analyst

    China's crude oil imports may rise by more than 800,000 barrels per day this year, boosted by storage needs, robust gasoline demand and fuel exports, an executive from a Beijing-based consultancy said on Thursday.

    The jump in imports, if realised, could see China overtaking the United States as the world's largest crude importer after China's average crude imports hit a record 6.71 million bpd in 2015, up 8.8 percent from a year ago.

    China is expected to import 860,000 bpd more crude this year, Yao Li, chief executive of SIA Energy said at a Platts conference.

    Independent refiners who recently received import quotas, have become a driver of Chinese crude demand and their preference for low-sulphur oil could cause producers from Venezuela and the Middle East to lose market share, Li said.

    "China's crude oil slate will become sweeter and lighter because of production yield requirement and as independent refiners prefer low-sulphur crude due to cost advantage," she said.

    "Middle East producers will probably lose more market share. Russian ESPO is the biggest winner."

    China's domestic oil consumption is expected to grow by 410,000 bpd as strong car sales boost gasoline use in the world's second largest economy, Li said. The estimate is higher than that of the International Energy Agency which sees China's oil demand growing by 330,000 bpd to 11.51 million bpd in 2016.

    SIA Energy's Li expects Chinese fuel exports to rise by 330,000 bpd this year as local refiners, driven by strong margins, have increased output, although this will be offset by incremental imports of 120,000 bpd, including mixed aromatics for gasoline blending.

    Most of the exports will be from state refiners rather than private companies as they have weak trading capabilities, Li said. Private refiners are "more likely to compete in the domestic market", she added.

    China is also expected to import 240,000 bpd more crude than last year to fill storage tanks for strategic and commercial purposes, Li said.

    More imports are also needed to replace falling domestic crude production, she said.
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    YPF Joins Oil Industry Penny Pinching as Argentine Subsidy Fails

    YPF SA is the latest oil producer to join the industry’s drive to reduce spending, and its finance chief sees more cuts coming as artificially high prices at home have failed to shield the company from a global downturn.

    The state-run producer, which announced Thursday it invested about 33 percent less in 2015 than it had planned, will have to trim its capital budget further this year, Chief Financial Officer Daniel Gonzalez said in a telephone interview. With lower funding needs this year, it plans to sell less than $1 billion of bonds, he said.

    "Cuts will be done in exploration and production,” Gonzalez said. “Our financial needs this year will be significantly less than in 2014 to the point we will only need to raise less than $1 billion in the international bond market. We’re already monitoring the market conditions and will proceed with the sale as soon as window of opportunity opens."

    YPF had its first loss in at least a decade in the fourth quarter as higher domestic crude prices introduced by former President Cristina Fernandez de Kirchner’s government weren’t enough to protect the company from a market rout. The country’s Medanito crude was set at $77 a barrel in September, compared with an average $44.69 for Brent, the international benchmark, during the fourth quarter.

    Last year’s elections and a weak economy prevented the company, which also refines about 60 percent of the country’s crude, from taking unpopular steps to raise gasoline prices in U.S. dollar terms, Gonzalez said.

    YPF said it invested 61.2 billion pesos ($4 billion) last year, compared with the $6 billion of investment pledged last year. The fourth-quarter net loss was 1.7 billion pesos, or 4.32 pesos a share, compared with a profit of 1.4 billion pesos, or 3.52 pesos, a year earlier, YPF said Thursday in a statement after markets closed.

    The company’s oil and gas production increased 3 percent to 576,700 barrels of oil equivalent a day last year.
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    Brazil January oil, natural gas output falls to 14-month low

    Output of oil and natural gas in Brazil fell to its lowest in 14 months in January as companies performed maintenance on offshore oil platforms, the country's petroleum regulator ANP said on Thursday.

    Forty-three companies in Brazil produced an average of 2.965 million barrels of oil and equivalent natural gas a day (boepd) in the month, 3.6 percent less than a year earlier and 6.3 percent less than it produced in December.

    Petroleo Brasileiro SA, or Petrobras, plans to increase oil platform maintenance shutdowns through June, taking advantage of low oil prices and low demand to fix and upgrade equipment, Reuters reported on Monday.

    Petrobras was the biggest producer in January despite the platform shutdowns. It accounted for 2.408 million barrels a day of output in the month, or 81 percent of Brazil's total.

    BG Group Plc, which became part of Royal Dutch Shell Plc on Feb. 15, was the second largest producer, with 206,778 boepd.

    Together, Shell and BG would have had 240,868 boepd. Shell was the No. 6 producer in the month with 34,090 boepd.

    Shell expects its output in Brazil to quadruple to about 1 million barrels a day by 2020, the company said last month.

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    Nigeria says OPEC, non-OPEC producers to meet in Moscow on March 20

    Some members of the Organization of Petroleum Exporting Countries plan to meet with other producers in Russia around March 20 for new talks on an oil output freeze, Nigeria’s petroleum minister said on Thursday.

    "We're beginning to see the price of crude inch up very slowly. But if the meeting that we're scheduling, it should happen in Russia, between the OPEC and non-OPEC producers happen about March 20, we should see some dramatic price movement," he told a conference in Abuja.

    "Both the Saudis and the Russians, everybody is coming back to the table," he said. "I think we're very humbled today to accept that if we get to a price of $50, it will be celebrated. That's a target that we have."

    Benchmark Brent futures LCOc1 were around $37 per barrel at 1215 GMT (0715 ET) on Thursday.

    No decision on the date or venue of a possible meeting between OPEC and non-OPEC producers has been made yet, a Gulf OPEC delegate said on Thursday.

    "There has been no decision made regarding the meeting yet. No date or location decided yet. The Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf city," the delegate told Reuters.
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    Eclipse Resources: Production Up 186%, Continued Drilling in 2016

    Eclipse Resources, a small but growing driller headquartered in State College, PA but drilling exclusively in the Ohio Utica Shale, released their fourth quarter and full year 2015 update yesterday. Among the highlights: Production was up 186% in 2015 over 2014. Revenue was up 97% over 2014. Eclipsed drilled 31 wells, completed 51 wells and brought 76 wells online in 2015. The company will continue to focus exclusively on the Utica in 2016, as they did in 2015. They plan to spend $168 million in 2016, of which $130 million is for drilling and completions, and with that money they will drill 7.6 net Utica wells, complete 9.4 net Utica wells and exit the year with 11.5 net Utica wells drilled but uncompleted (DUCs). The elephant in the room is that Eclipse lost nearly $1 billion in 2015. However, as with many other drillers, the loss was on paper only–not out of pocket. With impairments (write-down of lease values) and with depreciation and other accounting shenanigans, almost all of the loss was on paper. Hey, at least they will keep on drillin’ in 2016! Here’s the update with the details…

    Eclipse Resources Fourth Quarter and Full Year 2015, 2016 Capital Budget

    Fourth Quarter 2015 Highlights:

    • Net production averaged 247.0 MMcfe/d, which was approximately 5% above the high end of the Company’s previously issued guidance range for the quarter, representing a 100% increase to the fourth quarter of 2014 and an approximately 10% sequential increase over the third quarter 2015. For the fourth quarter 2015, the production mix was approximately 70% natural gas, 18% NGL’s and 12% oil
    • Revenues grew to $65.8 million. Adjusted Revenue1, which includes the impact of cash settled derivatives, grew to $74.4 million, representing a 41% increase relative to the fourth quarter 2014
    • Adjusted EBITDAX1 grew to $31.3 million, representing a 20% increase relative to the fourth quarter 2014
    • Unit operating expenses2 were $1.31 per Mcfe, below the low end of the Company’s previously issued guidance
    • Cash general and administrative expenses fell to $6.8 million, representing a 48% decrease relative to the fourth quarter 2014, and $3.2 million below the low end of the Company’s previously issued guidance
    • The Company realized a natural gas price, before the impact of cash settled derivatives and excluding firm transportation expenses, of $2.32 per Mcf, a $0.22 premium to NYMEX natural gas prices. The Company realized a natural gas price, after the impact of cash settled derivatives and including transportation costs, of $2.66 per Mcf, a $0.56 premium to NYMEX natural gas prices
    • The Company realized an average oil price, before the impact of cash settled derivatives of $32.03 per barrel, a $9.75 per barrel discount to WTI oil prices. The Company realized an oil price, after the impact of cash settled derivatives, of $38.25 per barrel, a $3.53 per barrel discount to WTI oil prices
    • The Company realized a natural gas liquids price of $14.50 per barrel, or approximately 35% of the average WTI oil price
    • Capital Expenditures were $45.1 million
    •  The Company drilled 4 gross (1.0 net) wells, completed 2 gross (0.3 net) wells and turned 15 gross (8.0 net) wells to sales

    Full Year 2015 Highlights:

    •  Net production averaged 207.9 MMcfe per day, a 186% increase from 2014. For the full year 2015 the production mix was approximately 66% natural gas, 19% natural gas liquids and 15% oil
    • Revenues grew to $255.3 million. Adjusted Revenue1, which includes the impact of cash settled derivatives, grew to $271.7 million, representing a 97% increase over full year 2014
    •  Adjusted EBITDAX1 grew to $113.1 million, representing a 81% increase over full year 2014
    •  Unit operating expenses2 were $1.26 per Mcfe, below the low end of the Company’s previously issued guidance for the year
    • Capital expenditures were $309.5 million, $20.5 million below the Company’s previously revised capital budget
    • The Company drilled 31 gross (15.0 net) wells, completed 51 gross (20.5 net) wells and turned 76 gross (33.8 net) wells to sales for the full year 2015
    • During 2015, the Company averaged 20 drilling days (from spud to rig release) per well with an average lateral length of 8,500 feet, representing a 31% drilling day improvement compared to the 2014 drilling program; additionally, Eclipse averaged 5.18 completion stages per day, a 16% increase over 2014

    2016 Strategic Plan and Capital Budget Highlights:

    At the beginning of 2016, the Company had liquidity of $281 million consisting of $184 million in cash and cash equivalents, and available borrowing capacity under the Company’s revolving credit facility of $97 million (after giving effect to $28 million of outstanding letters of credit)
    In February, the Company completed its spring borrowing base redetermination of its revolving credit facility, that resulted in no change to its $125 million borrowing base which remains undrawn other than for letters of credit

    The Company has recently augmented its hedges by adding a collar on 30,000 MMbtu per day of natural gas for calendar 2017 with a floor price of $2.50 per MMbtu and a ceiling price of $3.03 per MMbtu, and a swap of 850 Bbl per day of oil for March 2016 through December 2016 at an average price of $45.55 per Bbl

    Based on production guidance for the year, the Company has hedges in place representing 90% of its expected natural gas production at an average floor price of $3.11 per MMbtu and ceiling price of $3.21 per MMbtu; 70% of its expected oil and condensate production at an average floor price of $53.84 per Bbl and ceiling price of $59.50 per Bbl; and 60% of its expected propane production at an average price of $0.46 per gallon

    During 2016, the Company plans to focus on enhancing its margins, continuing to improve its peer leading drilling and completion efficiencies in the Utica Shale, strengthening its balance sheet and preserving its high quality asset base for the future. Details on these initiatives include:

    The Company plans to continue to streamline its operations in order to improve its operating margins which include the sale of certain non-core and higher-cost assets. During the year, the company anticipates receiving proceeds from these non-core assets of between $15 million and $20 million

    As a result of decreased activity, the Company implemented a workforce reduction in the second half of 2015. The Company estimates that its 2016 cash general and administrative expenses fall to approximately $36.0 million, and the Company intends to continue to thoroughly analyze its cost structure to identify additional savings opportunities

    The Company expects to maintain its voluntary production curtailment initiative through at least the first half of 2016 in order to preserve its productive capacity from its producing wells until commodity prices improve. At current forward strip prices, the Company anticipates that its production during 2016 to be consistent with the 2015 full year rate of approximately 200 MMcfe per day until such time as the Company elects to adjust this curtailment approach

    The Company plans to maintain flexibility in implementing its 2016 capital plan, which is heavily weighted to the second half of the year enabling the Company to further delay restarting its drilling and completion activity as necessary

    The Company has established an initial capital budget of $168.0 million3, which includes approximately $130 million for drilling and completion activities and approximately $35 million for land activities
    The initial capital budget includes capital expenditures to drill 7.6 net horizontal Utica Shale wells and complete 9.4 net horizontal Utica Shale wells in 2016. The Company expects to exit the year with 11.5 net drilled but uncompleted wells

    In establishing this capital budget, the Company has assumed an average Henry Hub natural gas price of at least $2.34 per Mcf and an average WTI oil price of at least $34.80 per Bbl for the year

    The 2016 Capital Budget is expected to be fully funded through internally generated cash flows and the Company’s current cash balance; the Company does not anticipate making any borrowings on its revolving credit facility during 2016 to fund its initial capital budget
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    InterOil provides Antelope appraisal drilling update

    InterOil Corporation provided an update on the appraisal drilling on the Antelope field in Petroleum Retention License 15 ('PRL15') in the Gulf Province of Papua New Guinea.


    During February, the second extended well test on Antelope-5 was completed. The well flowed at an average of 53.3 million standard cubic feet gas per day (mmcfd) measured through a 48/64' choke for 14 days and then shut-in for over 14 days to record the subsequent pressure build-up. The majority of the stabilized flow occurred on a 48/64' choke at a rate of approximately 57 mmcfd.

    Downhole pressure gauges have been successfully retrieved from both Antelope-5 and Antelope-1 (observation well) and data has been extracted for analysis.

    Preliminary analysis has confirmed the excellent reservoir quality and connectivity seen in the initial Antelope-5 production test conducted in mid-2015. The forward plan is to undertake further analysis to quantify nearby reservoir properties.


    During the month of February, 9-5/8' liner was run to the top reservoir, four cores were cut from the upper section of the reservoir and intermediate logs were run.

    The four cores were cut over an interval of 2,268 to 2,330 meters measured depth from rotary table (MDRT) and the well reached a depth within the reservoir section of 2,330 meters (MDRT). Preliminary interpretation shows approximately 12 meters of dolomite is present in the drilled section.

    It was decided to conduct an intermediate, multi-rate flow test over an interval from 2,264 to 2,330 meters MDRT in the target interval. A final stabilized flow rate of approximately 13 mmcfd was obtained over a 24 hour period, measured through a 40/64' choke. The well is currently shut-in for pressure build-up.

    Once testing is complete it is planned to drill through the gas-water-contact to a proposed total depth of approximately 2,650 meters MDRT and then run a full suite of wireline logs. Once logs have been obtained, a decision will be made regarding the need for further testing.

    The Antelope-6 appraisal well is located 2km east-south-east of the Antelope-3 well and is designed to provide structural control and reservoir definition on the eastern flank of the Antelope field. Antelope-6 spudded in December 2015 and intersected the top of the reservoir at approximately 2,264 meters MDRT.
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    India wants to store OPEC’s crude

    Prime Minister Narendra Modi’s message to OPEC is come and store crude oil in India.

    Modi’s Feb. 29 budget exempts foreign companies from federal income taxes on permitted local sales of oil kept in caverns India has been building. That may spur the Organization of the Petroleum Exporting Countries to fill the bunkers, allowing Modi to skirt the full cost of about $5 billion for stockpiling a targeted 130 million barrels.

    “This is a good way to fill up the caverns,” said Arun Kumar Sharma, finance director at the country’s biggest refiner Indian Oil Corp. “Most of our refineries are heavily dependent on OPEC crude.”

    Using India’s bunkers would help the bloc maintain its 85 percent share of the local market. A portion of the oil would likely be ring-fenced for use in a crisis, with the rest available to trade.

    The world’s third-largest crude buyer is seeking to boost small strategic reserves of just 10 million barrels. India’s emergency stockpile is a fraction of the supply buffers in neighbors Japan and China, even in a world awash with cheap crude looking for a home.

    “The Indian model is similar to the Japanese model, in that the country saves money by allowing other nations to store crude but has first access to it in the case of an emergency,” said Amrita Sen, chief oil market analyst at Energy Aspects Ltd. in London.

    India could boost the strategic reserve by 30 million barrels this year, but there may be delays to the schedule of having the rest in place by 2020, Sen added.

    The government is seeking to create strategic storage capacity of 17.83 million tons across seven caverns, which would provide cover for 40 days. Some 1.33 million tons in one cavern is in place now, and two others with a total 4 million tons capacity are due to be completed by May.

    Besides emergency tanks, refiners have capacity to store as much as 28.5 million tons of crude and fuels in tanks and pipelines, sufficient for 63 days.

    Several national oil companies from OPEC members in the Middle East are interested in storing crude in Indian caverns, people familiar with the matter said in 2015.

    Last month, Oil Minister Dharmendra Pradhan said Abu Dhabi National Oil Co. has offered to storeoil at the Mangalore emergency reserve in southern Karnataka state. An official said two-thirds of the deposit would be strategic storage and the rest can be traded.

    While India is moving to make sales of crude from bunkers free of federal income tax, the nation’s states impose other levies foreign companies would have to pay.
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    Kurds Tighten Grip on North Iraq Oil Fields With Kirkuk Deal

    Iraq’s self-governing Kurds are cementing control over oil produced in the north of the country by agreeing to pay for crude pumped in Kirkuk province, a contested area that Kurdish forces occupied after federal troops fled ahead of advancing militants.

    The accord covers oil produced in Kirkuk and exported through a Kurdish-controlled pipeline to Turkey, Kirkuk Governor Najmuddin Omar Karim said in an e-mailed statement. The Kurds agreed to deposit $10 million a month into a dedicated bank account for Kirkuk, which received no oil revenue from Iraq’s central government from June 2013 until June 2015, he said Wednesday.

    Pipeline exports from northern Iraq to the Mediterranean port of Ceyhan, Turkey, are still halted, Karim said. Shipments have been suspended since Feb. 16 after attacks on the link inside Turkey, according to the Kurdistan Regional Government.

    The financial arrangement between the Kurds and Kirkuk is in line with an earlier agreement about cooperation in the energy industry, a KRG official in the Kurdish city of Erbil said Wednesday in an e-mailed statement. The official couldn’t comment on details of the new accord, he said, declining to be identified in accordance with KRG policy.

    Kurdish Reserves

    Iraq’s minority Kurds, who historically have chafed at control by governments in the capital city Baghdad, are independently developing oil reserves they say may total 45 billion barrels -- equivalent to almost a third of Iraq’s total deposits, according to data from BP Plc. The KRG and the central government have traded accusations of breaches to a December 2014 agreement that provided for the Kurds to export their oil through the national oil company in return for cash from authorities in Baghdad.

    The failure of the two sides to settle differences over how to share revenue from oil sales has added to uncertainty about crude supplies from northern Iraq.

    The Kurds produced an average of 577,000 barrels a day of oil in 2015, with exports averaging 421,000 barrels a day, according to a report issued last month by the KRG’s Natural Resources Ministry. The figures include oil pumped from Kurdish-controlled deposits in Kirkuk.

    Iraq’s state-run North Oil Co. exported about 150,000 barrels a day through the Kurdish pipeline to Ceyhan before shipments were halted in February, according to the KRG. North Oil, which operates within Iraq’s oil ministry, will change its name to Kirkuk Oil Co., said Karim, the Kirkuk governor.

    Iraq, the second-largest member of the Organization of Petroleum Exporting Countries, produced a total of 4.385 million barrels a day in February, data compiled by Bloomberg show, with most of the oil produced and exported from southern fields.

    Attached Files
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    Vitol seeks partner in VTTI oil storage business -sources

    Vitol, the world's top oil trader, is looking to sell a stake in wholly owned storage company VTTI, in a bid to cash in on one of its most profitable businesses in the current downturn in crude prices, several banking and industry source said on Thursday.

    Oil storage companies have lately enjoyed booming business as traders and oil companies held increasing amounts of crude and refined products in tanks in the face of huge oversupply.

    Besides the immediate financial rationale, a stake sale could also allow Vitol to mitigate risk surrounding future oil prices and demand changes. For buyers, such a deal could offer an opportunity to access Vitol's large trading operations and VTTI's many storage outlets around the world.

    "A partner makes sense for Vitol both financially and strategically," a source close to the process said.

    Vitol's sale plan comes after the company last August acquired the other half of VTTI from Malaysian shipping company MISC Bhd for $830 million, taking full control of the company headed by Chief Executive Rob Nijst. The deal was completed in November.

    The sources did not say what size of stake Vitol is interested in selling or at what price, but the Swiss-based trader will remain majority holder in any case, two of the sources said. The process is being run by Citi, they added.

    A Citi spokesman declined comment and a Vitol spokeswoman also would not comment.

    VTTI BV has total gross storage capacity of 54 million barrels, including assets under construction, the company said last year.
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    Canadian Natural Cuts 2016 Budget as Oil-Price Outlook Darkens

    Canadian Natural Resources Ltd. lowered its 2016 spending budget, joining peers in clawing back investments as price assumptions fall in the worst oil rout in a generation.

    Canada’s largest heavy-crude producer now plans to spend C$3.5 billion ($2.6 billion) to C$3.9 billion this year, down from November’s estimate of between C$4.5 billion and C$5 billion, the Calgary-based company said Thursday in a statement. Analysts expect U.S. crude to average about $39.50 a barrel in 2016, according to the median of 37 estimates compiled by Bloomberg.

    Canadian Natural is among energy companies shelving projects and cutting costs to withstand an oil-price slump that’s lasted more than 20 months. The company, also the nation’s biggest gas producer, is contending with a drop in prices for that fuel as well. Canadian Natural continues to expand its Horizon oil-sands project to a target of 250,000 barrels a day in 2018 as it stays focused on long-term profits.

    “Canadian Natural is committed to advancing the completion of the Horizon expansion project, the major component of its transition to longer-life, low-decline asset base,” it said in the statement. “The Horizon project will generate substantial cash flow.”

    The company expects total production of 809,000 to 868,000 barrels of oil equivalent a day this year, down from an initial forecast of between 843,000 and 886,000 barrels. It reported an 89 percent decline in fourth-quarter net income to C$131 million, or 12 cents a share. Excluding one-time items, its 4-cent-a-share loss beat the 14-cent loss expected by analysts, according to the average of 14 estimates compiled by Bloomberg.
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    Iran hopes to raise March oil exports on higher European sales - sources

    Iran, OPEC's No. 3 producer, is expected to raise its oil exports in March to around 1.65 million barrels per day from 1.5 million bpd a month earlier on the back of higher crude shipments to Europe, two industry sources told Reuters on Thursday.

    State-run National Iranian Oil Co. (NIOC) is expected to ship around 250,000-300,000 bpd to Europe this month after it finalised term deals with France's Total and Spanish refiner Cepsa, effective from March 1, said the sources, who are familiar with Iran's exports.

    The French oil major has a contract to buy about 200,000 bpd, while Cepsa's deal was for about 35,000 bpd, one source said. Total is expected to lift at least 5 million barrels in March, the source added.

    Litasco, the trading arm of Russia's Lukoil, Cepsa and Total have become the first buyers in Europe after the lifting of sanctions and lifted trial cargoes in February, trading sources told Reuters.

    Hellenic Petroleum, Greece's biggest oil refiner, has said it will receive its first shipment of Iranian crude oil at the end of March.

    Tehran is working to regain market share, particularly in Europe, after the lifting of international sanctions in January. Oil exports rose by 500,000 bpd to 1.5 million bpd in February, a senior NIOC official said on Tuesday.

    The sanctions had cut Iranian crude exports from a peak of 2.5 million bpd before 2011 to just over 1 million bpd in recent years.

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

    But even a gradual increase in its exports would come at a time of global oversupply, with producers around the world pumping hundreds of thousands of barrels every day in excess of demand. Oil prices are near 11-year lows at around $37 a barrel.

    Saudi Arabia, Qatar, Venezuela and non-OPEC Russia agreed last month to freeze output at January levels in the first global oil pact in 15 years.

    Iranian Oil Minister Bijan Zanganeh said last week the freeze was "laughable". Iranian sources say the country would be prepared to discuss a production pact once output reaches pre-sanctions levels.
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    Origin: APLNG officially commences operations phase

    Origin Energy, the owner of a 37.5 percent stake in the Australia Pacific LNG said on Thursday the project has officially transitioned to the operating phase.

    The project, that has shipped its first cargo on January 9 has since then shipped additional five cargoes of liquefied natural gas, Origin said in a statement.

    Australia Pacific LNG CEO, Page Maxson in an earlier statement said that the full production capacity of 9 million tons per year from the APLNG facility is expected to be reached in 2016.

    Australia Pacific LNG is a joint venture between ConocoPhillips, the operator with a 37.5 percent stake, Origin 37.5 percent stake and Sinpec with a 25 percent stake.

    Sinopec also has a 7.6 mtpa long-term contract with Australia Pacific LNG.
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    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)


    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.'
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    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.
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    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.
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    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.
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    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.
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    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.

    Attached Files
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    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

    Attached Files
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    US oil production slips again

                                                 Last Week   Week Before  Year Ago

    Domestic Production '000....... 9,077             9,102           9,324
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    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.
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    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.
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    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.”
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    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.
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    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.
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    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.
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    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.
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    The Oil stockpile fret: climbing a wall of worry.

    Image titleWe may get to end of the year, and even though supply and demand are in balance, the market shrugs and says ‘So what?’ because it’s waiting for proof of inventory draw-downs,” said Mike Wittner, head of oil markets at Societe Generale SA in New York. “Moving from stock-builds to balance might not be enough.”Image titleInventories started to swell in 2014 as the wave of supply unleashed by the U.S. shale oil boom, coupled with other new output, outpaced growth in global oil demand by a factor of three. The pile-up continued in 2015 as OPEC members like Saudi Arabia and Iraq raised production to defend their share of world markets, and are poised to fill even more as Iran -- freed as of last month from international sanctions -- pushes new exports into a market that’s already saturated.
    Image titleFor a historical precedent, Goldman Sachs Group Inc. points to the oil glut that developed in 1998 to 1999 as demand plunged in the wake of the Asian financial crisis. Crude prices kept falling even as the Organization of Petroleum Exporting Countries made output cuts in March and then June of 1998, slipping below $10 a barrel in London in December of that year. It wasn’t until stockpiles in developed economies started dropping in early 1999 that the recovery took shape

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    Henry Hub breaks 20 yr lows.

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    GAIL delays LNG carrier tender again

    India’s GAIL has again postponed the tender seeking to hire nine LNG carriers to carry U.S. liquefied natural gas starting in 2017.

    According to the tender documents GAIL has set the new date for bid submissions to March 31, 2016.

    Indian company re-floated its tender in September 2015, but has since delayed the bid submissions date twice. It was last expected to close on February 29.

    No changes were made to the initial tender as GAIL is still looking for nine LNG ships of a cargo capacity of 150,000-180,000 cbm, enabling it to comply with its off-take commitments at Sabine Pass and Cove Point LNG projects from December 2017.

    According to the report by Press Trust of India, GAIL’s chairman and managing director B C Tripathi noted the latest postponement is due to a request by bidders that are looking for more time to complete their bids.

    Under the original tender, nine vessels, three of which have to be built by shipyards in India, will have a delivery window from January 1, 2019, to May 31, 2019, for foreign shipyards and July 1, 2022, and ending June 30, 2023, for Indian shipyards.

    Indian shipyards, Pipavav Defence and Offshore Engineering and Cochin Shipyard have already agreed deals with South Korea’s DSME and Samsung Heavy Industries, respectively, to cooperate in the construction of the vessels.

    Cochin Shipyard has additionally acquired a licence by France’s GTT to build LNG carriers with the Mark III membrane containment system.
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    Linn Energy expects to breach debt covenant, company says

    Linn Energy LLC expects to fall out of compliance with the terms of a fully drawn $3.6 billion line of credit in 2016, the company said in a regulatory filing Tuesday.

    The covenant breach could result in a default and ultimately a bankruptcy if creditors aren’t willing to renegotiate. The debt terms include a 30-day grace period.

    “The Company does not expect to remain in compliance with all of the restrictive covenants contained in its credit facilities throughout 2016 unless those requirements are waived or amended,” Linn Energy wrote in the document.

    “The uncertainty associated with the Company’s ability to meet its obligations as they become due raises substantial doubt about its ability to continue as a going concern.”

    Linn Energy made the comments in a regulatory filing announcing that the company would delay filing its 10-K form, which outlines annual and quarterly performance. Linn indicated it needed more time to complete the company’s financial statements and disclosures.

    On Feb. 4, Linn Energy said it was exploring strategic alternatives, business code for a restructuring or sale that could stave off bankruptcy. In Tuesday’s announcement, Linn indicated it had $1 billion in cash and cash equivalents available.

    Linn also indicated it will report significant impairments on its non-cash assets and oil reserves, totaling about $5.8 billion for 2015, according to the documents.
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    China raises coal bed methane gas subsidy to help fight air pollution

    Beijing has raised the subsidy for coal bed methane (cbm) production by half from this year to 2020 in a move to encourage exploration and production of the cleaner-burning fuel as part of its air pollution control initiatives.

    The subsidy for each cubic metre of cbm ¨C natural gas trapped among coal seams ¨C has been raised to 0.3 yuan in the five years to 2020 from 0.2 yuan in previous years, the Ministry of Finance said in a statement posted on its website on Tuesday.

    The move is expected to help struggling producers of the greener but more challenging and expensive to extract natural gas, after Beijing slashed non-residential wholesale natural gas prices by an average of 28 per cent from November following a crash in global energy prices.

    "Many cbm projects are no longer profitable following the recent domestic gas price cut amid slowing demand growth," Nomura Asia-Pacific head of oil and gas research Gordon Kwan said. "This is why China is lending a helping hand to the producers to motivate long-term investment in cbm."

    Cbm and shale gas ¨C natural gas trapped between shale formations ¨C are unconventional forms of gas that are free from state pricing, but they have not been immune from price reduction pressure since conventional gas has similar properties to and competes with unconventional gas.

    China is rich in unconventional gas but poorly endowed in conventional gas.

    Hong Kong-listed and Shanxi province-based AAG Energy, the first non-state-owned cbm explorer to get Beijing¡¯s permission to enter into large-scale commercial production in 2011, said in January competition from the expected conventional gas price cut forced it to lower its own cbm prices as early as September.

    As a result, its average selling price fell 11.9 per cent to 1.56 yuan per cubic metre in the second half of last year from 1.77 yuan in the first half.

    The latest 0.1 yuan per cubic metre subsidy increase is not sufficient to offset the price decline.
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    South Korea plans to buy more Iranian condensate this year

    The country's trade and energy ministry said on Tuesday.

    "We will increase oil and natural gas imports from Iran, especially Iranian condensate," the ministry said in a statement.

    It added that the two countries would establish a payment system to facilitate smooth trade of crude and condensate between National Iranian Oil Company and South Korea's SK Energy and Hyundai Oil Bank.

    South Korea's imports of Iranian crude oil tripled in January from a year earlier with the United States lifting sanctions on Tehran, but shipments remained far below pre-sanction levels.

    The Islamic Republic on Jan. 17 emerged from years of economic isolation as sanctions over its disputed nuclear programme were lifted.

    Iran is exporting 100,000 barrels a day of oil to South Korea, one of its main crude customers, and hopes to double that figure by the end of 2016, Oil Minister Bijan Zanganeh was quoted as saying on Monday.
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    Former Chesapeake CEO McClendon charged with bid-rigging of land leases

    Aubrey McClendon, former chief executive officer of Chesapeake Energy Corp  and a legend in the U.S. energy industry, was charged on Tuesday with conspiring to rig bids to buy oil and natural gas leases in Oklahoma, the Justice Department said.

    The indictment follows 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.

    In addition to the federal probe, the Michigan attorney general brought criminal charges against Chesapeake, which the company settled in 2015 by agreeing to pay $25 million into a compensation fund for land owners. The Justice Department indictment paves the way for what may be one of the highest-profile criminal antitrust cases against a well-known U.S. CEO in decades, and could thrust McClendon, a controversial figure whose aggressive leasing tactics are legendary in the energy industry, into the highest-stakes legal battle of a decades-long career.

    Oklahoma-based McClendon is a shale drilling evangelist who was once among the highest paid U.S. CEOs. He co-founded Chesapeake with fellow Oklahoma oilman Tom Ward in 1989. In 2013, McClendon stepped down from the helm of Chesapeake amid a liquidity crunch and corporate governance concerns. Ward left Chesapeake in 2006 and founded competitor SandRidge Energy Inc (SDOC.PK) the same year.

    McClendon, who is now with American Energy Partners (AEP), was charged with one count of conspiracy to rig bids, a violation of the Sherman Antitrust Act, the Justice Department said.

    "The charge that has been filed against me today is wrong and unprecedented," McClendon said in statement. "I have been singled out as the only person in the oil and gas industry in over 110 years since the Sherman Act became law to have been accused of this crime in relation to joint bidding on leasehold." Chesapeake itself is unlikely to face criminal prosecution, the company said. "Chesapeake has been actively cooperating for some time with a criminal antitrust investigation by the Department of Justice regarding past land leasing practices," said Chesapeake Energy spokesman Gordon Pennoyer. "Chesapeake does not expect to face criminal prosecution or fines relating to this matter."

    Chesapeake shares declined 3.6 percent in after-hours trading to $2.66

    The seven-page indictment alleges that McClendon set up a conspiracy of two energy companies which agreed not to bid against each other in purchasing oil and natural gas leases in northwest Oklahoma from 2007 to 2012. The indictment did not name either company.

    The indictment comes at a time when energy executives across America are already facing considerable distress. Oil and gas companies like Chesapeake, SandRidge, and McClendon’s new venture AEP, have struggled as the price of oil plummeted by 70 percent since late 2014.

    Both Chesapeake and SandRidge, once storied firms in Oklahoma’s oil industry, have recently engaged restructuring experts as they scramble to pay off billions in debt and avoid potential bankruptcy. Chesapeake's stock price has tumbled more than 80 percent in the last year. SandRidge was delisted from the New York Stock Exchange in January, and closed Tuesday at 4 cents per share.

    Much of the companies' debt was accrued in the period from 2007 through 2012 when McClendon was allegedly engaged in an antitrust conspiracy, a time when Chesapeake was snapping up millions of acres of land leases nationwide to expand its shale drilling.

    McClendon has also been embroiled in a lawsuit with Chesapeake which alleged that he took sensitive company data from his former company to build his new business.

    The Justice Department said that McClendon's indictment was the first case in an ongoing federal antitrust investigation into price fixing, bid rigging and other anti-competitive conduct in the oil and natural gas industry.

    “His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land. Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions,” said Assistant Attorney General Bill Baer, head of Justice Department's Antitrust Division.

    Chesapeake, SandRidge, and McClendon had previously disclosed in securities filings that they were being investigated by the Justice Department's Antitrust Division.
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    Anadarko says to monetize up to $3 billion of assets in 2016

    Anadarko Petroleum Corp said it plans to monetize up to $3 billion of assets this year amid a slump in crude oil prices.

    The U.S. oil company has already closed or signed agreements to monetize about $1.3 billion of assets this year, it said last week.

    Anadarko also said on Tuesday that it expected 2016 capital expenditures to range between $2.6 billion and $2.8 billion,
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    Colombia's Ecopetrol says reserves down 11 pct in 2015 to 1.85 bln bbl

    Colombian state-run oil company Ecopetrol said its proven oil and gas reserves were down 11 percent in 2015 to 1.85 billion barrels equivalent because of a decline in exploration caused by low crude prices.

    The reserves were equivalent to 7.4 years of output, down from 2014 figures of 8.6 years. The reserves' replacement index was 6 percent, Ecopetrol said in a statement late on Monday.

    "The largest contributions to reserves come from the Castilla and Chichimene fields, both operated directly by Ecopetrol, and the Rubiales field, which will be operated by the company from June 2016," the statement said.

    Ninety-five percent of the proven reserves are the property of Ecopetrol, while the remainder belongs to partners and subsidiaries.

    The company had reported 2.08 billion barrels equivalent of reserves in 2014.
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    SacOil agrees $6billion gas pipeline project

    Sacoil has agreed a deal for the construction of a $6billion, 2,600km large-diameter pipeline to transport natural gas between Mozambique and South Africa.

    The South African oil and gas company said the agreement is with national Mozambique oil company ENH and Profin and Chinese pipeline company CPP will transport natural gas from Mozambique’s Rovuma Basin to Gauteng in South Africa and en route will deliver gas to key towns and settlements in Mozambique.

    SacOil chief executive Dr Thabo Kgogo said the cooperation agreement is a key milestone in the progression of the natural gas pipeline and distribution project.

    “It confirms the financing commitments required for the pre-investment and engineering studies phases of the project, and paves the way for its speedy and effective construction and implementation.

    “The agreement brings together a wealth of expertise as a pre-investment consortium that will focus on bringing the project to bankability, assuring that a solid investor group is drawn from China, Mozambique and South Africa.”
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    Europe's Biggest Oil Hub Fills as Ship Queue at Seven-Year High

    The queue of ships waiting outside Europe’s biggest port and oil-trading hub of Rotterdam has grown to the longest in seven years as a global supply glut fills storage capacity.

    As many as 50 oil tankers, twice as many as normal, are waiting outside Rotterdam because storage sites are almost full, the port’s spokesman Tie Schellekens said by phone on Tuesday.

    “This is a clear sign of the oversupply filling up storage to the brim,” Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, said by phone. “People are preferring to store oil rather than cut production. These are bearish signs.”

    The world is so awash with oil that BP Plc Chief Executive Officer Bob Dudley said last month people will be filling up their “swimming pools” with it this year. Traders are taking advantage of a market contango, where forward prices are higher than current prices, by buying oil cheap, storing it and selling the commodity later. As onshore storage fills up, companies could start stockpiling at sea in a repeat of a strategy last seen in 2008 and 2009.

    Near Capacity

    Crude oil in storage tanks in Rotterdam stood at 51.3 million barrels on Feb. 19, the highest for the time of year in data starting in 2013, according to Genscape, which monitors inventories. Royal Vopak NV, the world’s largest oil-storage company, last week reported a fourth-quarter occupancy rate of 96 percent at its 11 terminals in the Netherlands compared with 85 percent a year earlier.

    The situation in Rotterdam mirrors that in the biggest U.S. storage hub of Cushing in Oklahoma, where stockpiles are at a record high.

    “In Cushing and probably Rotterdam storage is filling up very quickly,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich, Switzerland. “In China, given high oil imports, there are too many ships and the infrastructure seems not be able to handle that.”

    Saudi Arabia, the world’s biggest oil exporter, said last month it won’t cut production to ease global oversupply, while Iran has pledged to increase output after sanctions were lifted in January. Still, oil climbed on Tuesday from the highest close in more than seven weeks on speculation that monetary stimulus in China could help revive flagging economic growth in the world’s second-biggest fuel consumer.

    Price Contradiction

    Brent crude, the international benchmark, rose as much as 1.3 percent to $37.05 a barrel on the London-based ICE Futures Europe exchange, after prices gained 6.3 percent last week.

    There is a “contradiction” between the increase in oil prices and the physical supply and demand situation seen in Rotterdam and Cushing, Zambo said. With storage tanks filling up, oil prices for immediate delivery would probably fall while cargoes for future delivery would increase, resulting in a deepening of the market contango.

    Chris Bake, a senior executive at Vitol Group, the world’s largest independent oil trader, said in February that traders are considering storing oil at sea, a strategy last employed in 2008 and 2009.

    “Primary and secondary storage is pretty much full,” Bake said. “It’s probably a good time to be a vessel owner.”

    On Feb. 11, U.S. benchmark West Texas Intermediate for delivery in four months traded $6 a barrel higher than that for one-month supply, the widest gap in five years. The premium has since narrowed to $3.88 a barrel on Tuesday.

    That’s still some way off the $15 premium reached in January 2009, a “super-contango” that helped traders make billions of dollars from storing oil in supertankers moored in sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa.

    Attached Files
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    Frontline says resolving Iran oil shipping insurance issues still months away

    Frontline, one of the world's largest independent tanker firms, says securing insurance for cargoes carrying oil from Iran is likely to take another two to three months, potentially limiting Iran's ability to quickly ramp up oil exports.

    Iran has been seeking to rapidly increase oil exports since international sanctions were lifted as part of its nuclear deal with world powers, which came into effect in January, but it still faces insurance and financing hurdles.

    "We have not lifted anything yet, there are still terms of insurance and payments. There are still some outstanding (issues). (But) we expect that to be in place within two to three months," said Robert Hvide Macleod, chief executive of Oslo-listed Frontline.

    "That could change, but two to three months (is) our estimate," he told a conference call with investors on Monday.

    The United States still prohibits U.S. individuals or companies from trading with Iran and insurers are trying to clarify details on the parameters of the U.S. sanctions.

    "In terms of volumes, (Iran's) pre-sanctions levels were 2.8 million barrels of oil per day. Their domestic refineries consumed about 1.8 million," MacLeod said.

    "There is a million left to export which they did on their own ships. Now the post-sanctions volumes available into 2016 looks to be between 1.5 million to 2 million barrels."

    MacLeod said once the insurance issue is resolved, Iran would rely more on international shipping. Iranian tankers have been holding unsold oil at Iranian ports and will continue to do so due to a lack of land storage facilities, he said.

    "We expect the chartering requirement from Iran to increase and (for) them to fix international tonnage," he said.
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    Origin inks LNG deal with China’s ENN

    Origin Energy of Australia said Tuesday it has signed a non-binding heads of agreement with a unit of China’s privately-owned ENN Energy for the supply of 500,000 tonnes of LNG per year for a period of five years.

    A binding LNG SPA, which includes an option to extend the supply period by an additional five years, is expected to be executed during the second half of 2016, Origin said in a statement.

    Deliveries of LNG under the deal would be expected to begin in 2018 or 2019 after completion of ENN’s Zhoushan receiving terminal in Zhejiang province, China.

    Origin holds a 37.5 percent stake in the APLNG joint venture and is the upstream operator of the LNG export project.

    Under the heads of agreement, Origin has the flexibility to supply ENN from its portfolio interests, optimised with third party purchases where market conditions create an opportunity to lower overall cost of supply.

    As LNG and commodity markets strengthen in the future, Origin together with its partners, has the option to “bring forward the development of its resource positions on Australia’s east coast,” Origin said in the statement.

    “For example, the Ironbark resource is an economic source of supply for ENN when tolled through existing LNG infrastructure and can be developed at a time when it becomes the lowest cost source of supply,”  Origin added.
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    Gatwick gusher has moved from science project to “commercial reality”, says UKOG boss

    The boss of UK Oil & Gas said strong flow rates has converted the Horse Hill scheme from a “science project” to a “commercial reality”.

    UKOG Stepehn Sanderson spoke out after the site produced more than 900 barrels per day from an 88-foot aggregate perforated zone within the Upper Kimmeridge limestone interval at a depth of approximately 840 metres below ground level.

    The firm said sweet oil flowed freely to the service without pumping.

    Sanderson said: “This test provides unequivocal proof of concept for the Company’s new Kimmeridge limestone oil play. The two Kimmeridge flow tests have not only shown that moveable oil exists within the Kimmeridge, but more importantly, that it can be extracted at commercial rates even from vertical wells without significant stimulation.

    “This result is therefore very significant for the company and the Weald Basin of the UK. The Kimmeridge play has moved from science project into the zone of commercial reality.

    “The well’s natural aggregate flow rate from the Kimmeridge limestones of 1360 bopd looks to be one of the highest natural flow rates recorded in a UK onshore wildcat well since the Wytch Farm discovery in the 1970s. It should be noted that the planned use of horizontal appraisal and development wells may further significantly enhance production flow rates seen to date.

    “Following the final flow test in the overlying Portland, HHDL now plan to move full speed ahead to obtain the necessary permissions to return to the well, drill a horizontal sidetrack and conduct long term production tests.”

    With this stable Upper Kimmeridge limestone flow, the two Upper Kimmeridge and Lower Kimmeridge limestone intervals have now produced a combined average stable rate of over 1,360 bopd.

    The HH-1 well is located within onshore exploration Licence PEDL137, on the northern side of the Weald Basin near Gatwick Airport.
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    Marathon Oil Seeks $1.3 Billion in Stock Sale to Weather Rout

    Marathon Oil Corp. joins a slew of U.S. producers selling shares to shore up their finances as they endure the worst market rout in a generation.

    The producer plans to offer 135 million common shares, and underwriters will have the option to buy an additional 20.25 million, Houston-based Marathon said in a statement. That total would amount to about $1.3 billion at the closing price Monday, making it the company’s biggest share raise on record and increasing shares outstanding by about 20 percent. The stock, which is down 35 percent this year, fell 3.8 percent to $7.90 after the close of regular trading as of 7:27 p.m. in New York.

    Marathon is the latest U.S. oil company raising money by selling shares as it seeks funds to help ride out the worst oil-price downturn in decades. Devon Energy Corp. raised about $1.5 billion last week. Pioneer Natural Resources Co. and Hess Corp. are among other producers that offered shares to raise cash.

    "It supports the notion that Marathon will have the cash to continue to weather this downturn," said Brian Youngberg, an analyst at Edward Jones in St. Louis. "These are unusual times and, at the end of the day, the focus is on liquidity and credit."

    Last year, the company cut its dividend by 76 percent to preserve cash. Earlier this month, Marathon also slashed its 2016 capital spending plan more than 50 percent below last year’s budget.

    Morgan Stanley is acting as the book-running manager for the offering, Marathon said.
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    Pemex sees production drop of 100,000 bpd with budget cuts

    Production at Mexican state oil company Pemex is likely to fall by around 100,000 barrels per day (bpd) due to a current round of budget cuts at the firm, chief executive officer Jose Antonio Gonzalez Anaya said on Monday.

    The drop should be reversed at some point, Gonzalez told a news conference, but he did not specify when.
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    Cushing inventories in huge build

    Nothing says buy-the-dip in crude oil like a massive inventory build in an already-near-peak-storage Cushing. Following a dive in prices after Genscape reported a massive Cushing build of approximately 1mm barrels, WTI has surged as algos keep the dream alive in stocks...

    This would be the biggest weekly inventory build at Cushing this year...
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    Southwestern Cuts 2016 Spending 80%, Idles Marcellus Rigs (for Now)

    Southwestern Energy reported a large paper loss of $4.6 billion for 2015, but also reported an increase in production of 27% over 2014. As part of the quarterly dog and pony show,

    Southwestern (like every other driller) hosted an analyst phone call to accompany the release of their numbers. As sometimes happens, further details came out on the phone call that weren’t evident in the official update.

    For example, in 2016 Southwestern currently does not plan to drill any new wells in the Marcellus/Utica. They have “idled” all of their drilling rigs. Southwestern CEO Bill Way said he specifically used the word idled because they are waiting to restart them when/if prices pick up again.

    The current plan is to complete 20-30 wells in the northeast, in the southwest and northeast Marcellus–and then wait and see what happens with prices…
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    Exxon Said to Plan Bond Offering After Rating Downgrade Threat

    Exxon Mobil Corp., the world’s largest oil company by market value that’s under threat of losing its top-notch credit rating, is tapping the bond market.

    The company may sell debt in as many as nine parts for general corporate purposes, according to a person with knowledge of the matter. The offering comes after Moody’s Investors Servicewarned Thursday that the oil-market collapse imperils cash flow needed to cover debt payments and investment in new discoveries at Exxon and cut its outlook to negative from stable.

    Standard & Poor’s made a similar move on Feb. 2. Exxon is one of three U.S. corporate issuers with AAA ratings from S&P, along with Microsoft Corp. and Johnson & Johnson.

    "If you are Exxon, you have to be looking around at all of the wreckage in the energy sector these days and feel like a kid in a candy store," said Spencer Cutter, an analyst at Bloomberg Intelligence. "I am not sure I would say that this debt sale is a sign of health, but more likely of building a capital stockpile to be able to take advantage of the market, invest in assets while they are cheap."

    The longest portion of the offer is a 30-year bond yielding 1.75 to 1.8 percentage points more than comparable government debt, said the person, who asked not to be identified because the deal is private. Exxon is also selling 10-year and 7-year bonds.

    U.S. crude futures headed for their longest run of monthly losses in a year as a further pullback in drilling failed to stifle speculation that the glut will persist.

    As the company likely doesn’t need cash for anything in the near term, the debt offer may be a sign that Exxon intends to "start picking up great assets at fire-sale prices" and "take advantage of the downturn and start shopping," Cutter said. Though most investors will look at the deal as if the company has already been downgraded, he said, this probably won’t have a great impact on pricing as Exxon is still one of the strongest corporate credits in the world.
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    Saudis advocate cooperation to stabilize market

    "The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action," the Saudi cabinet said in a statement.

    Saudi Arabia and several fellow OPEC members agreed with non-OPEC Russia this month to freeze output at January levels in an attempt to prop up prices.

    Russian President Vladimir Putin called a meeting with top managers of his country's leading oil producers on Tuesday.

    However, Iran remains the main obstacle to a global output freeze because it is determined to ramp up supply after the country's emergence from international economic sanctions in January.

    On Monday Iran said it had increased exports steeply over the past month. Exports climbed as high as 1.75 million barrels per day, adding to an already oversupplied market.

    "There is still a lot of downside risk ... but the U.S. crude market seems to have passed the worst point and crude runs should start creeping higher, taking pressure off inventory levels," said Richard Gorry, director of JBC Energy Asia.

    U.S. producers cut the number of rigs drilling for oil for a tenth week running, taking the rig count to its lowest since December 2009.

    A Reuters monthly poll showed on Monday that oil prices are expected to average a little more than $40 a barrel this year.

    Financial data also suggested sentiment might be shifting.

    Data from InterContinental Exchange on Monday showed that investors in crude held more futures and options contracts betting on rising prices than at any time since the records began in 2011.

    The amount of open positions in U.S. crude contracts betting on a further fall in prices has dropped to about 17 percent since mid-February.

    At the same time, financial traders have raised their bullish bets on oil after talk of a global production freeze, signs of falling U.S. shale crude output and growing gasoline demand.

    "There are tentative signs the worst may be over for commodities, at least judging by the pick-up in investor sentiment," Barclays said.
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    Inflation expectations imply weak Oil.

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    Petronas posts $704 million fourth-quarter net loss, confirms spending cuts

    Malaysia's Petroliam Nasional Bhd, or Petronas, reported a fourth-quarter net loss on Monday and announced spending cuts for the next few years, as the state oil company braces for a prolonged period of low oil prices.

    Petronas reported a net loss of 2.96 billion ringgit ($704.3 million) for the October-December period, compared with a loss of 7.3 billion ringgit a year ago. The company attributed the net loss to impairment of assets caused by low oil prices.

    Revenue for the quarter was 60.1 billion ringgit, down nearly a quarter from 79.4 billion ringgit for the corresponding period a year ago.

    The 70 percent slump in crude oil prices LCOc1 since mid-2014 has been squeezing the finances of unlisted Petronas, which accounts for about a third of the Malaysian government's oil and gas revenue.

    "2016 and 2017 will continue to be challenging for Petronas," Petronas President and Group CEO Wan Zulkiflee Wan Ariffin said at a press conference to announce the results.

    "We are planning our projections based on Brent price at $30 for this year, and must brace ourselves for the corresponding impact to our financial performance."

    Petronas also confirmed plans to cut spending by 50 billion ringgit over the next four years, as earlier announced in an internal memo to its staff.

    It said the company would start with 15-20 billion ringgit cuts in 2016. But it added that it would stick to its commitment of paying a dividend of 16 billion ringgit to the government for 2016.
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    Genel to take about $1 bln impairment on Iraqi Kurdistan field

    Genel Energy Plc said it expected to book about $1 billion in impairment to the 2015 value of its Taq Taq oilfield in Iraqi Kurdistan, citing reduced estimate for recoverable reserves there and falling oil prices.

    Shares in the company lost nearly a fourth of their value in early morning trade in London.

    Following a review, the oil producer said it estimated that Taq Taq had proven and probable reserves of 356 million barrels of oil (mmbls) as of Dec. 31, down from its earlier assumption of 683 million barrels in June 30, 2011.

    By the end of last year, Taq Taq field had already produced 184 mmbbls gross.

    The news comes after Genel said earlier this month that it would resume drilling work at Taq Taq in the coming weeks to ramp up production, despite a roughly 40 percent fall in oil prices over the past year to around $30 a barrel.

    The move would have marked the first time in more than a year that Genel has drilled in the region to increase output from its fields after the Kurdistan Regional Government struggled to pay producers for oil exports.

    Genel said on Monday it had found that fracture porosity within the Shiranish - one of the three principal producing units at Taq Taq - was lower than estimated in 2011.

    Gross production at the field is expected to average about 80,000 barrels of oil per day (bopd) this year, the company said, sticking to its full-year guidance of 60,000-70,000 bopd.

    Genel shares were down 21 percent at 98.40 pence at 0838 GMT, making them the top percentage losers on the London Stock Exchange. The stock touched a low of 94.67 pence earlier. 
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    More US rigs idled last week

    Rigs targeting oil in the U.S. fell by another 13 to 400, after more than 100 were idled since the start of the year, Baker Hughes Inc. said on its website Friday. The report marks the 10th straight week of declines in the number of working rigs. Natural gas rigs gained by 1 to 102, bringing the total down by 12 to 502.

    Texas took the brunt of the week’s cuts. The Eagle Ford Shale in South Texas idled 8 rigs, bringing the total working in the region to 41. One rig was idled in the Permian Basin. Rigcounts in the D-J Niobrara and Williston Basin were both unchanged.

    After falling 31 percent in 2015, crude is down another 8 percent this year on speculation a worldwide surplus will be prolonged because of rising U.S. stockpiles that have swelled to the highest level in more than eight decades. Global producers are in discussions about a site for a meeting next month on a possible production freeze, Venezuelan Oil Minister Eulogio Del Pino said during a television broadcast on TeleSur.

    “Oil is stabilizing above $30,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “U.S. production cuts are by far the most likely source of further price support for the oil market, rather than any talks between Venezuela, Russia and other producers.”

    America’s oil drillers have been idling rigs since October 2014 as the world’s largest crude suppliers battle for market share. Despite the cutbacks, U.S. production has remained stubbornly high as new techniques that increase efficiency keep the oil flowing.

    Production fell by 33,000 barrels a day to 9.14 million, the lowest since October. It was the fifth straight week that U.S. output has declined.
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    Gazprom Export to hold gas auction for Baltic States in March

    Gazprom Export will hold a second gas auction - for supplying natural gas to the Baltic States, the company said in a statement received by Interfax on Feb. 27.

    The auction will be held in mid-March 2016. Gas supplies will be sent in the second, third and fourth quarters of 2016 to the natural gas measurement station in Kotlovka (on the border between Belarus and Lithuania). The natural gas at an underground gas storage facility in Incukalns, Latvia, will also be on sale. In all, over 560 million cubic meters of natural gas will go on auction.

    Russia and U.S. prepare to fight for European gas market

    More details on the auction, terms and conditions, and related documentation will be published later on Gazprom Export's website.

    "This form of sale adds to the system of long-term contracts that provide Europe's energy security," the company said.

    Gazprom Export held its first public sale of natural gas in September 2015 for deliveries through the Nord Stream gas pipeline during the 2015/2016 winter. The auction resulted in more than 40 deals with 15 contractors for a total volume of over 1.2 billion cubic meters of natural gas.
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    China's $5 bln to $10 bln Petrobras loan may help pay most 2016 debt

    A loan announced Friday from China to Brazil's Petrobras is for $5 billion to $10 billion, can be paid in cash or oil at China's request and may help pay the bulk of the $12 billion in debt the state-run oil company must repay this year, a source involved in debt talks told Reuters late Friday.

    The loan from the China Development Bank was first agreed to in early 2015, and when added to a $5 billion CDB loan made in 2009, increases the bank's debt exposure to Petroleo Brasileiro SA as Petrobras is formally known, to as much as $15 billion the source said.
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    U.S. shale's message for OPEC: above $40, we are coming back

    Less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; now some say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation.

    Their latest comments highlight the industry's remarkable resilience, but also serve as a warning to rivals and traders: a retreat in U.S. oil production that would help ease global oversupply and let prices recover may prove shorter than some may have expected.

    Continental Resources Inc, led by billionaire wildcatter Harold Hamm, is prepared to increase capital spending if U.S. crude reaches the low- to mid-$40s range, allowing it to boost 2017 production by more than 10 percent, chief financial official John Hart said last week.

    Rival Whiting Petroleum Corp, the biggest producer in North Dakota's Bakken formation, will stop fracking new wells by the end of March, but would "consider completing some of these wells" if oil reached $40 to $45 a barrel, Chairman and CEO Jim Volker told analysts. Less than a year ago, when the company was still in spending mode, Volker said it might deploy more rigs if U.S. crude hit $70.

    While the comments were couched with caution, they serve as a reminder of how a dramatic decline in costs and rapid efficiency gains have turned U.S. shale, initially seen by rivals as a marginal, high cost sector, into a major player - and a thorn in the side of big OPEC producers.

    Nimble shale drillers are now helping mitigate the nearly 70-percent slide crude price rout by cutting back output, but may also limit any rally by quickly turning up the spigots once prices start recovering from current levels just above $30.

    The threat of a shale rebound is "putting a cap on oil prices," said John Kilduff, partner at Again Capital LLC. "If there's some bullish outlook for demand or the economy, they will try to get ahead of the curve and increase production even sooner."

    Some producers have already began hedging future production, with prices for 2017 oil trading at near $45 a barrel, which could put a floor under any future production cuts.

    "It's no longer enough to be the low cost producer in U.S. horizontal shale," Bill Thomas, chairman of EOG Resources Inc , said on Friday. "EOG's goal is to be competitive, low-cost oil producer in the global market."

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

    Apache Corp, forecasts its output will drop by as much as 11 percent this year, but said it would probably manage to match 2015 North American production if oil averaged $45 this year.
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    Novatek’s profit doubles in 2015

    Russia’s Novatek, the operator of the giant Yamal LNG project, said its profit doubled to  74.4 billion roubles ($992 million) in 2015.

    The company’s profit rose mainly due to increase in liquids sales and a rise in rouble gas prices, Novatek said in a statement on Friday. Revenues for the year of 2015 increased by 32.9 percent to 475.3 billion roubles.

    Novatek’s natural gas sales volumes totaled 62.5 bcm as compared to 67.2 bcm in 2014.

    Lower natural gas sales volumes were mainly a result of warmer weather conditions in 2015 compared to 2014, as well as one of the company’s “major customers not taking temporarily its full contracted volumes due to technical reasons,” Novatek said
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    Russian Crude Production Sets New Post-Soviet Record In February

    According to calculations by Bloomberg's Julian Lee, released moments ago, Russian crude and condensate production just set new post-Soviet daily record of 10.92m bbl yesterday.

    He notes that the monthly estimate is based on daily data from Energy Ministry’s CDU-TEK for 1st 25 days, and applies the average rate over last week for final 4 days. And since this compares with a revised 10.91m b/d for January, it means that Russia took the production "freeze" seriously: by freezing at a new record high level of production.

    He adds that total January output was revised up by 32k b/d, and also notes that February output has risen by 205k b/d compared to a year ago.

    Lee quotes Russian DPM Arkady Dvorkovich who said that "no extra measures needed for Russian companies to meet proposed output-freeze deal." Well sure - since Russia can't produce more - even if it wanted to as it already is at capacity - there is no downside to making a "freeze" pledge.

    Which means that the only marginal wildcard is what shale producers will do: will the recent production cuts by the likes of such shale titans Whiting and Continental lead to a real and sustainable decline in US oil production, a metric which has stubborning refused to decline materially, or will the modest pick up in prices lead to a resumption of production.

    One answer, even if largely meaningless, will come later today when Baker Hughes will release its latest rig count, however as explained previously, the rig count has become a largely irrelevant statistic thanks to a efficiency improvements by existing wells.

    In any case, we expect many more spurious headlines, mostly out of Venezuela for whom the day of reckoning draws ever closer should oil fail to rebound sustainable from current prices.
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    Iraqi Kurdish oil pipeline seen shut for two more weeks

    Iraqi Kurdish oil exports to world markets will remain halted for at least another two weeks, Turkish shipping and industry sources said on Friday, as security threats to the pipeline in Turkey's southeast have significantly increased.

    The outage, one of the longest in the past two years, is a major blow to Iraq's semi-autonomous region which depends on revenue from oil exports via the pipeline and is struggling to avert economic collapse brought on the slump in energy prices.

    It also highlights how intertwined Iraqi Kurdistan's economic woes are with the deteriorating security in Turkey's predominantly Kurdish southeast, engulfed in the worst violence since the 1990s after a two year-long ceasefire between the state Kurdish militants collapsed last July.

    The interruption is also bad news for European refiners which have been snapping up relatively cheap Kurdish barrels over the past year, boosting profits and already being spoilt for choice in an oversupplied market.

    Carrying around 600,000 barrels per day (bpd) of crude to Turkey's Mediterranean port of Ceyhan from fields in Iraq's Kurdish region and Kirkuk, the pipeline has been offline since Feb. 17.

    "The physical repairs of the pipeline will not take a long time. However, the work to fully restore the security of the pipeline will take more time. We think that it will take two weeks at least," one Turkish industry source said.

    Considered a terrorist group by Turkey, the United States and the European Union, Kurdistan Workers Party (PKK) launched a separatist armed rebellion against the Turkish state three decades ago in a conflict that killed more than 40,000 people.

    The PKK, which says it is fighting for autonomy for Turkey's large ethnic Kurdish minority, has sealed off entire districts of some towns and cities in the southeast and declared autonomy, prompting the security forces to step up their operations.

    Idil, a town in Sirnak province, through which the pipeline passes, on border with Iraq and Syria have been a new focus in Turkey's operations. Army struck PKK targets in the region with Cobra helicopters earlier this week killing 12 militants.

    A Turkish shipping source said one crude tanker was due to be loaded for exports on Friday, with 375,000 barrels of Iraqi Kurdish oil from Ceyhan stocks. Once that cargo is exported, the stocks will depleted, he said but added there were several more vessels awaiting crude.

    "We have been told that large amounts of explosives have been buried near the pipeline and that it will take weeks to clear all that," the shipping source said.

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    Jera Co. holding discussions with KOGAS and CNOOC

    Japan’s Jera Co. is currently holding discussions with South Korea’s Korea Gas Corp., as well as China National Offshore Oil Corp. The talks are regarding the creation of an alliance that would offer the companies greater leverage in order to develop more flexible LNG contracts. Reuters reports that a Jera spokesman claimed that an agreement may be reached in a several days.

    Whilst the alliance’s purpose is largely to share market challenges – including LNG shipment restrictions related to destinations, and inflexible arrangements, including the periodic taking of deliveries – it would also consider the joint procurement of LNG, as well as joint investment in upstream developments. Nonetheless, the Jera spokesman claimed that any agreements regarding the latter are unlikely to come to fruition soon.
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    Cheniere to export up to 10 LNG cargoes within the next two months

    Cheniere Energy expects to export between eight and 10 cargoes of LNG from the Sabine Pass project within the next two months. Speaking at the IHS CERAWeek conference, Katie Pipkin, the Senior Vice President of Business Development and Investor Relations, said that the cargoes will be sold on a spot basis, and are expected to be delivered to Europe or, following in the footsteps of the recent first export from the facility, Brazil.

    This initial export to Brazil’s state-run oil company, Petrobras, was the first ever US LNG export. Cheniere currently has six additional vessels under charter. At present, Cheniere has contracted to sell 42 cargoes of LNG from the terminal to EDF Trading between 2016 and 2018, as well 12 cargoes of LNG per year to ENGIE between 2018 and 2023.
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    Alternative Energy

    China aims to boost renewable energy with 'green certificates'

    China plans to set up a market for renewable energy certificates to try to increase the use of cleaner energy as the world's largest greenhouse gas producer tries to reduce its reliance on coal.

    Power suppliers will be able to trade "green certificates" that represent the proportion of non-hydro renewable energy that they generate, the country's National Energy Administration said on Thursday in a statement on its website.

    China aims to increase the use of non-fossil fuel in the primary energy mix to 15 percent by 2020 from the current 12 percent. It plans to boost the share of renewables such as wind and solar power, with the goal of cutting emissions of major pollutants in the power sector 60 percent by 2020. China already has the world's largest capacity of photovoltaic solar power.

    But the government's efforts to promote a switch to cleaner energy has been hindered because power generated from fossil fuels is cheaper and is therefore given priority on the power transmission grid.

    In the statement, the energy regulator also set provincial and regional targets for the proportion of non-hydro renewable energy in use in 2020. They ranged between 5 and 13 percent, with Beijing's target set at 10 percent.

    "Power companies can trade the certificates to meet their targets for the proportion of non-hydro renewable energy. Certificate holders are encouraged to participate in carbon-emission-reduction trading and energy-saving trading," the statement said.

    The NEA did not say when a trading platform would be built, but it did say that power companies should generate at least 9 percent of their electricity from non-hydro renewable sources by 2020.

    China is going to set a national cap-and-trade carbon market in 2017, allowing the trade of carbon credits earned from renewable energy projects to help emitters comply their obligations.
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    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.
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    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. (

    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.
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    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.


    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.
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    China delivers global record wind and solar installs

    China has formally confirmed two new clean-energy world records in 2015 — one for installing a record 32.5 GW of wind in a single year, and the second for installing 18.3 GW of solar, both higher than initial estimates, Windpower reported on March 1.

    Meanwhile, coal consumption fell 3.7% year on year on the back of just 0.3% electricity production growth and a rapid diversification of China’s electricity generation capacity.

    “The latest figures confirm China’s record-breaking shift toward renewable power and away from coal,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

    “Solar and wind continue to be the big winners, as illustrated by a 73.7% increase in grid-connected solar generation capacity. Declining consumption coupled with an over-abundance of domestic supply, meaning coal imports into China were particularly badly hit, dropping 30.4% on year” , he said.

    While these figures are largely consistent with initial estimates for the 2015 year, the official Chinese National Bureau of Statistics confirmation yet again highlights that global electricity markets “are transforming a great deal faster than anyone actually expected,” said Buckley.

    “China’s official 2015 wind installations are an all-time global record of 32.5 GW, 30% ahead of even the most optimistic forecasts by financial markets made only a year ago. China itself is the only nation to have come anywhere near this, delivering 20.7 GW of new installs in 2014,” he said.

    The National Bureau of Statistics also reported 18.3 GW of grid-connected solar installations in 2015, again surpassing the previous world record of 12.9 GW set by China in 2013. The 14.9 GW of hydroelectricity and 6.0 GW of nuclear capacity installs by China in 2015 round out a year of rapid grid generation diversification.

    Bloomberg New Energy Finance reported that China’s new investment in renewable energy and energy efficiency rose 17% on year to a record $110 billion in 2015.
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    The World's Largest Solar Power Plant Is Now Active In The Sahara

    The Noor Ouarzazate, the world's largest solar power plant, has been activated in Morocco and is projected to be finished by 2018. In the video above, learn about the plant, which, when finished, will reduce carbon emissions by 760,000 tons per year.§ion=us_world&utm_hp_ref=world
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    Cabot Corporation Launches New Conductive Additive for Lithium-Ion Batterys

    Cabot Corporation (NYSE: CBT) announces the launch of the new LITX® 300 specialty carbon performance additive for use in lithium-ion batteries for consumer electronics, electric vehicles and other energy storage applications. The LITX 300 product strengthens Cabot’s current portfolio of performance additives by offering increased conductivity at lower loadings enabling greater storage capacity. This new performance additive also delivers mechanically stronger and more flexible electrodes for good stability and extended cycle life of lithium-ion batteries. Cabot will showcase this new product at booth B-671 at Battery Japan, March 2 – 4, 2016, in Tokyo, Japan.

    The lithium battery market continues to grow as applications such as mobile and consumer electronics, electric vehicles and renewable energy storage drive increased demand for higher-performing batteries. The performance and cost requirements of lithium-ion batteries are steadily increasing, and battery manufacturers continue to seek advanced and cost-effective materials to deliver increased energy density and power delivery. While conductive additives are a relatively small component of the total battery, they can have a significant impact on battery performance. As such, manufacturers are increasingly looking for advances in performance additives to enable next generation lithium-ion batteries to power electro-mobility, high-end electronics and other technology trends.

    “Our new LITX 300 product is a welcome addition to our existing portfolio that includes LITX 50 and LITX 200 additives that are designed for current applications and provide a balance of properties for the battery cell makers,” said Gregg Smith, business and marketing director for Cabot Energy Materials.

    “The LITX 300 additive is relatively easy to disperse and incorporate into the lithium-ion battery manufacturing process,” noted Miki Oljaca, technology director for Cabot Energy Materials. “For battery manufacturers looking to further boost their product performance, the LITX 300 additive allows increased energy density for high-end electronics and other applications that require very thick battery electrodes.”

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    SunEdison delays annual report citing internal probe

    SunEdison Inc  said on Monday it has delayed filing its annual report, mainly due to an internal investigation into the solar company's financial position.

    The investigation, which began late last year, is based on allegations by former executives concerning SunEdison's anticipated financial position disclosed to the board, the company said in a filing. 

    The investigation is being conducted by a committee set up by the board and no wrongdoing has been found so far based on the executives' allegations, SunEdison said.

    SunEdison did not comment further, when contacted by Reuters.

    In mid-November, SunEdison reported a wider-than-expected quarterly loss, prompting the company to stop selling projects to its "yieldcos"- dividend-paying units that hold solar, wind or other power assets for the parent company.

    Later in the month, the chief executives of SunEdison's two yieldcos stepped down.

    One of SunEdison's yieldcos, TerraForm Power Inc, is also delaying its annual report, according to a company filing on Monday. 

    Last week, SunEdison fought off an injunction filed by Appaloosa Management which prevented Terraform Power from buying some assets from Vivint Solar Inc (VSLR.N).

    David Tapper's Appaloosa said the acquisition of Vivint's assets - which had an initial purchase price of $922 million - was not in the interest of the yieldco's shareholders, mainly because it would alter the company's business model and force it to take on debt of $960 million.

    TerraForm Power could not be reached for comment, outside regular business hours.

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    Toshiba mulls battery plant in Australia as Japan seeks sub deal: sources

    Japan has enlisted electronics firm Toshiba Corp to help it try to win Asia's biggest defense contract, a A$50 billion ($36 billion) deal to build a dozen submarines for Australia, three sources said.

    Toshiba is considering building a factory in Australia to make lithium-ion batteries to power the vessels, said the sources who are familiar with the plan but not authorized to talk to the media.

    The potential investment, which is contingent on Canberra picking the Japanese design, is part of an incentive package promising commercial and defense sector work beyond the submarine program, aimed at winning over politicians who want jobs in Australia.

    The proposed plant, which could be worth hundreds of millions of dollars, will also fabricate industrial scale power packs for commercial customers around the world, said the sources.

    Such an investment could be an attractive proposition for Australia, which is seeking other avenues of growth as it grapples with plunging commodity prices.

    "Australia's prime minister (Malcolm Turnbull) is promoting innovation, and that is something Japan can do," said one of the sources.

    Australia's submarine industry is based in South Australia but the sources did not say where Toshiba was considering building a factory.

    Toshiba denied it was mulling a new Australian battery plant.

    Without commenting on Toshiba's potential involvement, South Australia's Minister for Defense Industries Martin Hamilton-Smith said he expected new facilities associated with battery technology would be based in the state as part of any domestic build option, regardless of who won the tender.
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    Why Is The Chinese Government Stepping In To Help Yingli Green Energy?

    Over the last few weeks, there have been reports thatYingli Green Energy will receive about 3.3 billion yuan ($500 million) in loans from the state-backed China Development Bank and the government of its home city of Baoding, as the beleaguered solar firm tries to reorganize its balance sheet.   The support would mark one of the most significant interventions by the state in recent years to shore up a struggling solar company, considering that the government largely allowed players such as Suntech Power and LDK Solar to go bankrupt after they failed to service their debts. So why exactly is the government stepping in to help Yingli and what could the support mean for the company?

    The global solar market has been faring well, owing to the recent policy tailwinds (COP21 and U.S. ITC extension) as well as growing demand from emerging markets. Installations are poised to grow by roughly 16% this year to about 67 GW according to IHS . The decline in module pricing has also been more moderate as compared to previous years given the relatively better supply-demand equilibrium in the market, which has allowed a majority of the large Chinese solar companies to return to profitability.

    Yingli appears to be in a fairly good position to take advantage of this demand growth, given its well recognized brand, wide distribution footprint and its vast manufacturing capacity (about 4 GW for modules as of May 2015). However, while many of Yingli’s peers such asFirst Solar FSLR +0.42% and Trina Solar have been operating at near full capacity in 2015, Yingli is only expected to have shipped about 2.4 GW of modules for 2015, implying a utilization rate of 60%, as it has been seeking to conserve cash for its debt payments (related: Yingli Posts Tough Q3 Amid Focus On Upcoming Debt Payments). A liquidity infusion could help the firm ramp up production.

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    Chevron Said to Weigh Sale of Asian Geothermal Energy Operations

    Chevron is considering a sale of its geothermal assets in Asia as it seeks to counter a slump in energy markets, according to people familiar with the matter.

    Operations could fetch as much as $3b, said one of the
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    SunEdison plans to offload equity in 500 MW project in Andhra Pradesh

    Image Source: Economic TimesSunEdison, the world's biggest renewable energy company, plans to offload equity in a 500 megawatt project it won in India by making a bid that rivals said was too low to make commercial sense.

    Industry sources said that the US company has approached potential buyers for the sale of equity and has consulted investment bankers to value the project it won in November with a bid of Rs 4.63 per unit in an auction conducted by NTPC for solar plants in Andhra Pradesh under the Jawaharlal Nehru National Solar Mission.

    SunEdison can sell up to a 49% stake in the project initially and can exit only one year after it is commissioned.

    Mr Pashupathy Gopalan, President, Asia Pacific, at SunEdison did not rule out the possibility of bringing in equity partner as allowed by the PPA.

    Mr Gopalan said that "We are always looking for equity investors as a business model in addition to selling our assets to our YieldCo. The power purchase agreement (PPA) we're about to sign for the Andhra project allows us to sell up to 49% stake after signing the PPA."

    But he insisted that SunEdison was extremely serious about executing the project.

    He said that "We have made an equity infusion of Rs 120 crore into the company and have submitted performance bank guarantees of Rs 150 crore to NTPC. We have done all the paperwork and are waiting for NTPC's response before signing the PPA," he added. Was he likely to sell the project a year later?

    He added that in our business model, we will continue to explore three strategies on an ongoing basis - holding assets in our balance sheet, selling assets to our YieldCo and partnering with third party investors.

    SunEdison's bid of Rs 4.63 per unit, which was the lowest ever at that time, had rattled the industry, prompting rivals to question the viability of the tariff, which is comparable to new coal-fired power plants.

    Aa rival developer said that "My sense is that doing the project all alone is proving difficult for the company and it is looking for some financial arrangements."

    Analysts said that if SunEdison exits the project, it would help the parent company, which has faced a harrowing time. Its stock price in New York has plunged on concerns of a massive debt burden, business performance and market worries about aggressive acquisition of assets.
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    U.S. NRC engineers urge fix for nuclear power stations

    A group of engineers within the U.S. nuclear power regulator is concerned that a design flaw in nearly all U.S. nuclear plants could endanger emergency core cooling systems. The group has urged the regulator to order power station operators to either fix the problem or face mandatory shutdowns.

    Seven engineers in late February petitioned the Nuclear Regulatory Commission to order immediate enforcement actions against licensees of U.S. nuclear power plants, in a little-noticed, but public move.

    The petition, filed under a standard NRC process, urges the agency to respond by March 21.

    The engineers are concerned that a design flaw in nearly all U.S. nuclear facilities leaves them vulnerable to so-called open phase events in which an unbalanced voltage, such as an electrical short, could cause motors to burn out and reduce the ability of a reactor's emergency cooling system to function. If the motors are burned out, backup electricity systems would be of little help, the petition said.

    In early 2012 an unbalanced voltage event forced Exelon Corp's Byron 2 reactor in Illinois to shut down automatically. The unit was shut for about a week.

    Later that year, the NRC alerted nuclear power plant operators in a bulletin to a potential design vulnerability concerning open phase and collected feedback from the operators.

    But the agency never ordered the plants to make changes to reduce any open phase vulnerabilities. The petition said 13 open phase events have occurred at U.S. and international nuclear plants over the last 14 years.

    Dave Lochbaum, a nuclear expert at nonprofit group the Union of Concerned Scientists, said it was encouraging that the engineers stepped forward without fear of retribution. But he said those concerns show "something is not right with the safety culture at the agency." The NRC could have eased concerns years ago by forcing plants to take action, he said.

    "Why the NRC snatched defeat from the jaws of victory, I don't know," Lochbaum said.

    The nuclear industry played down the petition. "This is not a matter of safety significance that merited interruption of the safe operations of our facilities, in 2012 or now," said John Keeley, a spokesman at the Nuclear Energy Institute.

    Scott Burnell, an NRC spokesman, said the engineers' petition "will be considered under our normal process." Based on responses to the bulletin the agency issued in 2012, the NRC is "confident that plants are safe to continue operating," Burnell said.
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    China’s Soft Power Tested as Sale of Cotton Stockpile Looms

    Global cotton prices have plunged in recent weeks as speculation mounts that China is getting ready to sell some of its 11 million metric ton stockpile—enough to make 10 billion pairs of jeans.

    Commodity analysts expect China to hold a new cotton auction in the next few months, its first since the end of August.

    While China sells nearly all of its cotton at home, it is such a big player in the market that unloading a chunk would depress global prices by reducing how much foreign cotton Chinese businesses buy. China holds about 60% of the world’s cotton stockpiles and is responsible for just less than a third of global consumption.

    In addition, China has tightened import quotas for cotton, leading to a 41% fall in imports in January compared with a year earlier. That means global cotton sellers have less access to the big China market.

    The expectation of a new round of selling by China has pushed down prices on the Zhengzhou Commodity Exchange to their lowest levels since 2004. Meanwhile, the benchmark ICE Futures U.S. exchange has cotton trading at around its cheapest level since 2009, having fallen 11.7% since the beginning of 2016.

    “Until those [Chinese] stocks are cleared, it is going to be hard for cotton to break away from current levels,” said Paul Deane, agricultural commodity analyst at Australia and New Zealand Banking Group, which is bearish on cotton.

    China’s National Cotton Exchange said it hadn’t been notified of further auctions from the National Development and Reform Commission. The commission was unavailable for comment. However, the U.S. Department of Agriculture said there “are numerous unofficial indications that the [Chinese] government intends to pursue a more aggressive reserve stocks sale program in the spring and summer of 2016.”

    But clearing its stockpiled cotton won’t be easy—or painless—for China.

    In the July-to-August auction, the National Development and Reform Commission wanted to sell 1 million tons of cotton. It fell way short, selling only 63,413 million tons.

    Global prices have dropped 9.5% since then, so China will need to put up its cotton at a far lower price if it is to sell.

    One factor putting pressure on China to sell: Cotton deteriorates, so it can’t simply hold supplies for years with hopes of rising prices.

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    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.
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    U.S. moves to end use of Bayer Cropscience, Nichino America insecticide

    The U.S. Environmental Protection Agency said on Tuesday it is issuing a notice of intent to cancel all Bayer CropScience and Nichino America flubendiamide products that pose a risk to aquatic invertebrates.

    EPA said it concluded that continued use of the insecticide would result in unreasonable adverse effects on the environment. The agency said it had requested a voluntary cancellation in accordance with the conditions of the original registration, but that thecompanies had rejected EPA's request.

    Flubendiamide is registered for use on over 200 crops, including soybeans, almonds, tobacco, peanuts, cotton, lettuce, alfalfa, tomatoes, watermelon, and bell peppers, with some crops having as many as six applications per year, according to the EPA.

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    Fertiliser maker Yara to cut costs, raise investments

    Norwegian fertiliser maker Yara plans to cut operating costs and raise investments to become more competitive and grow its business, it said in an update ahead of an investor meeting on Tuesday.

    The company raised its estimate for 2016 capital expenditure to 17.9 billion Norwegian crowns ($2.06 billion) from previous guidance of 14.5 billion, and predicted a decline to 10 billion in 2017 and 7 billion the following year.

    In 2015, Yara's capital expenditure was 14.4 billion.

    "We believe growth is key to creating further shareholder value, and sustaining and growing our competitive edge. Also, improving our relative cost position and productivity is a key priority," Chief Executive Svein Tore Holsether said in a statement.

    "During the next six months we will establish a corporate improvement programme, consisting of several initiatives aimed at reducing cost and increasing efficiency," it added, without elaborating.

    Yara presented two main scenarios for its earnings per share, ranging from 35 Norwegian crowns in the first to 57 in the second, and with the potential to add 6-7 crowns per share by 2018 under the company's growth plans.

    Both were ahead of Yara's reported earnings per share for 2015, which rose to 29.38 crowns from 27.59 crowns in 2014.

    "The scenarios are not a prediction of future results, but are "what if" examples based on selected fertilizer and energy price scenarios and Yara's current business," it added.
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    PotashCorp to idle two mines temporarily

    PotashCorp has responded to the ongoing slump in the potash market with more plans to curtail production.

    In a press release, the fertilizer giant said it is responding to market conditions by "adjusting inventory" at its Allan and Lanigan operations- meaning the two mines will stop producing for 4 weeks starting March 20. The temporary stoppages, designed to coincide with maintenance shutdowns, will reduce the company's 2016 output by around 400,000 tonnes. No layoffs are expected to result.

    The decision is the latest of several taken by PotashCorp in an effort to improve its bottom line. In November the world's largest crop nutrient company by capacity announced it would close its New Brunswick mine, Penobsquis, and take inventory shutdowns at three mines in its home province of Saskatchewan. Then in January, PotashCorp said it is "indefinitely" halting operations at its relatively new Picadilly mine, also in New Brunswick, in response to falling potash demand and weakening prices.

    The company, which had more than 5,000 employees worldwide at the end of 2014, said the suspension, effective immediately, would lead to 420-430 job cuts.

    And a month ago, the company announced it would cut its dividend by a third in response to weaker sales volumes and lower fertilizer prices, after seeing its fourth-quarter profit cut in half.

    Potash prices have fallen to under $300 a tonne from a peak of around $900 a tonne in 2008. The Financial Post quotes analysts at Macquarie as saying that prices could average US$254 a tonne in 2016 due to "ongoing weakness in agricultural commodities and depreciating currencies in emerging markets." The Australian investment bank expects global potash demand to fall by 4.4 million tonnes this year, with the largest declines coming in Southeast Asia, India and Brazil.

    Meanwhile, weakness in the potash and oil markets is taking a toll on Saskatchewan's economy, which is heavily dependent on both commodities. An economist at CIBC Capital Markets, told the Globe and Mail on Feb. 1 that he expects the provincial economy to shrink by half-a-percent in 2016, the same as in 2015. Saskatchewan in November projected a $262-million deficit for 2015-16.
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    Precious Metals

    Sagging industrial demand tarnishes silver’s sheen

    Weak industrial demand is holding back silver’s potential price performance against an upbeat gold price, seemingly treading water while gold enjoys renewed interest as a safe haven for investors in the uncertain global economic environment. 

    Bank of Montreal (BMO) Capital Markets research analyst for commodities Jessica Fung on Thursday – during BMO's Mining Outlook conference call – explained that the silver price typically moved in close relation to the gold price, meaning that when gold moved up, silver should be moving up by twice as much. Because of this, silver was often referred to as ‘poor man’s gold’. Fung stated, however, that she was seeing demand weakness across all industries for silver, not just in a specific industry, such as photography during the 1990s. 

    While silver’s uses had multiplied, manufacturers were also managing to reduce their use of the superconductive metal in certain applications, such as solar panels. “The reason we are not seeing this price performance right now is because silver is being held back by weak industrial demand. This is a trend that we think could potentially continue, so we will not see that gold-silver ratio come down that much,” she said. 

    Since the start of the year, gold had appreciated by about 18%, jumping by about 10% in February, while silver prices had only improved by about 9% since the start of the year, and by only about 5% in February. Fung advised that she expected the long-term gold-silver ratio to come down to about 0.60, down from around 0.80, where it was now. “We should see silver outperform at some point, but the industrial demand is just too weak to support silver prices.” 

    Meanwhile, gold prices were being supported by the global market uncertainty, prompting investors to renew their reliance on the yellow metals as a safe haven for value. Fung pointed out that the gold price trend was repeating itself early this year, compared with what happened early in 2015. Gold on Thursday closed at $1 256.80/oz, having earlier in the day touched a one-year high of $1 269.3/oz. 

    What will probably support gold prices around the $1 200/oz level, but not much above that level, was that there were potential negative interest rates on the cards for Japan, with talks about it in the European Union and possibly in the US too. Depending on how the global economy fared during the year, this might become a more pressing discussion point later in the year, said Fung. 

    “The next leg up for gold is that we need to price in more uncertainty and risk into what we already know. We know the [US Federal Reserve] is probably not going to raise interest rates this year. That was the reason our 2016 price forecast in December was $1 050/oz – we thought there were going to be three or four rate hikes,” she said.
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    De Beers ramps up diamond supply with $610m sale

    De Beers is ramping up diamond sales to cash in on a recovery from last year’s slump.

    The company last week sold $610 million of uncut stones at its second auction of the year, 12% more than a January offering that was already bigger than expected.

    “Rough-diamond demand continues to show signs of improvement as excess inventory has continued to work through the system in recent months,” Philippe Mellier, chief executive officer of the Anglo American unit, said in a statement. “However, we remain mindful of the need for a cautious approach as the recovery continues.”

    De Beers and Russia’s Alrosa, which control almost two-thirds of the market, sold more than $1 billion of diamonds in January, exceeding market expectations and sparking concerns that the sales may have been too much, too soon. Mining companies cut about a quarter of global supply last year to arrest the 18% slump in rough-diamond prices brought on by China’s economic slowdown and an industrywide credit crunch.

    Alrosa Sales

    Alrosa sold about $780 million of rough diamonds in its first two sales of the year, with the amount sold about the same in January and February, according to two people familiar with the transactions. The company hasn’t cut prices so far this year, unlike De Beers, which lowered them as much as 7% in January.

    China’s economy continues to show signs of a deepening malaise, with the latest spate of indicators this week showing weakness in services and manufacturing.

    Anglo has put De Beers at the center of its turnaround programme. The London-based parent, which last month reported a fourth year of losses, is speeding up plans to pull out of coal and iron ore and build its slimmed down future around diamonds, copper and platinum.

    De Beers’ contribution to Anglo’s profit almost halved in 2015 as underlying earnings fell. Sales dropped by 34% as prices declined and De Beers cut supply.
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    Resolute's profits rise on higher output and gold price

    Gold miner Resolute Mining has reported an increase in gross profits for the first half of 2016, from the A$29-million reported in the previous corresponding period to A$67-million in the six months ending December. 

    Revenue for gold sales during the period was up 19% on the first half of 2015, from A$209-million to A$249-million, on the back of higher gold production and sales, combined with a higher gold selling price. Gold production during the interim period under review reached 153 191 oz, an increase of 11% over the previous corresponding period, while gold sales reached 158 540 oz, at an average gold price of A$1 561/oz. 

    “Positive operation performance from Syama and Ravenswood has allowed Resolute to increase liquidity and aggressively pay down debt while we prepare for investments in our exciting growth developments,” said Resolute MD and CEO John Welborn. “The focus for the period has been strengthening the balance sheet, commencing our continuous improvement programme, and advancing feasibility studies for the future of our Syama, Ravenswood and Bibiani operations.” 

    Welborn noted on Monday that Resolute’s transformation would continue in the second half of the financial year, with the delivery of the Syama underground definitive feasibility study, in Mali, and the completion of an updated feasibility study for the Ravenswood extension project, in Australia, and the Bibiani gold mine, in Ghana. Resolute has, meanwhile, maintained its full 2016 production guidance at 315 000 oz of gold, at an all-in sustaining cost of A$1 280/oz.
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    Base Metals

    Freeport to sell stake in copper mine to Lundin for $263m

    Freeport-McMoRan’s agreed to sell part of its stake in a copper-gold project in Serbia to Lundin Mining Corporation for as much as $263 million, as part of its drive to offload assets to cut its debt by about $5 billion.

    The current partners in the Timok project are Freeport, who’s the operator, and an affiliate of  Reservoir Minerals, Toronto-based Lundin said on Thursday in a statement. The deal is expected to close in the second quarter, if Reservoir Minerals declines to exercise a right of first refusal, Lundin said.

    Commodity producers including Glencore and Anglo American are selling operations as weaker growth in China and supply gluts continue to weigh on prices and savage profits. Freeport agreed last month to sell an additional stake in an Arizona mine for $1 billion to Sumitomo Metal Mining Co.

    The planned sale adds to Lundin’s $1.8 billion purchase in 2014 of a controlling stake in Freeport’s Candelaria copper mining complex in Chile and its $325 million purchase of Rio Tinto Group’s Eagle nickel and copper project in northern Michigan in 2013.

    The deal will allow existing partners to use Lundin’s “proven underground base metals development, construction and operating skill sets to advance the Timok project into operation,” Lundin chief executive officer Paul Conibear said in the statement.
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    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.
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    Chile copper output drops in January as price rout bites

    World No 1 copper producer Chile produced 453 638 t of copper in January, down almost 14% from a year earlier, as the year-long rout in prices forced miners to scale back output, the government said on Monday. 

    The drop was the steepest in percentage terms in at least a year. It was also the lowest monthly total since August, when output was hit by maintenance stoppages and the effect of labour protests – the clearest sign yet that miners' spending cuts had started to curb supplies. 

    Cooling demand in top copper buyer China, the world's second-largest economy, has driven down the price of the base metal, leading miners around the globe to suspend or reduce high-cost production. "January 2016 saw lower ore grades and progressive decreases in production at some mines due to the adverse situation in mining, with low prices and high costs involved in production," said Chile's national statistics agency, INE. 

    Until now, the cutbacks have not been so sharply evident in the output data as miners have worked to improve efficiencies and boost yields from existing operations. "We are finally seeing some welcome reductions in Chilean copper production," said Ed Meir, metals analyst at INTL FCStone. Chile produced 5.79-million tonnes of the red metal in 2015, fractionally more than the previous year. Output is forecast to hold steady this year. London Metal Exchange prices have fallen almost a third since January last year and are languishing around $4 600/t, their lowest level since 2009. To be sure, a high base of comparison after Chile reached "historic levels" of copper output in January 2015 also helped explain the steep drop in output in January 2016, said INE. Mines in Chile produced 4 948 t of molybdenum in January, a 29.9% increase from a year earlier.

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    Tiger trips on falling copper price

    The falling copper price has resulted in miner Tiger Resources swinging to a loss during the full year ended December. The miner this week reported an after-tax loss of A$17.8-million, compared with a  profit of A$7.7-million in 2014. 

    Along with the decreased copper price, Tiger’s bottom-line was also affected by higher noncash run of mine inventory expenses associated with a full-year of processing heavy mineral sand stockpiles through the solvent-extraction and electrowinning plant at its Kipoi project, in the Democratic Republic of Congo, and higher finance costs. 

    Meanwhile, revenue for 2015 was up 2.1% on the previous year, reaching A$146.3-million, as production from the Kipoi project increased. Tiger delivered 26 151 t of of copper in 2015, compared with 13 557 t in 2014.
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    Indonesian government hope to revise mining law by September

    Image Source: valuewalkReuters reported that Indonesian lawmakers hope to revise the country's resource rules by September in a move that could include easing of export curbs on minerals, such as nickel and copper, giving Freeport McMoRan Inc and other miners time and money to build smelters.

    A parliamentary commission is discussing possible revisions to a 2014 law - which banned exports of nickel, bauxite and copper ores and set a three-year limit on concentrates sales to force firms to build smelters but instead ended up costing Indonesia billions of dollars in lost revenue.

    Mr Kurtubi, a member of the commission responsible for drafting the proposed revisions, told Reuters “If they are not allowed to export, the economy could be destroyed. Mining companies, mainly nickel producers, should be allowed to resume some ore and bauxite exports so they can earn revenue and complete their smelter projects.”

    Mining accounted for almost 6 percent of Indonesia's GDP before the ban, but has since slipped to about 4 percent.

    At least 32 smelter projects have been delayed or cancelled, mostly nickel, government officials said, due to a prolonged slump in prices of the metal that are mired near their lowest since 2003. Only five nickel smelters, of a targeted 12, were completed last year.

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    Production line remains suspended at Codelco's Andina mine

    Chile's state-owned mining company Codelco, the world's top copper producer, said Friday that a production line transporting concentrate at its Andina mine remained suspended after a pipeline burst. 

    The miner said in a statement that it was not yet possible to measure the impact on output because it would depend on the length of the suspension. On Thursday, the company had reported the production line halt after an underground pipe carrying material from a concentrator to a filtration plant burst, although the flow was quickly cut off. 

    Codelco said Friday that a full restart of operations "will only be possible once compliance with safety standards can be verified." Last year, Andina, which is located near capital Santiago, produced 224 300 t of copper, about 13% of Codelco's total 2015 production of 1.73-million tonnes.

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    Steel, Iron Ore and Coal

    Iron ore price jumps to new 2016 high

    The rally in the price of iron ore continued on Thursday with the Northern China benchmark import price advancing to a four-and-a-half month high.

    The steelmaking raw material exchanged hands for $51.70 a tonne on Thursday according to data supplied by The Steel Index. Iron ore is now up 20.5% since the start of the year, surprising many in the industry who have consistently been calling it lower.

    Supply disruptions in Australia due to bad weather and restocking following the Chinese lunar new year buoyed the market and helped iron ore outperform steel prices by a wide margin in February.

    All eyes are now on the National People's Congress where Chinese leaders will set economic policies for the next 12 months

    Beijing’s plans to stimulate the slowing economy including a cash injection by the People’s Bank and a joint statement by nine ministries recognizing the industrial sector as key to restoring investment confidence have also improved sentiment. All eyes are now on the National People's Congress where Chinese leaders will set economic policies for the next 12 months.

    Iron ore is dependent on the health of the world’s second largest economy more than any other commodity. China last year consumed nearly three-quarters of the seaborne iron ore supply with imports reaching a record 952 million tonnes. January’s 82.2 million tonnes represented a 4.6% jump over 2015.

    However, analysts are skeptical about the longevity of iron ore's rally and point to the fact that Chinese steel production (nearly half the global total) is set to decline further in 2016 after last year brought to halt three decades of unbroken growth. January’s output of crude steel was 7.8% lower than the year before.

    An announcement earlier this week that that 1.3 million coal and 500,000 steel workers will be “re-assigned” as part of the government’s ongoing efforts to reduce industrial overcapacity is telling and it comes after fresh anti-dumping duties on Chinese steel imposed by the US and Europe.

    The bearish view is also supported by disappointing PMI-figures in February indicating worsening conditions in the country’s manufacturing sector, increasing stockpiles of ore at ports which last week climbed to above 95m tonnes to the highest levels since May, and little appetite among the big four producers to cut supply.
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    Nucor's steel sheet price increase gets buyers talking

    Nucor became the second producer to officially announce a sheet price increase on Thursday, which led some buyers to think pricing may begin to climb as a result of lean service center inventories and firmer scrap prices.

    The $30/st increase came after ArcelorMittal announced a similar move at the beginning of the week.

    Buyers noted that Nucor's announcement would have a larger effect on spot prices as ArcelorMittal was not as active in spot sales. The direction of pricing on new spot orders comes down to Steel Dynamics and Nucor now, according to a service center source.

    The market may be headed towards a 60- to 90-day upswing as service center inventory levels are very low and may need to begin restocking, he said. However, he cited poor demand as a reason pricing momentum will remain tempered.

    Looking ahead, the service center source believed the preliminary hot-rolled coil anti-dumping ruling in less than two weeks could also add to the sticking power of the announced increases.

    The service center estimated new HRC quotes from Nucor could may be as high as $440-$450/st for some but believed if transaction pricing settled at $420/st it would still be a positive.

    A second buy-side source believed buyers "are starting to take it a bit more serious with scrap being a bit more bullish." He noted it was a valid question if the firmer scrap and lean inventory levels could generate restocking at the service center level.

    One mill source said new quotes would likely be up closer to $20/st but would not offer equalization on freight.

    The ongoing trade cases and raw material price increases will add support to the mill announcements, according to a third service center source.

    "Unlike past attempts to increase there are some fundamentals to support these," he added and the cold-rolled coil/hot-dipped galvanized "fundamentals are much stronger."

    The third sources said he would be surprised, he said, if the full increase goes through for HRC as "everyone knows mills are desperate for HRC and when mills need HRC orders they will negotiate."

    On a lack of new spot transactions heard in the market, Platts maintained its daily HRC and CRC assessments at $395-$420/st and $560-$580/st, respectively. Both prices are normalized to a Midwest (Indiana) ex-works basis.

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    China Feb coal imports from Gladstone port hit 7-yr low

    China’s coal imports from Gladstone port in eastern Australia hit a seven-year low of 150,000 tonnes in February, down 73.8% from 573,000 tonnes in January, Gladstone Ports Corporation said in a monthly report on March 3.

    It was the port’s lowest export volume to China since 145,000 tonnes was sent in January 2009 — during the global financial crisis — and equivalent to just one Capesize cargo.

    The February total may have been impacted by lull in demand during the Lunar New Year holiday in China in February, although Gladstone did send 588,000 tonnes of coal to China in February 2015.

    China’s demand for Gladstone coal exports began surging from late 2009 as its domestic demand began to outstrip domestic production.

    The country imported 11.1 million tonnes of coal via Gladstone port in 2015, up from 624,000 tonnes in 2008, according to Gladstone port data.

    Gladstone’s total coal exports in 2015 stood at 72.6 million tonnes.

    Gladstone port shipped a total of 5 million tonnes of coal in February, down from 5.82 million tonnes in January, the port data showed.

    The port in the state of Queensland ships both thermal coal and coking coal and its shippers include major coal miners Idemitsu, Glencore, Rio Tinto, Yancoal and Wesfarmers.

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    Workers at Colombia's Cerrejon coal mine vote in favour of strike

    Union workers at Colombia's largest coal mine, Cerrejon, have voted in favour of a strike, the union said on Thursday, in a dispute with the company over wages and benefits.

    A strike at the Cerrejon mine, which produces 32 million tonnes of coal a year, or 37 percent of Colombia's total output, would come at an inopportune time for the country, which is experiencing a commodity-related economic slowdown.

    "The workers voted to declare the strike," Sintracarbon union leader Jairo Quiroz said in a phone interview. "In the next 10 days, we will decide the start date."

    Cerrejon is a joint venture between Australia-based BHP Billiton Ltd , London- and Johannesburg-based Anglo American Plc and Swiss-based Glencore Xstrata . It has been producing coal in Colombia since the mid-1980s under a concession that runs until 2033.

    Colombia is the world's fifth largest coal exporter. The country's output fell 3.5 percent in 2015 to 85.5 million tonnes.

    The vote came after a 40-day period of direct negotiations ended without an agreement. The union and the company will meet again on Friday, Quiroz said.

    A representative from Cerrejon said the vote did not necessarily mean a strike would take place and that it is important the two sides continue the negotiations during the 10-day period the union has to declare a start time.

    The union represents 4,200 of the 10,000 workers at the mine, located in La Guajira province in northern Colombia.

    The vast majority of union members who voted were in favor of the action, Sintracarbon said on Twitter, with 3,428 voting to strike. Twenty-seven members favored taking the matter to a tribunal and 33 were null votes.

    Cerrejon has offered a 6.77 percent pay increase, in line with last year's inflation rate, while workers want a 10.1 percent raise, Quiroz told Reuters in an interview last week.

    They also want improvements in education, health and housing.

    Production at Cerrejon fell by 1.48 percent last year, while exports were down 2.33 percent.
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    Brazilian prosecutors question Samarco dam burst settlement

    Brazilian prosecutors on Thursday criticized a deal that mining company Samarco reached earlier this week with the federal government to pay an estimated 20 billion reais ($5.27 billion)in damages for a deadly dam spill in November.

    The settlement favors the miner instead of the population affected by what is considered to be Brazil's worst environmental disaster, the prosecutors of the task force investigating the spill as well prosecutors in the states of Minas Gerais and Espirito Santo said in a statement.

    Samarco and its owners, BHP Billiton and Vale SA, inked a settlement deal with the government on Wednesday after weeks of arduous negotiations. The miner agreed to pay an estimated 20 billion reais in damages over 15 years to compensate local communities flooded by a tsunami of mining waste that also polluted a major river in both states.

    The burst tailings dam killed 19 people and left hundreds homeless.

    Prosecutors said the deal does not guarantee the proper clean up and payment of damages for populations that were not included in settlement talks.

    The deal does not block other judicial actions currently ongoing in both states, prosecutors said.
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    Joy Global sales fall 25 percent amid commodity slump

    Joy Global Inc posted a bigger-than-expected quarterly loss as it sold fewer of its giant draglines and shovels to coal miners, which have been hit hard by a slump in commodity prices.

    The mining equipment maker's shares were down 2.8 percent in premarket trading on Thursday after the company also trimmed its profit and sales forecast for the year.

    Joy Global, which gets more than half of its sales from coal miners, has cut jobs and lowered production as it copes with a relentless decline in sales over the past three years.

    The company said it now expected 2016 earnings and sales to be toward the middle of its forecast of 10-50 cents per share on revenue of $2.4 billion-$2.6 billion.

    Analysts on average were expecting 2016 earnings of 25 cents per share on revenue of $2.48 billion, according to Thomson Reuters I/B/E/S.

    Joy Global said it is now targeting more than $100 million in cost reductions in 2016, up from $85 million previously, as "strained cash flows" among its customers are expected to cause further delays in maintenance work and equipment purchases.

    "Our customers are taking unprecedented actions on their equipment fleets to conserve cash as commodity prices have weakened. This has adversely impacted our incoming order rate, particularly in the U.S. coal and copper markets," Chief Executive Ted Doheny said.

    Coal companies have been hurt by weak demand for thermal coal as utilities have switched to cheap and abundantly available natural gas. Sluggish demand has also weighed on prices of metallurgical or steel-making coal.

    The company said its total bookings fell 21 percent to $550 million in the first quarter ended Jan. 29, hurt by declines in regions including North America and China.

    The company reported a net loss of $40.2 million, or 41 cents per share, in the quarter, compared with a profit of $30.5 million, or 31 cents per share, a year earlier.

    On an adjusted basis, the company reported a loss of 23 cents per share. Net sales fell 25 percent to $526.3 million.

    Analysts had expected first quarter loss of 12 cents per share, on revenue $528.3 million.

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    Exxaro may buy Anglo's South African iron ore, coal mines

    South African coal miner Exxaro Resources is considering buying assets from Anglo American, its chief executive said on Thursday.

    The diversified mining company mainly produces coal and invests in iron ore, posted a two-thirds drop in full-year profit dropped by due to a sharp fall in commodity prices, and reported a sharply lower dividend.

    Exxaro's CEO Mxolisi Mgojo told reporters and analysts he would consider buying assets from Anglo, which has said it plans to sell its iron ore, coal and nickel units in a sweeping strategic overhaul to cope with a commodities rout.

    "As part of looking at our own portfolio we will determine whether it makes sense and if there is value," said Mgojo.

    Financial director Wim De Klerk told Reuters the option to buy Anglo's Kumba Iron Ore unit was a possibility.

    "We note their announcement last week and we are partners in Sishen so we will be considering our options now that we know they are on sale," he said.

    Exxaro holds a minority stake in the company that runs Sishen, one of the largest open pit mines in the world, while Kumba holds 73 percent.

    Headline earnings per share - the key measure of profit which strips off certain one-off items - reached 457 cents from 1,372 cents in the previous year, meeting expectations forecast by Thomson Reuters StarMine SmartEstimates.

    The firm's shares rose 3 percent to 73.46 rand by 1000 GMT (0500 ET), despite Exxaro saying it would pay a final dividend of 85 cents per share, down 60 percent from the previous year.

    The firm also cut spending on a five-year coal program to 2020 by 15 percent to 18 billion rand ($1.16 billion).

    The company cut spending by 807 million rand in the year to December and said it expects to cut 2016 costs by 300 million rand, with the lion's share of all capital expenditure focused on improving its coal business.
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    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.

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    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.

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    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.
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    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.
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    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.
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    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.
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    China Iron ore, steel prices increase in tandem

    Iron ore and steel futures in China climbed to multi-month highs on Tuesday, buoyed by expectations of firmer steel demand in the world's top consumer from this month.

    Construction activity usually picks up from March along with the warmer spring weather, prompting Chinese steel producers to lift output, boosting demand for raw material iron ore.

    The most-traded May iron ore on the Dalian Commodity Exchange rose as much as 4.4 percent to 380 yuan ($58) a ton, its strongest since September 11, 2015. It was up over 3.7 percent at 378 yuan by 3 pm Beijing time.

    On the Shanghai Futures Exchange, construction-used rebar for May delivery was up 2.3 percent at 1,984 yuan per ton after rising as high as 1,991 yuan, its loftiest since August 28.

    "Steel futures are rising on expectations for demand into the Chinese new year as construction companies stock up on the reactivation of new projects authorized by Beijing," analysts at SP Angel said in a note.

    Daily crude steel output by key Chinese mills stood at 1.56 million tons in the first 10 days of February, up 3.7 percent from the previous 10 days, according to the China Iron and Steel Association.

    Stockpiles of finished steel products held at these mills totaled 13.85 million tons, up 15.2 percent from the prior 10 days, based on data released in mid-February.

    Sharp gains in Chinese steel prices has fueled a recovery in iron ore prices in 2016 following a three-year decline.
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    Brazil's iron ore exports increase, decline in value in February

    Brazil's iron ore exports fell 48.8% year-on-year in February to US$686mn, according to foreign trade department Secex.

    The drop was mostly due to falling prices amid a supply glut on the international market. The average price of Brazilian iron ore in February was US$22.90/t, down 54.4% year-on-year.

    In terms of volume, exports increased 12.3% to 29.9Mt.

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    Russia Jan coal output up 3.7pct on year

    Coal-rich Russia produced a total 32.22 million tonnes of coal in January, rising 3.7% year on year, showed data from the Energy Ministry of Russian Federation.

    Coal export stood at 12.59 million tonnes in the month, climbing 6.5% from a year ago, data showed.
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    Yancoal Australia to shut NSW coal mine

    Yancoal Australia, the Australian coal miner controlled by Chinese coal giant Yanzhou Coal Mining Co., will shutter its Donaldson mine in NSW's Hunter Valley in response to the prolonged downturn in the sector, it said in a regulatory filing on February 24.

    Yancoal said it will reduce mining activities from March 14, before moving the operation to "care and maintenance" in June.

    Coal prices have been languishing near multiyear lows due to slowing demand from China and an oversupply from new and expanded mines planned when prices were booming.

    The miner said the decision would result in about 92 job losses from its 103-person workforce at the mine, where it digs up thermal and semi-soft coking coal to be exported through the Port of Newcastle for power utilities and steel mills in Asia.

    Yancoal has announced it will offer voluntary redundancies across its three local underground operations, including Ashton outside of Singleton.

    The miner recently restructured their local operating model and about 180 staff was forced to sign controversial new workplace agreements.

    They are also planning to raise $950 million in new debt funding through an issue of nine year secured debt bonds to a consortium of financiers.

    “Yancoal will is seeking expressions of interest from Donaldson employees willing to move to Austar and Ashton if new opportunities become available," the release says.
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    Samarco to pay at least $5 billion in Brazil dam spill deal: source

    Samarco Mineracao SA will pay at least 20 billion reais ($5 billion) over 15 years as part of a deal reached with the Brazilian government to settle a lawsuit for damages caused by a deadly dam spill at a mine in November, a government source told Reuters on Tuesday.

    Samarco, a joint venture between Vale and BHP Billiton, will pay 4.4 billion reais in the three years following the agreement that will be signed on Wednesday, said the official who requested anonymity since the information was not yet public. The rest of the funds will be released in the following years.

    Regarded as Brazil's worst environmental disaster, the burst dam killed 19 people, forced hundreds to leave their homes and polluted one of the country's main rivers.

    The deal comes after Vale announced a fourth-quarter net loss of $8.57 billion, its worst ever as a private company, and BHP recorded its first loss in more than 16 years for the six months to Dec. 31.

    BHP Billiton declined to comment on terms of any agreement, but reiterated that an agreement was close.

    Press representatives with Vale and Samarco were not immediately reachable for comment.

    The dam burst revealed a series of mistakes by under-funded mining and environmental regulators in one of the world's top iron-ore producer, triggering a debate over harsher mining controls in Congress.

    Brazilian police in the state of Minas Gerais last week accused six Samarco executives and one contractor of murder in connection with the deaths caused by the dam spill.
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    China’s coal use declined 3.7% in 2015, according to official statistics

    This is the second year running that the consumption of China’s most polluting fuel has declined. What’s more, the reduction took place while the economy grew.

    The data will raise hopes that coal use in the country has finally peaked.

    The statistics reveal that the decline in coal is accelerating. In 2014, China’s coal usedeclined by 2.9%. The year before that, it increased by 3.7%, illustrating the country’s marked energy turnaround.

    Meanwhile, renewables continued to grow, with solar capacity increasing by 74% in 2015, and wind by 34%.

    According to Greenpeace analysis of the figures, this means that China’s CO2 emissions declined by 1-2% in 2015.
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    22 out of 33 listed steel enterprises post loss in 2015

    22 out of 33 listed steel enterprises in China, which have published their performance report or forecast for 2015, posted or predicted annual losses last year, with the rest 11 staying in the profit-making list, the latest data showed.

    Of the 22 loss-making enterprises, 19 witnessed their annual revenue turn to losses from profits just a year ago.

    Gansu Jiu Steel Group Hongxing Iron & Steel Company estimated the largest loss of 6.98 billion yuan ($1.07 billion), followed by Wuhan Iron and Steel Company and Maanshan Iron & Steel Company, with their annual loss estimated at 6.8 billion yuan and 4.8 billion yuan, respectively.

    Apart from the two above-mentioned enterprises in severe losses of more than 6 billion yuan, there are still another six that have forecasted losses of more than 3 billion yuan.

    In the same period, Baoshan Iron and Steel Co., Ltd., China’s largest listed steel maker, ranked the first with profit at 0.96 billion yuan. However, it is still a plummet of 83.4% from the year prior.

    While it is worth mentioning that Shandong Iron & Steel Group Company and Ling Yuan Iron & steel Company have turned from losses to profits in 2015, when the industry was struggling in its roughest time.

    Presently, steel capacity utilization has decreased to around 70% due to various problems accumulated in years of high-speed development in the industry, which are getting more prominent under 2015’s complicated domestic and international environment.

    In order to gain more market share and working capital, some steel makers lowered steel prices or even chose to sell their products at a lower-than-cost price, which has caused vicious competition, analysts said.
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    Kloeckner sees online drive as key to turnaround

    German steel distributor Kloeckner & Co is betting that doing more business online will enable it to respond to tough sector competition and allow it to reduce working capital and improve cash flow and profitability.

    The loss-making company has invested about 10 million euros ($11 million) in developing an online service platform to allow its many small customers to automatically detect and request imminent supply needs, speeding up delivery.

    Next year, it will launch a broader industry platform to bring in large suppliers. It is already working with steel giants Nucor and Tata and is in talks with others, Chief Executive Gisbert Ruehl said on Tuesday.

    Along with restructuring, managing supply chains online is the primary tool Kloeckner is using to combat desperate conditions in the steel industry, where European and U.S. prices are under pressure from cheap Chinese products.

    The strategy is not without risk: success in this area will come to some extent at the expense of its existing business, and it will increase price transparency -- something more in the interests of its customers than itself.

    Still, Ruehl believes, the company will lose if it hangs back.

    "Will we do it, even if we cannibalise part of our own business?" he asked at a news conference on Tuesday. "It will come," he said. "The only question is who will do it?"

    Ruehl, a consistent and outspoken advocate of online expansion, is convinced that Kloeckner is for now ahead of its peers.

    Building a system that allows customers' factory machines to predict and order what they need without human intervention will reduce inventories on all sides, pushing more steel-dependent sectors such as construction towards the just-in-time delivery that is already prevalent in the automotive industry.

    Lower steel inventories, driven not only by customers holding out for lower prices but also by more efficient ordering, helped Kloeckner to cut its net working capital by almost 200 million euros last year.

    That pushed its free cash flow back into positive territory and helped reduce its net debt.

    If it continues along its planned path, it could reduce net working capital by more than a third by 2019, allowing it to become practically debt-free if it wanted to, Kloeckner said.

    Kloeckner plans to charge a transaction fee, initially of 3 percent, for customers using its service platform.

    Ruehl said it was too early to tell whether that would be sufficient to compensate for a likely fall in prices due to greater transparency.
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    Consol to sell coal assets for $420 mln

    Coal and natural gas producer Consol Energy Inc said it agreed to sell some of its coal assets for about $420 million and would suspend its quarterly dividend once the sale closes.

    Pittsburgh-based Consol, which has shifted its focus to natural gas from coal, said it would sell its Buchanan Mine in southwestern Virginia and some other metallurgical coal reserves to Coronado IV LLC.

    The deal is expected to close in the first quarter.

    Consol said it intends to suspend its dividend beginning with the first declared quarterly dividend after the transaction closes.
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    Shaanxi Coal Industry Co. 2015 net loss at 3 bln yuan

    Shaanxi Coal Industry Co., Ltd, a leading coal producer in northwestern China’s Shaanxi province, suffered a net loss of 3 billion yuan ($458.2 million) in 2015, a deterioration from 951-million-yuan net profit a year ago, showed latest data from the company.

    It was mainly attributed to plunging coal prices amid severe oversupply and sluggish demand in the coal industry, it said.

    The company realized operating revenue of 32.51 billion yuan last year, down 132.26% from the year prior, data showed.

    Efforts had been made by the company to cut costs and optimize structure, which yet was offset by overwhelming price drop in 2015.

    Shaanxi Coal Industry announced to sell the stock rights, assets and liabilities of five coal mines in the red to parent Shaanxi Coal & Chemical Industry Group in November last year, and the deal would be closed before end-December. However, the move did not change its losing fate.

    Lately 28 listed coal producers released their earnings preannouncements for 2015, which showed 14 of them or 50% may make a profit, with 3 coal producers seeing rise in profits while the other 11 seeing declines of 60-80% year on year.

    The remaining 14 coal firms forecast a loss last year, of which 10 firms may turn from profitability into loss and 4 firms may face delisting risk warnings.

    “The coal industry saw over 90% of producers suffer losses in 2015 amid falling prices,” said Jiang Zhimin, deputy chairman of the China National Coal Association (CNCA).

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    Iron ore upturn lures hedgers worried gains may soon fade

    Some junior Australian and other Western iron ore miners are hedging forward cargoes for the first time in months after prices surged to their highest since October, trading sources say, looking to cash in on a price rally many fear may not last.

    The volumes being hedged are not huge, but the move underlines the sense of caution in the market after years of slumping prices, despite a strong comeback. At one point last week, iron ore was the best performing commodity this year.

    A junior Australian miner hedged a 300,000-tonne iron ore cargo for second quarter delivery last week, said a Singapore-based trader at an international trading firm, as prices topped $50 a tonne.

    "The last time we've seen these miners come to us to hedge was in September when prices also rallied," the trader said, adding they are also in talks with the miner to hedge a similar sized cargo for the third quarter.

    Hedging allows iron ore producers to cover future commitments at a fixed price, taking advantage of a current jump in market sentiment, even if the spot price falls back.

    Iron ore for delivery in April and May on SGX climbed to the highest since July at $48.25 a tonne last week while June jumped to a five-month peak of $46.75.

    "More and more inquiries are coming in," the trader said. "They're just not very confident of how sustainable the rally can be."

    "Above $45 I think it changes the landscape fairly significantly," said a Singapore-based broker who's seen some Western miners hedging, "taking some positions in the market particularly for Q2."

    The primary hedging tools are iron ore swaps and futures on the Singapore Exchange, the most liquid dollar-denominated marketplace for iron ore derivatives where volumes picked up as prices rallied.

    "The general premise had been that lower prices would quickly force higher-cost junior producers to exit the market, though shrewd hedging strategies taking advantage of recently higher prices could undermine that," Adrian Lunt, head of commodities research at SGX, told Reuters.
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    China expects to lay off 1.8 million workers in coal, steel sectors

    China expects to lay off 1.8 million workers in the coal and steel sectors as part of its efforts to reduce industrial overcapacity, an official at the human resources and social security ministry said on Monday.

    Yin Weimin, minister of human resources and social security, said capacity cuts will lead to some layoffs in 2016, but added that he was confident of keeping employment stable this year despite downward pressure on the economy.

    No timeframe was given for the 1.8 million figure cited.

    China aims to remove around 500 million tonnes of coal production capacity within the next three to five years and halt approvals of all new projects.
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    Salzgitter sees breakeven, room for optimism on steel

    German steelmaker Salzgitter said it was cautiously optimistic on steel prices thanks largely to EU anti-dumping measures taking effect this year and expects to break even at the pretax level in 2016.

    European steelmakers have been hit by a plunge in steel prices blamed largely on a surge in cheap exports from China, where existing overcapacity has been exacerbated by declining domestic demand.

    Salzgitter stands to benefit more than its rivals from new EU trade duties, with about half its shipments exposed to the affected steel categories. But the benefits are not expected to be felt until the second half of the year, the company said.

    Salzgitter's breakeven forecast disappointed analysts, who had expected more after the company posted its first pretax profit in four years for 2015 thanks to drastic restructuring measures. The profit figure totalled 12.6 million euros ($13.9 million).

    The steelmaker saw some reasons for optimism on steel prices and said it expected stable sales this year.

    "EU trade defence measures already implemented and partly decided a short while ago, the first signs of recovery in the large-diameter tubes business, as well as the recent halt called to the declining prices of many steel products gives us the basis for looking to the future with cautious optimism," Chief Executive Heinz Joerg Fuhrmann said in a statement.

    Shares in Salzgitter turned positive after dropping almost 3 percent in early trade and were up 2 percent at 20.05 euros by 1005 GMT, outperforming Germany's mid-cap index, which was up 1.7 percent.

    ArcelorMittal, the world's largest steelmaker, launched plans this month for a $3 billion share issue to help reduce debt and cut costs, and said it saw little improvement in overall global demand for steel this year.

    "Compared to peers, Salzgitter has a decent track record of cost cutting and asset restructuring," Jefferies analyst Seth Rosenfeld wrote in a note, but added that the company was coming towards the end of its latest restructuring programme.

    "In the absence of a notable recovery in market conditions, Salzgitter will find itself under increased pressure to expand cost cutting and restructuring measures in the year ahead," he wrote, keeping his "hold" recommendation on the stock.

    China said earlier this month it would cut crude steel capacity by 100-150 million tonnes within the next five years to tackle a crippling glut that has dragged prices down to multi-year lows.

    "A sustainable recovery is not guaranteed. But we think there is scope for a seasonal market recovery to continue into Q2 and that could drag equities higher still given positioning is still so negative in the space," Credit Suisse wrote.

    ArcelorMittal shares have dropped to less than a third of their value a year ago. Salzgitter shares have lost a quarter of their value during that time.
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