Mark Latham Commodity Equity Intelligence Service

Friday 6th November 2015
Background Stories on

News and Views:

Attached Files

    Oil and Gas

    Steel, Iron Ore and Coal


    Brazil speaker faces ethics hearings over Swiss bank accounts

    A Brazilian Congressional ethics committee on Thursday picked a first-term legislator to lead an investigation into secret Swiss bank accounts allegedly held by Eduardo Cunha, the speaker of the lower house.

    The investigation, part of the fallout from a kickback scandal engulfing state-run oil company Petroleo Brasileiro SA , or Petrobras, could seal the political fate of Cunha, third in the line of presidential succession.

    It is therefore a crucial piece of an ongoing political drama surrounding President Dilma Rousseff, currently facing the deepest economic and political crisis in Brazil in decades. As speaker, Cunha is the sole lawmaker with constitutional authority to take up one of the many impeachment requests filed by opponents against her.

    Ethics committee members appointed Fausto Pinato, of the Brazilian Republican Party (PRB), to lead the probe and gave him until Nov. 24 to recommend whether the committee should probe Cunha for lying about the accounts, a breach of conduct that could cost him the speakers position and his seat.

    The appointment raised eyebrows among some lawmakers because the PRB is a party of Evangelical politicians, many of whom have close ties to Cunha, himself an Evangelical Christian.

    Pinato, 38, vowed to be impartial and told reporters it was "very possible" that he would accept the complaint against Cunha. Aides to Cunha, meanwhile, said the speaker is confident he has enough support on the committee to avoid an unfavorable ruling.

    Though charged with upholding ethical standards, the committee itself is controversial in a country where corruption and politics are often inseparable.

    One third of its 21 members are being investigated for alleged crimes - from electoral and tax fraud to money laundering, according to the Estado de S. Paulo newspaper. Pinato himself is on trial on charges of giving false testimony in a case that predates his election last year.

    "The committee members will try to look good before the Brazilian public. If they give Cunha a free ride, it may become politically costly for them," said Aline Machado, a political scientist working for the Brazilian Congress.

    Cunha is under investigation for allegedly receiving a $5 million kickback in the massive corruption scandal involving Petrobras.

    After Cunha told a previous Congressional commission in March that he had no bank accounts abroad, Swiss prosecutors located four accounts in his and his wife's name at Julius Baer bank and passed the details to Brazilian authorities.

    Read more at Reuters

    Attached Files
    Back to Top

    Duke Energy profit rises on strong demand, low fuel costs

    Duke Energy Corp, the largest U.S. power company by generation capacity, reported a 5.5 percent rise in quarterly profit from continuing operations, driven by warmer-than-expected weather and lower fuel costs.

    The company lowered the top end of its 2015 adjusted earnings estimate - it now expects earnings for the period to be $4.55-$4.65 per share compared with the $4.55-$4.75 it forecast earlier.

    Duke, which sells power to 7.3 million customers across six U.S. states, has been retiring several of its coal operations and converting some of them into cheaper and less polluting natural gas-powered plants.

    The company has also been expanding its natural gas distribution business to lower dependence on power generation as demand for electricity weakens due to increased energy efficiency.

    Net income from continuing operations rose to $940 million, or $1.36 per share, in the third quarter ended Sept. 30, from $891 million, or $1.25 per share, a year earlier.

    Duke Energy Corp, the largest U.S. power company by generation capacity, cut the top end of its 2015 adjusted earnings forecast, citing a drought and a slowing economy in Brazil and a strong dollar.

    The international business, which spans Brazil, Argentina and Chile, had earned only half of what the company had expected through September, Duke said on Thursday.

    Adjusted income from international business, which accounts for about 12 percent of revenue, fell nearly 14 percent to $69 million in the quarter ended Sept. 30.

    Read more at Reuters

    Attached Files
    Back to Top

    OPEC, Russia oil battle heats up as Sweden buys Saudi crude

    The Saudi-Russian battle for Europe's crude oil buyers intensified this week as Swedish refiner Preem bought its first cargo of Saudi Arabian crude oil in around two decades, trading sources said.

    The purchase from another traditional buyer of Russia's Urals crude will heat up the contest for market share that Saudi Arabia has effectively brought to Russia's backyard in the Baltic region.

    Already, Poland's two refineries, PKN Orlen and Lotos, have turned to Saudi crude at the expense of Urals.

    The deputy head of Lotos earlier this week told Reuters that the purchase "made our negotiation position much stronger" with its traditional supplier, Russia.

    State oil company Saudi Aramco on Thursday also dropped its official selling prices for crude oil to northwest Europe.

    Preem, which also predominately runs Russia's Urals crude , confirmed the purchase but declined to elaborate on details.

    Market sources said the company would run the crude through refinery units by the end of November to see if it could take Saudi crude more frequently in the future.

    Read more at Reuters

    Attached Files
    Back to Top

    Will Ambrose eat his hat?

    I'll eat my hat if we are anywhere near a global recession

    The fiscal spigot is opening in the US, China and Europe, and the world's money growth is near a 25-year high

    The damp kindling wood of global economic recovery is poised to catch fire.

    For the first time in half a decade of stagnation, government policy has turned expansionary in the US, China and the eurozone at the same time. Fiscal austerity is largely over. The combined money supply is surging.

    Such optimistic claims are perhaps hazardous, given record debt ratios in most areas of the world and given that we are six-and-a-half years into an aging economic cycle that might normally be rolling over at this stage. It certainly feels lonely.

    "It is a very benign picture for the world. We should see above trend growth over the next year" Tim Congdon, International Monetary Research

    Attached Files
    Back to Top

    Vedanta scraps dividend as commodities market ‘challenging’

    Vedanta Resources Plc, India’s biggest aluminum and copper producer, will pay no interim dividend after revenue declined because of a rout in commodity prices.

    Earnings before interest, taxes, depreciation and amortization fell 39 percent to $1.29 billion in the six months ended September from a year earlier, the London-based company, controlled by billionaire Anil Agarwal, said in a statement Wednesday. Sales dropped 12 percent to $5.7 billion.

    “During this period, we have witnessed continued volatility in commodity markets, creating challenging conditions for all resource companies,” Agarwal said in the statement. “As a result of this market uncertainty, the board has decided not to pay an interim dividend.”

    Like all miners and metals producers, Vedanta is adjusting to a slump in prices amid weakening demand from top consumer China. The shares have fallen 11 percent this year in London trading as the Bloomberg World Mining Index is down 25 percent.

    Vedanta’s board will review dividend payments in May when it delivers its full-year results, the company said. Its interim dividend was 23 cents a share last year.

    The company reduced debt by $900 million to $7.5 billion in the period.
    Back to Top

    A second act in Volkswagen's massive emissions scandal just began.

    Late on Tuesday night VW Group announced that the company had identified "irregularities in CO2 levels" which had emerged as part of internal investigations.

    As many as 800,000 vehicles could be affected across the entire group, according to the release.

    The previous finding, revealed by the US Environmental Protection Agency in September, related to NOx, a different emission which can be extremely harmful to humans, but is less of a driver of climate change.

    The announcement late on Tuesday relates to CO2, the main pollutant associated with global warming. It's not clear if it relates to precisely the same issue — the use of illegal cheating software designed to game environmental emission tests required for all carmakers.

    Here's what Volkswagen say in their own words:

    Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process. The majority of the vehicles concerned have diesel engines.

    Volkswagen says that "An initial estimate puts the economic risks at approximately two billion euros." Analysts at Credit Suisse show how far implies a cost of "€2,500 per car vs. c.€609 per car provisioned for Diesel so far."

    The note from CS goes on (emphasis ours):

    At this point the financial impact from today's release is unclear, as only limited details have been provided. However, given that that provisions per vehicle are 4.1x higher versus the NOx issue, the magnitude could be much bigger in scale. In our view, today's announcement could concern those who believe that the economic impact is manageable and more than priced in post the drop in share price.

    In the third quarter, the company made its first loss in 15 years, and it seems like things could still get worst for the Volkswagen.

    Volkswagen shares dropped by 1.51% in trading on Tuesday after more bad news from the EPA — the regulators found another 10,000 vehicles on cars with larger diesel engines which had contained the same cheating software.
    Back to Top

    Natural gas losing its shine as Asia holds faith in coal power

    The shine is coming off once bright prospects for natural gas as the future fossil fuel of choice in Asia as power companies in India and Southeast Asia tap abundant and cheap domestic coal resources to generate electricity.

    Asian loyalty to coal is shrinking the space available for natural gas just as supplies are ramping up after massive investments in U.S. and Australian output. Demand growth for natural gas is also slowing in top energy consumer China, further dampening the fuel's prospects.

    While much attention has been given to a potential peak in China's coal demand and worries about emissions, in Asia alone this year power companies are building more than 500 coal-fired plants, with at least a thousand more on planning boards. Coal is not only cheaper than natural gas, it is often available locally and has no heavy import costs.

    Growth in coal use is expected to hit liquefied natural gas (LNG) producers hardest, especially with prices half of year-ago levels as Australia and North America wind up their spending spree of hundreds of billions of dollars.

    "Electricity is increasing its share in total energy consumption and coal is increasing its share in power generation," said Laszlo Varro, head of the gas, coal and power markets division for the International Energy Agency (IEA).

    Some of the biggest growth in coal use is in India, where it meets 45 percent of total energy demand, compared with just over 20 percent each for petroleum products and biomass/waste.

    "We're absolutely sure India's coal demand will continue to grow," Varro said.

    At the same time, costs for solar, wind and other renewables are falling, and countries are stepping up investments, eating away more of natural gas' portion of the market.

    China, in particular, added nearly as much wind capacity as the rest of the world in 2014, according to the latest annual report from the Global Wind Energy Council, and India is also investing heavily in renewable energy.

    Renewables are attractive as an offset to the carbon emissions and pollution associated with coal, and also because they help reduce import bills for expensive fossil fuels.

    Other emerging Asian economies are seeing similar growth to India's in coal-fired generation.

    "Coal is still the cheapest and the fuel that most Asian countries will use," said Loreta G. Ayson, undersecretary at the Philippine Department of Energy.

    Forty percent of the 400 gigawatts in generation capacity to be added in Southeast Asia by 2040 will be coal-fired, the IEA says. That will raise coal's share of the Southeast Asian power market to 50 percent from 32 percent, while natural gas declines to 26 percent from 44 percent.

    And growth in coal is not only seen in developing economies. Coal's share of the energy mix in Japan, top importer of LNG, will rise to 30 percent by 2030, up from 22 percent in 2010, according to the nation's Institute of Energy Economics, while natural gas will hold at 18 percent.

    Attached Files
    Back to Top

    China Sept thermal plants capacity utilization sees 20th straight yearly drop

    The capacity utilization of China’s thermal power generating units fell 265 hours on year to 3,247 hours in the first three quarters this year, with September utilization hours posting the 20th straight yearly drop, showed data from the China Electricity Council (CEC).

    However, China continued to expand thermal plants capacity, with 6MW-above installed capacity rising 6.8% on year to 947GW by end-September this year, including 855GW capacity from coal-fired plants.

    The thermal power output during the same period stood at 3,153.2TWh, falling 2.2% year on year.

    On the contrary, the electricity output from wind, solar and nuclear energy registered a year-on-year rise of 23.5%, 74% and 32.4% during the same period, respectively.

    Capacity utilization of wind, solar and nuclear power plants reached 1,317 hours, 996 hours and 5,525 hours, respectively.

    Over January-September, China’s power consumption climbed 0.8% on year to 4,130TWh, compared with a growth of 3.8% last year, which was mainly attributed to downward industrial manufacture, structural adjustment, industrial transformation and cooling weather.

    However, newly-added installed capacity hit a new high in recent years. The 6MW-above installed capacity stood at 1.39 TW by end-September, rising 9.4% from a year ago. The capacity utilization of power-generating units across the country fell 232 hours to 2,972 hours during the same period.

    Power output of the above-sized power plants across the country saw an increase of 0.1% on year over January-September, with non-fossil energy power output up 7.7%.

    The electricity demand in the fourth quarter is expected to maintain the Q3 level. China’s power consumption for the whole year would stand at 5,550TWh, with year-on-year rise at or below 1%, the CEC predicted.

    Newly-added installed capacity would be 100GW in the whole year, with non-fossil energy capacity accounting for over 53% of the total. The 2015 utilization hours of power-generating units would be 4,000 hours, with thermal power utilization hours falling sharply to less than 4,400 hours, said the CEC.
    Back to Top

    Japanese researchers develop glass as strong as steel reported that in a revolutionary breakthrough, Japanese researchers have developed a new type of glass that is nearly unbreakable and is said to be as strong as steel. To make glass tougher, alumina- an oxide of aluminium and silicon dioxide- is used.

    However, in the past, when researchers tried building strong glass by using large amounts of alumina, it caused the mixture to crystallize as soon as it touched any kind of container, preventing glass from being formed. Overcoming the obstacle, the team at the University of Tokyo’s Institute of Industrial Science, instead did away with the need of using container to make the glass.

    The researchers used gas to push the chemical components into the air, where they synthesized together

    The resultant transparent ultra glass was 50 per cent alumina and rivals the Young’s modulus of steel and iron, which measures rigidity and elasticity in solids.

    Once commercialised, practical use of the thin, light yet strong glass could range from buildings and vehicles to even electronics like tablets, computers, and even smartphones.
    Back to Top

    Kazakhstan mulls selling stake in miner ERG, dozens other firms

    Kazakhstan's government is considering selling some or all of its stakes in 60 companies, including miner Eurasian Resources Group (ERG), flagship carrier Air Astana and Kazakhtelecom, two sources close to the cabinet told Reuters.

    Both sources provided what they described as a preliminary list of companies that the government, which faces a plunge in oil revenues, plans to privatise. The list has no price estimates.

    The government has a 40 percent stake in ERG, the owner of mining group ENRC. Kazakhstan owns 51 percent of Air Astana, with the rest held by Britain's BAE Systems, and 52 percent of common stock in Kazakhtelecom.

    Also on the list is Tau-Ken Samruk, a unit of sovereign fund Samruk Kazyna, which has a 30 percent stake in Glencore-controlled zinc producer Kazzinc.

    ERG had no immediate comment on the matter, Air Astana referred the query to Samruk Kazyna and Kazakhtelecom and Kazzinc could not be reached for comments.
    Back to Top

    U.S. rail freight falls as industrial economy struggles

    Freight carried by major U.S. railroads fell by 7 percent in the second quarter of 2015 compared with the same period in 2014, confirming that large parts of the industrial economy are in recession.

    The major Class 1 railroads carried 431 billion ton-miles of freight in the three months ending June, down from 463 billion ton-miles in 2014, according to the U.S. Surface Transportation Board 

    Changes in freight volumes reflect broader difficulties in the industrial economy. Rail operators have been struck by a perfect storm which has hit both their traditional and new business lines 

    Coal shipments to power plants, the biggest commodity on the network, accounting for about one-third of total tonnage, have been hit by a combination of environmental regulations and low gas prices.

    Coal shipments were down by 27 million tonnes, around 15 percent, in the second quarter compared with same 2014 period.

    Petroleum shipments, one of the fastest growing sources of new business during the oil boom, fell more than 650,000 tonnes, 5 percent, as production began to peak and new pipelines diverted crude from the rails.

    And shipments of sand and gravel, a key ingredient in fracking, plunged by more than 2 million tonnes, nearly 14 percent, as the number of new wells drilled and fracked tumbled.

    Shipments of a range of other items from chemicals to fertilisers and other industrial supplies were also lower as the industrial economy ran into stiff headwinds from a stronger dollar and sluggish capital spending.

    The slowdown in industrial-related freight has continued into the second half of the year according to data from a range of other sources.

    Total traffic on U.S. railroads in the 42 weeks ending on Oct. 24 was down 1.3 percent compared with 2014, according to weekly carload statistics published by the Association of American Railroads (AAR).

    Shipments of intermodal shipping containers, which mostly handle manufactured products, were up 2.2 percent but shipments using box cars, tank cars, hoppers and gondolas, which handle farm and industrial products, were down 4.5 percent.

    Shipments were down in five of the 10 freight categories including coal (10 percent), forest products (3 percent), metallic ores and minerals (10 percent), nonmetallic minerals (2 percent) and petroleum (7 percent).

    The downturn has deepened and spread to more sectors as the year has progressed, according to AAR data.

    According to the U.S. Federal Reserve, total industrial output was 0.4 percent higher in September 2015 than September 2014.

    But while production of consumer goods was up 2.6 percent and business equipment 1.8 percent, industrial supplies were up just 0.2 percent and production of raw materials was actually down 0.2 percent.

    Attached Files
    Back to Top

    El Nino Warming Europe This Month Set to Strengthen Gas Bears

    The influence of El Nino will probably push temperatures in Europe above seasonal norms this month, increasing the bearish outlook for natural gas prices already near their lowest since 2009.

    Temperatures in November will be above normal for the time of year, according to all five meteorologists surveyed by Bloomberg News. Last month was cooler than usual for most of the region, boosting gas demand by 14 percent from a year earlier in the U.K., Europe’s largest traded market, according to National Grid Plc data.

    U.S. forecasters predict that this year’s El Nino, a warming of the equatorial Pacific Ocean, may be the strongest since records began in 1950, affecting weather patterns across the world. The warmth comes amid a period of abundant fuel, including a 41 percent jump in deliveries from Russia, the region’s biggest foreign supplier, that has increased European storage levels to near a record-high.

    “The European system at the moment is well supplied,” Fabio Cedronio, a senior gas trader at Repower AG, said by e-mail on Friday. “Storage is confirmed at a good level and above-average temperatures will cause a lack of demand for heating.”

    European gas traders are the most bearish since May, and have been negative on prices for all but one week since April, according to Bloomberg surveys. Next-month gas in the U.K. is trading at its lowest for the time of year since 2009 and the cost of the fuel is expected to remain low for the next five years, according to Bloomberg New Energy Finance.

    Temperatures in northwest Europe, including the U.K., are forecast to be 2.7 degrees Celsius (4.9 Fahrenheit) above the 10-year average next week, according to data from Weather Services International Corp. using the GFS model.

    “The very strong El Nino is having some influence on European climate,” Matthew Dobson, a meteorologist at MeteoGroup U.K. Ltd., said by e-mail on Friday.
    Back to Top

    China’s third largest hydropower station to start construction before 2016

    China may kick off construction of Wudongde hydropower station -- the country’s third hydropower station with annual capacity over 10 GW after Three Gorges and Xiluodu stations, in the remaining days of 2015, local media reported lately.

    The station, located in Jinsha River, was also the second hydropower station with annual capacity over 10 GW in southwestern Sichuan province. It has an installed capacity of 10.2 GW and was operated by China International Engineering Consulting Corporation (CIECC).

    Total investment in this project stood at 96.7 billion yuan ($15.1 billion). If constructed as scheduled, the station would be put into operation in 2020.

    The station will be used in power generation, flood protection and shipping. It will further enhance local economic development and optimize energy resources allocation.
    Back to Top

    Goodhart says 'inflation' will rise again.

    Image titleGoodhart argues that since roughly 1970, the world has been in a demographic sweet spot characterized by a falling dependency ratio, or in plainer terms, a high share of working age people relative to the total population. At the same time, globalization provided multinational companies the ability to tap into this new pool of labor. This positive supply shock was a negative for established workers, forcing down the price of labor as capital flowed to these areas.

    "Naturally, and quite properly, the West supplied much of the management; the East supplied the labor," wrote Goodhart.

    Outsourcing labor to less costly locales kept wages at home from rising too fast. This, in turn, entailed that inflationary pressures were benign, as best depicted by the concept of the Great Moderation, or the idea that central bankers were better able to stabilize the business cycle.

    As companies were encouraged to boost capacity with workers rather than capital equipment, this put downward pressure on the cost of the latter.

    "Access to a new reserve army of cheap global labor through globalization has encouraged companies to invest in this workforce rather than in capital at home. A garment company, for example, could choose to build a highly automated, capital-intensive factory in the U.S. or build a low-tech, high-labor factory in the Far East," said Toby Nangle, who published a column on the connection between labor power and interest rates in May. "For years, companies have been choosing the latter option, which reduces the requirement for capital in the West, thereby reducing the price of that capital."

    “China’s economic markets joined the global economy but its financial markets did not,” writes Goodhart. “When China’s labor force joined the global economy with a capital/labor ratio that was well below global standards, the relatively closed financial markets allowed China’s domestic real interest rate to remain very low in order to drive capital accumulation at home."

    The ensuing savings glut in China was recycled back into U.S. Treasuries, and put downward pressure on real interest rates. As such, the abundance of cheaper labor was only one avenue by which the world's second-largest economy contributed to these global trends.

    So what now, as the conditions that fostered these long- decades-defining demographic trends dissipate?

    Image title

    "So, we believe that demographic trends were one of the main causes of rising (within country) inequality in recent decades; and it was nothing to do with some innate tendency for returns to capital to exceed growth," wrote Goodhart's team in a direct challenge to the French economist's tome, Capital in the Twenty-First Century.

    The anatomy of income inequality over the past few decades has been increasing within countries, and decreasing between countries. Goodhart sees income inequality falling in both cases going forward.

    A shrinking labor force relative to dependents in advanced economies will work to quell income inequality within countries, while a stretch of stronger growth from emerging economies versus the Western World will continue to help income equality increase between nations.

    Perhaps most importantly, Goodhart and his predecessors' works offer a compelling rebuttal to the theory of secular stagnation -- essentially that we'll need negative real interest rates to achieve subpar growth and full employment.

    "It puts that in contention, and it puts it in contention with reference to data rather than hyperbole, and puts it in a theoretical framework that people can engage with," said Threadneedle's Toby Nangle.  "We can start to think about what data we should be looking for to test this, and luckily enough, we're looking to the fact that dependency ratios in developed markets and some emerging markets have already reached inflection points just about now."

    So the Japanification of advanced economies is far from set in stone. 

    Unlike many other economists, Goodhart does not believe the demographic backdrop of an aging population is inherently deflationary. The pool of labor around the globe that kept wages suppressed domestically on the island nation has nearly run dry; Japan, in other words, was a victim of circumstance. More generally, in order to meet the obligations of the state, the shrinking pool of workers will be forced to pay higher taxes at the same time that they'll be in a position to haggle for better wages.

    "This is a recipe for a recrudescence of inflationary pressures," wrote Goodhart. "The present concerns about deflation are fleeting and temporary; enjoy it while it lasts."

    Attached Files
    Back to Top

    Peru's Garcia makes mining key pillar of his presidential campaign

    Peru's former president Alan García has kicked off his campaign for a third term with a promise to deliver economic growth of at least 6% a year mainly by attracting more mining investment.

    The 66-year-old long-time leader of the centre-left American Popular Revolutionary Party, said he planned to achieve such goals by reducing red tape to a minimum, while working with local governments to re-start a long list of stalled mining projects.

    He also vowed to significantly reduce poverty to less than 10% by 2021, from last year's 23%, if he won a new term in the elections scheduled for April. “We will then be at the same level than developed countries,” he said according to local newspaperEl Comercio (in Spanish).

    García last governed Peru from 2006 to 2011, when prices for the key minerals mined in the country, such as copper, gold and silver, were skyrocketing and the nation’s was able to reach annual economic growth rate of 9%. But his administration also saw Peru become the world’s No. 1 cocaine exporter.

    The sociologist and politician said Peru is, undoubtedly, “a mining country” and, as such, it should work on easing opposition to projects, especially those in poor Andean regions.

    In an earlier interview with El Comercio, the sociologist and politician said Peru is, undoubtedly, “a mining country” and, as such, it should work on easing opposition to projects, especially those in poor Andean regions.

    García is proposing to do so by transferring royalties from mining projects directly to nearby communities.

    Mining opposition has stalled $21.5 billion worth of mining projects in recent years, disrupting major projects such as Southern Copper’s (NYSE, LON: SCCO) $1.4 billion Tia Maria copper mine and Newmont Mining Corp's (NYSE:NEM), (TSX:NMC) proposed $5 billion Conga copper and gold mine.

    García promised to build trains to transport minerals from operations, mostly located in the Andes Mountains, to ports on the Pacific coast, and said he would quickly formalize small-scale gold miners.

    Illegal miners clash with police during a 2014 protest against a law criminalizing their activities (Photo from archives).

    Peru’s current administration began such process in 2012, before making informal mining a criminalized activity. But despite the efforts, illegal gold production in the South American nation has increased fivefold in the last six years

    Attached Files
    Back to Top

    China Aims For Slower Growth

    China’s leaders have confirmed that they are aiming for an annual GDP growth of “at least 6.5 percent” over the next five years. The announcement confirms economists’ predictions that China would lower its official growth target from this year’s goal of “around 7 percent,” in an acknowledgment of economic challenges that have seen exports fall and output slow in recent months.

    China did not release a formal GDP growth target last week, when its leaders met to set the country’s economic direction for the next five years. But speaking to South Korean business leaders at a conference in Seoul on Sunday, Chinese Premier Li Keqiang said, “We need to maintain year-on-year growth of at least 6.5 percent,” adding that this would enable China to “meet the goal,” set at that meeting, of creating a moderately prosperous society by 2020.
    Back to Top

    China official PMI below expectations Caixin PMI above

    China’s official purchasing managers index remained at 49.8 in October, the National Bureau of Statistics said Sunday, compared with an estimate of 50, the line between expansion and contraction.

    The unchanged manufacturing PMI suggests continued monetary easing by China’s central bank hasn’t yet boosted smaller businesses as much as their larger, state-owned counterparts, which are able to borrow at reduced rates. A private manufacturing PMI reading by Caixin Media and Markit Economics released Monday was at 48.3, compared with the median projection of 47.6 in a Bloomberg survey and up from 47.2 in September.
    Back to Top

    Oil and Gas

    Petrobras reduces impact of oil workers’ strike

    Petrobras has managed to reduce the impact of this week’s oil workers’ strike.

    The Brazilian state-run oil and gas company said that, thanks to its contingency plan, the loss of production on November 4 was 134,000 barrels of oil, which means a 25% recovery with respect to that recorded the previous day.

    According to Petrobras, the estimated loss for Thursday is 127,000 barrels.

    Petrobras also said that there were isolated cases of occupation of facilities and control of production, without permission for contingency teams to operate.

    “The company is taking all the appropriate legal measures to protect its rights and will continue to do everything needed to ensure the maintenance of its operations, the preservation of its installations and the safety of its workers,” the company said.

    Petrobras added that any material facts would be timely disclosed to the market.
    Back to Top

    EOG Resources posts $4.1 billion loss on impairment

    EOG Resources Corp.’s oil production sank in the third quarter and it lost $4.1 billion, largely because it wrote down the value of large but older oil property.

    The oil slump also has brought EOG some benefits. It cut lease and well expenses by 17 percent as it wrung out costs and got better deals from equipment suppliers, the company said. And its costs to move its oil fell 11 percent as general and administrative costs declined 6 percent.

    Its oil production also slipped, falling 5 percent compared to the same period last year. But that’s a small figure compared to the 36 percent it cut from spending on drilling projects. It didn’t lower its annual spending guidance.

    “We are executing on our 2015 plan to reset the company to be successful in a low commodity price environment,” EOG CEO William Thomas said in a written statement.

    The Houston oil producer’s $4.1 billion loss, about $7.47 a share, was down from a $1.12 billion profit, or $2.01 a share, in the July-August quarter last year. Quarterly revenue sank from $5.1 billion to $2.2 billion.

    EOG said, it bolstered its collection of oil resources in West Texas by 1 billion barrels of oil equivalent as it scouted out 950 new drilling locations. It has been able to push its wells closer together as technology has advanced, giving it a way to tap stacked layers of oil-soaked shale rock. It also bought $368 million in acreage in the Delaware Basin across Texas and New Mexico.

    At its key acreage in the core of the Eagle Ford Shale in South Texas, EOG added more hefty payloads of sand into 95 percent of its wells, a technique to boost oil production from hydraulic fracturing, the process of blasting water, chemicals and sand underground to break open shale rocks.

    Attached Files
    Back to Top

    InterOil to increase interest in Triceratops and Raptor

    InterOil Corporation will increase its interest in two key licenses following the withdrawal of Pacific Exploration & Production Corporation from Papua New Guinea.

    The withdrawal of Pacific, formerly Pacific Rubiales Energy Corp., is consistent with its strategy of focusing on Latin America.

    As a consequence of Pacific's withdrawal, InterOil will increase its interest in PRL 39, which contains the Triceratops discovery, and also in PPL 475, which contains the Raptor discovery.

    InterOil Chief Executive Dr Michael Hession thanked Pacific for its support as a joint venture partner and for its investment in the discovery and appraisal of resources in Papua New Guinea.

    'We are pleased we will now own more than 78% of the Triceratops and Raptor discoveries,' he said.

    'Pacific's withdrawal simplifies license ownership for any commercialization discussions with other strategic players.'

    The 2012 farm-in agreement made certain provisions for Pacific to withdraw from the two licenses, including the right to receive a repayment of approximately US$96 million from the net cash proceeds of the commercial sale of petroleum recovered or produced from PRL 15. The repayment of US$96 million is to be made within six years from the date of withdrawal, with contributions of US$66 million from InterOil and US$30 million from minority interests. This amount has been previously disclosed in InterOil's financial statements under non-current liabilities and receivables.
    Back to Top

    Linn Energy announces third quarter 2015 results

    Linn reported the following third quarter 2015 results:

    - Average daily production of approximately 1,198 MMcfe/d for the third quarter 2015;
    - Total revenues of approximately $998 million for the third quarter 2015, which includes gains on oil and natural gas derivatives of approximately $549 million;
    - Lease operating expenses of approximately $154 million, or $1.40 per Mcfe, for the third quarter 2015;
    - Net loss of approximately $1.6 billion, or $4.47 per unit, for the third quarter 2015, which includes non-cash impairment charges of approximately $2.3 billion, or $6.43 per unit, non-cash gains related to changes in fair value of unsettled commodity derivatives of approximately $235 million, or $0.67 per unit, non-cash gains on extinguishment of debt of approximately $198 million, or $0.56 per unit, and gains on sale of assets and other of approximately $167 million, or $0.48 per unit;
    - Excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments considered by the Board of Directors, including total development of oil and natural gas properties, of approximately $111 million for the third quarter 2015;
    - Estimated net positive mark-to-market hedge book value of approximately $1.9 billion as of September 30, 2015;
    - Non-cash impairment of long-lived assets of approximately $2.3 billion for the third quarter 2015, primarily driven by lower commodity prices and the Company's estimates of proved reserves; and
    - Exceeded guidance expectations for average daily production, lease operating expenses, general and administrative expenses and excess of net cash provided by operating activities for the third quarter 2015.

    The Company highlighted the following significant accomplishments:

    - As previously announced, completed the semi-annual borrowing base redetermination in October 2015 with undrawn capacity of approximately $790 million as of September 30, 2015, pro forma for the redetermination;
    - As previously announced, repurchased approximately $783 million of outstanding senior notes during the nine months ended September 30, 2015, for approximately $557 million in cash;
    - Revised the 2015 oil and natural gas capital budget to approximately $470 million from the prior level of $530 million as a result of additional cost savings and a reduction in non-operated activity in the Williston Basin and Jonah Field;
    - Anticipate full-year cost reductions in lease operating expenses of approximately $135 million;
    - Anticipate general and administrative expense reductions of approximately $30 million on an annualized basis;
    Back to Top

    Northern Oil and Gas announces 2015 third quarter results, still has hedges

    - Production averaged 15,844 barrels of oil equivalent ('Boe') per day, for a total of 1,457,610 Boe
    - Oil and gas sales, including settled derivatives (hedges), totaled $92.7 million
    - Northern's credit facility balance was paid down by $18 million during the quarter, to $170 million, as a result of positive cash flow from operations
    - Northern added 85 gross (2.7 net) wells to production during the third quarter
    - Approximately 2.3 million barrels of oil are hedged for the next four calendar quarters at an average price of approximately $85.00 per barrel
    - Northern's adjusted net income for the third quarter of 2015 was $14.6 million, or $0.24 per diluted share. GAAP net loss for the third quarter of 2015, which was impacted by a $354.4 million non-cash impairment charge, was $323.2 million, or a loss of $5.33 per diluted share.
    - Adjusted EBITDA for the third quarter of 2015 was $71.7 million.


    'As we continue to focus our investments on our highest rate of return opportunities, we are seeing the added benefit of lower costs and innovative completion designs driving productivity,' commented Northern's Chairman and Chief Executive Officer, Michael Reger. 'In addition, the net effect of our capital spending discipline, hedge book and high-grade well additions allowed us to maintain our borrowing base at $550 million, generate free cash flow and reduce debt during the quarter.'

    Attached Files
    Back to Top

    Fed's Harker says Marcellus natural gas boom likely has peaked

    The U.S. natural gas boom centered around the Marcellus shale fields has probably hit a peak for now, Philadelphia Federal Reserve President Patrick Harker said on Thursday.

    "The robust natural gas drilling that carried this region through the worst of the Great Recession has likely plateaued in the past few years," Harker said in prepared remarks to be delivered in Philadelphia.

    Harker did not otherwise comment on the outlook for the U.S. economy or monetary policy.

    Read more at Reuters
    Back to Top

    U.S. oil producer Apache raises production forecast

    Apache Corp reported a much smaller-than-expected quarterly loss and joined a growing list of U.S. oil producers in raising full-year production forecast even as many of them cut spending.

    Increased efficiencies, a drop in service costs and low break-even levels in core U.S. shale fields are all helping U.S. oil companies increase production on reduced budgets.

    U.S. producers ranging from Oasis Petroleum Inc to Devon Energy Corp have forecast higher production in their latest quarterly reports.

    Apache on Thursday raised its full-year North American onshore production forecast to 307,000-309,000 barrels of oil equivalent per day (boepd), from 305,000-308,000 boepd.

    The company also increased its international and offshore production forecast to 172,000-174,000 boepd, from 164,000- 168,000 boepd.

    "As we turn to 2016, prudent capital allocation will continue to be our primary focus...," Chief Executive John Christmann said in a statement.

    Oil producers are keeping a tight leash on spending to cope with a near-60 percent drop in global oil prices since June last year that has sapped profitability.

    The net loss attributable to Apache's common shareholders widened to $5.56 billion, or $14.95 per share, in the third quarter ended Sept. 30, from $1.33 billion, or $3.50 per share, a year earlier.

    The latest quarter included a $1.5 billion charge related to deferred tax assets and a $3.7 billion writedown due to the oil slump.

    Adjusted loss was 5 cents per share, much lower than the average analyst estimate of 36 cents.

    Revenue more than halved to $1.5 billion.

    Read more at Reuters

    Attached Files
    Back to Top

    Denbury Resources reports third-quarter loss of $2.24 billion

     Denbury Resources Inc. (DNR) on Thursday reported a third-quarter loss of $2.24 billion, after reporting a profit in the same period a year earlier.

    The Plano, Texas-based company said it had a loss of $6.41 per share. Earnings, adjusted for asset impairment costs and non-recurring costs, came to 18 cents per share.

    The results beat Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 14 cents per share.

    The independent oil and gas company posted revenue of $303.6 million in the period, which fell short of Street forecasts. Four analysts surveyed by Zacks expected $454 million.
    Back to Top

    Saudi pilot carbon storage project may boost recovery rates at giant oilfield

    Saudi Arabia's first carbon capture and storage pilot project, located at its Ghawar oilfield, may boost oil recovery rates by 20 percentage points, oil minister Ali al-Naimi said.

    Carbon storage schemes are being promoted around the world as a way to slow global warming by preventing the release of carbon dioxide into the atmosphere. But big oil producers such as Saudi Arabia are also keen to develop the schemes as a way to extend the life of oilfields.

    By injecting carbon dioxide into depleted oil fields rather than more precious resources such as water, they can increase pressure in the fields and maximise yields, although the technology is still expensive.

    Ghawar, which has been pumping since 1951, produces over 5 million barrels per day, almost half Saudi Arabia's oil output.

    The carbon project, developed by national oil firm Saudi Aramco, started operating this year - 40 million cubic feet per day of carbon dioxide will be captured at the Hawiyah gas recovery plant and then piped 85 km (53 miles) to the Uthmaniyah area.

    At Uthmaniyah, it will be injected into flooded oil reservoirs under high pressure to enhance oil recovery, storing an estimated 800,000 tonnes of carbon dioxide every year. Aramco has previously used water injection at the field.

    "This pilot will show us whether we can take the Ghawar field from 50 percent (oil) recovery to 70 percent recovery plus or minus," Naimi told a news conference in Riyadh on Wednesday.

    The field has estimated remaining proven oil reserves of 75 billion barrels, according to the U.S. Department of Energy. Currently, Saudi oilfields have recovery rates of about 50 percent of their contents, but some fields have reached almost 70 percent through water injection, Naimi added.

    "It is hoped that this pilot project can demonstrate that it is possible to increase oil recovery at commercially sustainable costs," said Sadad al-Husseini, a former top executive at Saudi Aramco.

    There are currently 15 carbon capture and storage projects in operation worldwide, according to a report by Global CCS Institute released on Thursday.

    Read more at Reuters

    Attached Files
    Back to Top

    U.S. refineries start to return from maintenance

    Total stocks of crude oil and refined products in commercial storage across the United States dropped for the second week running last week, the first back-to-back fall since May, according to the U.S. EIA.

    More than 1.4 million barrels per day (bpd) of refinery capacity is still offline for routine maintenance and upgrades after the end of the summer driving season.

    Turnarounds have contributed to the accumulation of crude inventories but resulted in a big draw down in stocks of refined products including gasoline and distillate fuel oil.

    Stocks of crude rose by 2.8 million barrels in the week ending on Oct. 30, and have increased in each of the last six weeks, by a total of almost 29 million barrels.

    Crude stocks are now nearly 103 million barrels, about 27 percent, higher than they were at the same point last year ("Weekly Petroleum Status Report" published on Nov. 4).

    But the stock of refined fuels has fallen for seven consecutive weeks by a total of 25 million barrels, or about 500,000 bpd.

    Gasoline stocks have fallen more than 8 million barrels over the last four weeks while distillate stocks have been down for seven consecutive weeks by a total of more than 13 million barrels.

    At the end of the summer there were widespread predictions that the United States was headed for a glut of refined products once the driving season finished.

    But the threatened oversupply has not materialised as refineries have successfully matched runs with lower seasonal demand.

    The total surplus of refined products over prior-year levels has remained steady at around 95 million barrels since August.

    The increase in product stocks is concentrated in propane (22 million barrels) and distillate fuel oil (21 million barrels) with smaller rises in finished gasoline (14 million barrels) and gasoline blending components (13 million barrels).

    Proportionately, the surplus is much larger in propane, where stocks are up 28 percent, and distillates, up 18 percent, than gasoline, up just 6 percent, and blending components, up 7 percent.

    The result has been a big counter-seasonal shift in the relative prices of distillates and gasoline.

    With winter approaching, distillates, would normally command a premium of around 36 cents per gallon, $15 per barrel, over gasoline, and the premium would normally rise through year-end and into January.

    However, this year the premium has been falling and shrunk to just a third of its normal level, around 12 cents per gallon.

    U.S. refineries have passed the half-way point of the maintenance season. Crude processing has already increased by more than 350,000 bpd over the last three weeks.

    Runs are likely to rise by a further 500,000 to 900,000 bpd over the course of November and December based on prior experience.

    Increased processing should limit any further increase in crude oil stocks before the year-end while stabilising gasoline inventories. The main challenge for refiners will be marketing surplus propane and middle distillates.

    U.S. propane exports have been increasing rapidly and competing in markets much further afield than was the case in the past, according to the EIA ("U.S. propane exports increasing, reaching more distant markets" Nov. 3).

    Propane exports were initially directed towards neighbouring markets in Mexico, the Caribbean and South America but are now reaching Europe and Asia, where they compete with supplies from Saudi Arabia and the Middle East.

    Marketing surplus distillate is more challenging because diesel demand in the United States and China has been sluggish, and big new refineries in the Middle East and Asia are geared to maximise diesel production.

    However, fears that storage space for diesel will run out and force refinery slowdowns are overblown.

    Read more at Reuters

    Attached Files
    Back to Top

    Enbridge sees hit from delay in start of Line 9 pipeline

    Enbridge Inc, Canada's largest pipeline company, said a delay in starting up a pipeline that will move crude from Ontario to Quebec will hurt its adjusted earnings for the year.

    The company said it now expects full-year adjusted earnings to fall within the lower half of the estimated range of C$2.05-C$2.35 per share.

    Canadian regulators approved the additional test results of Enbridge Line 9 crude oil pipeline in September, clearing the way for the delayed 300,000 barrel-per-day route to the east of the country.

    The 639-km (400-mile) pipeline, which will replace supplies currently shipped by rail or imported from abroad, was expected to start operating in early 2015.

    Calgary-based Enbridge's adjusted earnings rose 15.7 percent to C$399 million ($303.4 million), or 47 Canadian cents per share, in the third quarter ended Sept. 30, from a year earlier.

    Analysts on average were expecting earnings of 48 cents per share, according to Thomson Reuters I/B/E/S.

    The company's Mainline system, which moves the bulk of Canadian crude exports to the United States, shipped an average of 2.2 million barrels per day (bpd) in the third quarter ended Sept. 30, compared with 2.0 million bpd a year earlier.

    Separately, Enbridge said on Thursday it had bought a 24.9 percent stake in an offshore wind energy project in the United Kingdom for C$750 million.
    Back to Top

    Spains's Fenosa expects to obtain first Sabine Pass LNG in 2016

    Spain's Gas Natural Fenosa expects to obtain some early quantities of LNG from the US Sabine Pass LNG terminal during 2016, according to company CEO Rafael Villaseca. 

    The company, which has a 4.8 Bcm/year contract starting in 2017, said Wednesday it expects to place some volume ahead of that date, without saying how much.

    Villaseca said the company has already made agreements to sell 3 Bcm of the annual 4.8 Bcm it has agreed to buy from the plant's operator Cheniere Energy.

    Villaseca said Gas Natural would buy US gas at an average of $6.33/MMBtu on a FOB basis for 2016.

    The company said it expects to sell 120 TWh of LNG globally in 2016, with 80% of that volume already covered.

    Attached Files
    Back to Top

    Canadian Natural Resources posts 3Q loss

    Canadian Natural Resources Ltd. (CNQ) on Thursday reported a third-quarter loss of $85 million, after reporting a profit in the same period a year earlier.

    The Calgary, Alberta-based company said it had a loss of 8 cents per share. Earnings, adjusted for one-time gains and costs, were 8 cents per share.

    The oil and natural gas company posted revenue of $2.54 billion in the period.

    Commenting on third quarter results, Steve Laut, President of Canadian Natural stated, "The third quarter was a very strong operational quarter, as we continue to make significant progress in reducing costs while maintaining effective, efficient and reliable operations across our business segments. Our disciplined approach has led to operating costs per barrel equivalent reductions in 2015 equating to approximately $945 million. At the same time our average production has increased 11% despite a very significant drop in capital program spending. We look to maintain this positive momentum into 2016, with 2016 production volumes targeted at roughly the same level as in 2015. We currently anticipate 2016 cash flows to cover 2016 capital expenditures between $4.5 and $5.0 billion, which includes approximately $2.1 billion of Horizon expansion project expenditures. Importantly, we target to exit 2016 with Horizon production volumes at 170,000 bbl/d and the Phase 3 expansion well advanced toward completion in Q4/17. For 2017, Horizon expansion project expenditure levels are targeted between $1.0 and $1.3 billion, as we complete the Horizon expansion."

    Canadian Natural's Chief Financial Officer, Corey Bieber, continued, "In 2015, we have been exceptionally proactive in managing our balance sheet and exhibiting capital discipline, given the significant decline in commodity prices. To date, and including the most recent reduction in capital expenditure guidance of $65 million, we have reduced our targeted capital expenditures by approximately $3.2 billion in 2015 from the original budget, while at the same time increasing crude oil and natural gas production by a targeted 9% year over year. For the first nine months, our cash flow funded all but $300 million of our capital expenditures and dividends paid, including over $1.6 billion of Horizon Phase 2/3 expansion costs. Our liquidity remains robust at $3.4 billion, and the balance sheet remains resilient through this commodity price cycle with our solid access to debt capital markets, as we maintain strong investment grade credit ratings."
    Back to Top

    No Credit? No Problem! Pipe Maker Offers Oil Companies Financing

    Billionaire Paolo Rocca has a new way of keeping his cash-starved oil company clients drilling: putting
    up funding as bank credit tightens.

    Rocca’s Tenaris SA, the biggest manufacturer of seamless steel tubes for the oil industry, will use its own cash to support clients next year after crude prices collapsed, the Argentine-Italian entrepreneur said Thursday on a quarterly conference call. Tenaris is prepared to take a hit on its net cash holdings as a result.

    “We are monitoring the financial health of our customers and we are providing to many of our big customers an extension in payment conditions that is really helping in this very
    complicated environment in which part of the credit lending has been cut by banks,”
     Chief Financial Officer Edgardo Carlos said on the same call.

    Crude’s 40 percent plunge in the past year is squeezing margins and triggering billions of dollars of writedowns among producers. Even so, Rocca expects drilling levels to improve in the U.S. and Kuwait next year. Drilling in Latin America probably will fall, he said.

    Tenaris net cash position rose to $2.1 billion in the third quarter. Little changed on Thursday, the company’s shares have fallen 6 percent his year compared with the Bloomberg Energy mSubindex’s 25 percent decline.

    “We will use part of our cash to support our clients, to support some of their plans,” Rocca said.

    Attached Files
    Back to Top

    Amec Foster Wheeler slashes dividend, shares tumble

    British oil and gas services company Amec Foster Wheeler Plc slashed its dividend, forecast lower second-half margins and raised its cost-saving target as upstream customers reduced spending amid tumbling oil prices.

    The London-listed company lost more than a quarter of its market value in morning trade on Thursday. The stock was on track to record its sharpest one-day fall ever.

    Oil equipment and services companies have been hit as their clients have cut capital expenditure, themselves pressured by oil prices that have more than halved since their 2014 peak.

    Amec Foster said it raised its cost-savings target by $55 million to $180 million by 2017, and that it would recommend a final dividend of 14.2 pence, half the amount it paid a year earlier.

    The company added that it expected second-half margins to fall from the first half. It reported pro-forma scope revenue of 3.87 billion pounds ($5.95 billion) for the nine months ended Sept. 30, a 1.8 percent fall from a year earlier.

    Amec's peer Hunting Plc on Tuesday forecast a sharp fall in profit from continuing operations this year to a tenth of its 2014 result, while engineering firm Weir Group Plc said separately it would cut 400 more jobs.

    Europe's oil majors have reduced 2015 spending programmes by about 15 percent to near $107 billion, and more cuts are seen next year.

    Amec Foster Wheeler shares were down 25.4 percent at 556.85 pence at 0922 GMT on the London Stock Exchange. The shares hit a low of 550 pence earlier in the session, their lowest since April 2009.

    Read more at Reuters

    Attached Files
    Back to Top

    China Pushing Ahead With Shale While Falling Prices Dim Interest

    China is poised to further open up its acreage to shale gas exploration even as the appetite for producing the fuel ebbs amid a global glut and plunge in energy prices.

    China’s Ministry of Land and Resources may announce details of the third round of shale gas auctions within two months, Guo Jiaofeng, a researcher at the Development Research Center of the State Council, a government think tank, said in an interview in Chengdu, Sichuan province. An announcement is expected by the end of the year, he said.

    The new blocks will be offered as interest in exploring China’s shale potential has cooled amid falling prices and the country’s challenging geology. Brent, the benchmark for more than half of the world’s crude trading, has fallen more than 40 percent in the past year, pulling gas prices down with it. The government is trying to lure more private companies in the next bid round as part of broader reforms of an industry dominated by state-run giants.

    “It may not be the best time for private companies to bid for shale parcels,” said He Sha, a professor at Southwest Petroleum University. “Falling oil prices, shrinking government subsidies and a lack of technology, among other things, will hurt private companies’ chances to succeed in shale gas exploration.”

    China will cut subsidies for shale gas developers from 2016 to 2020 even as the country encourages explorers to produce more natural gas as a replacement for coal. Shale gas subsidies will be cut to 0.3 yuan per cubic meter from 2016 to 2018 and further to 0.2 yuan from 2019 to 2020 from 0.4 yuan currently, China’s finance ministry said in April.

    The oil and gas research center at the China Geological Survey, an affiliate of the ministry, has selected 40 parcels in northern and southern China and submitted the list to the land regulator for the auctions, Guo Tianxu, an engineer at the center, said in an interview at the conference. The ministry may select more than 20 parcels from the list for the auction, he said.
    Back to Top

    Marathon Oil has third-quarter loss as low oil prices hurt

    Marathon Oil Corp, on Wednesday reported a quarterly loss that topped Wall Street expectations, as low commodity prices prompted the a U.S. oil company with operations in Texas and Equatorial Guinea to write down the value of assets.

    Marathon, based in Houston, also tweaked its production growth forecast for this year.The company expects total output to grow 7 percent, at the top end of its previous range for growth of 5 percent to 7 percent.

    U.S. oil and gas companies, hit hard by a more than 60 percent drop in crude prices from a year ago, have slashed capital spending and slashed the number of rigs drilling to conserve cash.

    Even so, operators have been able to lift output through drilling efficiencies and new techniques used to brings wells to production.

    "In an environment where we expect oil prices to remain low for a longer period of time, Marathon Oil continues to take strong action to deliver meaningful cost reductions and efficiency gains, while we remain on target to achieve the high end of our original total Company production growth targets," Marathon Oil Chief Executive Lee Tillman said in a statement.

    Marathon, which slashed its dividend 76 percent last week, reported a third-quarter loss of $749 million, or $1.11 per share, compared with a year-ago profit of $431 million, or 64 cents per share.

    Excluding $611 million in after-tax charges that included asset impairments, Marathon had a per share loss of 20 cents per share. On average, Wall Street analysts had expected a loss of 40 cents, according to Thomson Reuters I/B/E/S.

    Total oil and gas output from continuing operations (excluding Libya) averaged 434,000 barrels oil equivalent per day (boed), up 6 percent from the year-earlier period.

    Read more at Reuters

    Attached Files
    Back to Top

    China fuel surplus to double by 2020 as refining sector opens -CNPC research

    Surplus annual production of diesel, gasoline and kerosene in China will double to nearly 30 million tonnes by 2020 from last year's level, boosted by increasing output from independent refiners, according to an industry research paper.

    Smaller and independently operated refineries, known as 'teapots', are set to churn out more and higher-grade oil products after Beijing allowed them to import crude for the first time to encourage competition and boost private investment.

    That could stoke exports of finished products from the world's second-largest refining industry after the United States, dragging on Asian refining margins DUB-SIN-REF already pressured by rising supplies from mega-sized new refineries in the Middle East.

    "With improved feedstock, they'll be able to produce higher quality fuel ... Teapots will become more competitive in the Chinese fuel market," CNPC Economics and Technology Research Institute, the in-house research arm for state energy giant China National Petroleum Corp, said in its paper.

    These plants, mostly in the eastern province of Shandong, used to produce diesel and gasoline by processing imported fuel oil from places such as Russia or Venezuela, a feedstock heavier and generally of poorer quality than crude oil.

    The paper, released to media this week, estimated that teapot refiners could win quotas to import a total of 1.6 million barrels per day of crude oil. By the end of October, Beijing had granted 11 plants quotas to ship in a total of nearly 1 million bpd.

    China's refining industry has long been dominated by state companies Sinopec Corp and PetroChina, which have only until recently started scaling down expansion after nearly two decades of building frenzy.

    The growing fuel surplus will see independents queuing up to apply for permits to export as early as next year, industry experts said. For now, only a handful of state refiners are licensed oil exporters.

    Total Chinese exports of diesel, gasoline and kerosene stood at around 20 million tonnes in 2014, according to customs data Teapot refineries are forecast to operate at 60 percent of their total capacity in 2016, up from an estimated 37 percent in 2014, according to CNPC.

    It also estimated China's total crude oil processing capacity would reach 800 million tonnes, or 16 million bpd, by 2020 assuming an average addition of 400,000 bpd of new capacity each year.

    Crude throughput is likely to hit 12 million bpd, or 1.6 million bpd more than the current rates shown in official data.

    Read more at Reuters
    Back to Top

    US oil production climbed again last week

                                                     Last Week   Week Before     Last Year

    Domestic Production 1000'...... 9,160             9,112              8,972

    Attached Files
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending October 30, 2015

    U.S. crude oil refinery inputs averaged over 15.6 million barrels per day during the week ending October 30, 2015, 21,000 barrels per day more than the previous week’s average. Refineries operated at 88.7% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.5 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day. 

    U.S. crude oil imports averaged over 6.9 million barrels per day last week, down by 89,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.2 million barrels per day, 0.8% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 307,000 barrels per day. Distillate fuel imports averaged 84,000 barrels per day last week. 

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.8 million barrels from the previous week. At 482.8 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 3.3 million barrels last week, but are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.3 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 2.3 million barrels last week. 

    Total products supplied over the last four-week period averaged 19.7 million barrels per day, up by 1.1% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.2 million barrels per day, up by 2.5% from the same period last year. Distillate fuel product supplied averaged over 3.9 million barrels per day over the last four weeks, up by 8.9% from the same period last year. Jet fuel product supplied is up 2.8% compared to the same four-week period last year.

    Attached Files
    Back to Top

    Goodrich Petroleum reports 3Q loss

    Goodrich Petroleum reports third-quarter loss, misses expectations
    Goodrich Petroleum Corp. (GDP) on Wednesday reported a loss of $17.8 million in its third quarter.

    On a per-share basis, the Houston-based company said it had a loss of 44 cents.

    The results missed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for a loss of 21 cents per share.

    The independent oil and gas company posted revenue of $17.7 million in the period, also missing Street forecasts. Five analysts surveyed by Zacks expected $31 million.

    To date, the Company has reduced total debt by approximately $198 million (31%) and annual interest expense by approximately $9.5 million (debt exchanges and conversions only) since the end of the second quarter through the following transactions:

    In September the Company exchanged $55 million of (old) 2032 convertible notes into $27.5 million of (new) 2032 convertible notes resulting in $27.5 million of net debt reduction;
    In September the Company closed on the sale of its Eagle Ford Shale production, proved reserves and associated acreage which allowed for a reduction in net debt through the third quarter of approximately $72.5 million. Approximately $14 million of sales proceeds is still held in escrow pending a post-closing settlement;
    In October the Company exchanged $158.2 million of 2019 senior notes into $75 million of second lien notes resulting in $83.2 million of net debt reduction. The Company expects to book an estimated gain of $62.6 million in the fourth quarter for the debt exchange;
    In October the Company exchanged $17.1 million of (old) 2032 convertible notes into $8.5 million of (new) 2032 convertible notes resulting in $8.6 million of net debt reduction;
    In September and October the Company reduced total debt by an additional $6.2 million through conversion of (new) 2032 convertible notes into common stock.

    The Company remains focused on transactions that will reduce debt and interest expense.

    The borrowing base under the Company's senior credit facility was reaffirmed at $75 million and covenants amended to provide for flexibility through February 2017.


    Capital expenditures for the quarter totaled $16.4 million. Full year capital expenditures expected to be lower by 10-15% versus previous guidance;
    Production for the quarter totaled 645,000 barrels of oil equivalent ("Boe") (50% oil), which was affected by deferred completions and the sale of the Company's Eagle Ford production, proved reserves and associated acreage;
    Adjusted Revenues, which includes the benefit of realized gains on the Company's oil hedges, were $31.5 million for the quarter versus $55.1 million in the prior year period;
    Back to Top

    Norway Oil-Rig Tender Reveals 'Desperate' Drillers in Price Rout

    An unusually high number of rigs are competing for a Det Norske Oljeselskap ASA drilling contract on the Alvheim oil field in the North Sea, an illustration of how companies are desperate for business as producers slash spending amid a crude-price slump.

    “I’ve tendered for rigs on the Norwegian continental shelf many times, and I’ve never seen a tender with 13 rigs competing for the job,” Det Norske Chief Executive Officer Karl Johnny Hersvik said in an interview Wednesday. “That’s a pretty extraordinary figure.”

    Thanks to the fierce competition among drillers starved of contracts, Det Norske expects to pay “extremely favorable” rental rates and get “very flexible” terms for the 300-day contract for a semi-submersible rig that it’s seeking, Hersvik said.

    Offshores drillers such as Transocean Ltd., Seadrill Ltd. and Fred Olsen Energy ASA have been caught in a double whammy of falling demand for their services and a glut of new rigs coming into the market. In Norway, Statoil ASA, the dominant state-controlled oil company, has cut the equivalent of four years of drilling by terminating and suspending rig contracts over the past 18 months, adding to the oversupply.

    “It’s a desperate situation for the rig companies and a very pleasant situation for the oil companies,” analyst Truls Olsen of Fearnley Securities AS said in a phone interview. “Typically, less than a handful of rigs have been involved in tenders like this” and the number of companies vying for Det Norske’s contract “must be a record for Norway,” he said.

    The daily rental rate for Det Norske’s rig will be lower than a recent award to Odfjell Drilling Ltd., which will get about $300,000 a day to drill on Statoil’s Johan Sverdrup field for three years starting in March 2016, Nordea Markets analyst Janne Kvernland said by e-mail. That’s about half of what Odfjell’s Deepsea Atlantic rig is currently earning.

    Next year will be “ugly” for the rig market, Seadrill CEO Per Wullf said last month. The Hamilton, Bermuda-based driller could be willing to accept day rates of as low as $160,000 on very short contracts if they allow the rig to stay active and bridge a gap in its work schedule, he said. The company won’t accept less than $350,000 to $400,000 a day for longer deals, Wullf said.

    Det Norske expects to award the contract, which will also include options that are “much longer” than the initial period, “quite soon,” Hersvik said.

    Attached Files
    Back to Top

    UK Grid uses 'last resort measure to keep power flowing

    Britain was forced to rely on new "last resort" measures to keep the lights on for the first time on Wednesday after coal power plants broke down and wind farms produced less than one per cent of required electricity.

    National Grid used a new emergency scheme to pay large businesses to cut their electricity usage, resulting in dozens of large office buildings powering down their air conditioning and ventilation systems between 5pm and 6pm.

    The scheme, which is paid for through levies on consumer energy bills, was introduced last year but had never been called upon before.

    National Grid blamed the power crunch on “multiple plant break downs”. Several ageing coal-fired power plants had unexpected maintenance issues and temporarily shut down, experts said, reducing available supplies.

    Back to Top

    Carrizo Oil & Gas announces third quarter 2015 loss of $708 million and increases production guidance

    Carrizo Oil & Gas, Inc. today announced the Company's financial results for the third quarter of 2015 and provided an operational update, which includes the following highlights:

    Record Oil Production of 23,573 Bbls/d, 18% above the third quarter of 2014
    Total Production of 35,948 Boe/d, 7% above the third quarter of 2014
    Loss From Continuing Operations of $708.8 million, or ($13.75) per diluted share, and Adjusted Net Income (as defined below) of $10.4 million, or $0.20 per diluted share
    Adjusted EBITDA (as defined below) of $113.6 million
    Raising 2015 crude oil production guidance

    Carrizo reported a third quarter of 2015 loss from continuing operations of $708.8 million, or ($13.75) per basic and diluted share compared to income from continuing operations of $83.0 million, or $1.83 and $1.80 per basic and diluted share, respectively, in the third quarter of 2014. The loss from continuing operations for the third quarter of 2015 includes certain items typically excluded from published estimates by the investment community, including the full cost ceiling test impairment recognized this quarter. Adjusted net income, which excludes the impact of these items as described in the statements of operations included below, for the third quarter of 2015 was $10.4 million, or $0.20 per basic and diluted share compared to $31.8 million, or $0.70 and $0.69 per basic and diluted share, respectively, in the third quarter of 2014.

    For the third quarter of 2015, adjusted earnings before interest, income taxes, depreciation, depletion, and amortization, as described in the statements of operations included below ('Adjusted EBITDA'), was $113.6 million, a decrease of 22% from the prior year quarter as the impact of lower commodity prices more than offset the impact of higher production volumes.

    Production volumes during the third quarter of 2015 were 3,307 MBoe, or 35,948 Boe/d, an increase of 7% versus the third quarter of 2014. The year-over-year production growth was driven by strong results from the Company's Eagle Ford Shale assets as well as an increase in production from the Company's Utica Shale assets. Oil production during the third quarter of 2015 averaged 23,573 Bbls/d, an increase of 18% versus the third quarter of 2014 and 6% versus the prior quarter; natural gas and NGL production averaged 51,710 Mcf/d and 3,757 Bbls/d, respectively, during the third quarter of 2015. Third quarter of 2015 production exceeded the high end of Company guidance due primarily to strong performance from the Company's Eagle Ford Shale assets.
    Back to Top

    Range Resources to offload natural gas operations in Virginia for $876mln

    US-based oil and natural gas producer Range Resources is set to offload its natural gas operations in southwestern Virginia's Nora field for $876mln in a bid to reduce debt.

    As part of the transaction, the company will sell about 3,500 operated wells and about 460,000 net acres in the Nora/Haysi combined fields.

    During the third quarter, the Nora assets produced 109 Mmcf per day representing 7.5% of Range Resources' net production.

    "While these are great assets operated by a talented team, bringing the value forward through a sale was the best decision for our shareholders."

    Following the sale, the company will be able to cut total debt by an expected 24% and further bolster its financial position.

    Range Resources chairman, president and CEO Jeff Ventura said: "While these are great assets operated by a talented team, bringing the value forward through a sale was the best decision for our shareholders.

    "Using our consistent, return-focused capital allocation process, we will continue to review our portfolio for opportunities to bring value forward where other assets cannot compete for capital in comparison to our 1.6 million stacked-pay acreage position in the Marcellus, Utica and Upper Devonian."

    The sale, which is scheduled to close by the end of the year, is also expected to reduce direct operating expenses, brokerage natural gas and marketing expenses for 2016.

    According to Range Resources, the sale is subject to customary closing conditions as well as purchase price adjustments.

    The company purchased additional interest in the Nora Field in June 2014 and took over 100% ownership of the asset.
    Back to Top

    Report: EU plans more LNG imports

    European Union is targeting increase in liquefied natural gas imports, exploiting its diversification potential.

    According to Reuters, a draft document seen by the news agency reveals that the commission is preparing a strategy for LNG imports and gas storage, a part of its attempts to create a single market based on cooperation and source diversification across the union.

    The document also addresses the shareholder’s agreement signed by Gazprom and its partners to construct the Nord Stream II pipeline, claiming it opposes the European regulatory framework.

    The commission questions the necessity of such a project that would bypass the traditional transit state, Ukraine and reinforce Gazprom’s position in the German market, according to the report.

    Although, Russian gas is priced lower than LNG, it is believed that the later gives certain leverage to the European Union in new contract negotiations, cutting on its dependence on Russian gas.
    Back to Top

    NDRC cuts fuel prices

    The National Development and Reform Commission (NDRC), China's top economic planner, on Tuesday announced that it will reduce both gasoline prices and diesel prices by 125 yuan ($19.7) per ton each starting from Wednesday.

    Retail gasoline prices will fall by 0.09 yuan per liter after the adjustment, while diesel prices will be cut by 0.11 yuan per liter, according to the NDRC.

    This is the 10th oil price reduction this year, news portal reported on Tuesday.

    The NDRC said the adjustment was made based on recent changes in the global market.

    Attached Files
    Back to Top

    Chesapeake trims 2015 capex to cope with weak oil and gas prices

    Oil and gas producer Chesapeake Energy Corp cut its 2015 capital budget for the second time this year to cope with a slump in oil and gas prices, but raised its production forecast.

    The company also wrote down the value of some oil and gas assets by $5.42 billion in the latest quarter, adding to the $10 billion in impairment charges it has already booked this year.

    Chesapeake lowered its 2015 capital expenditure target to $3.4-$3.9 billion from $3.5-$4.0 billion.

    However, the company raised its 2015 total production forecast to 670,000-680,000 barrels of oil equivalent per day (boepd), from 667,000-677,000 boepd.

    Chesapeake's shares were up 4.7 percent at $7.97 in premarket trading on Wednesday. The stock has lost 65 percent in the past 12 months.

    Net loss attributable to Chesapeake shareholders was $4.69 billion, or $7.08 per share, in the third quarter ended Sept. 30, compared with a profit of $169 million, or 26 cents per share, a year earlier.

    Excluding one-time items, Chesapeake reported a loss of 5 cents per share, compared with the average analyst estimate of 13 cents per share, according to Thomson Reuters I/B/E/S.

    Read more at Reuters
    Back to Top

    Sinopec, PetroChina cut domestic oil product sales, boost exports

    China's state-owned oil giants Sinopec and PetroChina reported a modest 1.73 million mt or 0.7% increase in their domestic oil products sales in the first nine months of 2015, but exports rose by 2.59 million mt or 12% in the same period, Platts calculations based on recently released results by the two companies showed.

    The data from the companies, which account for around 85% of China's domestic market share, underscores the softness in China's oil demand and illustrates how refiners are ramping up exports in a bid to reduce rising stocks.

    Sinopec's domestic oil product sales edged up 0.8% year on year to 126.71 million mt over January-September, while exports rose 12.4% to 14.04 million mt, the company's third-quarter report released last week showed. Total sales came in at 140.75 million mt, up 1.9%.

    In comparison, PetroChina's gasoline, jet/kerosene and gasoil sales rose 1.5% year on year to 119.3 million mt, according to a report released last week.

    PetroChina does not split its sales between the export and domestic segment, but according to Platts calculations, the company sold around 109.54 million mt of these three oil products to the domestic market, up 0.6% from last year, but exports increased 12% to around 9.76 million mt.

    PetroChina said in its press release that the challenges in the domestic oil and gas market, including oversupply and a mismatch between production and sales, will remain unchanged.

    Amid sluggish demand and oversupply, both Sinopec and PetroChina reported a drop in the earnings of their marketing segments in the first three quarters.

    Sinopec's marketing profit declined 18.7% year on year to Yuan 21.5 billion, while PetroChina reported a loss of Yuan 978 million compared with a profit of Yuan 10.57 billion in the same period of 2014.

    In the refining segment, both Sinopec and PetroChina cut their operating rates over January to September.

    During the period, Sinopec refined 178.32 million mt of crude, up 1.4% year on year, the company said.

    Based on Sinopec's reported refining capacity of 292.4 million mt/year as of end-December 2014, its refinery utilization averaged 81.5% in the first three quarters of 2015, down from 83.3% in the same period of last year.

    Meanwhile, PetroChina cut its refinery utilization more sharply to average 79.5% in the first nine months of 2015 from 84.9% a year earlier.

    Attached Files
    Back to Top

    Yergin give the bulls on Oil hope.

    Oil is near a bottom and global supplies look poised to close their gap with demand as investments in new production decline and consumption grows, according to Pulitzer Prize-winning author Daniel Yergin.

    U.S. crude output, which surged to the most in more than three decades this year and triggered a price collapse, will retreat by about 10 percent in the 12-months ending April, according to Yergin, vice chairman at IHS Inc. Global oil supply and demand will begin to move into balance by late 2016 or 2017 and prices may rise to $70 to $80 a barrel by the end of the decade.

    “We are in the bottom part of the cycle and a year from now the the market will be looking different,” Yergin, author of the award-winning book “The Prize,” said in Tokyo on Oct. 30. “These prices are having such a big impact on investment.”

    Back to Top

    European Oil's $8 Billion Plan to Pay Investors and Retain Cash

    Image titleIn a record downturn for the oil industry, cash is everything to companies and dividends are everything to their investors. One tool is helping Europe’s three biggest producers preserve both, but there’s a long-term price to pay.

    Royal Dutch Shell Plc, Total SA and BP Plc will retain $8 billion a year in cash by giving investors the option of receiving payouts in shares instead, according to Jean-Pierre Dmirdjian, an analyst at Liberum Capital Ltd. That’s equivalent to about 8.5 percent of total cash and equivalents currently on their books, making the so-called scrip dividend a vital tool as companies curb spending to ride out the slump in oil prices.

    Oil companies’ balance sheets are under pressure as investors expect them to keep paying dividends and spending to develop new resources even as earnings tumble. BP and Total didn’t generate enough cash from operations in the first nine months of this year to cover these expenditures. While issuing new shares to investors eases the burden today, it also means future earnings will be spread more thinly.

    “The scrip dividend is postponing the cash payout for the future in the hope oil prices recover,” Alexandre Andlauer, a Paris-based oil sector analyst with AlphaValue SAS, said by phone. “While it preserves cash, for now, it dilutes earnings per share. When oil prices rise to $60, investors will start looking at more value through earnings per share rather than cash.”

    Attached Files
    Back to Top

    Oasis Petroleum profit beats thanks to cost cuts

    North Dakota oil producer Oasis Petroleum Inc posted a better-than-expected quarterly profit on Tuesday as it successfully slashed costs to offset plunging crude prices.

    Bucking the industry trend to hunker down, Oasis also boosted its production forecast for the year and locked in hedges for 2017, steps that signal the Houston-based company's confidence it can weather the low-price storm.

    For the third quarter, the company posted net income of $27.1 million, or 20 cents per share, compared with $121.6 million, or $1.21 per share, in the year-ago period.

    Excluding one-time items, including a gain from oil hedges, Oasis earned 9 cents per share.

    By that measure, analysts expected earnings of 6 cents per share, according to Thomson Reuters I/B/E/S.

    Oasis slashed its capital budget by 54 percent from the second quarter to $78 million, sharply curtailing spending on its exploration projects as well as its wastewater disposal division, which the company is marketing to potential investors.

    Production rose 10 percent in the quarter to 50,546 barrels of oil equivalent per day (boe/d).

    For the year, Oasis now expects to produce 49,700 to 50,100 boe/d, up from a previous estimate of 49,000 to 50,000 boe/d.

    Oasis also hedged 4,000 boe/d of production for 2017 at $53.62 per barrel, in line with Wall Street's expectations on where oil prices should be that year. 

    Oasis, which only operates in North Dakota's Bakken shale, said it plans to continue to operate three drilling rigs for the foreseeable future, though it likely will continue to expand its backlog of drilled-but-uncompleted wells from the current 87 due to cold winter weather.

    Oasis and other oil producers received a lifeline last month from regulators who approved a plan to extend the time required to bring a well online.

    The change will let the industry preserve cash. Oasis had $1.34 billion left to draw on its $1.53 billion credit line as of Sept. 30.

    The company received permission from its bondholders last month to make changes that restrict its ability to take on second-lien debt, a step that maintain its access to that line of credit.

    Read more at Reuters

    Attached Files
    Back to Top

    Despite gloom, four U.S. shale oil firms lift output views

    A handful of U.S. shale oil producers are pushing up their production forecasts, saying efficiency gains from drilling in prime rock are helping them eke out more crude in the middle of the worst price crash in six years.

    The slightly bolder outlooks this week from Oasis Petroleum Inc, Devon Energy Corp, Pioneer Natural Resources Co and Diamondback Energy Inc show that the confident swagger that typified the U.S. shale boom's early days has yet to be fully tempered by the more than 50 percent drop in oil prices since last year.

    Though the consensus view is that rig productivity in U.S. shale basins is stalling to portend a drop in national output as companies struggle to pump more with less, some firms appear to still be finding new ways to drill wells faster and frack them more intensively at a lower price.

    "Over time, we continue to think we'll need less rigs than we're even saying now," Pioneer Chief Executive Officer Scott Sheffield told investors on Thursday.

    Shares of Oasis, Devon and Pioneer rose more than 2 percent after their respective forecasts were announced. Shares of Oasis and Devon have lost about a quarter of their value this year, while those of Pioneer have held mostly steady.

    Sheffield said Pioneer, which is adding rigs, expects to grow production 11 percent this year, up from a previous view of 10 percent. The company also confirmed it would grow 15 percent per year through 2018 thanks in part to cost cuts and tweaked technology. It produced 211,000 barrels of oil equivalent per day (boepd) in the third quarter.

    Some of the flatlining of U.S. rig productivity has come as producers experiment with lower cost techniques for fracking, which involves injecting liquids and sand at high pressure into wells to coax oil from rock.

    Pioneer said some of its well performance in the Eagle Ford shale of Texas was hurt recently when it tried to complete wells with lower fluid concentrations. In the future, it said wells would be fracked with more fluid and more sand so as to boost production.

    At Oasis, executives now expect the company to produce 49,700 to 50,100 boepd, up from a previous estimate of 49,000 to 50,000 boepd.

    Oasis Chief Executive Thomas Nusz cited the company's use of ceramics and other techniques to boost production, and touted a drop of more than 50 percent in capital spending and other costs.

    And at Devon, Chief Executive Dave Hager raised the company's full-year production growth outlook for the second time this year.

    "We are delivering this incremental production growth with significantly lower costs," Hager said in a statement, adding he expects Devon to cut about $1 billion from its budget by year end.

    Diamondback raised the lower end of the range for its production guidance to 31,000 boepd from 30,000 boepd while saying it would come in at the low end of its expected capital spending of $400 million to $450 million. The top end for production stayed at 32,000 boepd.

    "We continue to deliver robust well results ... while lowering both well costs and totalexpenses," stated Diamondback CEO Travis Stice.

    Read more at Reuters

    Attached Files
    Back to Top

    Noble Energy 3Q15: Marcellus Prod. Up 50%, 1st Utica Well Drilled

    Noble Energy is a global driller involved in a number of shale plays in the U.S. including the DJ Basin, Eagle Ford Shale, Delaware Basin and Marcellus Shale.

    Noble idled the last remaining drilling rig they were operating in the Marcellus in September. Even so, they had a banner third quarter in the Marcellus.

    Noble issued their third quarter update yesterday and although the section on their Marcellus operations is brief, it packs a punch. Even with reducing rigs to zero, Noble completed and brought online their first Utica Shale well (in Marshall County, WV). Noble’s production volumes in the Marcellus in 3Q15 rocketed to 493 million cubic feet of natural gas equivalent per day (MMcfe/d), more than a 50% increase over 3Q14 numbers.
    Back to Top

    Libya Oil Guard Halts Zueitina Port Exports Amid Political Rift

    Libya’s Petroleum Facilities Guard halted crude shipments from Zueitina port indefinitely amid the escalating conflict between the divided country’s two rival administrations, putting the OPEC member’s oil exports at risk.

    A tanker moored at Zueitina for two days has been prevented from loading, the port’s workers union president, Ramadan Lefkaih, said Tuesday by phone. Zueitina will be closed until further notice and tankers seeking to load crude at the eastern port in the future must register with the National Oil Corp. administration loyal to the internationally recognized government in the eastern region, according to Petroleum Guard spokesman Ali al-Hasy.

    Vessels registered with the rival NOC headquarters in Tripoli, seat of an Islamist-backed government in western Libya, are “illegitimate” and won’t be permitted to load at the port, al-Hasy said Tuesday by phone.

    The Tripoli-based NOC, which has been in charge at Zueitina port, declared force majeure and said in a statement that the port was closed for all exports due to a “deteriorated security situation.” Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

    Libya, with Africa’s largest oil reserves, pumped about 1.6 million barrels a day of crude before a 2011 rebellion ended Muammar Qaddafi’s 42-year rule. Like the country’s leadership, the NOC has competing eastern and western administrations seeking to control energy facilities. Political infighting and worker protests curtailed output to 430,000 barrels a day in October, data compiled by Bloomberg show. Libya is currently the smallest producer in the Organization of Petroleum Exporting Countries.

    Wintershall AG temporarily suspended crude exports from As-Sarah field in Libya because Zueitina is currently unable to load cargoes, company spokesman Stefan Leunig said in an e-mailed response to questions.
    Back to Top

    State Oil Company Says Statoil Must Push Ahead on Arctic Project

    After three delays, Statoil ASA must make a decision to move ahead with the Johan Castberg oil project in Norway’s Arctic next year as planned, the Norwegian government’s oil company said.

    “There’s a milestone planned for next year, and we believe it’s time to make that decision,” said Grethe Moen, chief executive officer of Petoro AS, which manages the state’s direct stakes in offshore fields and is one of the owners of the Castberg oil deposits. “The project should definitely be mature for next year.”

    Statoil, which is cutting spending and costs to weather a collapse in oil prices, has postponed the project in the Barents Sea three times since 2013 to make it more profitable. A decision on the development concept is planned for the second half of 2016 and an investment decision for 2017. The company has now managed to lower the project’s break-even price to $60 a barrel from $80 and is seeking to reduce costs even further, Chief Financial Officer Hans Jakob Hegge said last week.

    The project encompasses the Skrugard and Havis finds, which hold as much as as 650 million barrels of oil and were considered breakthrough discoveries when they were made in 2011 and 2012. Yet the frontier area in the Barents Sea lacks production infrastructure such as pipelines, making it expensive to develop the deposits.

    The first delay came in 2013 after Norway decided to raise taxes, leading the owners to shelve a $15 billion plan that included pipelines to shore and a new terminal at North Cape. Statoil then put it off in 2014 after a disappointing exploration campaign in the surrounding area before a third postponement in March this year following a collapse in oil prices.
    Back to Top

    Pertrobras strike cuts output 25%...Union

    A strike of oil workers in Brazil, the ninth biggest global producer, helped push oil back up towards $50 per barrel on Tuesday.

    The strike that began on Sunday at Brazil's state-run oil producer Petroleo Brasileiro has slowed daily oil output by around 25 percent, and cut around half a million barrels of output in the first 24 hours, the country's largest union FUP said on Tuesday.

    A labor strike that began on Sunday has reduced oil production from Brazil's state-run oil producer Petroleo Brasileiro SA by 273,000 barrels on Monday, or 13 percent of its output, the company said in a Tuesday security filing.

    Petrobras said it estimated oil production would show a 8.5 percent drop on Tuesday and natural gas output would fall by 13 percent compared with the production level of the day before the strike began. It said fuel distribution has not been affected by the stoppage and does not expect supply shortages in Brazil.

    Read more at Reuters

    Attached Files
    Back to Top

    BP Says Technology Can Keep Oil and Gas Abundant, Affordable

    Technology can be used to increase the world’s proved oil and gas reserves by two thirds -- almost double the amount needed to meet demand through 2050 -- keeping energy supplies plentiful and affordable, according to BP Plc.

    The amount of oil and gas recoverable from known reservoirs could rise to 4.8 trillion barrels of oil equivalent through the application of existing technologies, compared with proved reserves of 2.9 trillion currently, said David Eyton, the group head of technology at BP. Energy consumption will rise by 40 percent by 2035 and about 2.5 trillion barrels equivalent will be needed to meet global demand through to 2050, he said.

    Image title

    “Technology is one of the very few levers that you have to pull to make a significant impact,” Eyton said in a presentation in London on Monday.

    New techniques developed in the U.S. to unlock oil and gas from shale formations have turned global energy markets on their heads. The nation reversed decades of decline to pump a record 9.6 million barrels of oil in June, contributing to a crude-price slump of almost 60 percent since June 2014. While future breakthroughs may allow a further 2.7 trillion barrels of oil equivalent to be added to technically recoverable reserves through 2050, government limits on carbon emissions may mean not all fossil fuel resources are extracted, according to BP.

    Attached Files
    Back to Top

    Shell says can make BG deal work despite weak oil price

    Royal Dutch Shell RDSa.L sought to ease investor concerns over its planned $70 billion takeover of BG Group BG.L, announcing plans for further benefits and cost cuts aimed at making the deal work with oil prices in the mid-$60s a barrel.

    The Anglo-Dutch group, which hopes to complete the deal early next year, said it now expected synergies to increase by $1 billion to $3.5 billion for the combination which will make Shell a leader in liquefied natural gas (LNG) and offshore oil production in Brazil.

    Shell, which last week reported a huge third-quarter loss due to $8 billion of write-offs in Alaska and Canada, said it would reduce its costs by $11 billion in 2015 as it tackles a prolonged period of lower oil prices, currently trading below $50 per barrel.

    "Shell is becoming a company that is more focused on its core strengths, a company that is more resilient and competitive at all points in the oil price cycle and that has a more predictable project development pipeline. We'll grow to simplify," Chief Executive Officer Ben van Beurden said in a statement ahead of a company strategy day in London.

    Investors have been concerned that the benefits from the deal would be at risk as a recovery in oil prices is now expected to take much longer than foreseen in April, when the merger with BG was announced.

    Back then, Shell indicated it expected oil prices to recover to $90 a barrel by 2020.

    BG shares currently trade at a discount of more than 10 percent to the valuation of the cash and shares deal, reflecting investor concerns over its viability and remaining regulatory hurdles. Shell awaits the approval of Australian and Chinese regulators before the deal can be put before shareholders.
    Back to Top

    Pioneer Natural Resources records strong bottom line

    Pioneer Natural Resources bolstered its bottom line in the third quarter by selling its midstream operations in the Eagle Ford Shale and implementing aggressive cost-cutting measures in its oil and gas drilling operations.

    The Irving-based energy company on Monday said net income rose to $646 million, or $4.27 per diluted share, compared with $374 million in last year’s third quarter. And despite lower oil prices, revenues climbed $705 million — to $2.2 billion from $1.5 billion — thanks to asset sales and derivative trading.

    Pioneer profited by selling its oil and gas transportation system in the Eagle Ford for $2.15 billion — pumping about $530 million into its accounts in the third quarter with the rest to be paid in 2016, the company reported. It also realized savings by cutting its costs on drilling and services by 25 percent compared with 2014, the company reported.

    But excluding derivative market-to-market gains and other unusual items, its adjusted results came to a loss of one cent per diluted share.

    Overall, CEO Scott Sheffield said he was pleased with the third quarter results. Pioneer reported that its production hit 211,000 barrels a day in the third quarter, above what the company had previously expected.

    “Despite the weak commodity price environment, the company reported a great quarter that was highlighted by the impressive production growth delivered by our horizontal drilling program in the Spraberry/Wolfcamp,” he said. “This drilling program continues to provide strong returns due to our aggressive pursuit of cost reductions and efficiency gains...”

    In the second quarter, Pioneer said it planned to ramp up its drilling program in the Permian Basin oil fields, even if it loses money because of low oil prices. It boosted its drilling budget to $2.2 billion and added rigs in the Spraberry and Wolfcamp fields.

    Read more here:

    Attached Files
    Back to Top

    Gazprom ups October exports to Europe by 41% TO 14.7 BCM

    Gazprom ups October exports to Europe by 41% TO 14.7 BCM

    Russian state-owned Gazprom said Monday that its exports to Europe in October increased by 41.4% year on year to 14.7 Bcm, in line with expectations that European consumers would ramp up purchases in the second half of the year, as the impact of low oil prices hits gas prices under long-term contracts.

    The October growth follows on from increases of 22.4% in July, 23.1% in August and 24.2% in September, Gazprom said.

    In September, Gazprom raised estimates for its exports to Europe in 2015 to 158 Bcm on the back of a strong second quarter. Initially Gazprom expected to ship 152-153 Bcm to Europe this year based on weaker demand in the first quarter, when purchases in those markets fell 20% year-on-year amid expectations of future lower prices for Russian gas under long-term contracts.

    Gazprom's long-term contracts with European consumers typically include a 6-9 month lag in oil prices built into the pricing mechanism, making gas supplied under these contracts significantly cheaper in H2 2015.

    Gazprom officials have estimated that its gas price will average Eur195.9/1,000 cu m in the upcoming winter season. This is the average price for all deliveries, including under long-term, oil-indexed contracts and spot markets.
    Back to Top

    Egypt's giant Zohr gas field aims to start output in 2017 -minister

    Egypt aims to start natural gas production from its massive offshore Zohr field in 2017, a year ahead of schedule, oil minister Tarek El Molla said.

    The Zohr gas field, discovered by Italy's Eni, is the biggest in the Mediterranean, and with an estimated 30 trillion cubic feet of gas it is expected to plug Egypt's acute energy shortages and save it billions of dollars in precious hard currency that would otherwise be spent on imports.

    "We're looking to expedite the agreement with the partner and speed up production. Hopefully we will begin production from the discovery in 2017," El Molla said in an interview at the Reuters Middle East Investment Summit.

    Eni has said it expects to invest between $6 billion and $10 billion to develop the Zohr field. Previously, officials had said production was expected to start in 2018.

    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 as soon as possible.

    In October British oil major BP said it would begin gas production at its north Alexandria concession in early 2017 rather than mid-2017. That should add up to 1.2 billion cubic feet of gas per day by late 2019.

    El Molla, appointed oil minister in September, succeeded Sherif Ismail who launched a drive to lure back foreign energy investors driven away by low prices and debt arrears.

    In July the oil ministry raised the price paid for gas from Eni to a maximum $5.88 for every million British thermal units and a minimum of $4, based on amounts produced, from $2.65. It then cut a similar deal with British Gas.

    Ismail's success in reinvigorating the sector, which is vital for economic growth at a time when energy shortages have crippled industrial production, helped propel him to the post of prime minister in September.

    The total value of Egypt's natural gas projects, excluding Zohr, is now $13.8 billion, and El Molla said the Zohr discovery had made additional investment much more likely.

    "The Zohr discovery whet the appetite of other foreign companies working in Egypt to speed up seismic discovery operations and exploratory wells."

    Current projects underway will add 2.4 billion cubic feet to the country's daily gas production by 2019, said El Molla. Current production is roughly 4.5 billion cubic feet.

    On the back of this, the stock of foreign oil and gas investment in Egypt is expected to increase to $8.5 billion during the current fiscal year ending next June, from $7.5 billion last year, said El Molla.

    Egypt's drive to expedite foreign investment in gas production comes just as the country has become a top growth market for imported liquefied natural gas (LNG).

    Attached Files
    Back to Top

    DEC Official Says NY in Danger of FERC Taking Over Pipeline Permits

    It was just two weeks ago that MDN posted an article saying the New York Dept. of Environmental Conservation (DEC) has had enough time to approve stream-crossing permits for the much-needed Constitution Pipeline.

    It’s now time to force their hand . As we wrote in that piece, the DEC risks the very real threat that the Federal Energy Regulatory Commission (FERC) may step in and force the DEC to issue the permits. Now a high-ranking official with the DEC has essentially said the same thing we did–on the record…
    Back to Top

    Ohio Landowners File Royalty Class Action Lawsuit Against Chesapeake

    A group of Ohio landowners is doing what others have previously done in Pennsylvania, Texas and elsewhere–they’ve filed a proposed class action lawsuit against Chesapeake Energy claiming Chessy has screwed them and about 1,000 other Ohio landowners out of a collective $30 million in royalty payments.

    The lawsuit was filed last Monday in Columbiana County Common Pleas Court by an Akron, OH woman and the owners of two Columbiana County farms.

    In addition to Chesapeake, French company Total E&P USA, Pelican Energy LLC and Jamestown Resources LLC were also named in the lawsuit.

    The plaintiffs claim the only allowed deduction from royalties, according to signed leases, is for taxes–not for drilling expenses, not for post-production costs, etc. The lawyers filing the lawsuit figure there are at least 1,000 landowners with 40,000 acres who have been negatively affected by Chesapeake’s royalty shenanigans…
    Back to Top

    LNG prices have further to fall amid supply glut: Wood Mackenzie

    Liquefied natural gas producers may be in for years of prices much lower than even current depressed levels, potentially causing temporary plant closures, according to global energy consultancy Wood Mackenzie.

    The latest analysis from the respected firm puts a possible floor for Asian and European LNG spot prices later this decade at $US5 a million British thermal units (MMBTU), but warns that lower coal prices could drag that price floor down to just $US4, about 40 per cent lower than current prices.

    That could lead to exporters in the United States, but potentially also in Australia, shutting down production because they cannot cover their cash costs, Wood Mackenzie global head of LNG and gas Noel Tomnay said.

    Spot prices have already dropped about two-thirds since early 2014 as new supply comes into the market from project start-ups, and demand growth disappoints in key markets such as China.

    LNG prices in Japan and Korea have slid to $US6.70 a MMBTU for short-term deliveries in November, down from about $US20 in early 2014, according to pricing service Platts.

    "If China demand does not pick up again until 2016 then that $US5 becomes a real risk," Mr Tomnay said.

    Some 130 million tonnes a year of new LNG supply could hit the market during the next five years, mostly from Australia and the US.

    Wood Mackenzie says European coal prices will be a key determinant for spot LNG prices. Assuming benchmark European coal prices of $US70 a tonne and Japanese coal prices of $US80, then the floor price for gas in Europe and north Asia should hold above $US5 a MMBTU.

    But if European coal prices are weaker than that, at $US50 a tonne, and Japan coal prices are $US60, then that floor for LNG falls to about $US4.

    Prices above $US5 should be high enough to avoid American LNG export production being shut down, but at $US4, US exporters would have to consider shutting in for periods, which would then depress US gas prices, the firm said.

    "The possibility of US LNG exporters being shut in will be very much determined by what happens in the coal market but it is a real possibility," Mr Tomnay said.

    He noted that Australia's conventional LNG plants, which have low cash costs and have output covered by mostly long-term sales contracts, would not face this issue. More affected are the coal seam gas-based ventures in Queensland, which have higher ongoing costs as they need to keep drilling new CSG wells.

    However, of the three Queensland CSG-LNG projects, only BG Group's Queensland Curtis project has sales based on a "portfolio" approach rather than tied to the project, giving only that venture the capacity to consider supplying its customers from plants elsewhere in its global portfolio or from the spot market, rather than keep producing from its Australian plant.

    "I would be very surprised if they are not looking at this but whether they actually implement it remains to be seen," Mr Tomnay said.

    He said the rationality for potentially closing down QCLNG would become more compelling if Shell succeeds in taking over BG, because of the greater number of other options Shell has to supply QCLNG's customers from its larger global portfolio.

    Most of the output from Australia's $200 billion wave of new LNG projects is covered by contract prices, but some volumes are exposed to spot prices, especially for the several "commissioning" cargoes that are shipped from new projects before deliveries start under long-term contracts.

    Shell global chief executive Ben van Beurden last week acknowledged that the "bit over 10 per cent" of the major's LNG business that is exposed to the spot market "of course sees a bit of pressure at the moment".

    But he said the very low cash costs of LNG projects meant the business "remains very healthy from a cash perspective".

    "Over the entire cycle, we still expect this to be a strong double-digit-return business," Mr van Beurden said.

    Read more:
    Follow us: @theage on Twitter | theageAustralia on Facebook

    Attached Files
    Back to Top

    Noble Energy posts loss amid crude price slump

    Oil and gas producer Noble Energy Inc, which acquired Rosetta Resources in a $2 billion deal earlier this year, raised its sales forecast for the current quarter, while cutting its 2015 capital budget by $100 million.

    Oil and gas producers are curtailing spending and cutting operating and other costs to weather a nearly 60 percent drop in crude oil prices since June last year.

    Noble reported a larger-than-expected quarterly loss on Monday, hurt by the slump in prices.

    Noble, which operates in the U.S. shale fields and offshore Gulf of Mexico, Eastern Mediterranean and West Africa, said it now plans to spend less than $3 billion this year.

    The company raised its fourth-quarter sales volume forecast to 385,000-405,000 barrels of oil equivalent per day (boepd) from 375,000-400,000 boe/d.

    Sales volume in the third quarter was 379,000 boepd.

    Noble said third-quarter sales volumes lagged production by 4,000 barrels per day due to the timing of lifting of some oil and natural gas liquids from its operations in Equatorial Guinea.

    The company's net loss was $283 million, or 67 cents per share, in the third quarter ended Sept. 30, compared with a profit of $419 million, or $1.12 per share, a year earlier.

    Adjusted loss was 21 cents per share, steeper than the average analyst estimate of 18 cents, according to Thomson Reuters I/B/E/S.

    Total revenue fell 37 percent to $801 million, lagging analysts' estimate of $955.3 million.
    Back to Top

    RasGas: collaboration required to avoid LNG market imbalance

    RasGas CEO, Hamad Mubarak Al Muhannadi said an LNG suppliers and buyers collaborative effort is needed to adopt a long-term view for maintaining a sustainable LNG market.

    “LNG buyers are currently comfortable with the availability of LNG and have a general wait-and-see attitude towards making new longer-term commitments,” said Al Muhannadi.

    However, if LNG suppliers fail to develop resources required to meet forecasted longer term demand growth, at the right time and place, there will be a supply and demand imbalance with longer term implications for LNG prices, he added.

    Speaking at the recently held Gastech conference on the growing role LNG will play in the global fuel mix, he pointed out that the ‘voice of gas’ is increasingly being heard supporting the further penetration of natural gas in the energy supply mix.

    “To help this vision along, we, as an industry, need to encourage  the  implementation  of  both  market  and  policy-focused  reforms  that  facilitate natural gas’ increased penetration,” he added.

    Al Muhannadi stressed that both buyers and sellers need to work together to honour contractual commitments and to jointly influence and enhance the role of gas by providing appropriate support for initiatives promoted by governments and regulatory agencies.
    Back to Top

    Gulf oil producers delay field work, see weaker 2016 prices -sources

    Gulf oil producers are delaying some field maintenance until next year to keep production high and reduce costs as they forecast weaker oil prices in 2016, industry sources said.

    It was not possible to clarify which fields were affected - information which is highly sensitive.

    But it showed that Gulf oil producers aim to keep pumping hard as they expect weak oil prices next year when sanctions on Iran are lifted allowing it to export more to an oversupplied market, the sources said.

    They told Reuters that OPEC members Saudi Arabia, United Arab Emirates and Qatar are rescheduling non-essential maintenance work at oilfields originally planned for the last quarter of this year later into 2016 due to low oil prices.

    "The non-urgent maintenance is definitely being pushed. We see huge focus on production in Qatar, Abu Dhabi and Saudi Arabia," said one industry source.

    "They are delaying to keep production high, if they shut down now they will not produce, and they also have to preserve cash," the source said.

    Two more sources also said that Gulf oil producers are pushing forward some of their maintenance plans for oil rigs, wells and pipes that are not critical to production or safety of operations, but declined to give details.

    "There is delay. The reason is low oil prices, they are trying to have some control over the cost," another industry source said of Saudi Aramco's maintenance plans this year.

    A Gulf industry source said: "Companies are trying to benefit from higher margins now as they expect oil prices to drop next year, when Iran comes back."

    Iran will notify OPEC in December of its plans to raise its output by 500,000 barrels per day (bpd), its oil minister said on Saturday.

    The sources said delayed maintenance was also a way to rein in spending, when the work often involves bringing in specialist foreign companies.

    "I think what people are doing is spacing out some maintenance, or being smarter about combining maintenance schedules as a way of bring prudent on costs," said one senior oil executive working in the Middle East.

    One industry source said he had not heard of any upcoming planned maintenance at ADNOC's oilfields and expects production from Abu Dhabi to hold steady in the fourth quarter. The UAE pumped 3 million bpd in September.

    Saudi-based sources have said the kingdom's level of crude production was likely to stay around current levels in the fourth quarter as a decline in domestic crude burning for electricity would be offset by rising global demand.

    Attached Files
    Back to Top

    Oil Bears vs History.

    Image title
    Back to Top

    Russian Crude Output Hits Post-Soviet Record Defying Price Slump

    Russian oil production broke a post-Soviet record in October for the fourth time this year as earlier investments boosted output and producers prove resilient to lower crude prices.

    Production of crude and gas condensate, which is similar to a light oil, averaged 10.776 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit. That is an increase of 1.3 percent from a year earlier and up 0.3 percent from the previous month.

    “Russian oil production is still reflecting oil prices above $100 a barrel due to long lead times in the investment cycle,” Alexander Nazarov, an oil and gas analyst at Gazprombank JSC, said by e-mail from Moscow. “The reason behind growth this year dates back to 2010-2014, when a number of projects were financed.”

    Output has kept growing even as the Organization of Petroleum Exporting Countries chose to defend market share rather than cut output amid a supply glut last year, a decision that sent prices tumbling. Gazprom Neft PJSC and Novatek OJSC are ramping up output at one of the country’s biggest new projects. Russia’s tax policies insulate the industry from swings in oil prices, with the state bearing most of the risk and reward.

    The ruble’s slump over the past year, which has tracked weaker crude prices, has made oilfield services, including drilling, cheaper and supported operating margins, Nazarov said.

    Russian crude exports rose to 5.42 million barrels a day in October, a 10 percent gain from the previous year and up 1.7 percent from the previous month.
    Back to Top

    U.S. oil demand growth slows to 2.1 pct in Aug as driving slows down

    The resurgence in U.S. oil demand is showing signs of flagging, with drivers easing off the gas pedal a bit in August, according to U.S. data on Friday that may weaken one of the key arguments for bullish oil traders.

    After several months of near 4 percent growth in fuel use that has helped offset weakness in demand from China, U.S. consumption climbed by just 2.1 percent or 414,000 barrels per day (bpd) in August versus the same month a year ago, U.S. Energy Information Administration data showed.

    Separate data from the Department of Transportation helps explain why: The number of miles Americans drove in August rose at the slowest pace this year, up 2.3 percent from a year ago.

    While that pace is still relatively strong for a country where gasoline use has been flat or declining since the financial crisis in 2007-2008, a sustained slowdown could prolong a global oil supply glut that has halved prices to below $50 a barrel. The United States consumes about a fifth of the world's oil.

    The tamer growth rate is surprising because pump prices in August were down about 10 percent from summer peaks near $3 a gallon. They have tumbled further to around $2.30 a gallon this month, potentially helping revitalize domestic consumption.

    Demand for gasoline climbed by just 1.7 percent, or 156,000 bpd, to 9.467 million bpd, the EIA data showed. Consumption of diesel and related distillate fuels eked out a small 0.3 percent gain to 3.888 million bpd, the same as in July, depressed in part by the slowdown in oil drilling.

    Since late last year, U.S. consumers have responded with surprising vigor to falling gasoline prices, which have declined about 90 cents a gallon from 2014.

    Typically, demand tapers after Labor Day weekend around the first Monday in September, but this year, may still stay above normal seasonal levels if consumers continue to be encouraged by low prices.
    Back to Top

    Canadian Natural in talks over royalty land sale - sources

    Canadian Natural Resources Ltd has discussed spinning off royalty assets with some pension plans and strategic buyers, according to three sources familiar with the situation.

    The company, which had said in May it intended to sell the assets this year, has engaged with the Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan and PrairieSky Royalty Ltd, said the sources, who spoke on condition of anonymity as the talks are not public.

    The move comes about four months after Cenovus Energy Inc agreed to sell its royalty lands to Ontario Teachers' for C$3.3 billion and more than a year after Canada's largest natural gas producer Encana Corporation spun off its royalty assets though PrairieSky.

    PrairieSky and Teachers were not immediately reachable for comment. Canadian Natural and CPPIB declined to comment.

    Shares in Canadian Natural closed up less than 1 percent at C$23.17 on Friday.

    Analysts estimate the value of the assets range from C$1 billion to C$2.5 billion.

    Canadian Natural, the country's second-largest oil and gas producer, is keen on ensuring that it gets cash, and not equity, the sources said.

    "The good thing is that they're not motivated sellers like some others. Unlike other sellers they are in a strong position, and can wait for the right window, or price," said one source, adding that it is going to be "very difficult" for Canadian Natural to get the valuation that Cenovus got on their lands.

    Given the volatility in the price of oil, the company is keeping all options open and has not made a decision to sell the assets right away, the sources said, adding it could hold off until prices improve.
    Back to Top

    US rig count resumes decline, drops 12 units

    The overall US drilling rig count dropped 12 units to 775 rigs working during the week ended Oct. 30, resuming its downward trend after sitting unchanged a week ago, according to data from Baker Hughes Inc. (OGJ Online, Oct. 23, 2015). The new total is the lowest since Apr. 26, 2002.

    The usual flurry of third-quarter earnings reports began to hit newswires this week, with net losses and freshly trimmed capital budgets again a common theme among the major US exploration and production firms.

    ConocoPhillips reported the termination of a rig contract for a Gulf of Mexico deepwater drillship, which resulted in aftertax impacts of $246 million. Hess Corp., meanwhile, expects to operate 4 rigs in the Bakken in 2016 compared with an average of 8.5 rigs this year.

    Oil rigs drop in 9th straight week

    Oil-directed rigs declined for the 9th consecutive week, losing 16 units to settle at 578, down 1,004 year-over-year and touching their lowest level since June 18, 2010. Since Aug. 28, 97 oil-directed rigs have gone offline.

    Land-based rigs dropped 11 units to 738, down 1,124 year-over-year. Rigs engaged in horizontal drilling resumed their decline after posting their first increase last week in 2 months, falling 14 units to 577, down 776 year-over-year. Directional drilling rigs edged down a unit to 86.

    Two rigs operating offshore Louisiana went offline, bringing the US offshore total to 32, down 20 year-over-year. Rigs drilling in inland waters edged up a unit to 4.

    Edging up a unit to 191, Canada’s rig count increased for a 5th straight week. While most of the recent rise is attributed to oil-directed rigs, which were unchanged this week at 84, the lone unit to come online this week was gas-directed, bringing that total to 107.

    Texas drops in 9th straight week

    Texas led the losses of the major oil- and gas-producing states with a 7-unit decline to 339, down 562 year-over-year and its lowest total since July 10, 2010. The state’s count has fallen in 9 consecutive weeks, during which time it has lost 47 units.

    The Eagle Ford dropped 2 units this week to 75, down 143 year-over-year.

    Oklahoma followed closely behind Texas, posting a 6-unit decrease to 84, down 124 year-over-year and its lowest level since Nov. 20, 2009.

    Louisiana fell 2 units to 71. North Dakota, Ohio, and West Virginia each edged down a unit to 62, 20, and 16, respectively. North Dakota, now down 118 year-over-year, is at its lowest level since Dec. 18, 2009.
    Back to Top

    Santos sells Stag field for $50 mln in sale to Malaysia's Sona Petroleum

    Santos Ltd, which rejected a $5 billion takeover offer last month in the hopes of getting better value from selling assets, made its first sale on Monday with a small deal to exit the Stag oil field off northwestern Australia.

    Malaysian company Sona Petroleum Bhd said it had agreed to buy the ageing oil field from Santos and private firm Quadrant Energy for $50 million, in a statement.

    Santos, scrambling to pay down A$8.8 billion ($6.3 billion) in net debt, had been looking to sell its two-thirds stake in Stag before it effectively put all its assets up for sale in August.

    "Stag had delivered a strong production performance over the life of the field but it was now mature and no longer core to the company's strategy," Joe Ariyaratnman, Santos' general manager for Western Australia and Northern Territory said in an emailed comment.

    Wood Mackenzie valued Santos' stake in the field, which as of June was producing 4,600 barrels a day, at $13 million.

    Santos shares rose 2.6 percent on Monday, defying weakness in other energy company shares.

    The company has declined to comment on reports it is in talks to sell down part of its coveted 13.5 percent stake in the Papua New Guinea liquefied natural gas (PNG LNG) project to Japan's Marubeni Corp.

    That stake alone could be worth A$6.5 billion ($4.6 billion) based on the value implied in a recent bid by Woodside Petroleum for Oil Search Ltd, a bigger stakeholder in PNG LNG.

    Sona plans to pay for the acquisition from cash it raised in its initial public offering two years ago.

    It expects to extend the life of the Stag field, producing since 1998, by adding new wells to boost oil recovery and has agreed to take over environmental liabilities which kick in at the end of the field's life.
    Back to Top

    Phillips 66 Profit Rises as Oil Market Downturn Lowers Costs

    Phillips 66, the largest U.S. refiner by market value, said profit rose as the worst oil market in decades continues to benefit companies that turn the crude into fuel.

    Third-quarter net income climbed to $1.6 billion, or $2.90 a share, from $1.18 billion, or $2.09 a year earlier, the Houston-based company said in a statement Friday. Excluding one-time items, the per-share result was 77 cents more than the $2.25 average of 16 analysts’ estimates compiled by Bloomberg.

    "It was a beat across the board in every one of the company’s segments," Justin Jenkins, an analyst at Raymond James in Houston who rates the shares the equivalent of a buy and owns none, said Friday in a phone interview. "Refining is clearly the healthiest segment of the overall energy value chain at the moment, and that’s probably going to continue for some time."

    Since being spun out of ConocoPhillips in 2012, the company has more than doubled in value. Refiners, which have far outperformed the rest of the energy sector this year, have surged as U.S. shale drilling produced an abundance of crude, allowing them to purchase oil domestically for less than it was selling abroad.

    "The companies are running better business models that they learned from past experience," Fadel Gheit, an analyst at Oppenheimer & Co. in New York, who rates the shares the equivalent of a buy and owns none, said in a phone interview before the results were released. "They are returning cash aggressively to shareholders."

    Capital Budget

    Capital spending is expected to fall 16 percent to $3.88 billion in 2016 from this year’s $4.6 billion, the company said Friday.

    "Our best quarterly earnings this year were driven by stronger results from refining and marketing," Chief Executive Officer Greg Garland said in the statement.

    The largest shareholder in Phillips 66 is Warren Buffett’s Berkshire Hathaway Inc., which has amassed a stake valued at more than $5 billion.

    Attached Files
    Back to Top

    Chevron Cuts More Jobs and Spending as Oil Downturn Saps Profit

    Chevron Corp. said it’s cutting its workforce by about 10 percent amid the worst oil-market slump since the 1980s even as the company posted third-quarter profit that surpassed analysts’ expectations.

    Chevron said in a statement Friday that it will cut 6,000 to 7,000 jobs, numbers that include 1,500 layoffs announced earlier this year. The company earned $1.09 a share, 33 cents more than the average of 21 analysts’ estimates compiled by Bloomberg. Profit from refining oil into fuels jumped 59 percent to $2.2 billion.

    Spending in 2016 will be 25 percent less than this year, said Chevron Chairman and Chief Executive Officer John Watson in the statement.

    "We expect further reductions in spending for 2017 and 2018," Watson said. "We are focused on improving results by changing outcomes within our control."

    The price of Brent, the benchmark crude used by most of the world, declined by half since June 2014 to an average of $51.30 during the July-to-September period. After a brief rebound, oil entered its second bear market in a year after an avalanche of supplies from U.S. shale fields and the Persian Gulf flooded markets at a time of faltering demand growth in China and other developing economies.

    Boosting Production

    Watson has stuck to plans to boost production 20 percent by the end of 2017 and continue dividend payouts to investors, even as the downturn erodes cash flow for the second-largest U.S. oil producer.

    Chevron’s stock has fallen 20 percent this year, putting it on pace for the worst annual performance since 2002. Every $1 decline in the average quarterly price of Brent crude reduces Chevron’s cash flow by $325 million to $350 million.

    The company is expected to outspend cash flow until at least the end of 2016, according to the average of six analysts’ estimates in a Bloomberg survey. The almost 45 percent drop in Brent crude during the past year represents the steepest 12-month decline since 1988, according to data compiled by Bloomberg.

    Net income fell to $2.04 billion from $5.59 billion, or $2.95, a year earlier, Chevron said. The statement was released before the opening of regular U.S. trading. Chevron rose 0.1 percent to $89.89 Thursday in New York. The company has 12 buy ratings from analysts, 16 holds and two sells.

    Attached Files
    Back to Top

    Exxon 3rd-qtr profit falls 47 pct but beats expectations

    Exxon Mobil Corp said on Friday its third-quarter profit fell 47 percent hit by low crude prices, but results were better than expected, helped by higher profits in the oil company's refining business.

    Crude prices have fallen more than 50 percent from last year's high over $100 a barrel. While the crude decline hurt Exxon's largest oil and gas business, it also boosted profit margins in refining by lowering feedstock costs.

    "Quarterly results reflect the continued strength of our downstream and chemical businesses and underscore the benefits of our integrated business model," Exxon Chief Executive Officer Rex Tillerson said in a statement.

    The Irving, Texas, company posted profit of $4.24 billion, or $1.01 per share, compared with $8.07 billion, or $1.89 per share in the same quarter a year earlier.

    Analysts on average had expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S.

    Refining profits nearly doubled from a year-earlier to $2 billion in the third quarter, while earnings at Exxon's exploration and production business fell $5.1 billion to $1.4 billion.

    Oil and gas output increased 2.3 percent from a year earlier to 3.9 million oil-equivalent barrels per day (mboed).
    Back to Top

    Brazil's main oil union to strike against Petrobras from Sunday

    Brazil's largest oil workers union said on Friday it will start an open-ended strike against Petrobras on Sunday in a bid to overturn moves to shrink the state-run oil company.

    FUP, which represents platform, refinery and other workers, will join a number of smaller unions already on strike.

    In a statement, FUP said the decision to strike had been made after more than 100 days of negotiations with Petroleo Brasileiro SA, as the company is formally known.

    Petrobras, in an emailed statement, said oil production or refining is not affected by the strike. The company was meeting with unions and had made a new salary proposal, it added.

    Petrobras wants to pay down debt, which at about $120 billion is the most of any oil company, and generate cash for investment and revive investor confidence after a massive corruption scandal.

    FUP said it wants asset sales stopped, work on refineries resumed, local content rules maintained, and a guarantee that Petrobras remain the sole operator in Brazil's sub-salt offshore oil area.
    Back to Top

    Global LNG surplus pushing producers, importers into spot market

    Producers and importers of liquefied natural gas (LNG) are preparing to trade the fuel more actively on a spot basis as a looming supply surplus threatens to overwhelm decades-old bilateral contracts and pressure prices lower.

    With the advent of 130 million tonnes of LNG capacity in Australia and North America by 2020, producers such as Woodside Petroleum and Chevron, and traditional buyers such as Japanese utilities, have expanded trading teams to handle excess cargo flows and navigate a more open market.

    Australia, with investments of almost $200 billion in new production, is on track to overtake Qatar as the world's biggest LNG exporter before the end of the decade.

    In North America, U.S. company Cheniere Energy plans to export its first LNG cargo in January, and Canada is also planning to start exports in the next few years.

    "Buyers will be able to have their choice ... (of) very large supply sources that can deliver pretty much at a moment's notice," Cheniere Chief Executive Charif Souki said this week at a conference in Singapore.

    Excess supply, along with rising demand, is key to establishing a liquid commodity market as in tight conditions producers and consumers tend to enter long-term fixed supply agreements rather than trade openly.

    And while new demand is popping up in countries such as Jordan, Dubai, Egypt and Pakistan, it is unlikely to be enough to offset the slower-than-expected consumption growth in China and the falling demand in top importers Japan and South Korea.

    Some major players in the industry disagree, though, on how quickly a robust spot market will develop.

    Last year, less than 5 percent of total volumes were sold on a prompt delivery spot basis, said Ann Collins, vice president for LNG at BG Group, at Gastech on Thursday.

    "A rapid tilt towards a commoditization of LNG seems unlikely in the near term," she said.

    Still, Ernst and Young (EY) says liquefaction capacity has more than doubled since 2000 and exceeded demand last year.

    This surplus, along with slow-growth demand, will keep prices under pressure until the end of the decade, consultancy Wood Mackenzie said in statement this week.


    Japanese power utilities - traditionally strictly buyers of LNG for gas-fired generators - are selling to each other or reselling to emerging smaller local buyers, even as nuclear reactors restart and the country's overall electricity demand falls with a shrinking population.

    Japan's JERA Co, a joint venture set up by Tokyo Electric Power and Chubu Electric Power, will renew only a minimum of the long-term contracts that supply 80 percent of its gas, and instead meet its needs via mid-term and short-term contracts or spot purchases.

    Australia's Woodside, one of the biggest producers of LNG, has traditionally sold its volumes on contracts that last 20 years or more, yet now says it needs more LNG tankers to deal with rising spot and short-term sales.

    "We're becoming more sophisticated in our marketing and trading activities," Chief Executive Peter Coleman told reporters at the industry meeting this week in Singapore.

    Chevron, which up to now has also dealt mostly in long-term supply agreements, has established an LNG trading desk in Singapore to handle output - mainly from its Australian projects - that is not committed to buyers.

    Commodity trading houses are also getting ready for the increase in supply, with Glencore planning to double its trading team as it mounts a challenge to rivals Trafigura and Vitol to become the top merchant LNG trader.

    Attached Files
    Back to Top

    China more than doubles 2016 non-state crude import quota to 1.75 mln bpd

    China has more than doubled its non-state crude oil import quota for 2016 to 87.6 million tonnes, or 1.75 million barrels per day (bpd), as Beijing seeks to boost competition and attract private investment in its oil industry.

    The 2016 quota issued by the Ministry of Commerce on Friday compared to this year's figure of 37.6 million tonnes.

    The commerce ministry said in July that China will allow more refiners to apply for import licences. The total quota, equivalent to about 28 percent of China's crude imports last year, will be allotted to traders outside the dominant four state traders - Unipec, Chinaoil, Sinochem and Zhuhai Zhenrong.

    So far six new refiners have won the right to directly import crude oil on their own.

    In the past, such traders would normally have to sell the crude they import to the state oil giants Sinopec and PetroChina, but under new rules issued by the National Development and Reform Commission in February, smaller refiners can get permission to use imported crude oil if they meet certain environmental conditions, including the closure of old and polluting refining capacity.

    Eleven refiners - nine in the coastal province of Shandong - have received either a preliminary or final greenlight to use about 1 million bpd of imported oil.

    The commerce ministry also set the 2016 quota for fertiliser at 13.65 million tonnes, the same number as the past year.
    Back to Top

    Permian works below $50

    The company earns a 35% return on its best wells even when oil trades at between $45 and $50 a barrel, he said. Pioneer began putting additional drilling rigs to work in the area in July, and says it will add a pair of rigs each month through the first quarter of next year.

    “The Permian Basin has the highest quality shale rock in the United States,” Mr. Dove said. “We’re really looking at decades of inventory.”

    Bigger players aren’t overlooking the area either. Exxon on Friday said it acquired leases on 48,000 new acres in the Permian to add to the portfolio of its shale-drilling affiliate, and Chevron Corp. also has said it is looking to expand there.

    Back to Top

    Alternative Energy

    Solar energy costs continue to plunge across the world

    Two stunning auction results in India and Chile in the last week have underscored the extraordinary gains that large-scale solar has made against its fossil fuel competitors.

    In both countries, solar is now clearly the cheapest option compared to new coal-fired power stations. In Chile, where the auction was open to all technologies, fossil fuel projects did not win a single megawatt of capacity. And the auction produced the lowest ever price for unsubsidised solar – US6.5c/kWh.

    In India, US firm SunEdison won the entire 500MW of solar capacity on auction in the state of Andhra Pradesh, quoting a record low tariff for India of INR 4.63/kWh (US7.1c/kWh). Again, this was unsubsidised. And again, it beats new coal generation, particularly generation using imported coal.

    These bids follow an auction in the US last month by the Texas city of Austin, which contracted to build 300MW of large-scale solar PV at a price of less than US4c/kWh. Even after backing out a tax credit, this is still less than US6c/kWh, and still beats gas and new coal plants, if anyone was planning to build one.

    As Greentech Media reported last month, and we have signalled in the past, that means utilities are choosing large-scale solar over new peaking gas plants. Solar PV is beating gas on fuel costs alone, and is acting as a safe hedge against fuel price volatility.

    The significance of the India auction was not just in the price, but in the quality of the bidder. Far from being an unheard of upstart who has bid low in previous auctions, SunEdison is the biggest renewable energy development company in the world.

    Other close bidders are also substantial names. Second place went to Japanese firm Softbank, much-touted for its announcement of investing US$20 billion in India’s renewables market, which is thought to have offered INR 4.80/kWh.

    Other parties to beat the previous record (of 5.05/kWh) and bid below the 5/kWh mark were Italian giant Enel Green, Reliance Power, the Indian power group that recently announced it was selling its coal mines to focus on solar, and Renew (no relation to this website), along with three others

    Such prices were predicted just last week by analysts including from Deutsche Bank, who predicted prices of 4.7/kWh and predicted that the India solar market was “ready to take off.”

    Still, the actual bidding results still took some analysts by surprise, with some suggesting that the prices will not allow for significant returns.

    The same thing was said about the ground-breaking solar result in Dubai earlier this year, but companies are clearly grabbing territory to develop supply chains that can further reduce costs. It is a story that has been repeated over and over across the world, and underlines the power of the auction system.

    And these results certainly have major implications for future energy choices in India, and elsewhere.

    Attached Files
    Back to Top

    Vestas: higher 2015 forecasts and share buyback

    Vestas Wind Systems raised its 2015 profit forecast on Thursday and said it would buy back shares after stronger than expected third-quarter results, sending its shares to their highest in over six years.

    The world's largest wind turbine maker said operating profit rose 50 percent from a year ago to 232 million euros ($252 million), helped by a 17 percent rise in revenue and higher turbine prices, beating analyst forecasts of 201 million.

    The company also said it would buy back shares of up to 1.12 billion Danish crowns ($163.2 million) starting on Thursday, sending its stock as much as 6 percent to 419.6 crowns, the highest since May 20, 2009.

    "The share buy-back programme comes sooner than I had expected. Its a clear-cut signal of Vestas feeling very confident about the future," said Sydbank analyst Jacob Pedersen.

    The results and outlook mark a complete turnaround for the Danish company. It was hit hard by the global financial crisis and subsequent economic slump when renewable energy projects, often boosted by state funding, took a back seat.

    The company ousted Chief Executive Ditlev Engel two years ago after a string of profit warnings, slashed its workforce and shut down some facilities. Engel was replaced by Anders Runevad who made turbines more price competitive.

    "With greater clarity on deliveries for the remainder of the year and a very solid financial position, we are raising our guidance," Runevad said in the company's results statement.

    Vestas said it now expected a profit margin on earnings before interest and tax of 9-10 percent, up from 8.5 percent previously, and for revenue of 8-8.5 billion euros this year instead of a minimum 7.5 billion.

    In the third quarter, its revenue rose to 2.12 billion euros while the combined backlog of wind turbine orders and service agreements stood at 16.4 billion euros.

    Vestas managed to get a higher price for its wind turbines in the quarter, said Alm. Brand Markets analyst Michael Friis Jorgensen.

    The company's results showed that one megawatt generated 0.99 million euros in the third quarter this year compared with 0.85 million in the same period a year ago.

    Read more at Reuters

    Attached Files
    Back to Top

    SunEdison to supply cheapest solar power in India

    U.S.-based SunEdison has won a bid to sell solar power in India at a record low tariff, which could boost the appeal of the renewable source at a time when Prime Minister Narendra Modi is pushing for clean energy to combat climate change.

    Solar energy still has a long way to go before it can effectively compete with coal, given questions over consistent supply and transmission. But falling rates could unlock more government support for solar and wind energy.

    Modi's government expects clean energy to yield business. Worth $160 billion in India in the next five years, and established U.S. companies like SunEdison and First Solar Inc are likely to be the biggest beneficiaries.

    SunEdison won the auction for a 500 megawatt project in the southern state of Andhra Pradesh, bidding to supply power at 4.63 rupees ($0.0706) per kilowatt-hour, Upendra Tripathy, new and renewable energy secretary, told Reuters on Wednesday.

    "Delighted that an all time low solar tariff ... has been achieved during reverse e-auction conducted by NTPC," tweeted power, coal and renewable energy minister Piyush Goyal, referring to India's biggest power utility.

    The previous lowest solar tariff in India was about 5.05 rupees per kilowatt-hour for Canadian company SkyPower's project in Madhya Pradesh state in central India. Coal power costs anywhere between 1.5 rupees to 5 rupees, according to a government official who declined to be named.

    India is providing cheap loans to set up solar projects and helping companies buy land to meet its ambitious target of multiplying renewable energy generation to 175 gigawatts by 2020. Solar energy is targeted to leap five-fold to 100 gigawatts.

    The country is relying on renewables to fight climate change rather than committing to emission cuts like China, arguing that any target could hinder economic growth vital to lifting millions of its people out of poverty.

    Read more at Reuters

    Attached Files
    Back to Top

    Floating wind farm to be installed off Peterhead

    A floating offshore wind farm will be installed in the North Sea off the coast of Peterhead after the Scottish government gave it consent.

    Norwegian energy firm Statoil has been granted a licence for the pilot scheme of five turbines.

    They will be attached to the seabed by a three-point mooring spread and anchoring system, making them easy to install in deep water.

    It is expected that the Hywind project could power up to 19,900 homes.

    The turbines will transport electricity via an export cable from the pilot park to the shore at Peterhead in Aberdeenshire just over 15 miles (25km) away.

    The pilot project is designed to demonstrate the technology on a commercial scale, according to Statoil.

    Construction is planned to start as early as next year with final commissioning in 2017, according the company.

    Currently offshore wind turbines are rigidly attached to the seabed which makes them difficult and expensive to install in deep water.

    The Carbon Trust believes that floating wind concepts have the potential to reduce generating costs to below £100/MWh in commercial deployments, with the leading concepts such as Hywind producing even lower costs of £85-£95MWh.
    Back to Top

    World's largest offshore wind farm to be built in the UK

    When the UK government began pulling subsidies for onshore wind farms, it meant that private companies dedicated to harvesting renewable energy would no longer receive financial kickbacks when they sold their electricity to energy suppliers. The decision could have affected the UK's total wind-collecting footprint, but offshore wind farms have remained exempt, allowing companies like Dong -- Denmark's largest energy company -- to commit to new, massive installations in British waters. The company announced it is tobuild the world's biggest offshore wind farm in the Irish Sea, around 19 kilometres off the coast of Cumbria.

    Dong says it has completed all of the necessary paperwork for its 660-megawatt Walney Extension project and expects it to open in 2018. The company will rely on turbines built by MHI Vestas Offshore Wind and Siemens, allowing it to surpass the current record-holder, the 630-megawatt London Array, which is another Dong installation. When the Walney Extension goes live, Dong will contribute 5,089 megawatts of offshore wind energy to UK and German infrastructure, enough to cover the needs of more than 12.5 million people.
    Back to Top

    Germany Cuts Onshore Wind, Biomass Plant Subsidies From 2016

    Germany will cut subsidies for onshore wind farms and biomass plants starting in January, the nation’s grid regulator said.

    Above-target onshore-wind installations resulted in a 1.2 percent subsidy cut, while below additions for biomass plants meant a lower cut of 0.5 percent, Jochen Homann, president of Bundesnetzagentur, said in a statement on Friday.

    As much as 3,666 megawatts of German onshore wind were installed in the 12 months through July, exceeding a target range of 2,400 megawatts to 2,600 megawatts. Biomass plant additions of 71 megawatts in the same period was below a 100-megawatt target, according to the regulator.

    If net installations of onshore wind farms stay within the target range, subsidies will be cut 0.4 percent each quarter. Any deviations will result in higher or lower subsidy cuts. In June 2014, German lawmakers backed an extensive revision of the country’s clean-energy law to curb subsidies.

    Attached Files
    Back to Top


    Areva says China's CNNC may buy minority stake

    Areva said on Monday it had signed a memorandum of understanding for a possible partnership with China National Nuclear Corporation (CNNC) that could see the Chinese group take a minority stake in the French nuclear company.

    The partnership would also cover "uranium mining, front end, recycling, logistics, decommissioning and dismantling", Areva said in a statement.

    The deal excludes the reactor business that French power group EDF is buying from Areva, the company said.

    "This project offers numerous opportunities for both AREVA and CNNC," Areva Chairman Philippe Varin said in the statement following a ceremony in Beijing.

    "Strengthening the cooperation with our Chinese partners is an integral factor for Areva's future success," said the statement, issued during a visit to China by French President Francois Hollande.

    The French government wants utility EDF and nuclear group Areva, both state-owned, to keep a combined 66 percent stake in Areva's former reactor building arm Areva NP, a government source told Reuters on Oct. 6.

    With respective stakes of 51 percent for EDF and 15 percent for Areva, this would open the door for outside investors to buy into Areva NP and limit the amount of funds the French state will have to spend on saving the nuclear firm.

    After four consecutive years of losses wiped out Areva's capital, EDF said in July it had agreed to buy 51-75 percent of Areva's reactor arm Areva NP, while Areva would keep a maximum 25 percent and EDF would look for other investors to invest in Areva NP.
    Back to Top

    Cameco Q3 adjusted profit falls amid oversupply

    Cameco Corp , the world's second-largest uranium producer, reported lower adjusted quarterly earnings on Friday, as an oversupply in the market continued to affect demand and pricing.

    The company said its quarterly profit, excluding one-time items, was hurt by a smaller gross profit from its uranium segment and lower tax recovery in the quarter ended Sept. 30.

    Cameco's uranium sales fell about 23 percent to 6.9 million pounds in the quarter, while its average realized uranium price fell about 5 percent to $43.61 per pound.

    On an adjusted basis, earnings fell to C$78 million, or 20 Canadian cents per share, compared with C$93 million, or 23 Canadian cents per share, a year earlier.

    The oversupply in the uranium market continues to affect demand and price, the company said, but reiterated its positive long-term view, saying that its Cigar Lake, Saskatchewan mine had exceeded its 2015 production target range.

    The mine, which began production in March 2014, was expected to produce 6 million to 8 million pounds of uranium concentrate this year, the company had said in January.

    Accordingly, Cameco raised its forecast for total production to 27.3 million pounds of uranium in 2015, from a previous range of 25.3 million to 26.3 million pounds.

    Total revenue in the quarter rose about 11 percent to C$649 million.

    Shares of Cameco, the world's second-largest uranium miner behind Kazakhstan's KazAtomProm, were down about 9 percent in very light aftermarket trade.
    Back to Top

    Shenhua to compete for nuclear power operating license

    China Shenhua Group will participate in nuclear power construction by buying shares of nuclear projects, and strive for getting nuclear power operating license, said Ling Wen, general manager of the coal giant on October 28.

    The group would seek and reserve two 2-3 nuclear plants in the future, added Ling.

    In end-May, the merger of China Power Investment Corp (CPI) and State Nuclear Power Technology Corp got the green light, creating another big nuclear power giant to compete with two traditional nuclear players – China National Nuclear Corp (CNNC) and China General Nuclear Power Group (CGN).

    China is poised to greatly expand the country’s nuclear power generation, making itself the world’s top generator in terms of both capacity and number of reactors by 2030.

    The government plans to make nuclear power a pillar of it economic policy and increase support for related government organizations and industries.

    Under this circumstance, many power and coal giants, including China Nuclear Engineering Group Corp (CNEC), Huaneng Group and Datang Group, started to compete in getting the fourth nuclear power operating license of the country.

    Shenhua posted a 44.1% year-on-year drop in its net profit in the first three quarters, mainly due to a slump in sales in its coal and power businesses amid falling prices.

    Shenhua has to change the idea of development and transform from a traditional coal supplier to a world-famous provider of clean energy, said Ling.

    By 2020, Shenhua will realize overall ultralow emission in its coal-fired units. It has already realized ultralow emission in over 20 units with total annual capacity at 15 GW.

    “We will continue to expand solar and wind power output, making the profit or revenue share of renewable energy, unconventional natural gas and hydrogen industry reach more than 20% of the total ”, added Ling.
    Back to Top

    Kyushu Electric Says Atomic Power Windfall Showing in Earnings

    Kyushu Electric Power Co. said restarting two nuclear reactors at its Sendai facility could boost annual profit by more than half a billion dollars, underscoring the benefits it’s already seeing by becoming the first utility in Japan to bring its reactors back online under post-Fukushima rules.

    The Sendai reactors in southern Japan will increase profit by 80 billion yen ($663 million) in the 12 months ending in March, the company said Friday as it reported first-half earnings.

    Highlighting nuclear’s impact even after only a few weeks of operations at Sendai, Kyushu Electric on Friday reported it swung to a profit in the first half. While the gain was mainly from the decline in the price of oil, nuclear restarts played a role.

    Net income was 53.6 billion yen for the six months ended Sept. 30, compared with a 35.9 billion yen loss a year earlier, the company said in a statement. Sales were almost unchanged at 931.4 billion yen.

    The company, which uses oil to generate almost a fifth of the electricity it sells, didn’t provide an overall full-year profit forecast, though it said annual sales may fall about 0.5 percent to 1.87 trillion yen. The average price of oil purchased by the company fell to $51 per barrel in September, compared with $106 a year ago.

    Fukuoka, Japan-based Kyushu Electric restarted the No. 1 reactor at its Sendai facility on Aug. 11, and resumed operation of its No. 2 unit earlier this month. The unit boosted the company’s profit by 11 billion yen during the period.

    Japan’s nuclear fleet was gradually taken offline in the years since the Fukushima disaster, with the last of the country’s 43 operable commercial reactors closed in September 2013.

    Kyushu was forced to replace lost atomic power with oil-, coal- and gas-fired power plants.

    Nuclear is the cheapest form of electricity production, according to data compiled by Japan’s government.

    Attached Files
    Back to Top


    CF Industries: More Ugly.

    CF Industries Holding Inc., the largest U.S. producer of nitrogen fertilizer, fell the most in almost four
    years after posting lower-than-expected third-quarter earnings amid lower prices and concern that the market will be awash with surplus supplies.

    The shares tumbled 9.5 percent to $46.84 in New York. After the close of trading on Wednesday, Deerfield, Illinois-based CF reported profit excluding one-time items of 49 cents a share, mtrailing the 73-cent average estimate of 17 analysts in a Bloomberg survey.

    CF prices were pressured by the “significant availability” of nitrogen fertilizer on global markets combined with lower demand. That slashed gross profit in the quarter to 18 percent of sales from 33 percent a year earlier. The company is one of several expanding in the U.S. to take advantage of low-cost
    natural gas, the main raw material used to make nitrogen-based crop nutrients.

    "We remain concerned that rising capacity in addition to a lower global cost curve are lowering the floor for North American nitrogen prices, implying narrower margins for domestic producers going forward," Paul A. Massoud, a Washington-based analyst at Stifel Nicolaus & Co. who recommends holding CF shares, said Wednesday in a note.

    In August, CF agreed to pay $5.4 billion for some assets of competitor OCI NV and move its headquarters to the U.K. in a deal that it said will make it the world’s largest producer of nitrogen fertilizer.

    Attached Files
    Back to Top

    Amid sour ag economy, Deere to buy Monsanto equipment maker unit

    Monsanto Co's Climate Corp will sell its Precision Planting farm equipment business to Deere & Co for an undisclosed sum, a move that underscores how turmoil in the agriculture sector has made it ripe for consolidation.

    For Climate, a unit of the world's largest seed company, the deal marks the latest push to shed businesses that are not focused on either software or services

    Deere, the world's largest farm equipment maker, hopes the deal will create a revenue stream in retrofitting older machinery to help offset slumping sales elsewhere.

    With a glut of used farm equipment on the market and most farmers not interested in buying new machinery due to soft commodity prices, both companies are hoping the deal will tempt farmers to update equipment and buy into new farm-data services.

    Grain prices are hovering around five-year lows and farm income is expected to tumble 21 percent this year, keeping a lid on spending by farmers and putting pressure on companies across the sector to consolidate and seek cost savings.

    Tuesday's deal is Deere's second push into the precision-planting equipment arena this week. On Monday, it announced plans to acquire France-based Monosem. Monosem makes farm equipment known as "precision planters, that use a technologically advanced process in which farmers can specify seed planting depths by crop row.

    Last month, Deere entered a joint venture with DN2K to create a software platform for agricultural advisers and consultants.

    One key for Climate in the deal is size: Deere controls about 60 percent of the U.S. farm equipment market, according to industry analysts.

    Climate said it will have a multi-year, exclusive agreement to move near real-time data between certain John Deere farm equipment and Climate's farming software programs, Climate FieldView.

    Deere will take most of Precision Planting's equipment business - which is built on a series of mechanical products that attach to planters and other farm machinery. In addition, the deal also gives Deere all of the company's hardware, sensors and display systems.

    Deere will also acquire the Precision Planting brand and facilities and most of its product portfolio, spokesman Ken Golden told Reuters.

    Deere plans to run Precision Planting as an independent, wholly owned subsidiary. Deere officials said the deal is expected to close within 90 days, pending regulatory approval.

    The deal also is part of a strategic shift for Monsanto, which made its first major move into high-tech farming when it bought Precision Planting for $250 million in 2012.

    The seed giant is restructuring its operations to cut costs in a slumping commodity market, company officials and industry analysts say.

    Read more at Reuters

    Attached Files
    Back to Top

    Mosaic profit beats estimates on lower costs

    U.S. fertilizer company Mosaic Co reported a better-than-expected quarterly profit, helped by lower costs and a smaller tax bill.

    Excluding one-time items, Mosaic earned 62 cents per share in the third quarter ended Sept. 30, above the average analyst estimate of 53 cents, according to Thomson Reuters I/B/E/S.

    "Cost reduction combination with our share repurchases and a lower effective tax rate, drove an improvement in adjusted earnings per share," Chief Financial Officer Rich Mack said in a statement.

    The company said selling, general and administrative expenses in the quarter were the lowest in the past six years despite an expanded business footprint.

    The selling, general and administrative expenses fell nearly 9 percent to $76.6 million.

    However, net earnings attributable to Mosaic dropped nearly 21 percent to $160 million, or 45 cents per share, hurt by lower sales of phosphates and potash and a strong dollar.

    Mosaic's net phosphates sales fell to $1 billion in the quarter from $1.1 billion a year earlier, while potash net sales dropped to $492 million from $593 million.

    The company also cut the upper end of its full-year capital expenditure forecast to $1.2 billion from $1.3 billion, while retaining the lower end at $1.1 billion.

    The Plymouth, Minnesota-based company's net sales fell 6.5 percent to $2.11 billion in the third quarter, below analysts' estimate of $2.33 billion.
    Back to Top

    GrainCorp to post lowest annual profit in seven years

    GrainCorp Ltd, Australia's largest listed bulk grain handler, said it expects to post its lowest net profit in seven years as dry weather curbs production along the country's east coast, and sees no early let up in difficult conditions.

    GrainCorp on Tuesday forecast a net profit of A$32 million ($22.9 million) when it reports its 2015 annual results on Nov. 12, down from A$50.3 million last year, and below analysts' forecasts of about A$54 million according to Reuters Estimates.

    The result would be the company's weakest since it posted a loss of A$19.9 million in 2008, with strong competition from the Black Sea region also eating into earnings.

    "Lower grain production in eastern Australia resulted in intense competition to originate grain, while bigger crops and stock levels in other regions also generated strong competition from alternative supply origins," said Graincorp chief executive Mark Palmquist.

    "This situation was exacerbated by lower fuel costs and ocean freight rates, which reduced Australia's freight advantage to major export destinations."

    Palmquist acknowledged that the headwinds that have affected GrainCorp's competitiveness may continue into the 2016 season.

    "Each year is different, but we do have some of the same conditions on the front-end [of the season] - crop size does not look like it is going to be too different and freight spreads are going to be narrow," he said.

    An El Nino weather event has brought drier conditions to much of Australia's east coast in recent months, which may lessen available supplies for GrainCorp next year.

    Australia's grain export fortunes may ultimately rely on the prospects of its competitors, analysts said. Should major exporters also suffer supply concerns - Australia may arrest the side in its competitiveness.

    The difficult outlook will fuel speculation over the intentions of GrainCorp's largest shareholder Archer Daniels Midland Co, whose A$2.8 billion bid for Graincorp was rejected by the Australian government in 2013 on national interest grounds.

    Local media reported last week that ADM's stake of nearly 20 percent may be up for sale, but Palmquist said he had not been informed by ADM of any intention to change it holding.

    Shares in GrainCorp hit a five-month high in October after Malcolm Turnbull was installed as the country's prime minister, stirring speculation that Australia may change it stance on an ADM takeover.

    GrainCorp shares fell as much as 6 percent on Tuesday but recovered to be down just 0.7 percent at 0205 GMT at A$8.83.

    It forecast an underlying 2015 net profit at A$45 million and said it expected EBITDA (earnings before interest, tax, depreciation and amortization) of A$235 million.
    Back to Top

    Precious Metals

    Modi launches gold monetisation scheme, response seen muted

    India's prime minister will on Thursday launch a programme to lure tonnes of gold from households into the banking system, but low returns and concerns over tax authorities hounding depositors may hinder a scheme aimed at cutting imports.

    India's obsession with gold is rivalled only by China, with the metal used widely in wedding gifts, religious donations and as an investment. The country has amassed about 20,000 tonnes of gold worth over $800 billion in family lockers and temples.

    Previous attempts at mobilising this gold have been unsuccessful, but Prime Minister Narendra Modi is hoping higher interest rates paid will help it to succeed this time.

    "The government wants to reduce the reliance on gold imports over time," a finance ministry official said.

    Banks will collect gold for up to 15 years to auction them off or lend to jewellers from time to time. They will pay 2.25-2.50 percent interest a year, higher than previous rates of around 1 percent.

    But industry experts and bankers said many prospective depositors will not take up the scheme due to concerns that the tax department could question the source of gold, while others may find conventional bank deposit rates of 8 percent more attractive.

    "The present scheme will not bring out even 20 tonnes of gold," said Anantha Padmanabhan, southern region head of the All India Gems and Jewellery Trade Federation.

    Modi will also launch a sovereign gold bond, offering 2.75 percent interest to domestic investors to cut physical buying.

    Padmanabhan, however, said an amnesty was needed for people to deposit up to 500 grams of gold without any questions. The government has yet to make its position clear on this issue.

    Investors will have to disclose their permanent account number, registered with the income tax department, if the value of gold is worth more than 50,000 rupees ($763.53). Some people fear it is a way for the government to keep a tab on the source.

    Read more at Reuters

    Attached Files
    Back to Top

    Silver Wheaton pays $900m for Glencore silver stream

    Silver Wheaton announced on Tuesday a deal to acquire a portion of future silver output from Glencore's Antamina copper mine in Peru for $900 million cash.

    As part of the streaming deal, Silver Wheaton will make ongoing payments of 20% of the spot price for silver for every ounce of metal delivered.

    Silver Wheaton will receive from Glencore an amount equal to 33.75% of the Antamina silver production until the delivery of 140 million ounces of silver and 22.5% of silver production thereafter for life of mine at a fixed 100% payable rate according to a statement from the company.

    The Vancouver-based silver and gold streaming company said the deal immediately increases its production and cash flow profile by adding expected average silver production of 5.1 million in 2016 and 2017, and 4.7 million ounces per annum over the first 20 years.

    "Silver Wheaton has focussed on building a portfolio of streams on high-quality, low-cost mines. Antamina has both the quality and the scale to make it an ideal addition to this portfolio, as it is not only the eighth largest copper mine in the world, but it is also one of the lowest cost," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer.
    Back to Top

    Gold Standard Intersects 149.4m of 1.38 g Au/t

    Gold Standard Ventures Corp.  today announced assay results from five reverse-circulation (RC) holes drilled in the 2015 Phase 2 program at the Dark Star oxide gold deposit on its 100%-owned/controlled Railroad-Pinion Project in Nevada's Carlin Trend. Four of the five holes returned significant intercepts containing gold values above the cut-off grade of 0.14 g Au/t established by APEX Geoscience Ltd. of Edmonton, Canada in its Dark Star NI43-101 resource estimate announced on March 3, 2015. Results include multiple oxide intercepts grading above one gram per tonne and are highlighted by a thicker zone of 149.4 meters of 1.38 grams gold per tonne (g Au/t).

    The DS15-10 intercept represents the discovery of a new gold zone that is thicker and higher grade by an order of magnitude than anything drilled to date at Dark Star.

    Jonathan Awde, CEO and Director of Gold Standard commented: "These results fundamentally change the character and potential of the Dark Star Deposit. In the short term, we anticipate significant resource expansion at Dark Star. In the bigger picture, we now see the Dark Star Structural Corridor emerging as a major feature of the district that could extend for many hundreds of meters north and south of the known resource."
    Back to Top

    Bitcoin Surges To 1 Year Highs, Up 100% From "China Capital Controls"

    Bitcoin, at $400, is now at its highest since November 2014, having surged over 100% since the late-August 2015 lows when we first warned of China capital outflows using the virtual currency conduit. As we suggested, and was confirmed overnight, it appears the Chinese are just getting started...

    As we noted previously, here is the validation that, just as predicted here two months ago, bitcoin has become the go-to asset class for millions of Chinese savers seeking to quietly and under the radar transfer funds from point A to point B, whatever that may be, in the process circumventing the recently expanded governmental capital controls:

    While he didn’t provide any concrete numbers, he did comment last week on what was driving the adoption. “Some Chinese traders are expressing a view on the CNY exchange rate after the last devaluation and you have interest by mainland speculators to move to other assets after the stock market fallout,” he explained in an interview with Bitcoin Magazine.
    Back to Top

    Northern Start Director Sale.

    Image title
    Back to Top

    Lonmin warns of $2bn write-down, 6,000 job cuts

    South African platinum producer Lonmin, the world’s third largest, said Monday it expects to take an impairment charge of about $2 billion triggered mainly by weak metal prices and rising costs, when posting annual results next week.

    The company, still hurting from a lengthy strike that crippled its mines last year, revealed in October extreme measures to stay afloat, such us planned layoffs of 6,000 people and its intention to raise $400 million in a rights issue of new shares for debt repayments.

    "The impairment charge is primarily driven by lower PGM prices and the business plan which has an impact on future discounted cash flows over the life of mine business plan across the group's operations," it said in a statement.

    Lonmin added that the results for the year would show an operating loss of $207 million before the impairment

    Lonmin added that the results for the year would show an operating loss of $207 million before the impairment, even though it was already “removing high-unit cost [platinum group metals —PGM] production and associated overhead costs.” Lonmin said it hoped to keep unit costs generally flat in nominal terms for the next three years.

    The miner, which is planning for lower production at some of its South African mines, is expected to cut platinum output from over 750,000 ounces to 700,000 ounces in 2016 and then down to 650,000 ounces for 2017 and 2018.

    Despite a five-month strike that axed South Africa’s platinum output last year, prices for the metal have been down to historic lows. According to the company, during the final quarter of its financial year it sold platinum at a price 30% lower in dollar terms than in the same period last year.
    Back to Top

    Yamana Gold inks metal purchase pact with Sandstorm Gold

    In a transaction valued at more than C$200 million, Yamana Gold has entered into three metal purchase agreements with Sandstorm Gold Ltd.

    The metal purchase agreements include a silver purchase transaction related to production from Cerro Moro, Minera Florida and Chapada, a copper purchase transaction related to production from Chapada, and a gold purchase transaction related to production from Agua Rica.
    Back to Top

    Base Metals

    China aluminium smelters seek power fee cuts as metal price hits lows

    Emboldened by a state-owned aluminium smelter winning a cut in its electricity costs last month, other smelters in China are making a pitch to local authorities for similar cuts to cope with metal prices at record lows, people with knowledge of the matter said.

    In meetings with local governments and power suppliers, smelter executives are saying a bleak outlook for aluminium prices will leave them with no choice but to cut or halt production of the metal if power prices are not reduced, the people said.

    Power tariffs account for about 40 percent of production costs of aluminium smelters in China, the world's top producer and consumer of the metal. Any output reduction in China will help support weak prices of the metal.

    With power suppliers' costs expected to fall due to low coal prices, and local governments wanting smelters to keep producing to support jobs amid the slowing domestic economy, there's a good chance that at least some provincial local governments will agree to the smelters' requests, the people said.

    The pleas came after state-owned Liancheng smelter in Gansu province won a cut last month, although it may still stop production by the end of this year as its gross production costs are still higher than metal prices. The charges to Liancheng was cut to 0.25 yuan per kilowatt hour, from about 0.375 yuan.

    Private aluminium smelters in the southwestern province of Guizhou are asking for power charges below 0.3 yuan from about 0.35 yuan currently and state-owned smelters are seeking 0.25 yuan due to higher costs, said an executive at one of the smelters and an industry source.

    State-owned smelters in China typically provide more social benefits to workers, adding to their gross costs.

    "Below 0.3 yuan should not be a problem in Guizhou and Guangxi," the executive said of the private firm's operations in Guizhou and the southwestern region of Guangxi, adding that the new fees could start from January 1.

    He said his firm's production costs would be around 10,000 yuan per tonne if the power charges were 0.25 yuan.

    The most-active aluminium futures contract in Shanghai hit a contract low of below 10,300 yuan per tonne late last month. The price has risen slightly since then due to mounting production cuts, trading at 10,545 yuan on Friday.

    Smelters in northwestern provinces of Ningxia and Qinghai and southwestern province of Yunnan also were seeking lower electricity tariffs of around 0.25 yuan, Xu Hongping, analyst at China Merchants Futures said.

    Read more at Reuters

    Attached Files
    Back to Top

    Processing fees for spot copper concentrates to China hit 7-month high

    Spot treatment and refining charges that Chinese copper smelters receive for processing raw material concentrate imports have risen 10 percent in two months to hit a seven-month high, as many smelters cut purchases prior to talks on term shipments.

    Strong spot rates could help smelters receive higher charges for the 2016 term shipments.

    Spot standard copper concentrates to China traded carrying treatment and refining charges (TC/RC) of about $108 per tonne and 10.8 cents per pound this week, the highest since April 2015, sources at smelters said.

    Spot TC/RCs were at about $98-$100 and 9.8-10 cents in September and $92-$95 and 9.2-9.5 cents in August.

    Supply of spot concentrates may rise next month, as some global traders and miners try to boost revenues ahead of the year-end, said a trader at an international trading house.

    Large Chinese smelters were not keen to take spot concentrate imports prior to talks with global miners on term shipments in 2016, though smaller smelters were seeking spot shipments with higher TC/RCs, the smelter sources and traders said.

    A manager at a medium-sized smelter said his firm was seeking spot imports and asking for TC/RCs of $107-$108 and 10.7-10.8 cents.

    Chinese smelters and global miners are set to start talks on TC/RCs for term shipments in 2016 in mid-November.

    Many Chinese smelters expect the global concentrate market to have a surplus next year although some global miners have trimmed production due to low metal prices trading not far off six-year lows, said a manager at a state-owned smelter.

    "Many estimates (by analysts) show a surplus...based on miners' production plans," the manager said. He expects the 2016 benchmark TC/RC to rise up to $110 and 11 cents, from this year's $107 and 10.7 cents.

    Smelter executives and traders said last month the 2016 benchmark could be about $100-$110 and 10-11 cents.

    Still, China's demand for concentrate imports is expected to rise next year to cover higher metal production, meaning some pressure on TC/RCs.

    State-backed research firm Antaike expects China's refined copper production to rise 6-7 percent to 7.87-7.94 million tonnes in 2016. China is expected to add about 550,000 tonnes both in smelting and refining capacity next year.

    Read more at Reuters

    Attached Files
    Back to Top

    Chile’s Codelco lays off over 4,000 workers

    Codelco’s chief executive Nelson Pizarro is following through with hispromise of cutting costs “to the bone” as the Chile-owned miner announced it has cut almost 3,900 jobs, including contractors, in response to low prices and weak demand.

    Until now, the world’s top copper producer had only disclosed the layoff of about 400 employees, mostly staff members in top positions.

    The fresh and massive cuts bring the number of layoffs to over 4,000, making of Codelco the mining company that has let go the highest amount of workers in Chile since metal prices began their decline over a year ago.

    According to Pizarro, the “painful, but necessary” move has not affected production, local newspaper El Mercurio reports (in Spanish). “What’s more, the company’s output has grown 5.5% during the last year, and costs have dropped by about 11%,” he told the paper.
    Back to Top

    Alcoa idling 3 U.S. aluminium smelters as prices bite

    Alcoa Inc said on Monday it will idle three of its four active U.S. aluminium smelters, slashing annual capacity by 500,000 tonnes, in the steepest cuts yet by an aluminium producer to battle oversupply and sinking metal prices.

    The company said in a statement it will suspend its Intalco and Wenatchee smelters in Washington state and the Massena West smelter in New York state. It will also permanently close Massena East, also in New York, which was shuttered in 2014.

    The move will reduce Alcoa's smelting capacity by a further 503,000 tonnes annually, leaving the Evansville, Indiana, smelter as its sole U.S. primary plant. It produces 269,000 tonnes per year.

    For Alcoa, the measures come as it prepares to break itself in two, separating the faster-growing plane and car parts business from traditional upstream operations.

    The cuts are the biggest since the year-long rout in benchmark aluminium prices and the collapse in premiums, paid for physical delivery, earlier this year, pushing many of the world's smelters into the red.

    Prices have plunged by a third since September 2014 and are languishing at six-year lows around $1,450 per tonne amid concerns about waning demand and a ballooning surplus.

    Some producers, like Century Aluminium Co, also blame exports of cheap metal from China, the world's top producer, for undermining their competitiveness.

    Traders said the cuts were a step in the right direction to chip away at the global surplus and may give U.S. premiums AL-PREM some support.

    "These difficult, but necessary measures will further strengthen our upstream portfolio, reducing our cost position and driving greater resilience," Klaus Kleinfeld, chairman and chief executive, said in the statement.

    The news deals a major blow to a U.S. industry struggling with high energy and labor costs. Many companies including Alcoa have built capacity in the Middle East where energy is cheap and abundant.

    Alcoa's cuts, coupled with recent announcements by Century, represent around 30 percent of U.S. aluminium production and will leave just four smelters operating in the United States, with capacity to produce 759,600 tonnes per year.

    That's the lowest output since the 1950s and compares with 23 smelters in 2000, according to the U.S. Geological Survey.

    Alcoa said it will begin the cuts later in the fourth quarter, and will aim to complete them by the end of the first quarter of 2016.
    Back to Top

    Tiger Resources reports record production in Q3

    Tiger Resources Limited delivered an improved and consistent production performance in Q3 2015 with 7,139 tonnes of copper cathode produced and 6,833 tonnes sold.

    Cash operating costs were US$1.40/lb, with a US$1.63/lb all-in sustaining cash cost.
    Back to Top

    Strike begins at the largest copper mine in northen turkey

    tmgrupDailysabah report that workers at Turkey's largest copper mine went on strike over a salary dispute, bringing to a halt operations at the mine in northern Turkey.

    Three-hundred-and-twenty workers at the mine operated by First Quantum Minerals Ltd. went on strike, after the company refused to grant an increase in wages following lengthy negotiations regarding a collective labor agreement.

    Mr Zekeriya Gültekin, the local representative of the Mine Workers' of Maden Union said on behalf of the protesting miners in Rize province's Çayeli district, strike was the result of the company refusing to consider raising salaries over the next three years.

    He said.that, this is one of the most important mines in Turkey. It helped the company generate high revenues for years and made significant contributions to Turkey's economy. It has been among the top taxpayers for years and managed to keep its revenues steady, even when stagnation was afflicting the industry and metal prices were low. The company has no excuse not to give a raise. We will not return to work unless they cancel this policy.

    According to its website, the Çayeli mine produces copper concentrate, copper, zinc bulk concentrate and zinc concentrate and base metals. It has a production capacity of 1.2 million tons per year.
    Back to Top

    Risking trade friction, China set to unleash more aluminium onto world markets

    China is likely to sell more aluminium onto world markets by offering its struggling smelters cheaper power prices to keep them operating, adding to growing trade tensions with rival producers in countries such as the United States and Russia.

    The world's top aluminium producer is making far more than it needs with record amounts of the metal being exported, adding to a global glut that has sent prices to six-year lows.

    The surge in shipments is already triggering calls for action to stem the flow in some countries and risks creating similar anger that soaring Chinese steel sales have caused.

    China exported a record 3.1 million tonnes of semi-manufactured aluminium products in the first 9 months of the year, even with a dip in the third quarter when weaker global prices made exporting less attractive.

    "As the price differential becomes attractive for exports, it's that much easier to hit the 'go' button and start exporting again," said analyst Paul Adkins of consultancy AZ China, noting recent falls in local prices would reinvigorate Chinese exports.

    The falls have come after China said it planned to cut wholesale prices of electricity for the second time this year, a move that would cut production costs for aluminium producers further.

    AZ China estimates average monthly aluminium production costs at at least a five-year low around 13,000 yuan a tonne, as power, carbon and alumina costs fall.

    Attached Files
    Back to Top

    Steel, Iron Ore and Coal

    Brazil's Vale cuts budget for S11D project by as much as $2.6bn

    Brazilian miner Vale SA expects its flagship S11D iron-ore project to be completed on time and as much as $2.6-billion below budget, the company said in an analyst presentation. 

    The cost reduction primarily reflects the dramatic devaluation of the real, which has lost about 35% to the dollar over the past year. Vale said the cost of the project, which is the largest in the company's history and will add 90-million tonnes per year of iron ore production, has fallen to $14.4-billion. The previous forecast, given in December, was between $16-billion and $17-billion. The savings come partly because 90 percent of future costs for the project are denominated in reais, Vale said in the presentation uploaded to its website on Wednesday. 

    The project is on track for completion by the end of next year and could bring Vale's overall iron ore production costs down to $10/t, depending on currency fluctuations, Peter Poppinga, the company's head of iron-ore, said recently.

    Attached Files
    Back to Top

    Indonesian Sep coal exports down 31pct on year

    Indonesia saw its coal exports fall 31% year on year to 24 million tonnes in September, the latest data showed.

    Over January-September, the country exported a total 235 million tonnes of coal, falling 19.8% year on year.

    Falling coal prices and sluggish demand from major importer China have driven many miners of Indonesia to cut output and even withdraw from the market.

    During the first three quarters of the year, the country produced 308 million tonnes of coal, down 14.4% year on year, with September output down 8% on year to 45 million tonnes.

    The Ministry of Energy and Mineral Resources has adjusted the country’s annual output target for many times, finalizing at 425 million tonnes, compared with the 460 million tonnes target set at the start of the year.

    The country has completed 72.5% of the annual target by end-September.

    In early-August, the government started to levy coal export tariffs, resulting in a rise at production cost and losses at enterprises.

    Sources said many medium and large mines at eastern Kalimantan were closed, with large miners starting to withdraw capital.

    85% mines at Jambi were forced to suspend operation. The province mainly produces 3,800 Kcal/kg NAR thermal coals, mainly exporting to China, Japan and India. The province could produce 8.5 million tonnes of coal each year.

    Over January-October, Jambi’ coal output plunged 65% on year to 2.8 million tonnes.

    Attached Files
    Back to Top

    China to cap coal use at 2.72 bln T of standard coal by 2020

    China’s coal consumption should be controlled below 2.72 billion tonnes of standard coal equivalent, according to a report released in an international seminar for the 13th Five-Year Plan on November 4.

    As a large energy consumer around the world, China’s energy consumption in 2014 totaled 4.26 billion tonnes of standard coal equivalent, accounting for 25% of the global volume, with coal consumption taking even more than 50% of the global total.

    Specifically, coal use for power sector will be controlled within 1.39 billion tonnes of standard coal equivalent or 51% of the total; that of manufacture and building sectors will be controlled below 1.17 billion tonnes and 240 million tonnes, accounting for 40.2% and 8.8%, separately.

    This move may force over half of the nation’s coal producers to withdraw from the market within five years, industry insiders said.

    The number of coal mining and washing enterprises across the country should be reduced from 6,390 in 2015 to 3,000 or less during the “13th Five-Year Plan” period ended in 2020, resulting in 671,000 and 191,000 lay-off workers from coal mining and washing industries, respectively.

    To realize the coal consumption control goal, the share of coal consumption will drop 8.6 percentage points from a year ago to 57.4% in the total energy consumption; while the share of natural gas use will be increased to 10%, and that of non-fossil energy use will up to 15.2%.

    China has promised to the world to peak carbon emission in 2030, and vowed to control coal use below 3.8 billion and 3.4 billion tonnes by 2020 and 2030, respectively.

    Additionally, the realization of coal consumption control should be based on a sound withdraw system for coal producers, especially the reemployment guarantee system for laid-off staffs in coal industry.

    Meanwhile, total energy consumption of the country should be or no more than 4.74 billion tonnes of standard coal equivalent by 2020, according to the report.

    Attached Files
    Back to Top

    Nine steel associations question China’s treatment as a non market economy

    The American Iron and Steel Institute (AISI), the Steel Manufacturers Association (SMA), the Canadian Steel Producers Association (CSPA), CANACERO (the Mexican steel association), Alacero (the Latin American steel association), EUROFER (the European steel association), Instituto AcoBrasil (the Brazil Steel Institute), the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports have released a joint statement regarding concerns about China’s attempt to gain market economy status in December 2016:

    The release said “The global steel industry is currently suffering from a crisis of overcapacity and the Chinese steel industry is the predominant global contributor to this problem. Estimates from the OECD Steel Committee indicate that there is almost 700 million metric tons of excess steel capacity globally today.

    China’s overwhelmingly state owned and state supported steel industry has an overcapacity ranging from 336 to 425 million tonnes and it is expected to grow in the coming years. This situation, together with a declining steel consumption, has resulted in record levels of steel exports from China to the rest of the world in 2014 and which are on track to exceed 100 million metric tonnes this year.”
    Back to Top

    Tata Steel to press ahead with cuts as China exports bite

    Tata Steel Ltd, Europe's second-largest steel producer, said on Thursday it will press ahead with cost cuts and restructuring to cope with a surge in cheap Chinese exports to Europe and India, its two key markets.

    Tata, which posted a surprise 22 percent rise in second-quarter net profit after selling some non- essential holdings, is trying to revive its struggling British operation and has cut thousands of jobs since buying Anglo-Dutch Corus in 2007.

    "We have seen huge pressure on (steel) prices ongoing and the strong pound has exasperated  the point," Karl-Ulrich Koehler, CEO of Tata Steel in Europe, told reporters. "Our focus on cost reductions and restructuring will have to continue."

    Koehler said Tata would look at all options for its European long products business

    The crisis in Britain's steel sector escalated last week as Tata Steel blamed its decision to cut British jobs on a flood of cheap imports, particularly from China, as well as tumbling steel prices.

    Net profit at Tata Steel, a division of a hotels-to-automobiles conglomerate, rose to 15.29 billion rupees ($232.9 million) on a consolidated basis in the quarter ended Sept. 30 from 12.54 billion rupees a year earlier.

    Analysts had forecast a net profit of 11.8 billion rupees, according to data compiled by Thomson Reuters.

    Tata's profit was boosted by 28 billion rupees earned from the sale of quoted investments during the quarter, including part of its stake in Tata Motors.

    Tata also said the "rapid and sharp deterioration" in the British business environment had forced it to take a non-cash charge in the period which, together with restructuring charges and other provisions, totalled 87 billion rupees.

    China makes nearly half the world's 1.6 billion tonnes of steel. With growth slowingat home, it is expected to export a record 100 million tonnes to world markets this year to help address its spare steel making capacity.

    India imposed a 20 percent import tax on some steel products in September to mitigate the damage to domestic companies.

    Despite this, steel prices in India will remain under pressure until there is a "meaningful uptick" in demand in Asia's third-largest economy, said T.V. Narendran, Tata Steel's managing director for India and Southeast Asia.

    Read more at Reuters
    Back to Top

    Dam burst at Vale, BHP mine devastates Brazilian town

    A dam holding back waste water from an iron ore mine in Brazil that is owned by Vale and BHP Billiton burst on Thursday, devastating a nearby town with mudslides and leaving officials in the remote region scrambling to assess casualties.

    The mining company Samarco, a joint venture between top iron ore miners Brazil's Vale and Australia's BHP, said in a statement it had not yet determined why the dam burst or the extent of the disaster at its Germano mine near the town of Mariana in Minas Gerais, south eastern Brazil.

    Civil defense authorities in Mariana said it was evacuating about 600 people to higher ground from the village of Bento Rodrigues, where television footage showed dozens of homes destroyed by the mudslide. A car rested on top of a wall where the roof of a building had been ripped off.

    They said the flood had also reached another village further down the hill, called Paracatú de Baixo, and that inhabitants there were being evacuated.

    The dam was holding tailings, a mining waste product of metal filings, water and occasionally chemicals. It was located near the Gualaxo do Norte river, adding to fears of potential water contamination.

    The G1 news service of the Globo Media group reported that between 15 and 16 people died and 45 others were missing, citing the local union.

    Civil defense authorities could not confirm casualties and said numbers reported in Brazilian media were speculative. A city hall official confirmed one death and 16 injuries, adding that dozens more were missing.

    Rescue crews continued to search the muddy waters after nightfall.

    Brazilian army units nearby stood ready to help the search and rescue effort and the minister of national integration, Gilberto Occhi, planned to visit the state on Friday to provide assistance, according to a note from the presidency.

    Miners are struggling amid a collapse in prices of iron ore and other commodities due to concerns about demand from China, the world's top consumer of industrial raw materials.

    Samarco produces about 30 million tonnes per year of iron ore, just under 10 percent of Brazil's output. Iron ore is transported down a slurry pipe from Germano to Espirito Santo, where it is turned into pellets.

    BHP said it was pressing Samarco for more information and expressed concern in a statement for the safety of employees and the nearby community. Vale directed media questions to Samarco.

    Read more at Reuters
    Back to Top

    Britain's steel sector significantly worse-India's Tata

    Tata Steel Ltd, Europe's second-largest steel producer, said on Thursday market conditions in Britain had "significantly worsened" during its second quarter due to a slump in prices and more cheap Chinese imports.

    Tata Steel, which has cut thousands of jobs since it bought Anglo-Dutch producer Corus in 2007, has been working on turning around its struggling operations in Britain.

    The crisis in Britain's steel sector escalated further last week as Tata Steel blamed its decision to cut British jobs on a flood of cheap imports, particularly from China.

    Tata said on Thursday the "rapid and sharp deterioration" in the British business
    had forced it to take a non-cash impairment charge which, together with restructuring charges and other provisions, totalled 87 billion rupees ($1.3 billion).

    "Our operating result has turned negative this year, reflecting the huge challenges the global steel industry is facing. In the UK these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness," Karl-Ulrich Köhler, CEO of Tata Steel in Europe, said in a statement.

    Tata, which also operates in India and South East Asia, reported a surprise 22 percent rise in its quarterly consolidated net profit, as one-time gains helped offset cheaper imports from the world's top steel producer China.

    Net profit at Tata Steel, a unit of a hotels-to-automobiles conglomerate, rose to 15.29 billion rupees ($232.9 million) on a consolidated basis in the quarter ended Sept. 30, compared to 12.54 billion rupees in the year ago period.

    Analysts had forecast a net profit of 11.8 billion rupees, data compiled by Thomson Reuters shows.

    The profit was helped by 28 billion rupees earned from the sale of quoted investments during the quarter, Tata said in a regulatory statement.

    Read more at Reuters

    Attached Files
    Back to Top

    China's crude steel output to fall to 780mn T by 2020

    China's output of crude steel is expected to fall to 780 million tonnes by 2020, the China Iron & Steel Association (CISA) said on Wednesday, as the steel sector grapples with slower demand growth and tumbling prices. China's crude steel production will fall this year and the next, with a brief rebound in 2017 before resuming its downward trend, CISA told an industry conference in Beijing.

    With steel prices hitting their lowest in more than two decades, the country's massive steel sector is struggling with surplus capacity of about 300 million tonnes and cooling demand growth.

    However, top iron ore miners, including Rio Tinto and BHP Billiton , are still expanding output, betting on sustainable growth in China, despite the contraction in steel output by the world's biggest producer.

    BHP sees moderate but sustainable growth in Chinese steel production over the next decade, although it cut its forecast for peak steel production to between 935 million and 985 million tonnes in the mid-2020s, down from 1 billion tonnes previously.

    Shrinking demand, soaring losses and tighter credit have undermined Chinese steel firms, with more, particularly in the northern region, expected to make deeper output cuts over the next few months.

    Anshan Iron & Steel Group, one of China's major state-owned steel firms, has suspended operations at some blast furnaces this week, industry sources said.

    China's apparent crude steel consumption fell in 2014 for the first time in three decades, to stand down 3.4 percent at 738.3 million tonnes. Consumption for the first nine months of this year dropped 5.8 percent to 533 million tonnes.

    Attached Files
    Back to Top

    China's imports of Australian coal from Gladstone up 53pct on mth

    China's coal imports from the eastern Australian port of Gladstone rose to 956,000 tonnes in October, up 53% from 624,000 tonnes in September, said Gladstone Ports Corporation on November 4.

    China’s imports of Gladstone coal over January-October stood at 9.6 million tonnes, down 32.9% from 14.3 million tonnes in the first ten months of 2014.

    South Korea's demand for Gladstone coal jumped to its highest in 27 months in October at 1.4 million tonnes, up 60% from September's shipments of 873,000 tonnes.

    Over January-October, South Korea imported 9.1 million tonnes of coal from Gladstone port, up 15.2% from a year earlier, the port data showed.

    Indian customers booked 1.28 million tonnes of coal from Gladstone port's three coal terminals in October, down 23.5% from 1.68 million tonnes in September. Its total imports from Gladstone port stood at 12.33 million tonnes over January-October, compared with 11.2 million tonnes a year ago.

    Japan, another major customer, consumed 1.68 million tonnes of coal from Gladstone in October, down 16% from 2 million tonnes in September.

    The port has exported 59.3 million tonnes of coal over January-October, up 1 million tonne from a year earlier.
    Back to Top

    Glencore Jan-Sep coal production drops 8pct on year

    Diverse miner Glencore produced 102.7 million tonnes of coal during January-September, slipping 8% year on year, as it continued to limit production in a weak market environment, the company said on November 4.

    The miner produced 16.2 million tonnes of South African export thermal coal during the first nine months of 2015, falling 7% on year.

    Output of South African domestic thermal coal for the first three quarters of the year also fell 8% on year to 15.6 million tonnes.

    Glencore attributed the lower production at its South African operations to the closure of the Optimum opencut operations and Middelkraal. However, the miner noted that Optimum's underground mine was still operating, although it was under business rescue proceedings, and increased production at Impunzi and Tweefontein has partly mitigated the overall reduction.

    At its Colombian operations, Glencore produced 13.9 million tonnes at Prodeco over January-September, slipping 8% on year, as it lowered production to meet temporary night railing restrictions.

    At the same time, the miner's 33.3% pro-rata share of production from the Cerrejon mine was 8.4 million tonnes, edging 2% higher.

    In Australia, its export thermal coal production for the first nine months dipped 8% on year to 38.8 million tonnes, while domestic thermal coal production at the Australian operations dropped 31% from the same period in 2014 to 2.9 million tonnes.

    Glencore has been scaling back production in Australia due to weak market conditions.

    Australian coking coal production for the first nine months of 2015 fell 9% on year to 4.2 million tonnes, due to geological issues at Oaky North, while semi-soft coking coal output rose 8% on year to 2.7 million tonnes.

    All average energy commodity export prices fell compared to the first nine months of 2014, with the South African thermal coal average realized export price dropping 23% on year to $54/t.

    The average realized export price of Australian thermal coal dropped 16% from the year before to $61/t, while in Colombia, the average realized export prices for the period were $64/t at Prodeco and $57/t at Cerrejon, slipping 175 and 15% on year, respectively.

    In Australia, the average realized export price of coking coal and semi-soft fell 16% and 18% on year, respectively, to $101/t and $79/t.
    Back to Top

    Ore exports from Port Hedland sink in October

    Image Source: dredgingtodayBloomberg reported that Iron ore cargoes from Australia's Port Hedland to China fell last month to the lowest level since July ahead of a seasonal slowdown in the largest buyer that may compound a decline in production and consumption as the economy cools.

    Exports to China were 30.7 million metric tons from 33.8 million tons the previous month and 31.7 million tons a year earlier, according to data from the Pilbara Ports Authority on Wednesday. Overall iron ore shipments totalled 36.5 million tons, down from a record 39.4 million tons in September and 37.5 million tons a year ago.

    For the year-to-date, shipments are still well ahead of 2014. Exports to China from Port Hedland were 314 million tons in the first 10 months compared with about 284 million tons in the same period in 2014.
    Back to Top

    Rio Tinto sees strong growth in iron ore demand outside China

    Rio Tinto said on Thursday it expects to see strong growth in iron ore demand in countries outside of China as the global seaborne market expands.

    China has long been the top market for sea-traded iron ore, importing close to 1 billion tonnes a year, out of a global market of 1.4 billion tonnes. Rio Tinto accounts for about a third of China's imports.

    "We project that the world will demand around 3 billion tonnes of iron ore by 2030, a 2 percent average annual increase from today's levels," Rio Tinto's iron ore head Andrew Harding said.

    "We are expecting non-Chinese demand for steel to increase by 65 per cent in the period to 2030, with ASEAN (Association of Southeast Asian Nations) economies and India playing key roles," Harding said in a speech to business leaders in Perth.

    Half of the expansion in global iron ore demand will be supplied through the seaborne market, according to Harding, where Australia and Brazil are the dominant suppliers.

    Still, Chinese demand for ore will be "critically important," with steel production expected to grow 1 percent a year from a very high base, he said.

    Harding's comments run counter to forecasts by the China Iron & Steel Association (CISA), which sees China's crude steel output declining to 780 million tonnes by 2020 from 823 million tonnes in 2014, as steelmakers grapple with slower demand growth and tumbling prices.

    CISA on Wednesday said it expected China's crude steel production to fall this year and next, with a brief rebound in 2017 before resuming the downward trend.

    China's steel sector is already struggling with 300 million tonnes of surplus capacity, pushing iron ore prices to their lowest since July, while inventories at Chinese ports have ballooned to the highest since May.

    Read more at Reuters
    Back to Top

    U.S. Steel reports another huge loss

    U.S. Steel continues to rack up huge losses despite an aggressive cost cutting program.

    The Pittsburgh-based company reported a third quarter net loss of $173 million US Tuesday afternoon. That brings its losses for nine months of 2015 to more than $509 million US.

    The latter includes a $53-million US loss to shut down blast furnace, steelmaking and most flat-rolled operations at its Fairfield Works and a $10-million US charge for a pension obligation related to its troubled U.S. Steel Canada operation.

    In a news release, company president Mario Longhi blamed the poor performance on unfair imports of subsidized foreign steel and a sluggish American economy.

    "Total segment (earnings before interest and taxes) improved as compared to the second quarter as we continued to take action to address our cost structure," he said. "We remain focused on our Carnegie Way transformation efforts to weather the continued difficult market environment. These efforts will better position our company to generate stronger operating margins and respond to changing market conditions."

    Carnegie Way, named for company founder Andrew Carnegie, is an aggressive cost cutting program that Longhi said has so far trimmed $715 million US from its operations.

    Despite its losses the company has strong liquidity of $2.9 billion US, including $1.2 billion US in cash.

    For the rest of 2015, the company predicts adjusted earnings before interest, taxes, depreciation and amortization of about $225 million US.

    The quarterly results compare to a net loss of $207 million US in the same period last year and a second quarter 2015 net loss of $261 million US.

    The results reported from the company's American headquarters do not include figures for its Canadian arm, which is under creditor protection.

    The court-appointed monitor of that process recently reported year-to-date losses of $343.8 million.

    The American company noted year-to-date losses of $217 million US associated with U.S. Steel Canada. That's down from $413 million US for the same period last year.

    [U.S. Steel wants Canadian unit to pay $2.2B debt]

    However, it also reported improved results in the flat-rolled steel segment compared to the second quarter, although it contends the sector continues to be plagued by unfair imports.

    "Imported flat-rolled products, much of which we believe are dumped and/or subsidized, remained excessively high in the third quarter, causing further damage to the domestic market," it said in a release. "Based on preliminary statistics, imported sheet products still averaged more than one million tons per month in the third quarter and not only continued to erode our market share, but also placed downward pressure on both our spot and our contract prices."

    Average prices for the quarter were $674 US per ton, down from $777 US for the same period last year. The year-to-date average price was $712 US per ton.

    Looking ahead, Longhi said the future is not bright.

    "Commercial markets are not improving as we had anticipated for the second half of 2015. Steel selling prices reversed direction as excessively high levels of imports, much of which we believe are unfairly traded, and a significant decline in steel scrap prices caused spot prices to reach new lows for the year," he added. "High import levels also had a negative impact on the rebalancing of supply chain inventories, decreasing customer order rates in the second half of the year."

    Based on those factors, Longhi said the company expects "significantly lower shipments and average realized prices than we previously projected for full-year 2015."
    Back to Top

    U.S. Sets New Duties on Chinese Steel

    Six American steel makers including U.S. Steel filed three trade complaints earlier this year. On Tuesday, they received a preliminary ruling on the first as the Commerce Department established preliminary duties of up to 236% on imports of corrosion-resistant steel from China. The tariff goes into effect immediately and will be set for five years if a final ruling in favour of the duty is made in January.

    U.S. Steel Chief Executive Mario Longhi pointed to the role of Chinese imports in a company statement Tuesday, saying that “excessively high levels of imports, much of which we believe are unfairly traded” hit steel prices.

    A U.S. Steel spokeswoman said the tariffs were “a good first step” and that the company is looking forward to the next decision, “encouraged that our federal agencies tasked with this critical oversight and enforcement of our trade laws will halt these harmful, illegal and unfair practices.”

    China’s Commerce Ministry declined immediate comment, saying it was looking into the decision. Phone calls to the China Iron and Steel Association weren’t answered.

    Steelmakers in China and other countries have denied taking advantage of domestic subsidies or other favours to dump low-cost steel on U.S. markets.

    Overall, imports of steel into the U.S. are slightly down in 2015, but they have increased dramatically for certain key steel categories, including the corrosion-resistant steel hit by the preliminary tariff.

    Many categories of steel are offered at such low rates that they’re “toxic for pricing,” said Phil Gibbs, an analyst for Cleveland-based Keybanc Capital Markets.

    The tariffs will provide some support for prices in the U.S., but some analysts say companies are going to have make longer-term structural changes.

    “We could see steel prices stay this low for the next 10 years,” Mr. Gibbs said.

    The Commerce Department also set smaller duties on imports from India, South Korea and Italy. A separate ruling on the case will be issued in December.

    Attached Files
    Back to Top

    Tata Steel announces carbon reduction project

    Tata Steel has announced a new carbon-cutting project called HIsarna, which could cut CO2 emissions by 20 percent.

    In conjunction with Rio Tinto and other European steelmakers, the project is being piloted at IJmuiden steelworks in the Netherlands.

    Research suggests it could reduce today’s steel industry CO2 emissions and energy use, as well as lower the emissions of fine particle dust and dioxins, and nitrogen and sulphur oxides.
    Back to Top

    German Cabinet passes coal-fired power reserve law

    The German cabinet on Wednesday approved a plan to pay utilities to set aside some of their coal-fired power capacity as Europe's biggest economy looks to ensure stable supply and reduce carbon emissions.

    Some 2.7 gigawatts (GW) of power generation from brown coal, equivalent to the output of eight power plants, will be placed in reserve and shut down by 2022, a government official said.

    The plan is part of Germany's efforts to cut its carbon emissions by 12.5 million tons by 2020.

    In July, Economy Minister Sigmar Gabriel abandoned plans for a levy on coal-fired power plants and instead announced that companies would be paid to shift capacity to the reserve.

    Utilities RWE, Vattenfall and Mibrag will reduce coal-fired power output from the start of winter 2016 and receive an average of 230 million euros ($251 million) per year collectively.

    Consumers are expected to face higher electricity bills as costs of around 1.6 billion euros for the scheme will not be shouldered by the government.

    Opposition lawmaker Oliver Krischer from the Green Party accused Gabriel of yielding to the interests of the utilities and creating a reserve which no-one needed at great cost.

    It remains to be seen whether the European Commission will approve the plan, he said.

    The Cabinet also passed a new electricity market design which allows utilities to charge higher prices at times of shortages when wind or renewable energy sources cannot provide sufficient supply.

    This could help operators of gas-fired power plants which are not profitable under current conditions due to low spot prices and competition from cheaper coal and renewables.

    Read more at Reuters

    Attached Files
    Back to Top

    Looming default by China coal producer

    Hidili Industry International Development Ltd, a leading private-sector coal company based in Southwest China's Sichuan Province, may not be able to repay $183 million in debt due on Wednesday, a situation that experts said underscores the difficulties that many domestic coal companies face.

    The coking coal producer said it would be unable to repay a six-month bond totaling $190.6 million of principal and interest with a coupon rate of 8.625 percent that was to fall as of Wednesday, according to a statement the company released on Friday.

    Hidili said in the statement that it had defaulted on 6 billion yuan ($947 million) in loans as of June 30. In addition, an affiliated company defaulted on a 289.6 million yuan bank loan.

    More coal companies will default due to sluggish industry conditions amid an economic downturn, experts said.

    "The ongoing economic structural transformation in China has put heavy pressure on the secondary industry including the coal sector," Liu Xuezhi, an analyst at Bank of Communications, told the Global Times on Tuesday.

    Liu noted that a transformation is also taking place within the coal sector. "The government is calling for industries with low rates of energy use and low levels of pollution," he said.

     "But the traditional coal industry is in the opposite situation," Liu added.

    More than 70 percent of China's large- and medium-sized coal companies lost money in the first half of this year, news portal reported on October 8, citing the China National Coal Association.

    Companies in North China's Hebei Province, East China's Shandong Province and East China's Anhui Province were worst affected, it said.

    The asset-liability ratio in the coal sector has been rising, reaching 52.57 percent as of the end of the third quarter, up 1.58 percentage points year-on-year, according to a report released Tuesday by Shenwan Hongyuan Securities Co.

    Analysts attributed the coal industry's difficulties to declining demand caused by a prolonged economic downturn and excessive supply.

    A core subsidiary of State-owned Sinosteel Corp announced on October 19 that it would delay payment of interest on its 2 billion yuan bonds, leading to the first debt default in the industry.

    Attached Files
    Back to Top

    Daqin Oct coal transport down 13.8pct on year

    Daqin line, China’s major coal-dedicated rail line, transported 29.79 million tonnes of coal in October, a decline of 13.8% on year -- the 14th consecutive year-on-year drop, and down 4.53% from September, showed the latest data on November 3.

    It completed 91.7% of its monthly target, data showed.

    In October, Daqin’s daily coal transport averaged 961,000 tonnes, down 7.6% month on month.

    Over January-October this year, Daqin accomplished a coal transport volume of 334.83 million tonnes, a decline of 10.5% from the year prior. That was 79.7% of its annual target, which was set at 420 million tonnes.

    In 2014, Daqin line accomplished a total coal transport volume of 450.2 million tonnes, up 1.11% on year, accounting for 27.42% of the nation’s total.

    In addition, Houyue line transported 6.42 million tonnes of coal in October, falling 16.3 % on year and down 6.96% from September.

    Over January-October, total coal transport of Houyue line stood at 67.61 million tonnes or 84.5% of its annual target, down 6.6% from a year ago.
    Back to Top

    Essar Steel Minnesota behind on payments to some contractors

    Minneapolis Star Tribune reported that cash hobbled Essar Steel Minnesota is in hot water again. Contractors and workers have called the state saying the company is late on payments for the massive $1.9 billion taconite production facility being built on the Iron Range.

    Some contractors said they are considering pulling workers from the job site, and a union representing workers there said others already have pulled some of their employees.

    State Rep Mr Tom Anzelc, who is also chairman of the Legislature’s Iron Range delegation said “Based on constituent calls and calls from businesses and workers I received, the buzz is that there appears to be another cash-flow issue at Essar with contractor and vendor payments being late [or] reduced. There have been layoffs at the site.”

    Essar originally was going to build a steel production plant in Nashwauk. It pulled back, however, to a taconite operation that instead of opening Oct. 1 will start production next year.

    The state of Minnesota has been pulled into Essar’s financing woes. Essar owes the state nearly $67 million in grants and $6 million in state-issued loans after failing to comply with the terms of an agreement in which Essar promised to deliver a working iron ore-to-steel mill by Oct. 1. Essar and the state are in negotiations over how that money will be paid back. Officials at the Minnesota Department of Employment and Economic Development said negotiations continue. Brunfelt said Essar officials are waiting to hear back from the state on its latest proposal.
    Back to Top

    Swelling iron ore stockpiles in China may signal more losses

    Iron ore stockpiled at ports in China posted the longest run of gains this year, and Australia & New Zealand Banking Group Ltd. predicts holdings will probably expand further, hurting prices that have dropped below $50 a metric ton.

    The inventories climbed 1 percent to 84.75 million tons last week to the highest level since May, according to Shanghai Steelhome Information Technology Co. The gain was the third straight weekly increase, the longest run of rises since November, and holdings expanded 5.3 percent in that period.

    “Slowing Chinese demand continues to push up Chinese port stocks,” ANZ wrote in a report on Monday. “We believe, based on seasonality trends, that there is still upside in port stocks, which should continue to put some downside pressure on iron ore prices.”

    Iron ore sank 12 percent in October on surging supply from low-cost miners including Rio Tinto Group and weaker consumption in China. The purchasing managers’ index for China’s steel industry fell to 42.2 last month from 43.7 in September, with readings below 50 indicating contraction. Steel demand is shrinking at an unprecedented speed and mills are making losses as product prices drop, according to the China Iron & Steel Association.

    The uptick in port holdings follows rising exports this year to China, which accounts for half of global steel output. Shipments from Australia’s Port Hedland to China were 33.8 million tons in September, near the record 33.9 million tons set a month earlier. Brazil’s exports totaled 35.6 million tons in September, the most this year. The voyage from Brazil takes about 35 days, three times the journey from Australia, AXSMarine Ltd. estimates.

    “There’s room for port stockpiles to climb further through year-end as the major miners continue to export large amounts of ore while mills’ purchases remain sluggish,” Huang Huiwen, an analyst at Shanghai Cifco Futures Co., said by phone. “Steel prices are so weak currently, so mills are unlikely to boost production. Conversely, steel output will fall because northern mills typically shut over November and December for the winter.”
    Back to Top

    China’s steel sector PMI further slides to 42.2

    The Purchasing Managers Index (PMI) for China’s steel industry further slid 1.5 on month to 42.2 in October, the second consecutive monthly decline and the 18th straight month below the 50-point threshold, showed the latest data from the China Federation of Logistics and Purchasing (CFLP).

    The falling index in recent months indicated a tougher status as well as future in domestic steel market, given the persisting weak demand amid sluggish market.

    The output sub-index dropped 1.5 from September to 43.1 in October, the 14th consecutive month below the 50 mark.

    China’s steel products output may continue to decline in November, mainly impacted by steel mills’ expanding losses and weakening demand at domestic market.

    The new order sub-index decreased 2.8 from September to 37.9 in October, and the new export order index fell 1.4 from September to 40.7 in the same month – the lowest level in recent nine months, reflecting a contraction trend of steel exports in the short run.

    The sub-index for steel products stocks decreased 3.6 to 45.7 in October, the fourth successive monthly drop and a new low since September 2013, as steel mills continued to destock to reduce losses.

    As of October 10, total stocks in key steel mills stood at 15.07 million tonnes, rising 1.89% from ten days ago but down 6.8% from September, said the CFLP.

    Domestic steel prices have decreased to record lows, and steel mills may intensify production cut to reduce losses. The steel market is expected to maintain weak in November.
    Back to Top

    S. African Sept thermal coal exports fall 15.1pct on year

    South Africa exported 5.93 million tonnes of thermal coal in September, slipping 15.1% year on year, according to customs data released late October 30.

    The volume was, however, 3.5% up on August 2015 and at a four-month high.

    Exports for the January-September period totaled 54.49 million tonnes, 1.6% higher than the volume shipped during the same 2014 period.

    India continued to be the largest destination for South African thermal coal in September, with 2.07 million tonnes shipped during the month. The volume was 21% lower than a year ago and also slipped 12% from the previous month.

    During the first nine months of the year, 25.65 million tonnes of thermal coal was exported to India, accounting for 47% of the total material shipped during the period.

    It has been a year since South Africa exported any thermal coal to China, while no material was sent to South Korea or the US.

    Spot FOB Richards Bay 6,000 kcal/kg NAR coal spot prices continued to fall during September, pressured by continued oversupply amid limited demand for the material. Indian buying also neglected to return as the monsoon season came to an end, due to credit issues and better availability of domestic thermal coal.

    Attached Files
    Back to Top

    Goan miners to export about 220,000 tonnes of iron ore in November

    Trust of India reported that leading iron ore miners in Goa - Vedanta and Fomento Resources - will export around 2.20 lakh tonnes of iron ore to steel plants in China and Japan this month. The consignment will be the second such shipment out of the coastal state, where iron ore mining resumed last month after being banned by the Supreme Court in 2012.

    This month, Vedanta will export its second shipment of 80,000 tonnes, whereas another leading miner from the state Fomento Resources will ship two consignments totalling around 140,000 tonnes.

    Vedanta was the first firm to resume iron ore mining in Goa and the company's Iron Ore Division shipped its first consignment of 80,000 tonnes last month to China.

    Price of iron ore with iron content below 58 per cent has fallen to USD 32 per tonne FOB in Goa, while the cost of production is about USD 34-35 a tonne, of which taxes alone account for more than 40 per cent

    Goa mainly produces low grade iron ore (with iron content between 55-58 per cent), which is mainly exported to China and Japan. While China accounts for 75 per cent of the ore, the remaining is largely exported to steel plants in Japan. Both the miners, however said that the sector in Goa is passing through its toughest phase as it tries to resume operations in the state amidst a subdued global economic sentiment and a commodities slump.
    Back to Top

    Kloeckner swings to Q3 net loss on steel prices

    German steel distributor Kloeckner swung to a net loss in the third quarter due to pressure from cheap imports and slow demand in anticipation of a further fall in prices as well as a collapse in prices for scrap.

    Kloeckner, whose efforts to restructure and digitise its business have so far been outpaced by price drops due to cheap Chinese exports and weak demand, said it made a quarterly net loss of 9 million euros ($9.9 million) compared with a profit of 16 million a year earlier.

    Kloeckner said on Tuesday it expected core earnings before restructuring charges in the single-digit millions of euros in the fourth quarter, where it forecast pressure from falling prices and slow demand to continue.

    In the third quarter, earnings before interest, tax, depreciation, amortisation (EBITDA) and restructuring charges of halved to 30 million euros, as the company had flagged in earlier this month.

    Kloeckner said it expected full-year EBITDA before restructuring expenses of up to 85 million euros, less than half what it made last year.

    It added that it expected an increase of about 1 percent in real steel demand in Europe for the whole of 2015 and a decrease of about 2 percent in the United States due to a slump in the oil and gas sector.

    Attached Files
    Back to Top

    Woes continue in China’s steel industry, sector to be boosted by the ‘internet+’ concept?

    Ever since Chinese Premier Li Keqiang delivered this year’s government work report at the 12th National People’s Congress and introduced the ‘Internet+’ strategy, it has become a buzzword in China for many industries.

    Industry and enterprises alike have started to put forward their applications of the strategy, including the Excellent Gas Network (EGN) e-commerce platform for the industrial gas industry.

    Now, it seems this might be a solution to the difficult situation of the steel industry in China.

    On 28th October, the China Iron and Steel Association held its 4th press conference of 2015 to provide an analysis of the situation of the steel business in the third quarter.

    Deputy Chairman Mr Zhu Jimin pointed out that, in the third quarter, the national economic growth continued to fall and the pull of economic growth on steel consumption was gradually weakening – and steel consumption intensity had decreased significantly over the period.

    In the first three quarters, the apparent national crude steel consumption fell sharply, by 5.8%, although the production of crude steel when compared to the same period last year had already declined 2.1% to 608.94 million tonnes – but this is insufficient to offset the decline in the demand side, and the imbalance between demand and supply is still very prominent.

    Steel prices continued to hit record lows, and the main business of iron and steel enterprises were all ‘seriously’ in the red, coupled with a substantial increase in foreign exchange losses and the price increase of iron ore, the entire iron and steel industry is facing losses across the board. Among the 34 steel enterprises that are listed in the stock market, 27 have released their financial results for the third quarter 2015; three-fifths of these are expected to record a loss.

    To put it in real terms, from January to September of 2015, according to the statistics from the China Iron and Steel Association, the medium to large-scale steel enterprises have seen total revenue decline 19.6% compared with the same period last year. The top 10 enterprises making a profit had a total profit of RMB 12.3bn, a drop of 18.7%; on the other hand, the worst 10 enterprises recorded a total loss of RMB 32bn, more than 10 times of the total loss of the same period last year.

    This demonstrates that the capability to make profit for the profit-making companies has deteriorated whereas the companies losing money are getting even worse.

    Now, there are suggestions that the ‘internet+’ idea should be adopted to facilitate integration of the assets and the restructuring of the industry chain: firstly to promote the coordinated development between the customised needs of the users and the scale of economics of steel production; secondly to evolve steel enterprises from merely producers to production service providers; and thirdly, to base steel enterprises on the research and development of target products for downstream industries to realise coordinated development.

    It is thought that making use of the ‘internet+’ concept for the reformation of the steel industry chain can not only achieve a revolution of the marketing model of steel enterprises, but also form a supply chain relationship between the large enterprise groups of the upstream and downstream industries – and ultimately a win-win development.

    The struggles in China’s steel industry create a backdrop – and arguably a catalyst – for challenges in the wider steel business, with a number of steel plant closures globally in the last 12 months. The most high-profile of late was the mothballing of the SSI plant in Redcar, UK, one of region’s the largest steel plants.

    Attached Files
    Back to Top

    Vedanta threatens to shut Amona pig iron plant

    vedantaresourcesHerald Goa reported that owing to the frequent disruption of transportation of iron ore by truck owners, Vedanta’s Sesa Goa Iron Ore Division, one of Goa’s largest iron ore mining companies, has threatened that it will be forced to close down its pig iron plant at Amona, which will affect the livlihood of about 4000 employees. The company has already shut down one of its three blast furnaces due to lack of raw material.

    On Friday, the company’s official spokesperson said, “We have been trying our best to keep the business running. The company has been forced to shut down one of its blast furnaces at Amona and will shut down the other two soon if transportation of ore is hindered by vested interest. The company’s pig iron plant at Amona depends on ore from its mines in Codli and Bicholim and this could affect a large workforce that earns their livelihood.”

    The spokesperson added, “We have been law abiding and have knocked on each and every door for a solution, approached every stakeholder of the industry to intervene and help resolve the problem amicably. Our efforts seem to be in vain, if things continue this way, the company will have no other option but to close down operations. All stakeholders must realize that if this happens, it is not just the organization that is at a loss. Every direct and indirect stakeholder will find sustenance difficult if they do not adopt a proactive approach to resolve the crisis at the earliest.”

    Vedanta’s Sesa Goa Iron Ore Division has begun mining operations and started transportation of ore purchased through e-auction for shipment at a trucking rate as declared by the Directorate of Mines and Geology (DMG) vide its circular on rate of transport dated April 21, 2015.

    Based on the Supreme Court directive, the company has purchased e-auctioned ore for its blast furnace operations at the pig iron plant as well as for exports. In the past ten days the company has been facing problems with truck operators hampering business demanding a hike in freight tariff.
    Back to Top

    China new five year plan puts Coal in the cross hairs

    China will strive to build a clean, safe, efficient and modern energy system, according to a communique released on Thursday after the fifth plenum of the 18th Communist Party of China (CPC) Central Committee that adopted proposals for economic and social development in the 13th Five-Year Plan (2016-20).

    In terms of energy development in the next five years, the government will focus on capping total energy consumption, developing cleaner sources of energy and implementing reforms targeting the sector, according to a report on the website of the China Energy News.

    As the last five-year plan before 2020, the year in which China is supposed to meet its goal of building a moderately prosperous society in all respects, the plan gained wide attention.

    China will enforce a strict limit on total coal consumption, the Xinhua News Agency reported, citing Li Haofeng, deputy director of the National Energy Administration's coal office.

    China will promote the clean, efficient usage of coal by using some of the world's most advanced process to support industrial upgrades, Li said.

    China was the world's largest energy consumer in 2014, with coal accounting for 66.03 percent of the country's primary energy consumption, according to the BP Statistical Review of World Energy 2015, which was released in June.

    The goal is to make coal account for 50 percent of China's total primary energy consumption by 2050, according to China's National Coal Association in September. Both coal prices and coal producers' profits slid during 12th Five-Year Plan period (2011-15), said Li Chaolin, a Beijing-based coal researcher.

    "Facing the prospect of falling coal production, the drop in oil and gas prices, and the continuous pressure from seaborne coal, coal producers will face hard times during the next five years as they struggle with high production costs," Li told the Global Times.

    As the energy demand is expected to slow with China's economic rebalancing, its energy policy is shifting away from ensuring sufficient supply to improving efficiency and making the sector more environmentally-friendly, said Jenny Huang, associate director of corporate research with Fitch Ratings.

    "Improving people's quality of life has taken priority for the nation to build a moderately prosperous society," Huang told the Global Times in an e-mail on Friday. "That means controlling consumption will remain an important part of the future energy plan for China to cap its primary energy consumption at 4.8 billion tons of coal equivalent by 2020, compared with 4.3 billion tons in 2014."

    Coal consumption, in particular, will be tightly monitored in air pollution control areas to ensure it does as little damage to the environment as possible, Huang said.

    New technologies such as coal extraction automation, which reduces the number of operators, and more detailed management will also play a bigger role in bringing down costs, Li noted.

    Attached Files
    Back to Top

    Datong Coal 3Q loss over 1.1 bln yuan

    Datong Coal Industry Co., Ltd, the listed subsidiary of Datong Coal Mine Group, suffered a loss of 1.15 billion yuan ($180.5 million) in net profit in the first three quarters this year, plunging 301.8% on year, it said late October 29.

    Total revenue of the company stood at 5.7 billion yuan during the same period, a decline of 15.7% from a year ago, it said.

    The slump in net profit was mainly attributed to the plunge of non-operating income, which slumped 98.5% on year to 18.4 million yuan during the same period.

    Over January-September, the company produced 27.11 million tonnes of coal, exceeding by 5.8% of its annual output target of 25.63 million tonnes.

    The company’s coal output stood at 30.27 million tonnes in 2014.

    However, coal sales reached 17.96 million tonnes between January and September, accounting for 86.7% of its annual target.

    The revenue of coal sales contributed to 5.46 billion yuan or only 66.4% of the whole year’s plan.

    The company’s total operating costs fell 5.4% on year to 6.52 billion yuan in the first three quarters, with sales cost at 3.6 billion yuan.

    The company may see a sharper year-on-year decrease in total net profits for 2015, it predicted.
    Back to Top

    BHP pins future of Indonesian coal mine on new rules

    The world's top exporter of coking coal, BHP Billiton , said plans to develop a massive mine in Borneo will hinge on a revision of Indonesia's mining rules, including on compulsory divestment and contract extensions.

    BHP in September said it had started mining at the Haju mine, part of the first stage of the IndoMet Coal project, in the forested Central Kalimantan province.

    "As we continue to cautiously proceed with a small scale mine at Haju, a regulatory regime with certainty will be essential in supporting future investment decisions," a BHP spokeswoman said in an email.

    BHP is continuing to evaluate the potential for larger scale developments at IndoMet and has already received buyer interest in the coal, she said.

    The project, in which Indonesia's Adaro Energy also holds a stake and is estimated to have at least 1.27 billion tonnes of resources, has come under fire from environmental groups, with BHP fending off criticism at its annual meeting in London last week.

    "If we were to leave ... it is unlikely that these areas would be set aside for conservation," Chairman Jacques Nasser told shareholders, noting that Indonesia wanted to develop the area, regardless of which company did it.

    "The area of interest has had accelerated development pressures over the last 20 years and it is not the pristine wilderness it was two decades ago," he said.

    Discussions on the rules on BHP's Coal Contracts of Work were ongoing, and the company expected these would not be finalised until the Indonesian government completed a review of regulations, the spokeswoman said.

    Adhi Wibowo, director of coal at Indonesia's energy ministry, said while the area was home to orangutans, BHP had received environmental permits and the government would help it get further forest-use permits if necessary.

    "There should be no more obstacles," he told Reuters, adding if they did not want to develop it they could return the concession.

    But he said the government was still reviewing rules on divestment and contract extensions, adding "we are waiting for parliament."

    Indonesia's mining rules are sometimes subject to debate because in some cases they overlap with contractual requirements, PwC mining analyst Sacha Winzenreid said.

    The fact that this project covered seven contracts of work, each held by a separate legal entity, meant negotiations may be particularly difficult, Winzenreid said.

    According to Friends of the Earth Indonesia (WALHI), the concessions "lie within the remote and largely undisturbed forests of Central Borneo, forests recognised globally for their biodiversity."

    As well as being home to indigenous Dayak groups, orangutans, pygmy elephants, clouded leopards, proboscis monkeys and numerous other rare and endangered species also lived in the forests, it said in a 2014 report.
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

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

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

    Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority.

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

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

    © 2018 - Commodity Intelligence LLP