Mark Latham Commodity Equity Intelligence Service

Thursday 24th March 2016
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    Oil and Gas


    Plat/Gold is not confirming rally.

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    Canada: stimulus

     A stimulus budget from Canada's
    new Liberal government, combined with a modest recovery in oil
    and non-commodity exports, makes it likely the Bank of Canada's
    next move will be an interest rate rise rather than a cut.
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    Negative Yields Seep Into Shell, Sanofi Debt as ECB Skews Market

    Sanofi and Royal Dutch Shell Plc bond yields have dropped below zero, highlighting how European Central Bank stimulus is distorting the region’s credit markets.

    Traders are quoting yields of minus 0.016 percent on the French pharmaceutical company’s 1.5 billion euros ($1.7 billion) of bonds maturing in May, according to data compiled by Bloomberg. That’s the first time the yield has dropped below zero. The same happened for Shell’s May 2018 bonds earlier this week.

    About 16 billion euros of highly rated corporate bonds are trading with yields below zero as negative deposit rates spur money managers to look for alternative safe places to park cash. Bond prices have also been bolstered by the ECB’s plan to start buying non-bank corporate notes, as policy makers seek to drive investors into riskier or longer-dated debt.

    Shell’s 2.5 billion euros of notes yield minus 0.021 percent, Bloomberg data show. The The Hague, Netherlands-based oil company declined to comment on the yields. Sanofi’s press-relations office in Paris didn’t answer a call and e-mail.
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    Optomec 3D Printing Systems Used in Mass Production of Consumer Electronics

    Optomec, a leading global supplier of production-grade additive manufacturing systems for 3D printed metals and 3D printed electronics, today announced its Aerosol Jet® technology is being used by LITE-ON Mobile Mechanical SBG (LITE-ON) for high-volume production of electronic devices. LITE-ON, a global contract manufacturer, has pioneered a 3D Direct Printing (3DP) solution that enables 3D antenna patterns and other functional electronics to be integrated into virtually any mechanical structure or cover - maximizing design flexibility, ensuring optimal placement and performance, and allowing slimmer product designs.

    “We see Aerosol Jet as a strategic component of our 3DP solution, which has enabled us to expand into new markets.”

    “With the flexibility provided by Aerosol Jet technology, our 3DP systems can print sensors, antennas, and other functional electronics onto plastic components and covers, as well as metal die-cast insert-molded polymer frames, and even onto glass panels and ceramic materials,” said Henrik Johansson, Senior Manager, Technology Development Antennas, at LITE-ON. “We see Aerosol Jet as a strategic component of our 3DP solution, which has enabled us to expand into new markets.”

    LITE-ON first purchased Aerosol Jet technology to develop prototypes for its OEM customers, which include world leading communication device, personal care and automotive brands. The digitally driven Aerosol Jet-based 3DP process provides full design flexibility, with quick iteration and minimum lead-time for last-minute changes. After successfully implementing Aerosol Jet in prototype environments, LITE-ON expanded its usage and has now deployed multiple production machines in Guangzhou, China, operating 24x7 printing conformal electronics onto millions of consumer devices. Since the 3DP process requires no plating or special resins, logistics are simplified and production costs are lowered.

    The open architecture of the Aerosol Jet hardware allows configurations to be optimized for specific production needs. The implementation at LITE-ON leverages a series of Aerosol Jet print modules spread across multiple 5-axis motion platforms, configured to handle common smartphone and tablet form factors. Each machine is able to print a wide range of common electronics materials, at a rate of millions of units per year, enabling next-generation applications in consumer electronics, automotive, aerospace and smart IoT devices. Click here for video.

    “LITE-ON has been an incredible strategic customer for Optomec. Their dedication and commitment was critical to proving the viability of Aerosol Jet technology in a real world 24/7 production setting,” said Dave Ramahi, Optomec President and CEO. “With its unique and in-depth process knowledge in Aerosol Jet printing, Optomec is pleased to recognize LITE-ON as a 'Center of Excellence' for High Volume Production of 3D Printed Electronics.”

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    Russia says Turkey suppresses Kurds under pretext of fighting terrorism

    Anakara is hindering Kurdish forces in their fight against Islamic State and using the slogan of a "war against terrorism" to suppress Kurdish organizations in Syria and Turkey, Russian Foreign Minister Sergei Lavrov said on Wednesday.

    Illegal traffic across the Turkish-Syrian border has decreased dramatically since the start of Russia's military operation in Syria, Lavrov told a news briefing.

    Referring to the Turkish border, he stressed a need to fully implement U.N. Security Council resolutions demanding a halt of trade in artifacts and oil with Islamic State and to stop "terrorists" from crossing into Syria, including from Turkey.
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    Mitsui sees around $620 mln annual loss on writedowns on copper, LNG assets

    Japanese trading firm Mitsui & Co said on Wednesday it expected a net loss of 70 billion yen ($623 million) for the business year to March 31, against an earlier forecast for a profit of 190 billion yen, hit by hefty one-off losses in its copper and other resource assets.

    The company will book a total of 260 billion yen in one-off losses, including a 115 billion yen impairment loss on its copper operation in Chile to reflect a revision to its long-term outlook for the price of the metal, it said in a press release.

    Other losses include writedowns on its LNG project in Australia, as well as on other energy and metal assets.

    Like international oil majors and mining companies, Japanese trading firms have been caught flat-footed by the rout in commodities brought about by softening demand from top consumer China where economic growth has slowed.
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    Caught in the low income trap.

    The low- or middle-income trap phenomenon has been widely studied in recent years. Although economic growth during the postwar period has lifted many low-income economies from poverty to a middle-income level and other economies to even higher levels of income, very few countries have been able to catch up with the high per capita income levels of the developed world and stay there. As a result, relative to the U.S. (as a representative of the developed world), most developing countries have remained, or been "trapped," at a constant low- or middle-income level.

    Such a phenomenon raises concern about the validity of the neoclassical growth theory, which predicts global economic convergence. Specifically, economics Nobel Prize winner Robert Solow suggested in 1956 that income levels in poor economies would grow relatively faster than income in developed nations and eventually converge with the latter through capital accumulation. (See sidebar.) He argued that this would happen as technologies in developed nations spread to the poor countries through learning, international trade, foreign direct investment, student exchange programs and other channels.1

    But the cases in which low- or middle-income countries have successfully caught up to high-income countries have been few.

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    Rise in Anglo American share price could offer chance to fill its coffers

    The doubling of Anglo American's AAL.l share price since late January means the time could be ripe for a rights issue rather than an asset fire sale to boost its defenses against tumbling commodity prices, fund managers say.

    The London-listed global miner has insisted it does not need to raise cash and that it plans to sell its iron ore, coal and nickel operations as part of a sweeping overhaul to raise $4 billion this year and cut net debt to $10 billion.

    But fund managers say that disposals while commodities prices are bumping along the bottom are likely to take some time, with potential bidders holding off in the hope that assets could become cheaper.

    "The recovery in Anglo's shares is a strong incentive for a rights issue," said Michael Hulme, a commodities equity fund manager at Carmignac.

    "It might depend on how De Beers is doing, but it's hard to see how they can get away without a capital raise. There are some signs of stabilization, but fundamentals in commodity markets haven't changed."

    Anglo is planning to concentrate on its De Beers diamond business as well as platinum and copper assets.

    The company's share price, at about 544 pence, is more than double the levels of late January, when the stock fell to a record low below 220 pence. However, the sector-wide gains could prove fragile, with rises attributed largely to short-covering rather than long-term investors looking for value.

    Anglo Chief Executive Mark Cutifani last month said that the industry could not rely on a reversal of the commodity price slump any time soon.

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    China power sector overcapacity may be above 20pct

    China’s power industry may see surplus capacity more than 20% above the actual demand, predicted Qiao Baoping, president of China Guodian Corporation, at the annual China Development Forum on March 19.

    China’s power capacity has surged to 1.51 TW from 357 GW in 2002, since reformation of the power industry been implemented over the years.

    But as China entered the "New Normal" of slower economic development, demand for electricity is poised to grow at a much slower pace, thus tackling overcapacity has become one new challenge.

    Data of the National Energy Administration showed that utilization of thermal power generating units now decreased to 4,329 hours in 2015, the lowest in the past 69 years.

    China’s power consumption in the first two months of 2016 only increased 2% to 876.2 TWh, indicating downward pressure on power consumption and capacity utilization in the entire year.

    In 2016, the utilization of thermal power generation units was estimated to see a decrease of 300 hours, given the newly added thermal power capacity of more than 0.1 TW.

    China Guodian is the third largest power company in the world, with designed capacity of 140 GW, according to Qiao.

    "We also have the largest wind power capacity of over 20 GW. So in terms of overcapacity elimination, we’re really under great pressure," Qiao noted.

    China’s power companies are also facing growing pressure from environmental protection, as the government implements the strictest control on emissions of pollutants from coal-fired plants to improve air quality.

    China has set specific emission standards for eastern, western and central areas, each by the end of 2017, 2018 and 2020.

    Thus, power enterprises have to accelerate technology reform to meet corresponding standards by further strengthening energy saving and emission reduction.

    Besides, the change of domestic power prices is also influential. The 0.03 yuan/KWh decrease of on-grid power prices (effective from January 2016) will directly cause more than ten-billion yuan slump in Guodian’s annual profits, said Qiao.
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    Brazil police targets Odebrecht in new anti-corruption raid

    Brazilian federal police were seeking to arrest 15 people on Tuesday as part of the corruption investigation centered on state-run oil producer Petroleo Brasileiro SA (PETR4.SA), police and federal prosecutors said.

    Tuesday's operation, codenamed "Xepa", uncovered a bribe-payment scheme led by Odebrecht SA [ODBES.UL], Latin America's largest engineering and construction conglomerate, police said in a statement.

    It is the 26th raid in the two-year-old corruption probe that has put top executives and political leaders in jail and has raised chances of the impeachment of President Dilma Rousseff in coming months.

    Odebrecht and other major engineering and construction companies have had a high profile in the graft and influence-peddling scandal at Petrobras known as "Operation Car Wash."

    On Tuesday, federal prosecutors said police uncovered evidence that Odebrecht used a so-called structured operations division to coordinate bribe payments in a systematic way.

    The structure, embedded into Odebrecht business model, is evidence that former chief executive Marcelo Odebrecht, sentenced to 19 years in prison, was aware and in charge of the illegal payments, the prosecutors said in a statement.

    "At least 14 executives at different parts of Grupo Odebrecht sent several requests of 'parallel payments' to members of that specific structure," according to the note. "This evidence opens a whole new line of investigation about bribe payments at many public works."

    Representatives of Odebrecht did not immediately respond to a request for comment on the police raids.

    Prosecutors have accused Odebrecht of paying bribes to win multibillion-dollar contracts with Petrobras in a scheme that also funneled money to finance political campaigns of ruling and opposition parties.
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    Helicopter Money.

    Increasingly, central bankers, economists and market watchers are discussing the pros and cons of what's called helicopter money, a 47-year old idea that posits a way to kickstart an economy through dropping money on its citizens. Peter Praet of the European Central Bank, for example, said in an interview published last week that "all central banks can do it" if needed; his ECB colleague Jens

    Weidmann warned that such a move "would rip huge holes in central bank balance sheets." Helicopter money feels very much
    like an idea whose time may be coming.

    Quantitative Easing

    Given all the interest, it's worth asking whether Milton Friedman, who came up with the concept, would support or oppose
    such an unorthodox policyif he were writing today. Friedman's 1969 essay on "The Optimum Quantity of Money" runs to 50 pages
    and opens a book that's almost 300 pages long and contains 13 articles.

    Friedman's thought experiment is designed to answer the question hinted at in the title: How much money would a
    perfectly balanced economy have in circulation to guarantee a community's ability to buy goods and services? He includes the important proviso that the money drop is a one-time, never-to- be-repeated event:

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    No separate carbon tax, more VAT reform in China, finance minister

    There will be no separate carbon tax in China, and instead, a carbon tax is likely to be incorporated into either the environmental protection tax or resource tax, said the head of China's Ministry of Finance.

    As for individual income tax, the current system is "unreasonable" and an official plan for its reform will be ratified by the State Council, the cabinet, admitted Finance Minister Lou Jiwei at the two-day China Development Forum, ending March 21.

    From May 1, China will expand a value-added tax (VAT) program and replace business tax across the board, he said.

    The country has long imposed VAT on tangible goods, but services are subject to business tax, which is based on the value of a firm's sales.

    Such a crude system results in a tax on tax: It is charged on the taxes already priced in the supplies they buy. VAT avoids this, as it is applied to the value added at each link in the chain of production.

    The program, which began in 2012, has reduced the tax burden of enterprises, most of which are small entities, by 641.2 billion yuan ($100 billion) by the end of 2015.
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    Russia says to act on its own against Syria truce breaches if no U.S. response

    Russia will act unilaterally against those militants who violate ceasefire in Syria if Moscow does not reach agreement with the United States on a mechanism of detecting and preventing truce breaches, Russia's Foreign Ministry said on Monday.

    The ceasefire agreement, worked out by Russia and the U.S., is largely respected, the ministry said.

    But the two nations, which co-chair the Syria International Support Group, have so far failed to agree on terms of preventing all cases of ceasefire violations, which sends a wrong signal to "those members of the opposition ... who have not dissociated themselves clearly enough from well-known terrorist groups", it said.

    Russia's general staff of the armed forces proposed earlier on Monday to hold an urgent meeting with U.S. representatives to agree on the mechanism of controlling the ceasefire in Syria, saying it would act unilaterally starting from March 22 if it gets no response.

    The United States later rejected the call from Russia's military, saying that its concerns were already being handled in a constructive manner.
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    EU trials new way to measure emissions but will it make a difference?

    An ungainly contraption that resembles a bicycle rack with tubing attached will become a common sight on cars around Europe over the coming months as a new way of measuring car pollution gains traction following the Volkswagen scandal.

    The Portable Emission Measurement System (PEMS) aims to supplement laboratory tests -- the flaws of which were laid bare by the VW experience -- with more realistic testing on roads.

    But Europeans shouldn't expect to be breathing much cleaner air in the near future, experts and analysts say, because all the testing regimens in the world won't solve the problem until the European Union introduces much tougher pollution limits and finds a foolproof way to enforce them.

    VW's use of a banned "defeat device" has led to the scrutiny of a system that has allowed nitrogen oxide (NOx) emissions to reach up to seven times their European limits.

    EU officials who spoke to Reuters on condition of anonymity said that industry manipulation of the testing regime had been obvious for years. The European Commission failed to stop it, they said, because of the influence of the auto industry and because protecting a pillar of the economy was for many a higher priority than the environment.

    "I was not in the least surprised when this came to light. I just thought 'finally they have been caught' but I was amazed at their stupidity in trying to cheat in the U.S.," said one of five EU officials interviewed by Reuters.

    The officials, who asked not to be named because they are not authorized to speak to the press, said it was a mistake to leave vehicle regulation primarily in the hands of the industry section of the European Commission, rather than the environment department.

    Although regulators did not know of anything clearly illegal going on, they were aware loopholes were being exploited and chose to tune out the problem, the officials said.

    "There was no push from the hierarchy," said the EU official. "It was failure by neglect."

    A second official said: "Policy officers (on the lower levels) develop a desire to do something meaningful ... higher up, they don't want to rock the boat. The lower down the pecking order you are, the closer you are to the facts."

    Commission spokeswoman Lucia Caudet said the Commission had worked for many years to improve regulation in consultation with all relevant parties, including the car industry.

    "The Commission always acts in the general European interest, not in the interests of any one group or stakeholder," she told Reuters in answer to written questions.


    PEMS have been used on trucks for years following a previous defeat device scandal in 1998, which, like the Volkswagen case, was discovered in the United States.

    Early versions of the device, which cost around 150,000 euros ($166,335) each, were too heavy for cars, but they have since become less unwieldy and are going on trial pending their mandatory use as part of EU vehicle authorization from September 2017.

    A VW spokesman said the company was already using the devices to test carbon dioxide (CO2)and NOx emissions in research and development.

    Emissions Analytics CEO Nick Molden bought a PEMS in 2011, seeing a business opportunity serving people who wanted to know why their cars used much more fuel, and therefore produced more CO2, than manufacturers promised.

    An economist by training, Molden specializes in advanced modeling techniques to helpbusinesses extract profit from data.

    His company, based in an industrial unit in Feltham on the western edge of London, attaches the device to cars, drives them around and collects the data, selling it on to interested individuals, businesses and even regulators. So far it has gathered data from 1,000 vehicles, Molden said.

    Business is brisk. Five major car makers subscribe to Emissions Analytics' database and the company set up a Los Angeles branch in 2013.

    Molden said the PEMS is a powerful tool but questioned how effectively its use would be enforced given the long history of industry, together with member states, diluting Commission plans.

    Since he formed his company, Molden has been invited to sit on EU working groups to debate proposed legislation in Brussels, and the experience is instructive.

    "It's clear for all to see the power of the automotive lobby versus the number of specialists from the Commission side. German manufacturers send their top engineers," he said.

    Only a month after the VW scandal was exposed, Germany and the car industry lobbied successfully for leeway to allow them to carry on polluting above official limits up to 2021 and beyond.  

    They argued they needed the flexibility to protect the profitability of an industry that provides around 12 million jobs, directly and indirectly, and accounts for 4 percent of EU GDP, according to European Commission data.


    Isolated EU officials have spoken out for the use of PEMS for years to tackle diesel fumes. In 2011, then-Environment Commissioner Janez Potocnik noted PEMS were already being used for trucks and said the Commission was working to ensure the "necessary technical developments" were completed by 2013 for cars.

    But resistance to the system is inevitable, analysts say, as carmakers are wedded to testing in laboratories using dynamometers, which they say they provide a predictable, repeatable result.

    By contrast PEMS are affected by many variables, such as different altitudes and temperatures, known as "boundary conditions", a spokesman for the European Automobile Manufacturers' Association (ACEA) said.

    Ongoing debate to define these boundary conditions legally could amount to another watering down of standards, Molden said.

    It is not clear how using PEMS would affect a system that has grown up in Europe whereby the government agencies that put their seal of approval on the cars -- so-called national type approvers -- work with manufacturers to put the cars through tests.

    That system has tolerated practices such as the use of specially prepared cars, known as golden vehicles, which are primed to be as fuel efficient as possible. Air conditioning is turned off, for instance, and special fuel and tires are used.

    The European Commission says PEMS will make it much harder to cheat. But although the Commission is redoubling efforts to tighten the regulations, it has stopped short of proposing a powerful independent regulator along the lines of the U.S. Environmental Protection Agency, the body that forced Volkswagen to admit its use of defeat devices.

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    Brazil's Agnelli, who turned Vale into top miner, dies in crash

    Roger Agnelli, the Brazilian banker who turned Vale SA into the world's No. 1 iron ore producer, died on Saturday in a plane crash. He was 56.

    Agnelli, his wife and two children were among seven killed when his Comp Air 9 turboprop monoplane slammed into two homes around 3:20 p.m. local time (1820 GMT), minutes after taking off from an airport in northern São Paulo, authorities said.

    "We have lost a Brazilian of extraordinary entrepreneurial vision," President Dilma Rousseff said in a statement Sunday, adding that Agnelli had devoted his career to big Brazilian companies and shown commitment to the development of his country.

    Sources said Agnelli was traveling to a wedding ceremony in Rio de Janeiro with his wife Andréia, son João, daughter Anna Carolina, and their two spouses. The weather was clear at the time of the crash.

    In a statement, Vale said it learned of Agnelli´s death with "immense sadness" and said his 10-year tenure at the company had intensified its global expansion and transformation into a major global player.

    Known for his discipline and feisty nature, Agnelli clinched the top job at Vale in July 2001 after 19 years as a corporate and investment banker with Banco Bradesco SA BBDC4.SA, a major Vale shareholder.

    He instilled a culture of meritocracy that helped make Vale Brazil's No. 1 exporter. To friends and foes, the key to Agnelli's success was accurately predicting the rise of China as a major minerals consumer, a crucial wager in turning Vale, a former bloated state-controlled firm, into a global powerhouse.

    "He was a visionary that corporate Brazil will miss badly," said Lawrence Pih, who for decades ran flour mill Grupo Pacífico SA and sat on the board at the São Paulo Federation of Industries with Agnelli.

    In a Harvard Business Review's ranking of the world's best-performing chief executive officers published in February 2013, Agnelli came fourth, only behind Apple Inc's Steve Jobs, Inc's Jeff Bezos and Samsung Group's Yun Jong-Yong. He was the top mining CEO in the 100-executive ranking.

    Agnelli earned the spot in the Harvard ranking after racking up a consolidated return of 934 percent during his tenure at Vale, whose market value more than doubled in the period.

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    Support for impeaching Brazil's president rises to 68 percent - poll

    A growing majority of Brazilians favour impeachment of President Dilma Rousseff or her resignation, according to a survey released on Saturday by polling firm Datafolha.

    The poll showed 68 percent of respondents favour Rousseff's impeachment by Congress, while 65 percent think the president should resign. The president's approval ratings have been hammered by Brazil's worst recession in decades and its biggest ever corruption probe.

    Rousseff's popularity also fell, with 69 percent of respondents rating her government negatively. The current percentage is close to the president's lowest ratings on record, in August 2015, when 71 percent of respondents rated the government negatively.

    The poll also showed that rejection levels for former President Luiz Inacio Lula da Silva, who was named as Rousseff's chief of staff on Wednesday, rose to a record 57 percent. That is far higher than the previous high of 40 percent in September 1994, before his 2003-2010 presidency.

    A Supreme Court judge suspended Lula's appointment on Friday, saying it might interfere with an investigation by prosecutors, who have charged him with money laundering and fraud, as part of the probe into political kick back scheme at state oil company Petrobras.

    Even if Brazilians support Rousseff's ouster, voters are not enthusiastic about a governmentled by vice-president Michel Temer. Some 35 percent of respondents say his government would be "bad" or "terrible".

    Datafolha surveyed 2,794 people on March 17 and 18.
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    CAT sales show mining slump only getting worse

    With sales and operations at the ends of the earth, few companies are in a better position to take the pulse of the global economy and the resource sector in particular than Caterpillar.

    The world's number one heavy equipment manufacturer has been hit hard by the decline in mining and construction – sales are down more than $20 billion from its peak just four years ago after a drop of over $8 billion last year.

    And things are only getting worse in 2016. Much worse.

    Sales have been falling for 39 months straight

    After a flicker of hope in January when the rate of decline seemed to slow at least in some regions,Caterpillar's latest sales figures released today shows a renewed slump in the sector.

    Sales to the mining industry make up 19% of total sales for the Peoria, Illinois-based giant (quarrying and aggregates account for another 10%) and worldwide sales to the sector dropped 42% in February on a rolling 3-month average basis.

    Overall sales have been falling for 39 months straight.

    Earlier this week Caterpillar warned of a40% fall in revenues for the first quarter again led by lower sales into the resources industry.

    With the release of its full year earning in January Chairman and CEO Doug Oberhelman  said the company hasn't seen any signs of improvement and was reluctant to predict a bottom for the industry

    Today's figures makes it clear why.

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    OK, lets think bullish.

    Represented by the relatively new Alternative for Deutschland party, nearly two million out of 12.5 million eligible voted marked their “X” for the climate change denying, pro-nuclear, pro-coal, and pro-fracking AfD. In much the same way that Donald Trump has galvanized both the media and either terrified or energized the electorate in the U.S. (depending on one’s position), the AfD has turned what are often sleepy regional contests in Germany into edge-of-your-seat political theater.

    At his news conference at his Mar-a-Lago resort on the night of several Super Tuesday victories, Republican front-runner Donald J. Trump bragged about the new voters he had drawn into to the party’s nomination process. As heexplained:

    Look, we have expanded the Republican Party. When you look at what’s happened in South Carolina and you see the kind of numbers that we got, in terms of extra people coming in. They came from the Democratic Party, or the Democrat Party, and they’re Democrats and they’re longtime Democrats and they were never going to switch and they all switched. And they were independents. And we’ve actually expanded the party.

    As a result of this expansion, he concluded, “I think we’re going to win in November.”

    Is he right?

    In any event, the 2,000 people who packed out the London Palladium for the Guardian’s first live debate on the EU referendum were hungry for both more talk about Europe and, possibly, more pantomime. They booed, whistled, roared, shouted and wanted villains to heckle or applaud. And from the stalls only a few things seemed certain.

    1. People hate it when politicians don’t give direct answers. (“Answer the question!” was a favourite heckle).

    2. Those who show up for debates have probably already decided in which of the two opposing camps – Brexit or Bremain – they belong.

    3. Public engagement on the Europe issue is in fine fettle.

    So which side will prevail in June? Will Britain’s fate be decided by trade, the economy, immigration? What about the third of the electorate who are still dithering? And what about the third within each camp who could start dithering again in the next 100 days?

    If the Palladium’s clapometer is any guide, the Leave side still has more of the energy and momentum. A louder, more vigorous cheer certainly went up for Brexit than for Bremain when warm-up comedian Andy Zaltzman asked us to declare our hands. Although he got an even bigger cheer when he asked how many would vote for Britain to leave Planet Earth altogether.

    Transcript of call between Rousseff and Lula, 16 March

    Rousseff: Hello.

    Rousseff: Lula, let me tell you something.

    Lula: Tell me, my love.

    Rousseff: It’s this, I am sending Messias [Jorge Rodrigo Araújo Messias, deputy head of legal affairs at the cabinet office] round with the papers, so that we have them, just in case of necessity, that is the terms of office, right?

    Lula: Uh-huh. Ok, ok.

    Rousseff: That’s all, wait there, he is heading there.

    Lula: OK, I’m here. I’ll wait.

    Rousseff: Right?

    Lula: OK.

    Rousseff: Bye.

    Lula: Bye, my love.

    (2.4m Brazilians took to the streets in horror)

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    Emerging Middle Class

    ArticleMcKinsey Quarterly

    Capturing the world’s emerging middle class

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    World Population Growth Sags.

    Image title

    More women than ever use family planning, says the UN, and having one child fewer could dramatically curtail the global population by 2030

    The number of women using contraceptives in developing countries has soared to record levels in recent years, such that projections for global population growth could be cut by as much as 1 billion over the next 15 years.

    The latest figures by the UN show more women than ever now use family planning, with some poorer regions recording the fastest pace of growth since 2000.

    In 2015, an estimated 64% of married women, or women living with a partner, aged between 15 and 49, were using modern or traditional forms of family planning. In 1970, the rate was 36%.

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    The Rise of White.

    JUST paint it white. That’s what real estate agents say to property owners, who might call in decorators, sign up for Selling Houses Australia or engage their own renovation talents on a property listed for sale.

    If only it were that easy. Painting walls white might once have been a default option for homes but now even experts are challenged by choice.

    In these days of Pantone perfection, white is no longer a colour. It’s a starting point and by the time most get to end of the colour chart, they realise that there may be 50 shades of grey but there are hundreds of shades of white. And every white tells a story.

    Some of that story is told in a book published by Penguin this month called White Rooms by design writers, Karen McCartney and David Harrison. The book presents itself as a guide to using only white in homes.

    An entire book devoted to one colour might seem excessive to those who prefer to wander into a hardware store and order a can of white paint but white is serious business to designers across many industries.Image title

    Is white the most popular new car colour because it's free? Not anymore, 80% of best-selling models charge at least £250 extra for it

    • Rise of white as a popular option sees carmakers cash in on the trend
    • One in five new cars are white - most popular colour for third year in a row
    • Eight out of ten of Britain's favourite cars charge more for white paint 

    Read more: 
    Follow us: @MailOnline on Twitter | DailyMail on Facebook

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    Rise in demand in UAE for beard and eyebrow implants

    DUBAI // A desire for perfect eyebrows or a more grandiose beard means facial hair transplants are in great demand, according to cosmetic surgeons.

    Fashion dictates that ladies should have an even, sculpted brow and men a long, bushy beard, but many people struggle to live up to that image.

    Men who cannot reach the hirsute heights of their favourite sports or film stars and women who want their eyebrows reshaped or reimagined are keeping the appointment book of Dr Riad Roomi filled.

    “The increase in eyebrow transplants is because a lot of women got their eyebrows lasered when it was the fashion to have a narrow eyebrow or had temporary tattoos and killed the hair follicles," said Dr Roomi, plastic surgery and hair restoration surgeon at You New Plastic Surgery. “The follicles are sensitive, if you destroy them they don’t come back."

    Full density of a beard cannot be achieved in a single visit, and a patient may require several trips to the doctor. Each hair graft costs Dh10 with some procedures involving up to 2,000 hairs.

    “You’re looking at about Dh20,000 for a full beard," said Dr Al Roomi, adding that the number of men opting for beard transplants had doubled in recent years. “The younger generation like beards for fashion," said the doctor, who added that others have religious reasons.

    “I had a man who wanted to go to Mecca and wanted a pious look. He had a transplant before he went for his religious duties.

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    Oil and Gas

    AREX: the Wolfcamp

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    Oil Trader Trafigura Wins Better Rates on $5.5 Billion Financing

    Trafigura Group Pte. lowered its borrowing rate as the commodity trader raised $5.5 billion in bank financing amid record industry profits from oil trading.

    A European revolving credit facility totaled $5.1 billion, including a one-year tranche for $1.91 billion and a three-year for $3.19 billion, the Singapore-based company said Thursday in a statement. Trafigura, which has major trading operations in Geneva, also closed a three-year 46 billion-yen ($413 million) loan, almost double the size of its previous Samurai credit in 2014.

    “We’ve met our target of raising collectively over $5.5 billion at a tighter price, a more than adequate sum to finance company operations in current market conditions,” Chief Financial Officer Christophe Salmon said in the statement.

    Trade finance is the lifeblood of the commodity-trading sector which needs short-term capital from banks to fund the business of moving physical stocks of oil, metals and other raw materials around the world. Against a backdrop of record profits from oil trading and reduced financing needs due to lower commodity prices, traders including Trafigura and Vitol Group are winning improved lending terms.

    Rosneft Volumes

    Lifting increased volumes from Russia’s Rosneft OAO has propelled Trafigura to become the world’s second-largest independent oil trader, handling close to 4 million barrels a day. That trails Vitol which handles more than 6 million barrels a day.

    Trafigura said in December that gross profit for its oil trading division soared 50 percent to a record $1.7 billion in the 12 months through September. Vitol posted net income in the first nine months of 2015 of $1.25 billion, up 59 percent from the same period in 2014, according to a person familiar with the company’s accounts.

    Oil traders are filling storage tanks and profiting from a market structure called contango that allows them to store oil to sell later at higher prices. They are also benefiting from price volatility and arbitrage opportunities between geographical markets.

    Gunvor Group, another top independent oil trader, announced record profit of $1.25 billion this week, due to Russian asset sales and strong results from its oil-trading unit.

    Trafigura will use the credit facility to refinance the $5.3 billion it raised last year and for general corporate purposes, the company said. Lead arrangers and bookrunners included Lloyds Bank Plc, Societe Generale SA, UniCredit SpA, ING Bank NV, Royal Bank of Scotland Plc and Rabobank, with 45 banks participating.

    Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank were lead arrangers for the Samurai loan, which was supported by 12 Japanese financial institutions.

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    CNOOC announces weak 2015 annual results

    In 2015, the Company maintained an intensive exploration program and made significant achievements in oil and gas exploration while lowering exploration capital expenditures. During the year, the Company made 16 new discoveries and successfully appraised 23 oil and gas structures. In offshore China, the Company made independent new discoveries including mid-to-large sized structure Liuhua 20-2, and successfully appraised a number of mid-to-large sized oil and gas structures such as Caofeidian 6-4. Overseas, we obtained new discoveries in Algeria and Nigeria, and successfully appraised three oil and gas structures including Libra in Brazil. Due to the low oil price, the Company's reserve replacement ratio was 67% for the year. As at the end of 2015, the Company's net proved reserves were approximately 4.32 billion barrels of oil equivalent (BOE).

    The Company successfully met its annual oil and gas production target, with net oil and gas production reaching 495.7 million BOE, an increase of 14.6% year-over-year (yoy). The seven projects planned for 2015 have commenced production smoothly with many of them coming on stream ahead of schedule, demonstrating once again the Company's outstanding competence in project management.

    During the year, the Company continued to proactively promote the 'Year of Quality and Efficiency' program. The Company stimulated its operational vitality through management innovations and effectively lowered operating costs by utilizing market mechanisms. The Company has embarked on the path for future growth through innovation in technology. We established a long-term mechanism to optimize our cost structure, thereby laying a solid foundation to offset the challenges posed by low oil price.

    In 2015, the Company's average realized oil price was US$51.27 per barrel, a decrease of 46.6% yoy, while the average realized natural gas price was US$6.39 per thousand cubic feet, a decline of 0.8% yoy. In addition, the Company's oil and gas sales revenue was RMB146.6 billion, representing a decline of 32.8% yoy. Due to the efforts of the lowering costs and enhancing efficiency program, the Company's all-in cost decreased by 5.9% yoy to US$39.82 per BOE, representing a cost decline for the second consecutive year. The net profit declined by 66.4% yoy to RMB20.25 billion.

    In 2015, the Company's capital expenditures were RMB66.5 billion, representing a decrease of 37.9% yoy.

    In 2015, the Company's basic earnings per share was RMB0.45. The Board of Directors have proposed a year-end dividend of HK$0.25 per share (tax inclusive).

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    Exxon Mobil must allow climate change vote: SEC

    The U.S. Securities and Exchange Commission has ruled Exxon Mobil Corp  must include a climate change resolution on its annual shareholder proxy, a defeat for the world's largest publicly traded oil producer, which had argued it already provides adequate carbon disclosures.

    In a Tuesday letter to Exxon seen by Reuters, the SEC said the oil producer cannot keep a proposal spearheaded by New York state's comptroller from a full shareholder vote at thecompany's annual meeting in May.

    If approved, the proposal would force Exxon to outline specific risks that climate change or legislation designed to curb it could pose to its ability to operate profitably.

    Exxon had argued that the proposal was vague and that it already publishes carbon-related information for shareholders, including a 2014 report on its website entitled, "Energy and Carbon – Managing the Risks."

    The SEC found those reports do not go far enough.

    "It does not appear that Exxon Mobil's public disclosures compare favorably with the guidelines of the proposal," Justin Kisner, an attorney-adviser with the SEC, wrote to the oil producer.

    Exxon Mobil declined to comment on the SEC's ruling.

    "We'll be communicating the board's recommendations on shareholder resolutions through the proxy document next month," Exxon spokesman Alan Jeffers said.

    It is not uncommon for companies to give shareholders their opinion on proxy votes. It is unclear whether the proposal, though, has much chance of success. Exxon shareholders have never approved a climate change-related proposal, and last year they rejected by 79 percent a request that a climate expert be appointed to the company's board.

    Nevertheless, New York state Comptroller Thomas DiNapoli, who oversees the state's $178.3 billion pension fund, called the SEC's decision a "major victory" for shareholders.

    "Investors need to know if Exxon Mobil is taking necessary steps to prepare for a lower carbon future, particularly now in the wake of the Paris agreement," DiNapoli said in a statement, referring to an agreement last fall by 195 countries to rein in rising emissions that have been blamed for global warming.

    "The SEC has rejected Exxon's attempt to silence investors' concerns about the very real financial risks associated with climate change," said Shanna Cleveland of Ceres, a nonprofit group that tracks environmental records of public companies.

    DiNapoli was joined in the SEC filing by the Church of England, the Vermont State Employees' Retirement System, the University of California Retirement Plan and the Brainerd Foundation.

    The ruling from the SEC comes as Exxon fights other carbon-related battles, including an inquiry by New York Attorney General Eric Schneiderman into whether the company misled the public and shareholders about the risks of climate change.
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    Energy Transfer slashes synergy expectations from Williams deal

    Energy Transfer Equity on Wednesday cut its expectations for commercial synergies from its takeover of rival pipeline company Williams Cos Inc, due in part to lower oil prices and the increased cost of capital.

    Energy Transfer now expects that the base case for earnings before interest, taxes, depreciation and amortization from commercial synergies from the deal is about $170 million a year by 2020, it said in a filing with the Securities and Exchange Commission. It had previously expected more than $2 billion of annual EBITDA by 2020 from the synergies.

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    China's ENN buys $750 mln stake in Australia's Santos

    Chinese gas distributor ENN is set to become the top shareholder in Australian gas producer Santos after agreeing to buy a $750 million stake from Hony Capital in a push to ease its dependence on China's state-owned giants for supply.

    As part of the deal, Hony, one of China's most successful private equity funds, will buy a stake in a unit of ENN Group, looking to help drive ENN's expansion offshore.

    "We are gaining a strategic investor and partner in Hony Capital whose deep China experience and global outlook can help us accelerate future growth overseas," ENN Group chairman Wang Yusuo said in a statement.

    Santos said on Friday it had approved the transfer of Hony's 11.7 percent stake to ENN Group's ENN Ecological Holdings Co . Hony acquired most of its interest last November when Santos sold A$3 billion in new shares to help it slash debt.

    ENN is effectively paying A$4.84 a share, based on Thursday's exchange rate, a 23 percent premium to Santos' last close.

    Private Chinese gas distributors like ENN are looking to acquire interests in gas producers to lock in supplies of liquefied natural gas (LNG) and ease their dependence on state-owned giants CNOOC Ltd, PetroChina and Sinopec, bankers have said.

    "Once the proposed transaction completes, we will be keen to meet with ENN and discuss whether there are opportunities to supply gas through ENN into the growing Chinese gas market," Santos said in an email to Reuters.

    ENN is building China's first private LNG receiving terminal in Zhoushan, set to handle 3 million tonnes a year, starting in 2018.

    "Bringing in ENN as a strategic investor will help Santos connect to that opportunity in China, and at the same time we are helping a Chinese company expand internationally," Hony Capital Chairman John Zhao said in a statement.

    The jewel in Santos' crown is a 13.5 percent stake in the Papua New Guinea LNG (PNG LNG) project, while its biggest LNG asset is the newly opened $18.5 billion Gladstone LNG project in Australia.

    "Santos investors will wait to see what ENN's intentions are towards Santos, but at the very least this should provide some comfort that there are other buyers out there willing to pay a premium for Santos stock," UBS analysts said in a note.

    Hony, whose backers include state-sponsored Legend Holdings , Singapore's Temasek and Abu Dhabi Investment Authority, will invest $380 million for a stake in ENN, subject to approval by ENN-EC's shareholders.

    Santos shares rose 3 percent on Thursday to value the group at A$7.1 billion, in line with the value of a takeover proposal it rejected last year from a fund backed by the ruling families of Brunei and the United Arab Emirates.

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    Emerald Oil becomes latest U.S. driller to file for bankruptcy protection

    Emerald Oil this week joined dozens of U.S. oil producers in seeking Chapter 11 bankruptcy protection amid a punishing oil downturn and said Wednesday it intends to sell its business in an auction.

    In court papers, Emerald Oil Chief Financial Officer Ryan Smith said the Denver-based company since last year has stopped most of its drilling, cut 40 percent of its workers and tried to refinance its debt but wasn’t able to consummate at least four attempted deals.

    “The debtors have fallen victim to the same macroeconomic forces afflicting the rest of the oil and gas industry,” Smith said in court papers. He said the company considered several financial options but its access to capital markets was “significantly impaired” and the value of its proved developed reserves dropped dramatically.

    Emerald Oil pumps most of its crude from North Dakota’s Williston Basin, where drilling activity has been reduced to a fraction of what it once was before the sharp drop in oil prices, which began in late 2014. The company said it has $405 million in total assets and $361 million in total debt.

    Emerald Oil said it is planning to sell itself at an auction, though the private company Latium Group has already made an offer for Emerald and will be the leading bidder in the auction. Emerald Oil said it obtained a $20 million loan, subject to court approval, to keep running its operations through bankruptcy.

    “Emerald’s plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for company stakeholders,” Emerald CEO McAndrew Rudisill said in a written statement.

    JPMorgan Chase & Co. recently estimated 48 domestic oil companies have filed for bankruptcy protection.
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    Kurds pumping oil again?



    No detail just headline
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    MHR Wiggles Out of One Midstream Contract, Sues to End Another

    Two weeks ago Magnum Hunter Resources (MHR), a driller focused almost exclusively on the Marcellus/Utica and going through bankruptcy protection proceedings, struck a deal with pipeline company Texas Gas Transmission Inc. to terminate four existing contracts with company to use its pipelines.

    MHR was pressuring Texas Gas to cancel the contracts it has with MHR subsidiary Triad Hunter, but Texas Gas was resisting. In the end Texas Gas agreed to cancel the contracts provided they get a $15 million “unsecured claim” which grants Texas Gas the right to be near the front of the line to get paid $15M when MHR is either sold or emerges from bankruptcy proceedings.

    MHR isn’t, however, having as much success with cancelling signed contracts for another of its subsidiaries in the Bakken Shale region. Bakken Hunter has an existing, signed contract with Oklahoma midstream company Oneok.

    Citing the recent Sabine Oil & Gas ruling in which that company was allowed to cancel midstream contracts during bankruptcy, MHR is asking a Delaware bankruptcy court to allow them to wiggle out of the Oneok deal.

    In addition to updates on these two situations, we also have news that the Securities and Exchange Commission is at least partially blaming two former Magnum Hunter employees–a chief financial officer and chief account officer–for the company’s financial predicament…

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    New Marcellus/Utica Driller Quietly Launches w/$800M Investment

    Details are just now coming to light of a new E&P (exploration and production, or drilling) company head quartered in Pittsburgh and focused totally on the Marcellus and Utica region.

    Until now the company has flown under our radar. The company is American Petroleum Partners (APP)–not to be confused with Aubrey McClendon’s American Energy Partners (AEP)–and is headed by Rice Energy alumnus Varun Mishra, who is the founder and CEO.

    The big news is that last September Mishra’s new company, founded in 2014, received a major injection of investment capital. Apollo Global Management invested $411 million in APP with the option to double it up to $800 million.

    MDN has it on very good authority that although APP quietly issued a press release about this last September, the company has intentionally kept the news quiet. Not any more! Big mouth MDN is blabbing it to the world.
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    Global LNG Growth Peaks in 2016 With Australia Projects: Chart

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    Australia is leading a wave of new liquefied natural gas projects that will increase global capacity by a record this year. That’s coinciding with a slump in prices to the lowest since 2009 that’s straining the cash flow of some of the most expensive energy projects ever. LNG growth is set to slow after this year, with fewer new developments on the horizon. Woodside Petroleum Ltd. on Wednesday scrapped plans to develop the $40 billion Browse development, citing the “extremely challenging” market.

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    Ineos lands Marcellus shale gas in Norway

    Europe has taken its first shipment of US shale gas with the arrival of an Ineos carrier at the Swiss operator’s petrochemicals plant in Norway.

    The JS Ineos Intrepid made it to the facility at Rafnes on Wednesday laden with 27,500 cubic metres of gas form the Marcellus shale play in western Pennsylvania.

    The vessel, one of a planned fleet of eight so-called Dragon-class units Ineos will use to transport US shale gas to Europe, left the Marcus Hook terminal near Philadelphiaearlier this month.

    Ineos chairman Jim Ratcliffe said on the carrier’s arrival in Norway: “Shale gas economics has revitalised US manufacturing, it has the potential to do the same for European manufacturing.”

    He added: “We are nearing the end of a hugely ambitious project that has taken us five years and cost $2 billion, as we begin supply of ethane from shale to our sites in Europe.”

    The deep-water Marcus Hook terminal is connected via the 480-kilometre Mariner East pipeline to the Marcellus shale.

    To receive the US gas, Ineos has built two large ethane gas storage tanks at Rafnes and another of its terminals, Grangemouth, in Scotland, where it will use the ethane in gas crackers as fuel and feedstock. It is expected that shipments to Grangemouth will start later this year.

    On Tuesday, a Scottish politician said Scotland “would be foolish” if it missed out on the opportunity to develop its own indigenous shale gas resources.

    MSP Murdo Fraser, also convener of the Scottish Parliament’s Economy, Energy and Tourism Committee, said: “There is a lively debate in Scotland today and across the UK about fracking.

    “Our committee has not considered this issue directly, but my personal view is that we would be foolish to miss this opportunity.”

    Fraser told the Upstream Efficiency Forum conference in Aberdeen that many people now losing their jobs in the offshore industry had exactly the right skills to develop unconventional onshore gas.

    He added: “The Ineos petrochemical plant at Grangemouth relies on shale gas from the US being shipped across the Atlantic in a fleet of Chinese-built supertankers - and yet, Grangemouth is sitting close to substantial gas reserves right here in Scotland.

    “On no level does this make sense, not least the environmental cost of shipping shale gas from Pennsylvania to Scotland.”

    Fraser added: “My hope is that, once the elections are out of the way, the Scottish Government will start listening to their own scientists and lift their moratorium on fracking , with the proper controls and regulation in place.”

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    US oil production falls again

                                                 Last Week     Week Before   Last Year

    Domestic Production '000....... 9,038              9,068            9,422
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    Summary of Weekly Petroleum Data for the Week Ending March 18, 2016

    U.S. crude oil refinery inputs averaged over 15.8 million barrels per day during the week ending March 18, 2016, 176,000 barrels per day less than the previous week’s average. Refineries operated at 88.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production decreased last week, averaging over 4.7 million barrels per day.

    U.S. crude oil imports averaged 8.4 million barrels per day last week, up by 691,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.1 million barrels per day, 11.6% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 415,000 barrels per day. Distillate fuel imports averaged 93,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 9.4 million barrels from the previous week. At 532.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 4.6 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 0.9 million barrels last week and are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 0.3 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.9 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.4 million barrels per day, up by 1.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.4 million barrels per day, up by 7.0% from the same period last year. Distillate fuel product supplied averaged about 3.6 million barrels per day over the last four weeks, down by 8.0% from the same period last year. Jet fuel product supplied is up 1.5% compared to the same four-week period last year.

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    Algeria's Sonatrach to sell oil and gas sites

    After a deep slide in oil prices, Algeria’s Sonatrach is shifting strategy to offer foreign firms direct negotiations to buy stakes in 20 oil and gas fields in a bid to attract investors and increase output, a source at the state energy company said.

    The campaign to bring in energy investment comes at a crucial time for the north African Opec producer as it tackles lower revenues and stagnating production.

    Algeria, a key gas supplier to Europe, is also in talks with EU officials on holding a summit in Algiers in May that will discuss energy investment opportunities in Algeria as EU leaders look to diversify from Russian gas.

    The switch to bilateral deals follows two energy bidding tenders that failed to attract much interest. A bid scheduled for last year was cancelled because of low crude prices.

    “Direct negotiations are a more efficient, less expensive, a faster, and a less bureaucratic approach,” the Sonatrach source said of the talks.

    The source did not give details of the other firms and ENI declined to comment.

    The stakes being sold are expected to leave Sonatrach the majority holder as Algerian law dictates.

    The 20 fields, which the source said Sonatrach took over from state hydrocarbons agency Alnaft in September as part of the streamlining process, include oil and gas fields across the centre and south of the country in places such as Ouargla and Adrar provinces, and Illizi near the Libyan border.

    As part of the campaign, Sonatrach chief Amine Mazouzi will travel to China at the end of the month for meetings with Chinese oil companies Sinopec and CNPC, which are already operating in Algeria.

    Algeria’s energy potential is not in doubt, but oil executives say tough terms on production-sharing contracts, bureaucracy and other problems make the country less attractive.

    Reforms to open up the and gas sector to foreign investment in 2005 were reversed a year later, adding a windfall tax and more Sonatrach control, when oil prices were high and Algeria’s reserves were in good shape.

    Security is also a factor after the 2013 attack on the In Amenas plant run by BP and Statoil with Sonatrach in which 40 oil workers died.

    BP and Statoil on Monday said they were reducing staff in Algeria after rockets hit another gas plant last week.

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    Scramble for oil storage extends, suggesting excess has room to run

    Trading houses are betting on oil markets remaining oversupplied for at least two more years even as crude prices stage a recovery driven by early signs of falling production.

    Traders such as Vitol, Gunvor and Glencore are looking to extend or lock in new leases onstorage tanks for crude oil and refined products in key hubs as far out as the end of 2018, sources at storage firms and trading houses say.

    Storing oil in a heavily oversupplied market has been a cash cow for traders and oil companies in recent years as markets bet that future oil prices will be significantly higher than current ones, in what is known as contango.

    Ian Taylor, chief executive of top oil trader Vitol, said on Tuesday that "stocks of crude and products continue to build and these will weigh upon the market".

    Like other traders, Vitol has invested in recent years in storage, and last August acquired the other half of its VTTI storage subsidiary for $830 million.

    Oil prices have risen 30 percent since mid-February to around $40 per barrel, as global production shows signs of slowing, which has led to a significant narrowing of the crude contango despite a stock overhang of 300 million barrels.

    Crude oil has found more of a balance in recent weeks through supply disruptions in Iraq, Libya and Nigeria.

    But refined oil products have not followed suit. Gasoline and blending components have been quietly building, squeezing the amount of storage left in Europe. U.S. gasoline stocks, when adjusted for current consumption, are just at the top of their 10-year range.

    Krien van Beek, head of sales at RVB Tank Storage Solutions, a tank storage broker in the Netherlands, said traders are seeking storage on 12-month leases for products such as gasoline and naphtha outside key hubs in northern Europe, Singapore and the United States.

    "They are prepared to look at storage for the longer term because of the contango in the market but everyone is cautious about costs because we are at the top of the storage market," van Beek said.

    "Since the standard storage options are taken, traders are considering less conventional and less attractive locations."

    According to RVB, global commercial tank capacity is around 900 million cubic metres across 4,400 facilities - not including "captive tanks" in refineries that are not open to commercial buyers.


    This chimes with the International Energy Agency's view that a "hinge point" in the market, when demand surpasses available supply, will not begin to draw down stocks in earnest until 2018.

    "We still see an oversupplied market, just not so much as it was before," said Andrew Wilson, the IEA's oil market analyst in charge of stocks and prices.

    A key choke point, however, is forming in middle distillates - the diesel used to power trucks and generators, and the heating oil that warms homes around the world in winter.

    Typically, these stocks fall over the winter. But warm weather this year kept this from happening - all while refineries worldwide ran full steam to feed seemingly insatiable demand for gasoline in the United States, China and India.

    Global distillate stocks in the developed world are close to a record high, in the thick of refinery maintenance season, and in the run-up to the time when gasoline use hits its summer high point, but interest in diesel typically fades.

    "Absent run cuts, the market faces another round of rapid stockbuilds once refineries return from maintenance," Robert Campbell of Energy Aspects said in a note.
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    PetroChina profit dives 70 pct in 2015 on low oil prices

    PetroChina Co. profit tumbled to the lowest since 1999 as falling crude prices crimped earnings at the country’s biggest oil and gas producer.

    Net income at the Beijing-based explorer dropped 67 percent to 35.5 billion yuan ($5.46 billion) from 107 billion yuan, according to a statement sent to the Hong Kong stock exchange. That compares with a 34.3 billion yuan mean estimate from 11 analysts compiled by Bloomberg. Sales fell 24 percent to 1.73 trillion yuan. The company warned in January that 2015 profit may fall 60 percent to 70 percent.

    Brent, the global benchmark, dropped to an average of about $54 a barrel last year, from roughly $99 the year before, prompting global oil energy companies to write down assets, slash earnings and cut capital expenditure plans. Despite the pain, PetroChina and its state-owned parent China National Petroleum Corp. won’t resort to laying off frontline oil and gas workers as a way to cut costs, Chairman Wang Yilin said this month.

    “In 2015, the global economic recovery slowed down, the downward pressure on China’s economy continuously intensified, the overall supply in the oil and gas market was sufficient and the international oil prices kept dropping at a low level,” the company said in its earnings release.

    Oil has climbed back from a 12-year low this year on speculation that stronger demand and falling U.S. output will ease a global surplus. The Organization of Petroleum Exporting Countries and other producers including Russia plan to meet in Doha next month to discuss limiting output to reduce a global oversupply.

    China’s biggest explorers including PetroChina, China Petroleum & Chemical Corp. and Cnooc Ltd. all posted profit or revenue declines for the first nine months of 2015. PetroChina and CNPC sold pipeline assets in November to raise cash to meet their annual profit target. Capital spending this year will be 5 percent lower at 192 billion yuan, following a 31 percent cut last year.

    The company rose 0.9 percent to HK$5.37 before the earnings announcement, compared with a 0.3 percent loss in the city’s benchmark Hang Seng Index. Shares are down 35 percent in the past year.

    Parent company CNPC will be among the first state-owned companies to undergo government-guided reforms, transforming into a strategic holding company that will not manage day-to-day operations of its subsidiaries, according to people with knowledge of the situation. As part of the overhaul, China’s government islooking to spin off oil and gas pipelines from its energy companies into independent businesses.
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    Indonesia decides against Inpex floating LNG project plan, goes with onshore proposal -president

    Indonesia has decided against a proposal by Japanese oil and gas company Inpex Corp to build a floating liquefied natural gas project in eastern Indonesia and will proceed with plans to process the gas onshore instead, the president said on Wednesday.

    "This is a long-term project that concerns hundreds of trillions of rupiah. From these calculations, we have decided to build it onshore," President Joko Widodo said in a recorded statement obtained from palace officials.
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    Woodside scraps Australian Browse LNG project as glut bites

    Woodside Petroleum and its partners have shelved plans to build the $30 billion Browse floating liquefied natural gas (LNG) project off Australia in the face of global oversupply, spelling the end of an era of mega LNG projects.

    The shelving of the project follows an 80 percent plunge in Asian LNG prices over the past two years after a construction boom that is set to make Australia the world's top LNG exporter.

    Browse is one of five projects now stuck on the drawing board in Australia amid a glut of new supply, including from Chevron's newly commissioned $54 billion Gorgon project and exports from the United States.

    The move came as no surprise after Woodside Chief Executive Peter Coleman flagged last month that now was "not the time to be reckless" in spending capital and that the project had failed to line up any customers for Browse LNG.

    Browse faced tough hurdles as its costs per tonne were higher than rival projects in places such as Papua New Guinea and North America and large-scale floating LNG was unproven technology.

    "These factors, combined with the greatly reduced appetite for large-scale greenfield investments in the current market conditions, made it quite a herculean task to achieve partner alignment to sanction Browse," said Saul Kavonic, an analyst with consultants Wood Mackenzie.

    This is the second time Browse has been sent back to the drawing board. The partners ditched plans in 2013 for an onshore project, that analysts estimated at $45 billion, at a site opposed by green groups and some Aboriginal landowners.

    The partners then spent $100 million redesigning the project to floating LNG, slashing costs by 35 percent. Despite the savings, Coleman said Browse would not have been profitable at today's oil price around $41 a barrel.

    "Unfortunately, with pricing falling away from us, that cost reduction doesn't get us to a breakeven price that's low enough for us to feel comfortable making an investment at this point in time," Coleman told Reuters in an interview.

    "It's very disappointing in the scheme of things as this is a key part of our growth story."

    Not only is it a blow to Woodside, but it's painful for its Japanese partners, Mitsui & Co and Mitsubishi Corp , which together paid $2 billion for a nearly 15 percent stake in 2012, and PetroChina, which paid $1.63 billion for an 11 percent stake in 2013.

    Mitsui said on Wednesday it would book an impairment charge of about 40 billion yen ($356 million) on its Browse investment as a result of the postponed development. Mitsubishi had no immediate comment.
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    Qatargas eyes expanded LNG supply deals with UK, Dutch terminals

    Qatargas is looking to Britain and the Netherlands in an effort to weather a looming global glut of gas supplies by expanding import deals into Europe's most liquid markets, industry sources said.

    The world's biggest exporter of liquefied natural gas (LNG) must lock in buyers for its unsold supply just as new Australian and U.S. producers muscle into its prized Asian markets.

    Slowing demand globally is only adding to producer woes, thrusting Europe's gas markets and dozens of under-used import terminals into the spotlight.

    Qatargas has held talks with Petronas UK Ltd to gain greater access to the Dragon import terminal in Wales, as well as with Uniper, formerly known as E.ON Global Commodities, for the Gate terminal in Rotterdam, two sources said.

    Uniper declined to comment, while Qatargas and Petronas did not respond to requests for comment.

    Stefaan Adriaens, commercial manager at Gate, said he could not comment on whether Qatargas was interested in increasing capacity at the terminal either via Uniper or directly.

    "They see competition in Asia, so if they are looking for capacity, then I presume it's to have an alternative to Asia," he said.

    Dong Energy, EconGas, Uniper, Shell and Eneco hold Gate capacity but around 0.9 billion cubic metres remains available.

    Unlike the last four years, import capacity at Gate and other northwest European terminals is becoming more valuable in response to the start of U.S. LNG exports.

    "As more people are looking to Europe the capacity value has increased, whereas in other areas it's quite the contrary. Everybody was hoping for Asia demand but there demand was slower so I think capacity value has decreased there," he said.


    In 2013, Qatargas signed a five-year deal to supply 1.14 million tonnes a year (mtpa) to Petronas' half-share of the Dragon terminal at Milford Haven.

    Qatargas 4, a joint venture between Qatargas and Royal Dutch Shell, signed the deal with Petronas, followed by a five-year agreement with E.ON Global Commodities to ship 1.5 mtpa to the Gate terminal.

    Both deals are flexible, according to the original announcements, meaning Qatar is not obliged to ship any LNG to Britain or the Netherlands and can divert cargoes at will.

    At the time, companies with import rights at Dragon and Gate were eager to drum up business and effectively gave Qatar free options to make use of their capacity.

    While Qatari deliveries to Dragon/Gate have been rare up to now, weak Asian demand coupled with surging supply makes Europe an increasingly attractive destination for cargoes.

    Talks between Petronas and Qatargas over expanding the existing deal at Dragon initially sought to double volumes and extend the duration of the deal by up to 10 years, one of the sources said.

    A proposal was also made to commit Qatargas to delivering a third of the overall volume, he said.

    At Gate, the choices boil down to exacting supply guarantees from Qatargas or making it pay for optional import slots, sources said.
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    Single Investor Buys ~$56Mln of Rice Energy Stock in 1Q16

    Investors constantly sink money into, and pull money out of, oil and gas companies. Managers of those companies also buy and sell stock in their own companies.

    From time to time we highlight such cases–but lately, we only highlight it if it’s a really big investment. This is one of those really big investments. Billionaire Steven Cohen, founder of Point72 Asset Management, has snapped up 5.6 million shares of Rice Energy during the first almost three months of this year–so far. Rice’s stock currently trades at $12.69 per share.

    Over the past three months the price per share has varied from a low of $8.48/share to a high of $13.08/share. Let’s pick a number and say Cohen paid an average of $10 per share for his 5.6 million shares. That means he ponied up something on the order of $56 million–a sizable chunk of ownership in the company…
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    Gazprom asset swap in focus as OMV chief plans Russia visit

    The chief executive of Austrian oil and gas group OMV and Austria's finance minister will visit St. Petersburg on April 1, an OMV spokesman said, as the company seeks to reach a deal on an asset swap with Russia's Gazprom.

    The companies have been working for months on a swap agreement under which OMV would take a stake in the Urengoy gas field in Siberia, but no details have emerged on what assets OMV -- central Europe's biggest energy group -- might offer in return.

    OMV Chief Executive Rainer Seele, who said last month that due diligence for the deal would take several months, will be accompanied on his Russia trip by Finance Minister Hans Joerg Schelling, a spokeswoman for Schelling confirmed.

    Seele is relying heavily on the swap to help OMV to lower production costs and has said he has no Plan B.

    A source close to OMV said that the finance minister's attendance suggests that progress might have been made in the talks about future cooperation.

    Russia's energy minister has said the swap could include OMV oil and gas fields "in third countries" or infrastructure or energy projects in Austria.

    OMV has upstream operations in the North Sea, Romania, Austria, Australia, New Zealand, the United Arab Emirates, Tunisia, Gabon, Kazakhstan, Namibia and Madagascar, as well as idled operations in Libya and Yemen.

    It is in the process of taking over gas trading company EconGas, has a majority stake in the Central European Gas Hub (CEGH) in Austria, owns gas storage facilities in Austria and refineries in Austria, Germany and Romania.

    It wants to sell its Petrol Ofisi petrol station business in Turkey and is in the process of selling a minority stake in Gas Connect Austria, though it has ruled out Gazprom as a buyer.

    OMV has said maximum output from the Urengoy area in which it is interested is expected to be 60,000 to 80,000 barrels of oil equivalent (boe) per day over the next 20 years. OMV's current total output is about 309,000 boe per day.
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    Chesapeake: The Riskless Trade Everybody Loves

    Chesapeake just produced an incredible risk-free trade.

    This Friday an interesting Chesapeake Energy 8-K hit EDGARonline. It's a short 8-K so I'll transcribe the important part here:

    Chesapeake Energy Corporation (the "Company") has entered into privately negotiated purchase and exchange agreements under which it has and will exchange (the "Exchanges") in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), shares of the Company's common stock, par value $0.01 per share (the "Common Stock") for outstanding 2.5% Contingent Convertible Senior Notes due 2037 (with May 2017 put rights) and 6.5% Senior Notes due 2017 (collectively, the "Outstanding Senior Notes") of the Company. As of March 18, 2016, the Company has issued or agreed to issue an aggregate of 17,255,347 shares of Common Stock, representing approximately 2.6% of the Company's outstanding Common Stock, in exchange for $105.0 million aggregate principal amount of its Outstanding Senior Notes.

    What do we have here? Given CHK's recent share and bond behavior, we have the description of what was a riskless trade for those taking it. The riskless trade consisted in:

    Buying those 2017, 2037 bond issues.
    Exchanging them for shares.
    Selling the shares in the market.

    Why was the trade riskless? Because:

    Those 2017, 2037 bonds were trading at very depressed levels, like the rest of CHK's debt.
    The principal amount retired/number of shares is the same as issuing shares at ~$6.09.
    CHK stock traded over $5 per share on high volume 11 market sessions ago, and did so for 3 market sessions, including the market session on Friday.
    $5/$6.09 = ~82.1 cents paid per dollar of principal on those bonds. Of course 82 cents is a high price for a CHK bond.

    Attached Files
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    Vitol Sees Record Oil Volumes as Market `Favors' Traders

    Vitol Group, the world’s largest independent oil trader, said it handled a record volume of 6 million barrels a day of crude and refined products last year as it benefited from a market that “favors” traders.

    At a time when oil-rich countries are suffering and major energy companies are retrenching, the closely-held trader’s net income was $1.25 billion in the first nine months of last year, up 59 percent from the same period of 2014, according to a person familiar with the company’s accounts.

    The financial performance until the end of September and the record full-year trading volumes suggest Vitol is heading for one of its best years ever. The company, headed by Chief Executive Officer Ian Taylor, posted a record profit of $2.28 billion in 2009, according to data compiled by Bloomberg. The current market “favors a physical trader,” but is challenging for the wider industry, Taylor said.

    “Whilst opportunities in the physical market continue to exist, we are increasingly vigilant in respect of counterparty risk as current price levels will inevitably test some market participants,” Taylor said in a statement on Tuesday. “The absolute price levels and market volatility are causes for caution” as the risk of defaults increases, he said.

    Increased Volatility

    While Vitol only releases publicly its traded volumes and revenue, it does provide financial information to its lenders and some other groups. The person familiar with the accounts asked not to be named, citing confidentiality clauses.

    Oil traders such as Vitol and rivals Trafigura Group Ltd Pte, Glencore Plc, Gunvor Group Ltd., Mercuria Energy Group Ltd. and Castleton Commodities International LLC are profiting from the increase in price volatility. They are also filling storage to take advantage of contango -- a situation where future prices are higher than current levels, allowing investors to buy oil cheap, store it in tanks and lock in a profit for a later sale using derivatives.

    In an interview in February, Taylor said that Vitol, which celebrates its 50th anniversary this year, would report net income for 2015 above the $1.35 billion it earned in 2014. However, he said the company wouldn’t match the record of 2009. The company, which is owned by its senior staff, planned to take writedowns in its exploration and production business and make provisions against customers defaulting on contracts, he said.

    Cautious Approach

    Vitol’s traded volumes of crude and oil products rose 13 percent from a year earlier to 303 million metric tons, equal to about 6.2 million barrels a day. That’s enough to meet the combined oil consumption of Germany, France, Italy and Spain. Revenue, which rises and falls in parallel to commodity prices, plunged 38 percent to $168 billion as oil fell.

    The trading house, which is formally incorporated in Rotterdam but has its main operations in Geneva, London, Singapore and Houston, has experienced strong growth over the last 20 years on the back of rising oil trade, large price swings and, more recently, investment in storage and refining. In 1995, Vitol earned just $20 million.

    Taylor said the current environment "vindicates the extremely cautious approach we have long taken towards risk and debt."

    While the company’s refinery assets performed well in 2015, slowing global growth and a rebalancing of the Chinese economy are “likely to impact parts of the portfolio and we expect a slowdown in the rate of demand in some energy markets,” Taylor said. Stockpiles of crude and products will continue to build and weigh upon the market, he added.

    Ship journeys conducted by Vitol rose 9.5 percent to 6,629 during the year. Natural gas sales fell 43 percent to 683 terawatt hours, while power sales declined 13 percent to 102 terawatt hours and coal sales slipped 41 percent to 20 million tons, the company said.

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    Novatek sees 2016 liquids production up 30 pct

    Russia's No.2 natural gas producer Novatek expects its production of crude oil and gas condensate to increase by 30 percent this year, Chief Executive Leonid Mikhelson told Rossiya-24 TV channel.

    In December, Novatek started commercial production at the Yarudeyskoye oil field in northern Russia.
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    Iraq seeks financial agreement with Kurds before pumping crude to Turkey

    Iraq will not resume pumping crude through a Kurdish pipeline to Turkey unless it reaches a financial agreement with the Kurdish regional government, the Iraqi oil minister said on Tuesday.

    Adel Abdul Mahdi confirmed on his Facebook page that the central Iraqi government had decided to stop pumping crude from fields under the management of its state-run company in northern Iraq through the pipeline.He said state-run North Oil Company previously fed 150,000 barrels a day into the pipeline that carries crude from the Kirkuk fields and other reservoirs managed by the Kurdish authorities to the Turkish Mediterranean terminal of Ceyhan.

    "We have two options" in order to resume pumping, the minister said, demanding either a return to a previous oil agreement between Baghdad and the Kurdish Regional Government (KRG), or making a new agreement.

    The previous agreement provided for the KRG to transfer to Iraq's central state oil marketing company 550,000 barrels a day of crude produced in the Kurdish region, in return for a 17 percent share in the federal budget, he said. The Kurds stopped all oil transfers to the government in September 2015, at which point they also stopped receiving government funding, he added.
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    China's vice premier seeks acceleration of gas pipeline with Russia - State TV

    China and Russia should accelerate construction of the Altai natural gas pipeline linking the two countries, vice premier Zhang Gaoli told Gazprom CEO Alexei Miller in Beijing on Tuesday, state television reported.

    The two countries should also expand cooperation in upstream and downstream, natural gas supply services and energy sales, Zhang said, according to China Central Television.

    Gazprom's Miller said Russia would be actively engaged in negotiations with China on the Altai project, according to the broadcaster.

    Russia has been pushing for plans to sell China natural gas through the Altai project, also known as the western route. Analysts have estimated the cost of the Altai pipeline at up to $20 billion.
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    BG Egypt halts some development wells over price dispute -source

    BG Egypt has suspended work at some Egyptian development projects after it failed to agree with the government on the price of gas, an Egyptian General Petroleum Corp (EGPC) official told Reuters on Tuesday.

    "BG has stopped work at 9A+ and 9B after failure to reach an agreement on the fixed price to be paid for extracted gas, and it withdrew rigs working on the 9A+ wells on the seventh of March," the EGPC official said.

    Egypt's Ministry of Petroleum denied BG Egypt had stopped development as a result of price disagreements and said in a statement that "negotiations over timelines for the projects" are ongoing.

    The development areas include several deepwater wells in the West Nile Delta.

    BG Egypt, a subsidiary of Royal Dutch Shell, is looking to raise the price it is paid for gas to $5.88 per million British thermal units from $3.95 currently, the official said.

    Egypt has over the past year raised the price it pays many international oil companies for natural gas production in order to encourage more investment.

    BG Egypt has worked out deals with Egypt's EGPC to earn the higher price of $5.88 at other development wells, which it is continuing work on.

    Egypt, which is facing an acute foreign currency shortage, has delayed paying foreign petroleum companies their arrears, which reached about $3 billion at the end of December 2015.

    BG Egypt has made setting a timetable for repayment of its arrears a condition for re-starting work at the suspended development wells, the EGPC official said.

    Once an energy exporter, Egypt has turned into a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap.

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    Saudi Arabia will freeze oil output without Iran, says Opec delegate

    Saudi Arabia is prepared to sign up to an oil output freeze next month even without Iran taking part, a senior Opec delegate said, potentially removing one of the major obstacles to a deal among big producers.

    Some of the world’s biggest oil exporters will meet in Doha on April 17 to discuss restraining output. It follows a provisional agreement reached in February by Saudi Arabia, Russia, Qatar and Venezuela to freeze production at January levels.

    “There is agreement from many countries to go along with a freeze, why make it contingent on Iran,” said the delegate.

    The comments contrast with those from Gulf officials last month, which suggested any deal was conditional on Iran, Saudi Arabia’s Opec rival, taking part alongside other big producer countries.

    Iran sought to increase production and exports after the lifting of sanctions against its oil industry in January. Iranian officials have until now shown no willingness to back any deal that would result in restricting its own output.

    Questions have been raised among Gulf delegates about the country’s ability to ramp up output, suggesting this could be one reason for compliance even without Iran.

    “Despite all the bragging, we have yet to see what Iran can do,” said the delegate.

    Abdalla El-Badri, Opec’s secretary-general, said on Monday at a news conference in Vienna: “Maybe in the future they will join the group. They [Iran] have some conditions about their production.”

    About 15 Opec and non-Opec countries — accounting for two-thirds of global oil output — have so far supported an oil freeze, Qatar’s energy minister Mohammed Bin Saleh Al-Sada said last week.

    A provisional deal has helped to support prices and reverse negative market sentiment toward oil. Brent crude was at $41.47 on Wednesday, up 53 per cent since hitting a 2016 intraday low of $27.10 a barrel.

    “Look at what it [the move towards the oil freeze] did to change the psyche of the market,” said the delegate. “Now the market can see people are gathering, people are communicating. This collaborative element has helped the price.”

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    National Oilwell Considering Billion-Dollar Deals in Oil Slump

    After slowing down its M&A machine considerably over the past two years, National Oilwell Varco Inc. is looking at a couple different acquisitions in the billion-dollar range.

    The largest U.S. maker of oilfield equipment made seven acquisitions last year for a total of $86 million, a sharp drop from 2013, when it spent $2.4 billion in cash to buy Robbins & Myers Inc. Up until Clay Williams took over as chief executive officer in early 2014, National Oilwell Varco had made at least $1 billion in acquisitions for each of the three previous years.

    "We’ve had some larger acquisition opportunities we’ve looked at," Williams said in an interview Monday in New Orleans at the Scotia Howard Weil Energy Conference. "We have a lot of liquidity and a lot of access to capital, so I think we have a broad range of things that we can consider."

    Last month National Oilwell Varco reported its biggest quarterly loss since 2000 as customers cope with the worst crude market downturn in decades by cutting orders for new rigs, pipes and other gear in the oil patch. The company ended the year with $2.1 billion in cash and $3.6 billion in undrawn capacity on its revolving credit facility.

    Williams, who oversaw acquisitions at Varco Inc. before it was bought in 2004 by National Oilwell Inc. for $3 billion, said he’d like to deploy capital opportunistically in the downturn because it’s the kind of environment that can lead to good values. He added, though, that he doesn’t feel like he must pull the trigger.

    "We really need to be patient and make sure we’re getting good value for our shareholders as we move forward on transactions," Williams said "It’s turned out to be a much rougher downturn than most of us thought this time last year."
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    Offshore Drilling Rig Suppliers Say Oil Recovery Will Be Slower Than Expected

    Leaders of the world’s largest suppliers of offshore drilling rigs and the services that go with them see the oil market recovery taking even longer than expected last year.

    Transocean Ltd. Chief Executive Officer Jeremy Thigpen expects it will have to wait at least another three years before his company can begin charging higher rates for offshore rigs. Schlumberger Ltd. chief Paal Kibsgaard sees the oil industry, stuck in the deepest financial crisis ever, in no rush to get rigs back online even after prices recover.

    Before rig owners can charge more, they must first see a boost in activity after the worst crude market crash in a generation. Transocean doesn’t expect an increase in rig leases until late next year or sometime in 2018, Thigpen said Monday in an interview at the Scotia Howard Weil Energy Conference in New Orleans. Daily rates, which have fallen by more than half over the past two years, aren’t expected to climb until 2019 or 2020, he said.

    "I think ’16 and ’17 are going to be tough," said Thigpen, who joined the Vernier, Switzerland-based company 11 months ago. "We’re taking the necessary steps to navigate our way through the downturn, but we’re also preparing for that eventual recovery."

    Fragile State

    The fragile financial state of oil explorers means there will be a noticeable lag from when oil prices climb and when exploration and production companies invest again, Kibsgaard said in a presentation to investors at the conference.

    Profitability and cash flow are "at unsustainable levels for most oil and gas operators which in turn has created an equally dramatic situation for the service industry," he said. "Going forward, the industry is likely facing a ‘medium-for-longer’ oil-price scenario, subject to periods of volatility, as the national oil companies within OPEC can still generate significant returns for their owners in such an environment due to the low cost base of their conventional resources."

    Rig contractors have suffered through the double blow of declining customer demand due to tumbling oil prices and a glut of vessels that continue to be built to meet orders made before the rout.

    Transocean leads the industry in reducing its fleet, with 24 rigs scrapped since the downturn began and another eight to 10 it could retire over the next year to 18 months, Thigpen said. Transocean currently has 61 rigs in its fleet with another 11 under construction.

    Financial Liquidity

    The company reported $2.3 billion in cash at the end of last year. Thigpen said he has "no real concerns" with Transocean’s financial liquidity through the end of 2018, and the company has a number of levers it can pull beyond that if needed.

    Schlumberger said Monday it expects revenue in the first quarter to fall to $6.5 billion, a 16 percent drop from the final three months of last year. That’s a larger drop than the $7 billion average of 25 analyst estimates compiled by Bloomberg. The Houston- and Paris-based company said it’s not expecting a meaningful recovery in its own activity until next year.

    Other U.S. oil-industry executives echoed the cautious sentiment:

    Anadarko Petroleum Corp.’s CEO Al Walker said in a presentation increasing demand will signal that higher prices are likely to be sustained.

    Weatherford International Ltd. plans to reduce headcount by another 6,500 after cutting 14,500 jobs in 2015. CEO Bernard Duroc-Danner said he sees the North American market bottoming in the second quarter of the year.

    Apache Corp. is unlikely to pursue acquisitions until more companies in the industry have gone through restructuring, CEO John Christmann said in an interview.
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    Oil up on Cushing crude drawdown; eyes on U.S. output

    Oil prices rose about 1 percent on Monday after data showed crude inventories at the Cushing, Oklahoma delivery hub for U.S. futures fell for the first time since January, and ahead of the expiration of the U.S. front-month contract.

    Oil's upside, however, was limited by concerns that U.S. energy companies could ramp up drilling again after a two-month long recovery in crude prices, analysts said.

    Brent crude futures for May delivery LCOK6, the front-month, settled up 34 cents, or 0.8 percent, at $41.54 a barrel. Brent has risen 53 percent from 12-year lows of $27.10 hit on Jan. 20.

    U.S. crude's futures for April CLJ6 gained 47 cents, or 1.2 percent, to settle at $39.91, expiring as the front-month. The more-active May contract CLK6, which would be front-month from Tuesday, finished up 38 cents at $41.52.

    Crude stockpiles in Cushing fell 570,574 barrels to 69.05 million in the week to March 18, traders said, citing data from market intelligence firm Genscape. Cushing inventories had previously risen toward 70 million barrels, causing market participants to fear they could hit capacity.

    "Although, it's not a huge draw by any means, the latest data breaks a string of builds," said Peter Donovan, broker at Liquidity Energy in New York.

    Genscape's Cushing data, however, contrasts with a Reuters poll of analysts showing U.S. crude inventories as a whole likely rose 3 million barrels in the week to March 18, rewriting a previous record high. Government data showed Cushing crude stocks USOICC=ECI rose to a peak of 67.5 million barrels in the week to March 11.[EIA/S]

    Stockpile worries aside, some analysts fear U.S. oil production is creeping higher.

    On Friday, data from energy service firm Baker Hughes, showed U.S. drillers added one oil rig last week after 12 weeks of cuts. [RIG/U]

    Analysts generally agreed it was early to read too much into that rise, since oil rigs had fallen by two-thirds over the past year to their lowest since 2009. Still, there were signs the drop-off in drilling was stabilizing after a 50-percent rally in crude prices since February.

    "The higher prices go in the current recovery rally, the higher the likelihood that U.S. producers are going to build their hedge portfolios, which could then result in U.S. oil production not declining as much as what the current forecasts are showing," said Dominick Chirichella, senior partner at he Energy Management Institute, New York.
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    Petrobras posts record loss as oil price slump forces writedowns

    Brazil's state-controlled oil company Petrobras posted its biggest-ever quarterly loss on Monday after booking a large writedown for oil fields and other assets as oil prices slumped and refinery projects faltered.

    Petróleo Brasileiro SA, as the company at the epicenter of Brazil's massive corruption scandal is commonly known, had a consolidated net loss of 36.9 billion reais ($10.2 billion) in the fourth quarter, according to a securities filing.

    The bigger-than-expected shortfall was 48 percent larger than the 26.6 billion-real loss a year earlier, the previous record. It also turned the company's full-year 2015 result, which was positive through September, into a full-year loss.

    For a second year in a row, Chief Executive Officer Almir Bendine said, Petrobras will not pay dividends to either its government or non-government investors and it plans to make no bonus payments to employees.

    The result caught analysts and investors by surprise. The largest fourth-quarter loss expected in a Reuters survey of analysts was 9.7 billion reais. Petrobras common shares PBR.DG fell 5.5 percent in after-hours electronic trading in New York, after the results were released.

    The red ink at Petrobras was driven by a 46 percent decline in the price of benchmark Brent crude oil LCOc1, a drop that has driven up losses and caused writedowns throughout the global oil industry.

    Of the 46.4 billion reais written off in the quarter, 83 percent was for oil fields. A year earlier, writedowns were also the cause of Petrobras losses, although they were largely related to the giant price-fixing, bribery and political kickback scandal that has roiled the company and help fuel calls for the impeachment of Brazilian President Dilma Rousseff.

    Petrobras' poor result also bodes poorly for Brazil's economy. Brazil's biggest company and largest investor has been slashing spending and laying off thousands in the wake of the scandal and oil price drop, helping deepen the country's worst recession in decades.

    Net sales, or sales minus sales taxes, totaled 85.1 billion reais in the quarter and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, were 17.1 billion reais.

    The fourth quarter result pushed the company's full-year 2015 result to a 34.8 billion-real loss.

    The company, though, did manage to increase its cash position at the end of the period to 97.8 billion reais from 44.2 billion reais by cutting investments. That provided it a bigger cushion to pay its 492.8 billion reais, or $126.2 billion dollars, of debt at the end of the quarter.

    Bendine told reporters on Monday, the company can generate enough cash to make all its debt payments through the end of 2017 without needing to raise new capital, even if its plan to sell about $14 billion of assets this year runs into trouble.

    "Even if we hit a road-bump we have sufficient cash through 2017," Bendine said. "This doesn't mean if we have good opportunities to raise cash or lengthen maturities we won't do it."

    Total debt in reais, though, was 40 percent greater at the end of 2015 than a year earlier.

    The biggest non-oil-field write-off was 5.28 billion reais for the company's unfinished Comperj refinery near Rio de Janeiro, whose ballooning costs and repeated delays were one of the key focuses of the Petrobras corruption scandal.

    Start-up of the refinery has been pushed back to at least 2023 because Petrobras has been unable to find a partner to help finance the plant's completion, company officials said on Monday.

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    Leviathan Partners Said in Talks to Secure Up to $4 Billion

    The partners in Israel’s Leviathan natural gas find are seeking to raise as much as $4 billion to develop the offshore field and are in talks with banks on funding plans, two people with knowledge of the matter said.

    Noble Energy Inc. of the U.S. and Israel’s Delek Group Ltd and Ratio Oil Exploration 1992 are seeking to raise between $3.5 billion and $4 billion, the people said, asking not to be identified as the talks are private. The partners will secure their slices of the funds in proportion to their ownership of the Leviathan field, the people said. Delek owns 45 percent through its units, Delek Drilling LP and Avner Oil Exploration LLP, while Noble owns 40 percent. Ratio holds a 15 percent stake.

    They’re negotiating with lenders including Deutsche Bank AG, Citigroup Inc., HSBC Holdings Plc, BNP Paribas SA, JPMorgan Chase & Co. and Natixis SA to cover about 65 percent of the development costs, the people said. The remainder could come from bond sales or equity, according to the people.

    Gas discoveries off Israel’s Mediterranean coast include the Tamar field and Leviathan, the country’s largest deposit, which have brought the nation closer to energy independence and to becoming an energy exporter. Tamar holds about 10.8 trillion cubic feet of gas and Leviathan about twice that amount.

    The partners are also negotiating to export about 10 billion cubic meter a year of natural gas to Turkey, which would be worth about $2 billion a year, according to the people.

    In November they agreed to enter non-binding negotiations with Dolphinus Holdings Ltd. in Egypt to supply as much as 4 billion cubic meters of natural gas annually for a period of between 10 and 15 years. Dolphinus is a group of large, non-governmental gas consumers and distributors headed by Egyptian businessman Alaa Arafa. In addition, Israel expects a gas pipeline to Jordan to begin in 2017.

    Delek Group rose as much as 2.9 percent before gaining 1 percent to 655.80 shekels at the close of trading in Tel Aviv. Delek Drilling added 1.4 percent and Avner advanced 1.2 percent. The TA-Oil & Gas Index strengthened 1.2 percent to 918.7, the highest level since Jan. 11.

    Delek, Noble, Ratio, Deutsche Bank, HSBC and Citi declined to comment. Natixis, BNP Paribas and JPMorgan didn’t immediately respond to requests for comment.
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    U.S. on track for record summer gasoline demand

    The United States will probably consume a record amount of gasoline in 2016, passing the previous peak set in 2007, and the prospect is helping lift crude oil prices.

    Recent data indicates the country is on track for its biggest-ever driving season this summer, which will keep refineries running flat-out turning crude into the motor fuel.

    A rapid expansion in U.S. gasoline consumption has coupled with strong demand growth in India and China, falling crude output in the United States, and hedge funds turning bullish, to send crude and fuel prices surging.

    U.S. motorists consumed 9.16 million barrels per day (bpd) of gasoline in 2015, just 125,000 bpd short of the record 9.29 million bpd set in 2007.

    The U.S. Energy Information Administration (EIA) is still forecasting consumption in 2016 will remain slightly below the 2007 peak.

    On Feb. 23, the EIA published a commentary titled “Motor gasoline expected to remain below 2007 peak despite increase in travel”.

    But the agency has been revising its estimates higher in response to the extraordinary strength in demand exhibited in recent high-frequency data.

    In December 2015, the EIA predicted gasoline consumption would rise by just 10,000 bpd in 2016. By January, it had upped its forecast increase to 70,000 bpd and in March, the agency raised the number to 90,000 bpd (“Short-Term Energy Outlook”, EIA, December 2015 to March 2016 editions).

    The upward revisions come amid statistics showing gasoline demand already running at record levels.

    In the four weeks to March 11, implied consumption of gasoline averaged almost 9.4 million bpd, an increase of about 560,000 bpd compared with the same point in 2015 (

    Implied consumption, what the EIA calls “product supplied”, was more than 200,000 bpd higher than the previous record for the time of year, set in 2007, and 400,000 bpd above the 10-year average.
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    Schlumberger expects first quarter revenue to fall 15 percent from fourth quarter

    Schlumberger Ltd, the world's largest oilfield services provider, said revenue in the current quarter is expected to fall 15 percent from the fourth, as spending cuts by oil producers take a toll.

    The company forecast revenue of $6.5 billion for the first quarter ending March, lower than the average analyst estimate of $6.94 billion, according to Thomson Reuters I/B/E/S.

    "The third phase of E&P spending reductions that we are currently experiencing will have a significant impact on our earnings per share in the current and coming quarters," Chief Executive Paal Kibsgaard said at an energy conference on Monday.

    Kibsgaard, whose comments are closely watched, also called for a change in the way the oil and gas industry operates.

    There is an urgent need for a change in the way the energy industry works given that oil prices are expected to be "medium-for-longer", Kibsgaard said in his keynote address at the Scotia Howard Weil Energy Conference.

    The cost reductions by oil and natural gas producers over the past 18 months were not linked to efficiency improvements, Kibsgaard said, adding they were the result of pricing concessions from oilfield services providers.

    Under the current model, oil producers split drilling and production work into smaller parts, and then seek bids from service providers.

    But this model has led to inefficiencies due to a lack of collaboration between operators and suppliers, Kibsgaard said.

    Schlumberger — which is buying equipment maker Cameron International Corp (CAM.N) for $14.8 billion deal — is developing total drilling and production systems to move away from single components, Kibsgaard said.

    Kibsgaard also hinted at more job cuts, saying the company will continue to match costs and resources to activity.

    Schlumberger has cut 34,000 jobs, or 26 percent of its workforce, since November 2014.
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    BP inviting new bids on Mad Dog 2

    BP IS taking cost-cutting efforts a step further at its Mad Dog 2 development in the deep-water Gulf of Mexico by inviting revised bids this summer from existing contenders and new participants.
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    Bankers Petroleum enters acquisition agreement with 1958082 Alberta Ltd. and Charter Power I

    Bankers Petroleum Ltd. is pleased to announce that it has entered into a definitive agreement with 1958082 Alberta Ltd. and Charter Power Investment Limited for the purchase of all the issued and outstanding common shares of Bankers at a cash price of C$2.20 per Bankers Share. The Purchaser and Charter Power are affiliates of Geo-Jade Petroleum Corporation, one of the largest independent oil and gas exploration and production companies in China. The transaction will be effected by way of a plan of arrangement under the Business Corporations Act (Alberta). The Arrangement values Bankers at approximately C$575 million before the assumption of the outstanding indebtedness of Bankers.


    Cash price of C$2.20 per Bankers Share
    The Arrangement has received the unanimous approval of the Board of Directors of Bankers (the 'Bankers Board') and carries the full support of Bankers' management team
    The Purchaser brings a considerable new investment focus to the Bankers portfolio of assets
    Bankers' corporate and technical headquarters will remain based in Calgary, Canada, with operational offices in Albania, Hungary and Romania

    The transaction price represents a premium of 98% over Bankers' closing share price on the Toronto Stock Exchange ('TSX') of C$1.11 on March 18, 2016, and 109% over the 30-trading day volume weighted average trading price of Bankers Shares of C$1.05 per share ending on March 18, 2016.

    David French, President and Chief Executive Officer of Bankers commented:

    'The proposed transaction provides Bankers with the opportunity to return value to our shareholders at a significant premium to the current market valuation, while offering Bankers added financial resources to accelerate our activity in Albania and capitalize on the potential created by the current commodity price environment. This transaction will generate substantial economic benefit for Albania and the local communities in which Bankers operates. We look forward to working alongside our new investors to deliver the asset possibilities before us.'Following a successful transaction, the Purchaser will support the Bankers' leadership and employee base to capitalize on the experience and depth of the Bankers team. The Purchaser plans to realize the joint vision of both companies to grow the business with enhanced investment into its Albanian operations, while concurrently focusing on growth opportunities in the global marketplace.
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    Sevan agent arrested in Portugal

    Raul Schmidt Felippe Junior was an agent or broker, for listed Sevan Brazilian subsidiary from 2001 to 2007. It was during this period that Sevan, with its distinctive cylindrical platform solutions, signed contracts in Brazil that made Norwegian Norwegian authorities responded autumn 2015. Sevan -gründerne Arne Smedal and Jan Erik Tveteraas, plus the company known today as Sevan Drilling, were charged with corruption. Apparently they have paid Raul Schmidt Felippe Junior 200 million for Sevan Marine would gain entry by Petrobras with two platforms.
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    Halliburton-Baker Hughes Stalled a Third Time by EU

    Halliburton Co.’s bid to buy oil-services rival Baker Hughes Inc. was stalled for a third time by the European Union as the companies continue to face regulatory hurdles on both sides of the Atlantic.

    In a re-run of a similar delay last month, the European Commission said Monday it stopped the clock on the review because it wasn’t provided with key data about the deal. Halliburton already faced months of delays after last July’s EU rejection of an initial merger filing because crucial details were missing.

    “To comply with merger deadlines, parties must supply the necessary information for the investigation in a timely fashion,” Ricardo Cardoso, an EU spokesman, said in an e-mailed statement. “Failure to do so will lead the commission to stop the clock. ”

    Halliburton agreed to buy Baker Hughes in November 2014 in a cash-and-stock deal that at the time was valued at about $35 billion. The transaction was scheduled to close last year, but has been delayed as the companies grapple with antitrust concerns in the U.S. and Europe.

    Self-Imposed Deadline

    The companies previously set a self-imposed deadline of April 30 to close the deal. Halliburton would have to pay Baker Hughes a breakup fee of $3.5 billion if the bid is dropped.

    "Halliburton is working to provide the additional information as expeditiously as possible," said Emily Mir, a spokesperson for Halliburton, in an e-mail.

    “If the review extends beyond April 30, 2016, the merger agreement does not terminate automatically,” she said. “The parties may continue to seek the commission’s approval or one of the parties may terminate the merger agreement after April 30, 2016.”

    The EU probe is seen as one of the most complex in recent years, with regulators identifying more than 30 product lines with potential competition problems.

    ‘Very Complicated’

    The EU move may be just because it’s a “very complicated, data-heavy investigation,” said Anne MacGregor, a competition lawyer at Cadwalader, Wickersham & Taft LLP in Brussels. In the past, there have been cases "in which arguably the stop-the-clock mechanism was used to buy time in the procedure when there were no other options."

    Regulators already extended the review last month to add an extra 20 working days to the deadline.

    Margrethe Vestager, the EU’s antitrust chief, earlier this month pleaded with merging companies to be up-front with officials reviewing deals. The EU process is "based on the trust that everyone plays by the rules. If that gets broken down, things get much more burdensome" and regulators are forced to "check and check again" the information they get from companies, she said.

    While she said she wasn’t specifically referring to Halliburton, she has described the deal as "complicated" to examine.

    Halliburton has been adding assets to the list of businesses it plans to sell to gain antitrust approval. The company plans to divest Baker’s offshore drilling-and-completions fluids division and the bulk of Baker’s completion systems, people familiar with the matter said last month. This comes on top of two other batches of overlapping business lines Halliburton pledged to sell to assuage the U.S. Department of Justice’s concerns.

    The EU merger authority opened an in-depth probe into the deal on Jan. 12, citing concerns that combining the second- and third-largest suppliers to oil exploration companies may impede competition and increase prices.
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    Canada's Pacific Exploration delays interest payment

    Canada's Pacific Exploration & Production Corp said on Monday it chose not to make an interest payment due March 28, making it the first Toronto-listed oil and gas company in the last one year to delay a payment.

    The company, due to make a $25.6 million interest payment next Monday, said it was working with debtholders to restructure debt. The company has a 30-day grace period.

    Pacific Exploration warned on Friday that its auditor had raised significant doubt about its ability to continue as a going concern.

    The company suffered a major setback in March last year, when Colombia's state-run Ecopetrol said it would not extend its contract with Pacific Exploration to operate Colombia's highest-producing Rubiales oilfield.

    The decision on interest payment follows a Wall Street Journal report last week that Pacific Exploration was evaluating six buyout offers to avoid bankruptcy.

    The company had a long-term debt of $5.38 billion and cash and cash-equivalents of $342.7 million in the year ended December.
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    BP, Statoil to withdraw staff from Algerian plants after attack

    BP and Norway's Statoil will withdraw staff from two gas plants in Algeria after an attack by militants on one of the sites in the North African country, the companies said on Monday.

    Militants attacked the In Salah gas plant, operated with state-owned Sonatrach, with rockets on Friday, causing no casualties or damage. Al Qaeda's North Africa branch claimed responsibility for the attack.

    Algeria's energy infrastructure has been heavily protected by the army, especially since a 2013 attack on the In Amenas gas plant, also operated by BP and Statoil, during which 40 oil workers were killed.

    "BP has decided to undertake a phased temporary relocation of all its staff from the In Salah Gas and In Amenas JVs in Algeria over the next two weeks. This decision has been taken as a precautionary measure," the British firm said in a statement.

    Statoil said it would also withdraw staff from the In Salah and In Amenas plants, together with staff from its operations center at Hassi Messaoud.

    "It will happen over the next few weeks. Those who are on rotation now will not be replaced when they finish their shifts," a Statoil spokesman said, declining to say for security reasons how many employees would be affected.

    "It's only been four days since shots were fired at In Salah. The production started again, but in the current situation we believe that this is the right decision to make," the spokesman added.

    According to BP's website, In Salah started production in 2004 from the Krechba, Teguentour and Reg fields. In February, it announced the start up of development of the Gour Mahmoud, In Salah, Garet el Befinat and Hassi Moumene fields, to bring output to 9 billion cubic meters a year.

    Statoil, BP and Sonatrach were due to restart the third and final processing train at the In Amenas gas plant, damaged during the 2013 attack, later this year.

    Statoil repeated on Monday the restart of that train would still happen "in the coming months".
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    Regulator sets permanent steam restriction at CNRL project

    The Alberta Energy Regulator said on Monday it is implementing additional requirements at Canadian Natural Resources Ltd’s Primrose oil sands project after concluding excessive steaming caused a 6,648 barrel bitumen emulsion leak in 2013.

    The requirements include permanent limits on the steam volumes the company is allowed to use to extract bitumen from underground reservoirs, and a requirement that CNRL seek approval for each steaming cycle at its Primrose East site.

    “The restrictions do amount to a permanent ongoing reduction in the intensity of the company’s operations. The company will not be able to pursue its original operating strategy at Primrose,” Kirk Bailey, executive vice president of operations at the AER said.

    CNRL has been operating under steam restrictions at Primrose since the seepage was discovered and in July 2013 company President Steve Laut said the project was producing about 10,000 barrels per day less than previously expected as a result.

    Bitumen emulsion – a mixture of bitumen, sand and water – was discovered oozing to the surface at two locations at CNRL’s Primrose project in northern Alberta in May 2013. Two more leaks were discovered over the next month, prompting the AER to impose restrictions on the site and launch an investigation.

    Biutmen seepage to the surface as a result of oil sands operations are not permitted under Alberta energy regulations. A number of animals died as a result of the leak, which continued for months, including birds, mammals and amphibians.

    The investigation, described by Bailey as one of the most complicated ever undertaken by the AER, concluded the seeps were caused by excessive steam volumes along open conduits such as well bores, natural fractures and faults and hydraulically induced fractures.

    Cyclic steam simulation involves injecting high-pressure steam into an oil well to liquefy viscous bitumen so it can flow to the surface.

    The AER said it looked at other producers using the same technology for oil sands extraction, such as Imperial Oil , and concluded those projects posed no risk of similar seepages.

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    Airlines stop hedging

    After decades of spending billions of dollars to hedge against rising fuel costs, more airlines, including some of the world’s largest, are backing off after getting burned by low oil prices.

    When oil prices were rising, hedging often paid off for the airlines, helping them reduce their exposure to higher fuel costs. But the speed of the 58% plunge in oil prices since mid-2014 caught the industry by surprise and turned some hedges into big money losers.

    Last year, Delta Air Lines Inc., the nation’s No. 2 airline by traffic, racked up hedging losses of $2.3 billion, while United Continental Holdings Inc., the No. 3 carrier, lost $960 million on its bets.

    Meanwhile, No. 1-ranked American Airlines Group Inc., which abandoned hedging in 2014, enjoyed cheaper fuel costs than many of its rivals as a result. “Hedging is a rigged game that enriches Wall Street,” said Scott Kirby, the airline’s president, said in an interview.

    Now, much of the rest of the industry is rethinking the costly strategy of using complex derivatives to lock in fuel costs, airlines’ second-largest expense after labor.

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    Platts: April LNG spot prices to Asia plummet YoY

    Prices of spot LNG for April delivery to Asia averaged $4.46 per MMBtu, according to latest Platts Japan/Korea Marker data for month-ahead delivery.

    At $4.46/MMBtu, the April JKM was 38.7 percent below prices for the same delivery month in 2015.

    Platts adds in its report that the latest marker for April delivery is also at the lowest monthly average level seen since July 2009, when the monthly average for August-delivered cargoes was $4.23/MMBtu.

    Sentiment for April and further out in May continued to remain bearish due to expectations of extra supplies from both new and recently commissioned projects in the United States and Australia, as well as additional volumes from the Angola LNG project starting in the second quarter of 2016.

    The JKM had begun the trading month at $4.7/MMBtu, before sliding to an intra-month low of $4.25/MMBtu in the first half of the month. Expectations of oversupply from the projects coming online weighed on the market sentiment, Platts said.

    However, the downward pressure on prices was short-lived, as demand for April cargoes emerged at the same time from several buyers looking to quickly fill their April positions. Buy tenders from Argentina, PTT, SK, Posco, GSPC, Gail, and IOC for prompt April cargoes reversed the downward trend in prices. The Platts JKM rebounded back up to $4.60/MMBtu by March 11.

    Max Gostelow of Platts said “While there are still valid concerns that 2016 will be an oversupplied market for most of the year, it’s evident that if buyers all adopt the same attitude and all wait for prices to bottom out before entering the market to buy cargoes, then we could definitely see more volatility in the markets like what has happened in early March.”

    He added, however, that the price recovery has stalled as the market expects sellers who had bid unsuccessfully into Argentina’s 15-cargo tender to make those volumes available to the spot market.

    “We are also noticing that the Qataris are growing increasingly competitive on price due to their long position, and offering very good price for volumes delivered to their term buyers,” Gostelow said.

    The price of fuel oil, a possible competing fuel, decreased 53.6 percent year over year, while thermal coal was down 24.8 percent from the same month in 2015.

    Attached Files
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    China Feb LNG imports up 12.1 pct on year to 1.85 mln tonnes -customs

    China's liquefied natural gas imports were 1.85 million tonnes in February, up 12.1 percent compared to the same month last year, data from the General Administration of Customs showed on Monday.
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    Dreaded 'stealth' supply becomes reality as U.S. drillers turn on 'ducks'

    Some U.S. shale oil producers, including Oasis Petroleum and Pioneer Natural Resources Co, are activating drilled but uncompleted wells (DUCs) in a reversal in strategy that threatens to bring more crude to a saturated market and dampen any sustained rebound in prices.

    When oil prices started their long slide in mid-2014, many producers kept drilling wells, but halted expensive fracking work that brings them online, waiting for prices to bounce back.

    But now, with crude futures hovering near multi-year lows and many doubting recent modest gains that brought oil prices near $40 a barrel can hold, the backlog of DUCs is already shrinking in some areas. In key shale areas such as Eagle Ford or Wolfcamp and Bone Spring in Texas such backlog has fallen by as much as a third over the past six months, according to data compiled by Alex Beeker, a researcher at Wood Mackenzie.

    "If the number of DUCs brought online is surprising to the upside, that means U.S. production won't decline as quickly as people expect," said Michael Wittner, global head of oil research at Societe Generale. "More output is bearish.”

    In the Wolfcamp, Bone Spring and Eagle Ford, the combined backlog of excessive wells remains around 600, Beeker estimates.

    About 660 wells could be the equivalent of between 100,000 and 300,000 barrels per day of potential new supply, according to Ed Longanecker, president of Texas Independent Producers and Royalty Owners Association (TIPRO).

    For now, most of the wells are activated in Texas, where proximity to refiners allows producers to sell their crude closer to benchmark prices, and by well-hedged companiesthat have locked in higher prices.

    Still, the pace of fracking of the uncompleted wells may quicken if cash-strapped producers facing debt repayments can no longer afford to store their oil in the ground.

    While the potential additional supply is a fraction of total U.S. production of around 9 million bpd, the fresh flow would reinforce concerns about a growing global glut just as Iran ramps up output and inventories in domestic storage tanks from the Gulf to Cushing, Oklahoma, test new highs on a weekly basis.

    Wood Mackenzie reckons that the backlog of excess DUCs will decline over the next two years, and return to normal levels by the end of 2017. It is expected to fall 35 percent from current levels in the Bakken and 85 percent in the Eagle Ford by the end of 2016. (

    With service costs down, now is a good time to bring a well online if a company has hedged its production and covered its costs, said Jonathan Garrett, an analyst with Wood Mackenzie. The U.S. crude breakeven for such wells is one-third lower than for new ones, according to Wood Mackenzie.

    Typically, average DUC inventory is around 550 in the Wolfcamp/Bone Spring formations and around 300 in the Eagle Ford, Beeker estimates.

    In each of those formations, the excess has fallen by about 150-175 over the past six months, bringing the surplus to around 300 wells in each. "We're just going to be continuously completing the wells there (in the Permian) with our fleets and so you will not see any DUCs in Midland basin," Pioneer Chief Operating Officer, Tim Dove, told a recent earnings conference.

    Attached Files
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    Oil rigs rise by one, ending months-long slide

    U.S. oil drillers added one rig back to a desolate oil patch this week, according to the latest Baker Hughes rig count.

    The number of oil rigs chasing crude rose by one to 387 in the week ending March 18. Rigs drilling for natural gas fell by five to 89. Combined, the rig count fell by four to 476.

    The oil rig remains down 75.9 percent from its October 10, 2014 peak and down more than 53 percent from this week last year. The last time producers added rigs was in the week of Dec. 11 through Dec. 18, when the count rose from 524 to 541.

    Today’s rock-bottom rig count, and the declining production it has driven, has helped pushed oil prices back above $40 per barrel.

    On Friday, oil was hovering around $40 per barrel after briefly touching a high of $41.19 per barrel. Shortly after the count was released, oil traded down 20 cents or 0.5 percent to $40.00 per barrel.
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    U.S. oil exports going around the world

    Three months since the U.S. lifted a 40-year ban on oil exports, American crude is flowing to virtually every corner of the market and reshaping the world’s energy map.

    Overseas sales, which started on Dec. 31 with a small cargo aboard the Theo T tanker, have been picking up speed. Oil companies including Exxon Mobil Corp and China Petroleum and Chemical Corp have joined independent traders such as Vitol Group and Trafigura Pte in exporting American crude.

    The “growing volumes of exports” from the U.S. are now “spooking the markets,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London, said in a note. The “flurry of export activity” is helping to support spot oil prices in the U.S. relative to contracts for later delivery, she wrote.

    With American stockpiles at unprecedented levels, oil tankers laden with U.S. crude have docked in, or are heading to, countries including France, Germany, the Netherlands, Israel, China and Panama. Oil traders said other destinations are likely, just as supplies in Europe and the Mediterranean region are also increasing.

    Small Scale

    That said, the U.S. is likely to remain for the foreseeable future a small exporter compared with OPEC giants Saudi Arabia, Iran and Iraq and non-OPEC producers Mexico and Russia. Ian Taylor, chief executive of Vitol, the company behind the first export, believes exports will remain a “very marginal business.”

    Yet, tanker by tanker, overseas sales are growing.

    Enterprise Products Partners LP, one of the biggest operators of oil ports in the U.S., told investors this month it alone expected to handle exports of crude and condensates — a form of ultra-high quality oil — of about 165,000 barrels a day during the first quarter, up almost 28 percent from the 2015 average.

    Cheaper Transport

    One reason behind the rise in exports is cheap pipeline and railway fees to move crude from the fields in Texas, Oklahoma and North Dakota into the ports of the U.S. Gulf of Mexico. Another is that U.S. oil prices have been trading at a discount to Brent crude, allowing traders to move oil from one shore of the Atlantic to another at a profit.

    The exports could relieve pressure on storage capacity in the U.S. after stockpiles rose to the highest level in official data going back to 1930. The tanks at the oil hub of Cushing, the biggest in the country and the delivery point for benchmark West Texas Intermediate crude, are 92.5 percent full, according to the Energy Information Administration.

    The risk is that the U.S. could shift the glut into Europe and the Mediterranean, where there are higher-than-usual loadings from the North Sea and the arrival of the first barrels of Iranian crude to the region since 2012.

    Texas to Sicily

    The export ban was imposed in the aftermath of a 1973 to 1974 oil embargo by the Arab members of OPEC, the Organization of Petroleum Exporting Countries. It crippled the U.S. economy and highlighted its dependence on imports.

    Before it was lifted, the U.S. sold as much as 500,000 barrels a day overseas, from Alaska and a few other origins allowed under federal law.

    Exxon in early March became the first major U.S. oil company to ship American crude from elsewhere, sending the Maran Sagitta tanker from Beaumont, Texas, into a refinery it owns in Sicily, Italy. Days later, Sinopec lifted on the Pinnacle Spirit tanker a cargo of U.S. crude, a first for a Chinese oil group.

    Oil traders are starting to export American crude to store it overseas and profit from a market condition called contango. That’s where prices of oil for delivery today are lower than those in future months. Buyers with access to storage can fill up their tanks with cheap crude and sell higher-priced futures contracts to lock in a profit.

    Gunvor Group Ltd., a commodities trader with main offices in Geneva, plans to ship 600,000 barrels of U.S. crude to a storage terminal in Panama. It’s then likely to ship the crude in Europe.

    Oil traders are expecting more vessels to depart over coming weeks, with companies seeking to open new export routes from the U.S. West Coast and also moving barrels from new locations, including directly out of Cushing.
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    Eni cuts CAPEX, plans further assets disposals

    Eni of Italy plans to additionally cut its capital expenditure by 21 percent to €37 bln (approx. $41 bln) according to its strategic plan covering the period from 2016 to 2019.

    Additionally, the company has already achieved 90 percent of its transformation target in the previous 4-year plan and it intends to shed a further €7 billion (approx. $7.9 billion) of assets by 2019.

    Claudio Descalzi, Eni’s CEO said the company plans to dispose of the assets “mainly through the dilution of our stakes in recent and material discoveries as part of our dual exploration model strategy.”

    Operational expenditure is targeted to remain bellow the $7/boe throughout the plan, Eni said.

    Investment during the four-year plan is focused on high-value projects with accelerated returns and the development of conventional projects.

    Eni expects its hydrocarbon production to grow by over 3 percent over the period from 2016 to 2019 despite an 18 percent upstream CAPEX reduction.

    It expects new discoveries of 1.6 million boe at a cost of $2.3/b and an overall cumulative growth in production of 13 percent by 2019. The average breakeven price for the new projects has been reduced from $45 to $27/boe, Eni said

    Eni ‘not far’ from selling stake in Mozambique gas project

    According to Reuters, the CEO of Italian energy company, Eni – Claudio Descalzi – has stated that the company is ‘not far’ from selling a stake in its Mozambique gas project. Descalzi reportedly said that the company will aim to sell a stake in the project in 2016.
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    Low Oil prices due to 800,000 'Missing' Barrels of crude

    The oversupplied global oil market has its mystery – missing barrels of crude. Last year, 800,000 barrels of crude a day were unaccounted for by the International Energy Agency (IEA).
    Where these barrels are, or if they even existed, is key to understand the ongoing crisis in the global crude market, an article in The Wall Street Journal read.

    Some analysts say those barrels may have ended up in China. Others say that the barrels were created by flaws in accounting and they do not actually exist. If this is true then the oversupply in the market could be much smaller and crude prices may rebound faster.

    Barrels have gone missing before, but last year their amount reached the highest level in 17 years.

    "If the market is tighter than assumed due to the missing barrels, prices could spike quicker," David Pursell, managing director at investment bank Tudor, Pickering, Holt & Co., was quoted as saying.

    According to the author, last year the IEA estimated that the average daily output was 1.9 million barrels more that there was demand for. Some 770,000 barrels of that crude went into onshore storage while roughly 300,000 barrels were in transit by sea or via pipelines. Thus, some 800,000 barrels a day were unaccounted for.

    In 1998, the last time the number of missing barrels was so high, the issue was addressed by US Congress. A senator asked the Government Accountability Office to examine the data. The agency found that statistical "limitations can introduce errors into the data." Most analysts agree with this conclusion.

    "The most likely explanation for the majority of the missing barrels is simply that they do not exist," Paul Horsnell, an oil analyst at Standard Chartered, was quoted as saying by the WSJ.

    A representative of the IEA referred to the agency’s website which says that the missing barrels can be explained by overstated supply, understated demand or stockpile changes in non-OECD countries.

    Meanwhile, the IEA estimates crude supply and demand from global data, its numbers on where the oversupply is stockpiled come only from OECD country members. As a result, some of the missing barrels could be found in non-ECD countries, including China.

    But some analysts disagree. "The missing barrels have become such a large proportion of the oversupply that this would imply that stockpiles are building up in non-OECD countries at a much faster pace than those in the organization, something that they question," the article read.

    Over 50 percent of global crude demand now comes from non-OECD countries where statistical gathering is not well developed. Demand in countries outside the OECD could be larger than it is reported by the IEA, according to a report by investment bank DNB Markets.

    Oil data is "an imperfect science," Rob Haworth, senior strategist at US Bank Wealth Management, told the WSJ.

    "Whether these barrels are missing or not, the global glut of crude is still far from over," he concluded.
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    Motiva: ARAMCO wanted the lot, Shell said 'no'.

    The two partners began talks in 2014, four years ahead of the expiration of the 20-year partnership agreement that became Motiva, the sources said.

    Saudi wanted to take all three Motiva refineries and acquire Shell's chemical plant in Norco, Louisiana, but Shell refused to give up the Norco chemical plant and adjoining Motiva refinery that supplies it, they said.

    "They want to acquire refineries," one of the sources said. "They want to get into chemicals. They want to expand and Shell doesn't."

    Shell's reluctance to give up the refineries and chemical plant underscores the financial and strategic value of the plants as it pushes ahead with a large $30 billion asset sale program.

    Shell expects to complete the split some time this year pending necessary regulatory approvals, according to an internal memo from John Hollowell, chief executive of Shell Midstream Partners, Shell's pipeline master limited partnership.

    The companies intend to start running their respective independent businesses "as quickly, efficiently and safely as possible", it said.

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    Alternative Energy

    SunEdison in debtor-in-possession financing talks: Debtwire

    Embattled solar company SunEdison Inc is in talks with holders of its second-lien loans to fund a debtor-in-possession financing facility, Debtwire reported, citing two sources familiar with the matter.

    Shares of the company, which is grappling with a huge debt load caused by its aggressive acquisition strategy, fell as much as 19.4 percent to $1.62 on Tuesday.

    The talks this week have focused on providing the company with about $300 million in new liquidity, Debtwire reported.

    "DIP negotiation means that the company has effectively run out of cash and they get to pay their creditors 'fair market value' for the secured assets versus the contracted value," Axiom Capital analyst Gordon Johnson told Reuters.

    The talks follow unsuccessful attempts by second-lien lenders to reach an out-of-court solution for the company's cash shortage and debt issues, Debtwire reported, citing the sources.

    The investor group includes those holding term loans of a total of $725 million, Debtwire reported.

    "We decline to comment on rumors and speculation," SunEdison spokesman Ben Harborne said in an email.

    SunEdison delayed filing its annual report for the second time on March 16 after identifying "material weaknesses" in its financial reporting, primarily related to problems with a newly implemented IT system.

    The company had outstanding debt of $11.67 billion and cash and cash equivalents of $2.39 billion as of Sept. 30.

    Solar panel installer Vivint Solar Inc earlier this month terminated a deal to be taken over by SunEdison, amid concerns about SunEdison's weak finances.

    Attached Files
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    Siemens willing to buy Areva JV in Gamesa deal: paper

    German industrial group Siemens is prepared to buy Spanish-French wind power joint venture Adwen as part of the planned merger of its wind assets with those of Spain's Gamesa, Germany's Sueddeutsche Zeitung reported on Tuesday.

    Citing sources close to the negotiations, the newspaper said Siemens Chief Executive Joe Kaeser was now ready to buy French state-owned energy firm Areva's stake in the venture as part of the cost of doing the deal.

    Siemens declined to comment on the report.

    Siemens and Gamesa plan to combine their wind assets to form the world's biggest wind farm manufacturer with approximately 10 billion euros ($11 billion) in annual sales, overtaking current market leader Vestas of Denmark.

    But the deal has stumbled over the Adwen venture.

    Two sources told Reuters last week that Siemens did not want to fulfill certain elements of contracts won by Adwen, which included an obligation to develop and build a jumbo offshore turbine in France.

    Siemens' Chairman Gerhard Cromme is due to meet French Economy Minister Emmanuel Macron in Paris on Tuesday morning, according to Macron's agenda.
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    China Plans 22% Boost for Wind Power Capacity After Record 2015

    China plans to increase total wind power capacity by 22 percent in 2016, underscoring the government’s effort to develop clean energy at about the same pace as last year’s record installations.

    The nation plans to develop 30.83 gigawatts of wind power this year, the National Energy Administration said in a statement on its website on Monday. It added 33 gigawatts in 2015, triple France’s entire capacity of the clean resource, according to data from NEA.

    Developers rushed to deliver projects last year before tariffs paid for clean energy were reduced, and the support levels on offer this year are generous enough to keep drawing in investment.

    "The target is very high" for 2016, said Shi Yan, a Shanghai-based analyst at UOB Kayhian Investment Co. "New projects will be in regions with little idling capacity, offering good profitability for developers."

    The central province of Henan will have the most wind power projects approved this year, with the eastern province of Shandong following, according to NEA.

    Wind installations in China have almost doubled since 2012 to 139 gigawatts, according to data compiled by Bloomberg. The rapid growth of wind power has left the grid struggling to connect all the plants, forcing wind turbines to sit idle.

    China is clamping down on the ability of local authorities to plan new wind projects in some of the windiest provinces because the pace of building to date has outstripped the grid’s ability to absorb new power flows. Those places include the northern provinces of Inner Mongolia, Jilin, Heilongjiang, Gansu, Ningxia and Xinjiang.

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    SunPower Delivers 70 Percent More Energy with 70 Percent Fewer Visible Parts

    Today, SunPower introduces the SunPower Equinox™ system, now available to U.S. homeowners. It is the first residential solar solution in the nation in which every major component has been designed and engineered by one company to work seamlessly together, delivering unbeatable power, long-term performance and curb appeal. With a typical SunPower Equinox installation, only the solar panels and a Smart Energy management device are visible, reflecting SunPower’s minimalist architectural approach at the system level.

    The SunPower Equinox platform was engineered based on the company’s The Power of One™ philosophy, which drives innovation of preconfigured solutions that simplify solar for consumers. In 2010, SunPower introduced its Oasis® Power Plant, the world’s first fully integrated utility solar platform, which enables rapid, cost-effective construction of large-scale power plants, now with over 1.8 gigawatts deployed. In 2015, SunPower introduced the industry’s first fully integrated solar solution for commercial customers, the SunPower® Helix™system, which can be installed on commercial rooftops more than 2.5 times faster than any commercial solar solution on the market. Now, the SunPower Equinox™ system brings The Power of One™ to homeowners.  

    “The SunPower Equinox system is a game changer for home solar,” said Howard Wenger, SunPower president, business units. “This powerfully elegant solution produces 70 percent more energy with 70 percent fewer visible parts compared to conventional solar, and we’re backing it by the best combined power and product warranty in the industry. SunPower continues to raise the innovation bar by delivering solutions that make the complex simple, reducing costs, speeding installation, and increasing satisfaction for our customers – while improving quality and aesthetics.”
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    Tendering Regime Reduces The Cost Of Connecting Offshore Wind Farms By At Least £700m

    New figures show that competitive tendering is cutting the costs for connecting offshore wind farms to the GB high voltage grid by at least £700m.

    The tender regime is run by Ofgem, which chooses the most competitive bids made by firms to own and run links to offshore wind farms over a 20-year period. It was launched in 2009.

    The latest figures published by Ofgem today have been produced by independent consultants. They are based on the first three tender rounds. The savings are accumulating in the 20 year period over which new owners will run the links. 15 tenders have now been completed and the first licence for a firm to run one of the links was granted in 2011.

    The fourth tender round will be officially launched next month where bidders will compete for the right to own and run the link to the Burbo Bank Extension, a 258MW wind farm in the Bay of Liverpool. Ofgem expects to launch a fifth tender round this autumn.

    - See more at:
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    Bayer shares jump on Monsanto crop science interest

    Shares in German drugs and pesticides maker Bayer rose more than 5 percent on Monday after sources close to the matter told Reuters that Monsanto was interested in a deal with its crop science business.

    The sources said on Friday the two companies had held talks over Bayer's agricultural assets, the world's second-biggest crop chemicals business by sales after Switzerland's Syngenta . Bayer declined to comment.

    Bayer's shares gained as much as 5.4 percent on Monday, and at 1235 GMT were up 3.2 percent at 102.45 euros, a 7-week high.

    Monsanto's move underscores the U.S. seed maker's determination to expand after Syngenta rejected its takeover approaches last year.

    Shares in German chemicals group BASF, the world's third-largest maker of crop chemicals, were also higher, up 1.4 percent, though trailing the European chemical sector's gain of 1.6 percent.

    Bloomberg at the weekend cited sources as saying Monsanto had been in contact with both Bayer and BASF about deals in agricultural chemicals. BASF declined to comment.

    UBS analyst Alexandra Hauber, who rates Bayer "neutral", said Bayer's business could be a better fit for Monsanto.

    "Bayer's crop science business is stronger than BASF in terms of market share, which should put Bayer in more favourable negotiation position vs BASF," she wrote in a note.

    Hauber added that, due to possible objections from competition regulators, a marketing collaboration seemed the most likely result of any discussions.

    UBS values Bayer's crop science business at about 40 billion euros ($45 billion), or 15 times its estimated 2017 earnings before interest, taxes, depreciation and amortisation (EBITDA).

    Bayer as a group is trading at 9.1 times its estimated EBITDA for the next 12 months, according to Thomson Reuters data.

    Syngenta agreed earlier this year to be acquired by ChemChina for $43 billion, or about 17 times its estimated future EBITDA.

    "In theory, (a deal between Monsanto and Bayer) is a logical next step given Monsanto's strength in seeds and Bayer's in crop protection. However, we do not see Bayer to be in any rush to sell its division," Deutsche Bank analysts wrote in a note.

    Bayer's crop science division has businesses in seeds, crop protection and non-agricultural pest control. It had sales of 10.4 billion euros in 2015 and adjusted EBITDA of 2.42 billion.

    Bayer said last year it planned to keep its crop chemicals business, describing it as an "integral part" of the group.
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    Precious Metals

    Barrick Gold to face US group lawsuit over LatAm mine

    A federal judge on Wednesday granted class certification for a U.S. class-action lawsuit filed against Barrick Gold Corp claiming Barrick misstated facts of its now halted Pascua-Lama gold-mine project on the border of Argentina and Chile.

    The class certification means the world's largest gold producer will have to face the U.S. lawsuit.

    U.S. District Judge Shira Scheindlin in Manhattan said that shareholders who purchased Barrick shares from May 7, 2009 through Nov. 1, 2013 are a part of the class-action lawsuit.

    Investors who bought Barrick's common stock during this period have said Barrick touted Pascua-Lama as a world-class project even as it became clear that the project would fall short of expectations.

    Barrick bought the untapped Pascua-Lama mine in 1994, and had been counting on it to generate a large percentage of its overall gold production.

    But cost overruns, environmental issues and falling bullion prices, among other issues contributed to the company's decision on Oct. 31, 2013 to indefinitely halt the project.

    Class action lawsuits can lead to larger damages or broader remedies than individual lawsuits that can be costly to pursue.

    The case is in re: Barrick Gold Securities Litigation, U.S. District Court, Southern District of New York, No. 13-03851.
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    Gold Fields successfully closes R2.5bn bookbuild

    Following the launch of an accelerated bookbuild on Thursday, JSE- and NYSE-listed Gold Fields raised R2.5-billion through the oversubscribed placing of 38.9-million new Gold Fields ordinary shares. Gold Fields on Friday successfully priced and closed the private placement, representing some 5% of the company’s issued share capital, to qualifying institutional investors at a price of R59.50 a share, the proceeds of which would be allocated to an existing dollar-based revolving credit facility that was used to buy guaranteed notes in February.

     Last month, after launching a tender offer to buy back up to $200-million of its $1-billion, 4.875% guaranteed notes, which were due in October 2020, the company accepted $147.61-million of the notes tendered, at a purchase price of $880 per $1 000, using the revolving credit facilities. 

    The placing price represented 6% discount to the 30-day volume weighted average traded price of Gold Fields ordinary shares for the 30-trading day period ended March 17. Trading of the shares was expected to start on March 24.
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    Base Metals

    Copper usage in decline

    Judging by the pipes and plumbing fixtures inside the E.W. Berger & Bros. warehouse in New Jersey, the
    slumping global copper market has more to worry about than just weakening demand from China.

    E. W. Berger has cut monthly purchases of copper products to 5,000 pounds (2.3 metric tons) from 20,000 pounds a decade
    ago. While the cost of the metal has dropped, more clients prefer plastic, which is even cheaper, said owner Jay Richman.
    Demand for copper in the U.S., the second-largest user, has plunged by more than a quarter in the 10 years through 2014,
    including a 55 percent plunge in tubes and pipes, the Copper Development Association estimates.

    From plumbing to communications to electronics, traditional copper uses are losing out to lower-cost or better-performing
    substitutes. That’s muddying the demand outlook as economic growth slows in China, which accounts for 45 percent of demand
    and helped send prices to a record in 2011. Now, the metal has dropped in value for three straight years and in January slid to
    the lowest since 2009, as mine owners failed to cut output enough to avoid a surplus.

    “It’s a dramatic shift,” said E.W. Berger’s Richman, 65, who has been selling plumbing supplies in Weehawken for four
    decades at the business founded by his father. “People are continuously changing and trying to find the best way and
    cheapest way to do it.”

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    Jiangxi Copper plans output cuts after profit fall

    Jiangxi Copper Co Ltd , China's biggest integrated copper producer, said it plans to cut refined copper output by 6.7 percent this year, in line with a proposal by the country's big smelters to reduce output to support prices.

    The move would cut production by 80,000 tonnes to 1.175 million tonnes, and follows a pledge last week by No. 2 producer Tongling Nonferrous Metals Group to reduce output by 110,000 tonnes.

    Nine of China's large copper smelters agreed last year to cut output by at least 350,000 tonnes in 2016, and said they could deepen the cuts if prices and profitability deteriorate.

    Copper prices have come under pressure from high supply and reduced demand in China, the world's top consumer, but have recovered around 7 percent this year, supported by output cuts from firms like Glencore and Freeport McMoRan.

    Jiangxi Copper on Tuesday reported a fourth straight fall in annual earnings, with 2015 net profit tumbling 77 percent to 637.2 million yuan ($98.2 million) due to lower metal prices, it said in a filing to the Shanghai stock exchange.

    Economic conditions could restrict demand growth for nonferrous metals this year, the company said, but forecast a 6 percent rise in global copper mine production, adding pressure to prices.

    "There was an imbalance in demand and supply in 2015. Copper prices plunged due to oversupply and other factors, such as a relatively stronger U.S. dollar," its said in its earnings report.

    The move to cut output came after Jiangxi produced 1.259 million tonnes of refined copper in 2015, up about 50,000 tonnes from the previous year.

    The company said it would also cut gold and silver production, taking gold to 25 tonnes from 26.115 tonnes in 2015 and silver to 530 tonnes from 570.8 tonnes.

    It would also trim production from its copper mines but planned to raise output of semi-finished copper products such as rods by 50,000 tonnes in 2016 to 1 million tonnes.

    The results came after China and Hong Kong markets closed on Tuesday. Its Shanghai shares were down 1.8 percent while its Hong Kong stock fell 2 percent, both underperforming the main index in their respective markets.
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    Some Japanese aluminium buyers agree to Q2 premium of $115/T -sources

    Some Japanese aluminium buyers have agreed to pay a premium of $115 per tonne for primary metal for shipment in the April-June quarter, three sources directly involved in the quarterly pricing talks said.

    The premium was reached with one global metal producer and is 4.5 percent higher than the $110 per tonne premium PREM-ALUM-JP in the previous quarter, a second straight quarter-on-quarter increase. The increase reflected lower inventories in Japan, the sources said.

    Japan is Asia's biggest importer of aluminium and the premiums it agrees to pay for primary metal shipments each quarter over the London Metal Exchange (LME) cash priceset the benchmark for the region.

    The deals were struck over the past week with one producer that cut its proposal from an initial offer of $125 per tonne, a source at a trading firm told Reuters, declining to be named due to the sensitivity of the talks.

    Japanese buyers are still negotiating with global smelters, with further deals expected in the coming weeks.

    Aluminium stocks at three major Japanese ports hit a record high of 502,200 tonnes in May last year as buyers elsewhere in Asia bought cheaper semi-fabricated products from China, prompting more primary metals to head to Japan to look for buyers.

    But, by the end of February the stockpiles had dropped 27 percent from May to 365,600 tonnes as buyers reduced imports, according to trading house Marubeni Corp.

    The latest quarterly pricing negotiations began last month between Japanese buyers and global producers, including Alcoa Inc, Rio Tinto and South32 Ltd, with initial offers ranging between $125 and $130 a tonne, according to sources.

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    Private capital is ready to invest $7 billion in mining

    According to a study of private capital in the resources sector from industry tracker Preqin, finds half of investors in the mining and metals sector will deploy more capital this year despite two-thirds of institutional investors displaying less appetite for the sector compared to a year ago.

    The pullback comes after fundraising for natural resources investment reached record levels in 2015, with 74 funds raising a total of $67.8bn.

    In total natural resources investment firms have $400 billion assets under management. Of this $243 billion represent unrealized value with the remaining  $157.3 billion so-called dry-powder capital ready to invest. The vast majority is destined for North America.

    A full two-thirds of institutional investors have a decreasing appetite for metals and mining investments

    Only $6.9 billion of the dry powder money in 2016 is for metals and mining although a portion of the diversified funds' $9.7 billion will also go into projects and assets in the sector.  Fund managers also still have to exit some $8.3 billion in mining investments.

    The survey found that fund managers’ views differed most widely in their approach to metals and mining assets. Although 50% of fund managers investing in metals & mining expect to increase the amount of capital they deploy in 2016, 25% expect to decrease the amount of capital deployed, including 8% that plan to invest significantly less capital:

    While this partly reflects the relative lack of success by metals and  mining-focused funds in raising capital in 2015, it may also be the case that some non-specialists, including diversified and energy-focused funds that also invest in mining, are holding off deploying capital in this area until metals markets show greater signs of recovery.

    The number one concern according to the survey is commodity prices. Global market volatility and uncertainty is also a top concern. At the same time 50% of surveyed fund managers believe it's easier to find attractive investments in the sector.

    The five biggest mining and metals funds of the past ten years in terms of aggregate capital raised  have zero funds currently in the market

    Tellingly, the five biggest mining and metals funds of the past ten years in terms of aggregate capital raised – Resource Capital Funds, Orion Resource Partners, Sentient Group, Pamodzi Investment and Waterton Global Resource Management – have zero funds currently in the market.

    In terms of fundraising, as of March there are 256 natural resources funds in the market targeting $141.5bn in aggregate capital.

    Mining is the smallest subset with 13 metals and mining focused private closed-end funds hoping to raise $3.8bn in 2016 representing 5.4% of the total.

    A Preqin survey of fund managers showed significant changes in appetite for natural resources. A full two-thirds of institutional investors have a decreasing appetite for investments in metals and mining compared to a year ago, the only sector where investors interest are, on the whole, on the wane.

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    Glencore closer to selling Lomas Bayas copper mine in Chile

    Mining and commodities giant Glencore is getting closer to selling its Lomas Bayas copper mine in Chile’s Atacama Desert, after receiving at least two significant offers for the asset, local media reports.

    According Diario Financiero (in Spanish), the bidders include former Barrick Gold CEO Aaron Regent's company — Magris Resources —, and Chilean energy firm Copec.

    Bidders include former Barrick Gold CEO Aaron Regent's company and Chilean energy firm Copec.

    In October, the Swiss firm confirmed it had received a number of unsolicited expressions of interest for the Lomas Bayas open-pit operation and also its Cobar mine in Australia’s New South Wales.

    Glencore said at the time the potential buyers may purchase "either one or both of the mines and may or may not result in a sale.”

    These mines are over and above the asset sales, share offerings and other money raising efforts including by-product forward sales detailed by Chief Executive Officer Ivan Glasenberg last year, as part of its plans to reduce its crippling debt load by $13 billion over the near term.

    The operations are definitively not among the largest in Glencore’s portfolio. Cobar generates about 50,000 tonnes of copper concentrate a year, while Lomas Bayas — acquired by Glencore as part of its 2013 takeover of Xstrata —produces 75,000 tonnes.

    According to analysts including Citigroup Inc. and UBS Group AG, the mines may worth between $500 million to $1 billion.

    Glencore has said it expects to finalize the sales in the first half of the year.
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    Steel, Iron Ore and Coal

    Russia's NLMK earnings drop 37 pct in fourth quarter

    Russia's biggest steelmaker NLMK said on Thursday its core earnings fell 37 percent in the last three months of 2015 from the previous quarter due to lower prices for its products and a decline in sales.

    Earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled $321 million, down from $508 million in the third quarter, the company said.

    NLMK and other Russian steelmakers struggled to maintain profit levels in 2015 as a surge in cheap exports from China undermined prices for their products.

    "Key factors behind the slump in steel product prices included an unprecedented spike in steel exports from China on the back of the continuing fall in demand and the dip in raw material prices," Chief Financial Officer Grigory Fedorishin said.

    Fedorishin said NLMK was also hit by lower demand at home, which fell 9 percent in 2015 with Russia's flagging economy in recession for a second year in a row.

    Analysts polled by Reuters had expected fourth-quarter EBITDA of $343 million, down 32 percent from the previous quarter and a decline of 50 percent from $638 million in the fourth quarter of 2014.

    Net profit for the last quarter of 2015 was $76 million, down 81 percent quarter-on-quarter due to foreign exchange losses, while revenue slipped 19 percent from the third quarter to $1.6 billion due to both lower sales prices and volumes.

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    Iron ore sinks to test $50 level amid China concern

    Iron ore futures in Singapore dipped back below $50 a metric ton amid a resurgent dollar and indications China’s economy has yet to rebound, offering early vindication to forecasters including Goldman Sachs Group who’d argued that recent gains were unlikely to persist. Miners’ shares fell.

    The SGX AsiaClear contract for May settlement sank as much as 5.8% to $49.90 a ton in Singapore and was at $51.41 at 2:07pm local time, while on China’s Dalian Commodity Exchange futures fell as much as 5.1%. Losses in the contracts in Asia typically presage a drop in the Metal Bulletin price for 62% content spot ore in Qingdao, which is updated daily.

    Iron ore has been on a wild ride in March as investors sought to gauge conflicting economic signals from China against still-elevated port stockpiles and shifts in the US currency. Prices posted the biggest ever one-day gain on March 7 in a rally to the highest since June, prompting banks including Goldman to say the gains would be temporary. Miner BHP Billiton said after the spike that it was probably more bearish about iron ore than the price of any other commodity in its portfolio.

    “There hasn’t been much improvement in China’s economy and steel mills aren’t keen to purchase iron ore, especially after the price surge,” said Zhao Chaoyue, an analyst at China Merchants Futures Co in Shenzhen. “The dollar also surged overnight, spurring a sell-off in commodities.”
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    China Coal Energy Company sees huge loss in 2015

    China Coal Energy Co. posted a huge loss and shrinking revenue in 2015 as the saturated coal industry has begun to bite into corporate profitability.

    The Shanghai-listed mining company posted losses of 2.52 billion yuan (around 390 million U.S. dollars) last year, a sharp contrast with profits of 767 million in 2014, according to its latest financial report on Wednesday.

    Its total revenue dropped 16.1 percent year on year to 59.27 billion yuan for the whole year.

    The state-owned coal producer suffered as domestic coal prices continued to drop last year, according to the company's board chairman Li Yanjiang, who attributed the lackluster performance to an over-supplied market.

    The Bohai-Rim Steam-Coal Price Index, a benchmark index, stood at 370 yuan per tonne by the end of 2015, markedly down from 525 yuan per tonne at the beginning of the last year.

    Responding to the situation, the company cut production at less-competitive coal mines and transferred business to the more profitable coal processing sector, the report said. Its new coal chemical plants raked in 1.5 billion yuan in profit last year, which offset the loss from leaden coal mining.

    Coal mining is one of several heavy industries struggling with serious overcapacity amid the economic slowdown, which has made many coal mines redundant, with less than 80 percent of the capacity actually under operation.

    The problem has become a priority, and the government has promised to slash 500 million tonnes of coal capacity in the next three to five years.

    By the end of 2015, the country had a total coal production capacity of 5.7 billion tonnes.
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    Jiangsu to cut nearly half coal capacity in 3-5 yrs

    Eastern China’s Jiangsu province targeted to shut 47.7% of its coal capacity in 3-5 years in response to the national call of overcapacity elimination, according to a statement released by the provincial Development and Reform Commission.

    According to the country’s elimination standards, the province could keep all its mines. But given the low production capacity, long-term losses and poor safety conditions in some mines, the provincial government decided to guide the orderly exit of 14 coal mines from five enterprises by offering policy support.

    Of this, eight mines under three local enterprises – owned by the prefecture and lower-level governments – account for 8.36 Mtpa of the total shut capacity; and that of the six mines under the rest two state-run enterprises was at 3.46 Mtpa.

    Jiangsu will close 11 coal mines with combined capacity of 10.16 Mtpa in 2016, two mines with 0.46 Mtpa capacity in 2018, and one mine with 1.2 Mtpa capacity in 2020.

    By end-2015, total coal production capacity of the province’s 20 mines in six coal enterprises was 24.77 Mtpa, including 18 mines that in normal operation with capacity at 21.82 Mtpa, and the rest two halted mines taking 2.95 Mtpa capacity.
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    The “massive” rally that means China will curb steel exports

    The record flood of steel exports from China will probably abate after prices surged in the largest producer, boosting the attractiveness for mills of local sales against shipments overseas, according to commodity trader Noble Group Ltd.

    “The main reason why we’re going to see lower Chinese steel exports, at least for the next few months, is that the Chinese steel prices have way outperformed steel prices in other regions since December,” Gueorgui Pirinski, a carbon-steel materials analyst at Noble Group, said at a conference in Singapore on Wednesday. “We’ve had a massive 30, 40 percent rally.”

    Exports from China, which accounts for about half of global output, surged to an all-time high last year as producers contended with sinking local prices and a glut of material. The flood boosted competition in Asia, Europe and the U.S., hammering profits at mills worldwide and spurring an increase in trade tensions amid claims the rising volumes from China were being sold too cheaply. This year, steel prices in China have rebounded in a shift that Pirinski said was driven by lower output.

    “The major driver of this reversal in trend has been the very aggressive curtailment in domestic steel production in China,” said Pirinski, who raised the possibility that output may now pick up, endangering the recovery in steel prices. “We will see a material pickup in domestic production of steel in China — that will then put into question the sustainability of the steel price.”

    Steel reinforcement bar in China, a benchmark product used in construction, has jumped 25 percent in 2016 after five years of losses. The contract price on the Shanghai Futures Exchange rallied to 2,240 yuan ($345) a metric ton on Wednesday, the highest since June. It bottomed in December at 1,618 yuan.

    China’s steel exports expanded almost 20 percent to a record 112.4 million tons in 2015, according to customs data released in January. In February, sales of steel products dropped 17 percent to 8.11 million tons, the lowest since March last year, government data show.

    The unprecedented tide of cheap shipments from China prompted a backlash from Europe, India and the U.S., which have moved to raise tariffs as local mills complained. Still, the spread of protective trade rules wasn’t a cause for slowing shipments, according to Pirinski. The reason “China steel exports are falling is not anti-dumping duties, it’s not all the posturing,” he said.
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    China Feb coking coal imports down 24.9pct on year

    China’s coking coal imports in February fell 24.9% on year and down 11.87% on month to 2.97 million tonnes, showed the latest data from the General Administration of Customs (GAC).
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    China key steel mills daily output down 0.28pct in early-March

    The daily output of China’s key steel mills edged down 0.28% from ten days ago to 1.59 million tonnes in early-March, according to the latest data released by the China Iron and Steel Association (CISA).

    China’s daily crude steel output in early-March was estimated at 2.08 million tonnes, dropping 1.8% from late-February.

    By March 10, stocks in key steel mills posted a second straight ten-day fall of 0.64% or 88,600 tonnes to 13.71 million tonnes.

    Domestic prices of the six major steel products all increased in early-March, with rebar price averaging 2146.9 yuan/t, up 8.2% from late-February, showed data from the National Bureau of Statistics (NBS).

    Over January-February, China produced 121.07 million tonnes of crude steel, dropping 5.7% from the previous year; China’s daily crude steel output also fell 7.27% on year to 2.02 million tonnes in the same period, according to the NBS data.

    In spite of the drop in output, profits in steel mills witnessed an increase as steel and iron ore prices gained more strength in February; in March, demand from industrial activities showed uptick due to better performance of the housing sector.

    Thus, crude steel output may see a slight increase in later period, thanks to the rising demand from end-users combined with higher operating rates and profits in steel mills.

    By March 21, China’s social stock of steel products stood at 11.82 million tonnes, falling 398,500 tonnes on week, among which rebar stocks contributed 250,000 tonnes, indicating a better demand from downstream sectors.

    The lower-than-expected stock level will provide a stronger support for steel prices.

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    Chinese February thermal coal imports lowest since April 2011

    China imported 5.06 million mt of thermal coal in February, down 13.6% on the year and 13.2% below January to the lowest monthly volume since April 2011, according to data Tuesday from the General Administration of Customs.

    The volume included 3.75 million mt of bituminous material and 1.31 million mt of sub-bituminous coal, but excluded imports of lower CV lignite material.

    During the first two months of 2016, China imported 10.9 million mt of thermal coal, down 20.1% from a year ago.

    Australia remained the largest shipper of thermal coal to China at 2.54 million mt, with the volume dropping 22% on the year but remaining steady month-on-month.

    Imports from Indonesia were 1.78 million mt, up 5% year-on-year but down 16% from January to an eight-month low.

    China's imports of Russian thermal coal slipped back below 1 million mt to 729,020 mt in February, up 6% on the year but 28.6% lower than January's one-year high.

    Total lignite imports in February were steady on the year at 3.79 million mt, but fell 9% from January's four-month high. Of the total, 3.25 million mt was received from Indonesia.

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    Mounting debts could derail China plans to cut steel, coal glut

    China's campaign to slim down its bloated industries could be derailed by more than $1.5 trillion of debt in its steel, coal, cement and non-ferrous metal sectors, which threatens to overwhelm local banks, Reuters reported on March 23.

    The four sectors targeted in the battle against overcapacity owe around 10.2 trillion yuan ($1.56 trillion), according to documents submitted to parliament by Wang Mingsheng, head of Anhui-based coal firm Huaibei Mining.

    China is providing more than 100 billion yuan ($15 billion) in the next two years to handle layoffs from coal and steel, but that will only be made available once debts have been settled.

    Costs for the estimated 1.3 million coal-sector layoffs alone are as much as 195 billion yuan, and coal industry delegates attending parliament urged government to provide more support to deal with the mounting debts of hundreds of stricken "zombie" firms.

    China's statistics bureau puts coal and steel debts alone at 8 trillion yuan, of which about a third is bank debt.

    If 20% of that were to go bad in 2016, which industry analysts say is not unrealistic, it would raise Chinese banks' non-performing loans by nearly half.

    Bankers say city and regional banks set up by party or provincial government officials are most exposed, and that official NPLs, which already doubled last year, underestimate the scale of their problem lending.

    "China needs to set up a new organization, a special bank just to take over these debts in order to avoid the local banks going bankrupt," said steel industry consultant Xu Zhongbo.

    As well as seeking cuts in value-added tax and relief from expensive "social functions" like healthcare and education, the coal delegates urged government to provide additional funding and policy support, and establish "debt-to-equity" mechanisms to handle the problem.

    In plans published in February, Beijing promised to slash 100-150 million tonnes, or up to 12.5%, of crude steel capacity and as much as 500 million tonnes, or 9%, of coal production in over three to five years.

    The February policy documents also said China would create a special mechanism to restructure industry debts and non-performing assets while introducing incentives to write off bad debts or transfer them to specialist asset managers, but officials said more specific measures were required.

    The action plans said China would rely mostly on "market methods" to solve debt problems.
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    Global crude steel output down 3.3pct in Feb

    Crude steel output from 66 members of the World Steel Association (WSA) amounted to 120 million tonnes in February, sliding 3.3% year on year, the latest data showed.

    Over January-February, global crude steel output declined 5% on year to 248 million tonnes, data showed.

    In February, the capacity utilization of crude steel was 66.2%, falling 5.7 percentage points but 0.9 percentage points higher than January.

    China, the world’s largest crude steel producer, saw its output slipping 4% on year and down 7.44% from January to 58.5 million tonnes in the month.

    Meanwhile, Japan’s crude steel output dropped 1% on year to 8.4 million tonnes; output from the US fell 2.9% to 6.4 million tonnes.

    The global steel price posted a narrower decline than January, signaling a stable and weak trend of the market in the short run.
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    Beijing to cut coal consumption to 12 mln T in 2016

    China’s Beijing planned to cut coal consumption to around 12 million tonnes this year, a decline of 11 million tonnes or 47.8% from the year of 2012, local media reported.

    The volume will be further reduced to 11 million tonnes next year, in a bid to push for a better air condition.

    The closure of Beijing-based Gaojing Thermal Power Plant under Datang International Power Generation Co., Ltd in July 2014, and that of Shijingshan Thermal Power Plant under Beijing Jingneng Power Co., Ltd and Guohua Thermal Power Plant in March last year would help trim 7,400 tonnes of dioxide carbon emissions in Beijing per year, and sharply reduce emissions of nitrogen oxide and dust.

    A total 30 billion yuan ($4.62 billion) had been invested by Beijing authorities in the work of reducing coal burns in the past three years, and efforts will be made to further cut coal burns at suburbs.

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    Tokyo Steel hikes April steel bar prices, 1st rise in over 2 years

    Tokyo Steel Manufacturing , Japan's top electric arc furnace steelmaker, will raise prices of construction-used steel bars for April delivery by 5 percent in its first hike in over two years, reflecting a rebound in spot prices at home and abroad.

    The company will increase prices for steel bars, including rebar, by 2,000 yen ($17.83) to 44,000 yen a tonne, it said in a press briefing on Tuesday.

    That is Toyko Steel's first price hike since January delivery in 2014, possibly indicating that the market has bottomed out after slumping on oversupply.

    Tokyo Steel's pricing strategy is closely watched by Asian rivals such as Posco, Hyundai Steel Co and Baosteel, which export to Japan.

    Prices for the company's main product, H-shaped beams, which are also used in construction, and other products including hot-rolled coils and heavy plates will remain unchanged in April.

    "We believe the domestic steel market has hit a floor following a sharp rebound in overseas prices, led by price hikes by Chinese mills," Tokyo Steel's Managing Director Kiyoshi Imamura told reporters.

    On the Shanghai Futures Exchange, construction-used rebar futures for October delivery hit a nearly nine-month high on Monday, as a recovery in China's housing prices boosted hopes for demand for the commodity.

    "We expect an upward trend in steel prices to continue as domestic demand for construction materials is solid and inventory for that steel is low," said Imamura.

    But Japan's crude steel output fell in February for an 18th straight month, the longest streak since the 1997-99 Asian financial crisis, hit by slow auto demand and low export prices.

    Still, Imamura forecast a stronger pick up in local demand in and after summer as a new national stadium project and other Olympic-related works are poised to start early next year.
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    China miners move to cut, consolidate 1b tons of coal capacity

    Many large domestic coal producers are actively following the nation's plan to cut overcapacity in the sector, the Beijing-based Securities Daily newspaper reported on Monday.

    The country will close 500 million tons of capacity and consolidate another 500 million tons into the hands of fewer but more efficient mine operators in the next three to five years, the State Council, China's cabinet, said in a guideline in February.

    Overcapacity in the industry is serious, with shrinking domestic demand amid the economic slowdown making many mines redundant.

    China's annual coal production capacity may have been as high as 5.7 billion tons in 2015, while demand was about 3.5 billion tons, according to media reports in January. Many coal producers have been reporting losses. Experts said China's energy structure is also changing, aided by low global crude oil prices.

    The Bohai-rim thermal coal price index was about 400 yuan ($61.72) per ton as of this month, down from about 520 yuan approximately one year earlier, according to media reports.

    Large State-owned companies including Shenhua Group and Datong Coal Mine Group have announced capacity-cutting plans, according to the Securities Daily.

    Shenhua has focused on eliminating high-cost, low-quality mines or those that don't meet environmental standards. The company has stopped output or construction at 12 of its mines, reducing annual production capacity by 30 million tons so far this year, the Securities Daily reported.

    Zhang Youxi, chairman of Datong Coal Mine Group, said earlier this month that his company plans to close 12 mines, cut capacity by 12.55 million tons and reduce losses by 1.24 billion yuan during the 13th Five-Year Plan (2016-20) period, according to the Securities Daily. In 2016, the company plans to close five mines, making about 10,000 workers redundant.

    So far, eight provincial-level regions, including major coal producers such as North China's Inner Mongolia Autonomous Region and Shanxi Province, have announced action plans to cut overcapacity in the sector, according to the Securities Daily.

    Other areas include Southwest China's Chongqing Municipality, Sichuan and Guizhou provinces and East China's Shandong and Anhui provinces.

    Liu Dongna, a coal industry analyst with Shandong-based industry portal, said that although a few companies have been calling for an industry-wide cut in capacity since 2014, the results have been limited.

    "But in this round, with reducing coal and steel overcapacity atop the central government's agenda, we are seeing more serious cuts and we can expect a higher level of implementation," Liu told the Global Times Monday.

    Li Chaolin, an independent coal industry analyst in Beijing, said that many of the localities are choosing to close unprofitable mines because of low prices.

    "For instance, producers in Guizhou were able to make profits when the price was good, but they've lost competitiveness now that the coal price is low. Ensuring local employment has also been a reason for them to keep running, as less advanced mines still employ many hands to extract coal," Li told the Global Times on Monday.

    However, experts said that eliminating capacity will be a lengthy process, although it will help stabilize and support coal prices.

    Low coal prices, which translate into lower costs for products and services in many downstream industries such as electricity, have incidentally helped other sectors struggling with slowing economic growth, Liu noted.

    Compared with privately owned mines, many of which were driven out of business long ago by losses, large coal mines face bigger problems in dealing with laid-off miners, experts said.

    A recent report by investment bank China International Capital Corp forecast that this year and next, 30 percent of the 10 million people employed in China's coal, steel, electrolytic aluminum, cement and glass industries will lose their jobs. The forecast was cited in February in a report by the European Union Chamber of Commerce in China that discussed overcapacity in China.

    A 40-year-old coal miner at a subsidiary of Datong Coal Mine Group based in Datong, Shanxi Province told the Global Times on Monday that he hasn't been paid for more than 10 months.

    "We've been told that the company can't pay right now as it has been struggling with difficulties," he said, preferring not to be identified due to the sensitivity of the issue. He noted that like many of his co-workers, he can only wait to see if the local government will offer "supportive" policies for unpaid coal miners.

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    CIL coal production target at 598 mln T for FY17

    Government has set the 2016-17 coal production target for Coal India at 598 million tonnes, Coal secretary, Anil Swarup told NDTV Profit in an exclusive interview.

    ''We are targeting a production of 598 million tonnes for FY17, and should be able to hit 535 million tonnes this year''.

    He acknowledged that the target for 2015-16 was very high at 550 million tonnes and with just a few days left for the current financial year to get over, the total production in the current year should be 535 million tonnes, 15 million tonnes short of the original target.

    The government has a vision to produce a billion tonnes by 2020. While the production has been increasing continuously there has not been many takers of coal. Coal demand has remained subdued; it did not increase as per the increase in the production.

    Coal India has achieved 9.2% increase in production this year, compared with an average of 1-3% production growth between 2009-10 & 2013-14. Coal production grew by 6.7% in 2014-15.

    At a time when the demand for coal remains weak, the government believes that there is still scope for more supply. The government now wants to reduce the imports of coal even further.

    The coal secretary said that ''Coal production should go up further, there is a lot of space occupied by the imported coal''. Till now this year the coal imports have come down by almost 15%.

    Going forward, in 2016-17 improving the quality of coal will be high on government's agenda.
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    Only 4 million tonnes of iron ore extracted this season in Goa

    Herald Goa reported that only 4 million tonnes of fresh iron ore was extracted till date in the Goa during the ongoing mining season, ending on May 31. By March end, the extraction may touch five million tonnes.

    Directorate of Mines and Geology on Monday met mine owners expressing concern over low iron ore production and to work out measures to increase revenue through the balance seven million tonnes of ore awaiting e-auction.

    During the meeting it was informed that with 17 mining leases commencing operations, only four million tonnes of fresh ore extractions have been reported, with royalty collection of INR 30 crore.

    Mine owner Mr Harish Melvani said the meeting discussed measures to attract more value to the ore proposed for e-auction. He said “The meeting resolved that the government should lower the earnest money for mineral based industries that after purchase of ore would process it and improve its grade. It was also decided to exempt small time industries from payment of earnest amount.”

    Mr Melvani was of the opinion that the government should undertake an exercise to segregate balanced ore into lumps and fines, so that interested buyers can go in for ore of their choice. He said “This move will help us fix different base price and get good value.”

    The date of the final phase of e-auction, where nearly 7.76 million tonnes of stacked iron ore is to be e-auctioned, is yet to be announced. In the last two years, DMG managed to e-auction 7.24 million tonnes of ore, of which more than 60 per cent remains at the sites.
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    US Coal stockpiles grow to highest level in at least 25 years

    Stockpiles of coal are growing to historically high levels at the nation’s power plants.

    The U.S. Energy Information Administration reported Monday 197 million tons of coal were being stored at the end of 2015, the highest year-end level in at least 25 years.

    Government analysts attributed the spike to both a decline in coal demand due to an unseasonably warm winter and a larger economic shift away from coal as a power source.

    Cheap natural gas and steady growth in wind and solar farms have driven down the price of electricity in many U.S. wholesale markets. And with increasing environmental regulation on power plant emissions, many electricity companies have pulled back on coal-fired generation.

    The amount of coal capacity on the U.S. power grid fell 10 percent between 2010 and 2015. according to EIA.

    The shift has caused uncertainty around the future of U.S. coal mining, a critical industry in states including Wyoming, West Virginia and Kentucky. Texas produced roughly 44 million tons of coal in 2014, about 11 percent of Wyoming.

    Peabody Energy, the largest private sector coal producer in the world, has seen its stock price drop to less than $3 a share – from more than $95 a year ago – and is now the subject of speculation whether it will file for bankruptcy.

    The demand problem is evident in the government’s coal supply data. In December, a time when coal stockpiles typically decrease by 3 million tons, the U.S. saw coal reserves grow 8 million tons.

    The decline had a ripple effect on the railroad industry. Over the last four months of 2015, an average of 94,000 railroad cars were loaded with coal each week. That was more than 20 percent below average, according to EIA.
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    China COSCO, Vale sign agreement on iron ore shipping

    China COSCO Shipping Corp Ltd and Brazilian miner Vale on Friday signed an agreement on iron ore shipping, the latest cooperation between the two companies.

    COSCO's subsidiary China Ore Shipping will ship around 16 million tons of iron ore for Vale annually for the next 27 years.

    China COSCO Shipping Corporation is a new company formed by the restructuring of China's top two shipping firms, officially established in February.

    By amalgamating COSCO and China Shipping, the new conglomerate has the world's largest total shipping capacity and the fourth biggest container fleet.
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    Tangshan expo & summit to impact 5-6 mln T steel output in Apr-Oct

    Tangshan, the major steel producing city in northern China’s Hebei province, would take mandatory measure to cut emissions during a series of activities to be held in the city over April-October, according to a document released by the local government.

    These activities include World Horticultural Exposition (April 27-May 3), China-CEEC local heads meeting and Hebei international economic and trade fair (June 14-21) among others.

    A total of 986 enterprises in the city will be ordered to reduce production, and cut emissions by 30-50% during these activities, according to the document.

    Coal-fired power plants that have realized ultralow emission upgrading and steel mills using clean energy such as natural gas and pipeline gas are not included, it said.

    Meanwhile, stricter measures would be adopted if heavy pollution or extreme weather occurs.

    Industry insiders estimated this may impact crude steel output by only 5-6 million tonnes, less than previous market anticipations, as restrictions would be tightened only before and during these activities.

    China’s steel market rebounded recently, prompting many furnaces to resume operation, though the strength of demand from end users remains fragile and uncertain.
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    Wugang to let go of up to 50,000 of its 80,000 workforce

    Wuhan Iron and Steel Co., Ltd. (Wugang), one of China's biggest steel producers, would cut up to 50,000 jobs, which marks more than 60% reduction of its total workforce of 80,000 employees, it said lately.

    Ma Guoqiang, chairman of the state-owned company, warned "probably 40,000 to 50,000 people will have to find other ways forward". He added the company was facing lower demand because of which it had reduced its production capacity by 25% to 30%.

    Ma said the company has eliminated 4-5 million tonnes of backward capacity in the past ten years. At present, Wugang has a total capacity of 18 Mtpa; it arranged production of 15-16 million tonnes in 2014-2015.

    China has been accused of selling steel at reduced prices and dumping excess production on the world's markets. This made it very difficult for steel manufacturers in the West such as those in Europe and the US because they have higher costs.

    This steel crisis has cost the UK more than 5,000 British jobs in 2015 alone. Tata Steel and Caparo Industries are among the steel companies that had to close their plants or reduce production in the UK owing to this pressure of low prices from China.

    Beijing in the past had promised to cut annual steel production from 1 billion tonnes in the world's second largest economy to 850 million tonnes within 5 years. Industry experts, however, argue there is no sign of progress in this regards.

    The Chinese government fears that imposing such cuts would cause social unrest from the huge Chinese workforce that currently works in the iron and steel sector. Seth Rosenfeld, an analyst with Jefferies, in a recent note on the global steel sector said this fear by Beijing would withhold any chance of improvement in this sector during the near to medium term.
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    U.S. Steel to lay off workers, idle plants

    United States Steel Corp said it would idle plants and lay off workers in Alabama, Ohio and Texas as it tries to keep a lid on costs to tackle a steep fall in steel prices.

    The company said the layoffs could impact 650 union and 120 non-union workers at Fairfield Tubular in Alabama, Lone Star Tubular in Texas and Lorain in Ohio, along with its Oilwell Services and sales office in Houston.

    Steelmakers worldwide have struggled for years as a global surplus has expanded, weighing on prices and stoking tensions between major exporting countries.

    The U.S. Commerce Department said on Wednesday it will slap anti-dumping duties on certain hot-rolled steel products from seven countries in a preliminary ruling that followed a complaint by U.S. steelmakers last year.

    U.S. Steel reported a bigger-than-expected loss and a 37 percent fall in sales in its latest fourth quarter.

    Shares of the Pittsburgh, Pennsylvania-based company closed up 2.2 pct at $15.76 on the New York Stock Exchange on Friday.
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