Mark Latham Commodity Equity Intelligence Service

Wednesday 28th September 2016
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    Lightning storms knock out power to entire Australian state

    Severe storms and thousands of lightning strikes knocked out power to the entire state of South Australia on Wednesday, energy authorities said.

    South Australia is the country's fifth most populous state, with 1.7 million people, and is a major wine producer and traditional manufacturing hub.

    "No upstream supply from the transmission network. State currently w/out power," state energy provider SA Power Networks said in a statement.

    The Bureau of Meteorology said a vigorous cold front was moving across the state with an intense low pressure system due on Thursday.

    "We'll have gale-force winds and large seas (across the south of the country); also heavy rain and thunderstorms, which will lead to renewed river rises," it said on its website.

    "Currently, though, we have gale force wind warnings for the coastal waters extending from Perth all the way across to Adelaide."

    SA Power Networks said repairs to its transmission network were expected to be completed later in the day.

    "There were more than 21,000 lightning strikes recorded over a 12-hour period from midday yesterday on the West Coast, and as a result it is likely some damage has occurred to our distribution network," it said.

    No power was flowing from the neighbouring state of Victoria into South Australia, said a spokesman for the Australian Energy Market Operator, which operates the power systems in southern and Eastern Australia.
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    China September official factory gauge seen showing 2nd month of growth

    Activity in China's manufacturing sector likely expanded modestly for a second straight month in September, a Reuters poll showed, suggesting the economy is stabilizing thanks to government infrastructure spending and a property market boom.

    The official manufacturing Purchasing Managers' Index (PMI) is expected to be 50.4 for September, unchanged from August and above the neutral 50.0 mark separating growth from contraction on a monthly basis, according to the median forecast of 30 analysts polled by Reuters.

    Profits earned by China's industrial firms grew the fastest in three years in August with rising sales, higher prices and reduced costs, official data showed on Tuesday.

    That data indicated a construction boom helped to drive up demand while capacity cuts for sectors which had production gluts saw rising commodity prices because of reduced supply.

    But it also showed that profits remained uneven, as traditional heavy industries with excess capacity such as steel still struggled for growth.

    Analysts say the improved performance of industrial firms, rising land sales and some progress on starting public-private partnership infrastructure projects should help keep the growth outlook stable in the short- and medium-term.

    Factory activity in China has been hovering around the neutral 50 point mark this year with a mild recovery in the first quarter. The official PMI index unexpectedly rose to show expansion in August after slipping to signal contraction in July.

    But economists worry that growth propped up by the housing boom and government infrastructure spending is unlikely to be sustainable in the longer term.

    They warn that rising government infrastructure spending will further squeeze private investment growth, which accounts for 60 percent of overall investment and has shrunk to record lows this year.


    While property investment unexpectedly rose at a modest pace in August, showing investor confidence, sharply rising home prices have caused a severe overheating in bigger cities, leading more of them to impose stricter cooling measures to prevent asset-price bubbles. Many fear that the property market boom is peaking.

    On the other hand, as Beijing vows to quicken the pace of industrial capacity cuts after falling behind earlier in the year, the risks of more layoffs and debt defaults are rising.

    Debt has emerged as one of China's biggest challenges, with the total load rising to 250 percent of gross domestic product (GDP) last year, with corporate debt rising steeply to around 170 percent of GDP.

    China's central bank is unlikely to resort to more monetary easing soon, with policymakers already worried about possible property and bond market bubbles. Forcing more money into the system could boost already high debt levels and increase speculative activity.

    The official September manufacturing PMI data will be released on Oct. 1, along with the official non-manufacturing PMI.

    Services continued to expand robustly in August, albeit at a slower pace than in July.

    The Markit/Caixin PMI, a private gauge of manufacturing activity which focuses more on small and mid-sized firms, is due on Sept. 30. Analysts expect it to rise marginally to 50.1, from the previous month's reading of 50.0.
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    DOJ Is Assessing Size Of Criminal Penalty It Can Levy On Volkswagen

    When two weeks ago the DOJ announced a far larger than expected $14 billion settlement demand from Deutsche Bank, one which if left unrevised would would leave Deutsche Bank short of billions in capital, has since triggered the latest episode of European bank selling and potential contagion, some wondered if there was an element of punitive retaliation aimed at Europe's "assault" on Apple's taxes. That question will surely grow louder when overnight Bloomberg reported that the DOJ is now assessing"how big a criminal fine it can extract from Volkswagen AG over emissions-cheating without putting the German carmaker out of business."

    The government and Volkswagen are trying to reach a settlement by January, Bloomberg reported, before a new U.S. administration comes into office and replaces the political appointees who have been overseeing the process. In criminal prosecutions, the Justice Department may assess the impact of a charge or settlement on a business’s viability, and the resulting effect on shareholders and employees. A prosecution’s potential collateral damage is one of the factors the department considers under principles for prosecuting businesses laid out in the “U.S. Attorney’s Manual.”

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    More than 1.9 mln homes lose power as Typhoon Megi hits Taiwan

    Bringing strong winds and heavy rain, typhoon Megi left more than 1.9 million homes without power in Taiwan, according to Taiwan Power Company on Tuesday.

    According to the company, around 1.5 million households were still cut off from the power grid as of 3:33 p.m. Tuesday.

    The typhoon made landfall at Hualien City in the east part of the island at about 2:00 p.m., carrying top wind speeds of 198 km per hour, according to the island's meteorological agency, which issued land and sea warnings for the storm system.

    The typhoon grounded flights and suspended train services on the island, in addition to forcing schools and businesses to close, according to local authorities.
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    Obama power plant rules face key test in U.S. court

    The centerpiece of President Barack Obama's climate change strategy, federal rules curbing greenhouse gas emissions mainly from coal-fired power plants, faces a key test on Tuesday when opponents try to convince a U.S. appeals court to throw out the regulations.

    Twenty-seven states led by coal-producer West Virginia and industry groups are challenging the Environmental Protection Agency's Clean Power Plan rules before 10 judges of the U.S. Court of Appeals for the District of Columbia Circuit.

    They argue that the EPA overstepped its regulatory authority under the federal Clean Air Act when the agency issued the rules, which the U.S. Supreme Court has put on hold while the case is litigated.

    During Tuesday's arguments, these opponents will face off in court against the EPA, 18 states, corporations including Apple Inc and Alphabet Inc's Google, and a number of cities that support the regulations.

    The Clean Power Plan was designed to lower carbon emissions from U.S. power plants by 2030 to 32 percent below 2005 levels, with each state assigned its own emission reduction target and tasked with designing its own plan to achieve that goal.

    Power plants are the largest source of U.S. carbon emissions. Nearly 1,500 coal- and gas-fired power plants together emit nearly two billion tons per year of carbon dioxide.

    The Clean Power Plan is the main tool for the United States to meet the emissions reduction target it pledged to reach at U.N. climate talks in Paris last December.

    "It's an invasion, in our estimation, of the state regulatory domain," Scott Pruitt, the Republican attorney general of Oklahoma, one of the states suing the EPA, said at a Washington event this month.

    Richard Revesz, director of the Institute for Policy Integrity at New York University's law school, said the suing states were exaggerating the regulatory reach of the EPA.

    "The Clean Power Plan, while certainly a very important rule, is not the boundary-breaking behemoth that the petitioners make it out to be," Revesz said.

    The Clean Power Plan, if it survives the legal challenge, could prompt a faster shift to renewable energy sources and accelerate the closure of the country's oldest coal plants.

    The fate of the Clean Power Plan was thrown into question on Feb. 9 when the Supreme Court made a surprise 5-4 decision to grant a request by the challengers to put the rule on hold while the appeals court considered the matter.

    The eventual appeals court ruling could decide the case, even if it goes to the Supreme Court. The Feb. 13 death of conservative Justice Antonin Scalia left the court ideologically split with four conservatives and four liberals. A 4-4 ruling by the high court would leave in place the appeals court ruling.


    The arguments will be heard by 10 judges rather than 11 because the court's chief judge, Merrick Garland, has recused himself from the case. Garland is Obama's nominee to replace Scalia. Of the 10 judges who will hear the case, six were appointed by Democratic presidents.

    A 5-5 ruling would leave the regulations in place.

    A ruling is unlikely before the end of the year and possibly not until after Obama leaves office on Jan. 20.

    The outcome of the Nov. 8 presidential election could be pivotal for the regulations. If Republican Donald Trump wins, the government could reverse the rules or decline to appeal to the Supreme Court should the appeals court strike them down. If Democrat Hillary Clinton is elected, the losing side in the appeals court ruling could be expected to take the case to the Supreme Court.

    If the case does reach the high court, it may not make it in time for the justices to hear it during the court term that begins next Monday and ends in June.
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    Oil and Gas

    Saudi Aramco Sees Oil Demand 'Steady' as Supply Growth Slows

    Slower growth in oil supply is helping the crude market to re-balance, and prices are set to increase over time, according to the head of the world’s biggest producer.  

    As investments in new oil and natural gas capacity have been being canceled or deferred worldwide, supply is rising more slowly, especially production of U.S. shale oil, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said Monday. Global demand is “on a steady, if moderate course,” he said in a speech at a conference in Dubai.

    “Despite volatility, the market is heading toward re-balance, and prices are likely to strengthen with time,” Nasser said. “However, market volatility could remain with us for the near future.”

    Oil-producing nations have been considering limiting output to counter a global glut that has cut crude prices by more than half from their 2014 peak. Saudi Arabia and other OPEC members are meeting in Algeria this week and may consider freezing production in an effort to shore up prices. Brent crude, the global benchmark, has averaged about $43 a barrel so far this year and was 73 cents higher at $46.62 at 1:27 p.m. in London.

    Unfettered Output

    Crude gained about 11 percent in August on speculation that the Organization of Petroleum Exporting Countries will reach an output deal in Algiers. The group’s discussions are a sign OPEC may be reconsidering a Saudi-led policy adopted in 2014 allowing members to raise output to protect market share from higher-cost producers, including U.S. shale drillers.

    OPEC’s production rose to a record 33.69 million barrels a day in August, just under a third of global demand, data compiled by Bloomberg show. Saudi Arabia, the group’s biggest producer, pumped a record 10.69 million barrels a day last month, the data show.

    “While the oil market has recovered from its most severe period, it’s still weak,” Nasser said.

    Mature Fields

    Improvements in energy efficiency have tempered consumption growth, but an expanding world population and rising living standards in developing countries will support long-term demand, he said. Oil’s central role as a source of fuel for heavy transportation and feedstock for petrochemicals will remain solid, Nasser said.

    “The oil and gas resources we have available, as well as new discoveries, are more challenging and more expensive to develop. At the same time, the present oil and gas fields are becoming increasingly mature and complex to operate.”

    Saudi Arabian Oil Co., known as Saudi Aramco is exploring more intensively to augment its “resources” to 900 billion barrels from 800 billion barrels over the next decade, Nasser told reporters. Its budget over the next five years will be “much more” than $100 billion, and the company seeks to increase oil-recovery rates at its fields to 70 percent from 50 percent, he said, without specifying timing.

    Rig Count

    Aramco is also adding drilling rigs to explore onshore and offshore for oil and gas, Nasser said. Saudi Arabia had 124 rigs operating in August compared with 101 in May 2014, according to Baker Hughes Inc.

    The oil industry needs new investment in exploration and production to meet future demand, according to Schlumberger Ltd. and  Total SA.

    “We are setting ourselves up for a supply crunch one or two years down the road” as non-OPEC supply declines along with cuts in investment, Schlumberger CEO Paal Kibsgaard said at the conference. Total foresees a supply shortfall of 5 million to 10 million barrels a day by 2020, Arnaud Breuillac, the Paris-based company’s president of exploration and production, told reporters in Dubai.

    Attached Files
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    Oil Halts Loss Before OPEC Meets as Saudis Signal Future Deal

    Oil halted losses below $45 a barrel after Saudi Arabia signaled it may compromise with regional rival Iran on a future output agreement as both countries expect no deal when OPEC members meet Wednesday in Algiers.

    Futures rose 0.5 percent in New York after falling 2.7 percent Tuesday. A deal in November is possible, Saudi Arabian Oil Minister Khalid Al-Falih said at a briefing in the Algerian capital, adding that Iran, as well as Libya and Nigeria, should be allowed to “produce at the maximum levels that makes sense.” Global output will exceed demanduntil late 2017, according to Fatih Birol, executive director of the International Energy Agency.

    Oil has swung near $45 since last week amid speculation over whether the Organization of Petroleum Exporting Countries will agree on ways to stabilize the market. While Saudi Arabia has offered to pump less crude if Iran caps output, neither country expects an agreement this week. Freezing output was first proposed in February, but a meeting in April ended with no final accord. OPEC’s next formal meeting is in November in Vienna.

    “OPEC members are peddling their self interests, and while that’s the case, there can’t be a cooperative effort,” said Michael McCarthy, chief market strategist in Sydney at CMC Markets. “Oil is trapped between $40 and $50 a barrel, and at this stage, there doesn’t appear to be anything on the horizon to break prices out of that range.”

    West Texas Intermediate for November delivery was at $44.87 a barrel on the New York Mercantile Exchange, up 20 cents, at 8:01 a.m. in London. The contract lost $1.26 to $44.67 on Tuesday. Total volume traded was about 26 percent below the 100-day average. Prices have averaged about $44.80 this quarter.

    OPEC Meeting

    Brent for November settlement added 25 cents to $46.22 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.38, or 2.9 percent, to $45.97 on Tuesday. The global benchmark crude traded at a premium of $1.36 to WTI.

    “It’s not our agenda to reach agreement in these two days,” Iran Oil Minister Bijan Namdar Zanganeh said on Tuesday. Al-Falih echoed the sentiment, saying the meeting on Wednesday will be used for consultation and that he doesn’t expect that an agreement will come out of it. Consensus may be reached at the informal meeting, but there will be no formal deal, Russian Energy Minister Alexander Novak said.

    Iraq is seeking to reduce the gap of the viewpoints between Iran and Saudi Arabia to reach a compromise formula in a way that serves the interests of oil producers and backs the stability of the market, Iraq’s Oil Minister Jabbar Al-Luaibi said in a text message.
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    IEA’s Birol Warns Oil Supply Will Exceed Demand Until Late 2017

    Global oil output will exceed demand until late 2017, the head of the International Energy Agency said before major producing nations gather for talks.

    "We don’t see the oil market re-balancing until late 2017" provided there’s no “major intervention,” IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg Television in Algiers.

    The Paris-based agency is extending its bearish view after saying Sept. 13 that oil supply will outpace demand “at least through the first half of next year.” OPEC members will hold informal discussions in the Algerian capital on Wednesday as they seek to buoy prices following two years of decline amid brimming global stockpiles.

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    Oil-demand growth has been weaker than expected, Birol said. The IEA this month cut its forecast for consumption growth in 2016 and 2017, citing a "marked slowdown" in India and China. The agency, which advises industrialized countries on energy policy, projected demand growth of 1.3 million barrels a day in 2016, down from 1.6 million a day in 2015. Its prediction slips to 1.2 million a day next year.
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    There's a chance that oil may never rebound

    Oil prices are hovering in the mid-$40s per barrel, and the hopes of a rebound have once again been delayed. The IEA’s September Oil Market Report predicts that the supply/demand equation might not come into balance until next year, suggesting another year of low oil prices. But what if oil prices never rebound?

    The question seems ridiculous, not only because the oil markets always go through booms and busts, but also because demand continues to rise. Supplies are also falling from high cost areas, ensuring that the supply overhang will eventually be erased. Moreover, the oil industry has made unprecedented cuts in spending on exploration and development. The IEA says the industry cut spending by more than $300 billion over the past two years and a separate estimate from Wood Mackenzie expects oil and gas producers to slash about $1 trillion from spending between 2015 and 2020. Such draconian measures are surely sowing the seeds of another supply crunch, guaranteeing a price spike in the years ahead.

    But the world is still oversupplied with oil, and the recent ramp up in production from OPEC could lead to low oil prices for a few years. Libya is set to bring back around 600,000 barrels per day (although those claims are questionable), and Nigeria has already returned somewhere between 200,000 and 300,000 barrels per day of interrupted supply. Production in the U.S. has also recently leveled off over the past month at 8.5 million barrels per day, after nearly 18 months of declines

    The IEA expects global supplies to exceed demand through next year, and inventories to continue to build through 2017. Crude oil and refined product inventories are only slightly down from record levels, and will take a few more years to get worked through.

    All of that is to say there is a good chance that ample supplies could ensure relatively low oil prices for several years, perhaps as long as towards the end of this decade.

    In the meantime, alternatives will continue to make inroads into the transportation sector. Batteries for electric vehicles (EVs) continue to achieve cost declines, having fallen by 35 percent in 2015 alone. Bloomberg New Energy Finance sees EVs becoming as affordable as gasoline-powered cars – on an unsubsidized basis – as soon as the early 2020s. That could erase about 2 million barrels per day of oil demand by 2023. Given that the global surplus in crude oil over the past two years was only a little more than 2 million barrels per day at its worst point, which was enough to cause a meltdown in oil prices, the displacement of 2 mb/d from EVs in six years is a big, big deal.

    By 2040, EVs could cost as little as $22,000 (in 2016 dollars), BNEF says. Electric vehicles could displace 13 million barrels per day of oil demand by then, enough to keep oil prices permanently low. It wouldn’t stop there, if EVs made that kind of progress, the takeover of the transportation sector would accelerate and oil would continue to lose market share.

    These, of course, are aggressive scenarios, BNEF concedes. But maybe not. If governments around the world crack down on oil drilling through new taxes and regulation, and also subsidize R&D and the adoption of EVs, all with an eye on climate change, the scenarios could prove to be more of a middle-of-the-road prediction. Major oil spills, or sudden natural disasters could spark a public backlash, demanding deeper reductions in carbon emissions. In other words, the uncertainty around the advancement of clean energy could be on the upside – unforeseen future public policy could very conceivably accelerate EV adoption faster than we can envision sitting here in 2016.

    Abundant oil supplies plus huge volumes of oil and refined products sitting in storage – a supply-side problem – could ensure oil price stay low in the near- to medium-term. But steady efficiency and the technological advancements in EVs – a demand-side problem – might mean oil demand ends up being much lower over the medium- to long-term than we currently expect. These scenarios are certainly not inevitable, but if they are even remotely accurate, oil prices could stay low more or less permanently.
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    Russia's Sakhalin oil output to rise by 8 pct in 2016 - regional govt

    Russia's Pacific island of Sakhalin is expected to increase oil production by 8 percent in 2016 from a year ago, a regional official said, which would add to the global glut the industry currently faces.

    Russia and the Organization of the Petroleum Exporting Countries are gathering in Algeria this week in a second attempt this year to cooperate on global oil markets to stabilise prices. Yet, the task looks hard as hopes are fading that Saudi Arabia and Iran would find a compromise, while production is growing in Russia.

    Vera Sherbina, head of Russia's regional government of Sakhalin, told a conference on Wednesday that oil and gas condensate production at the island, which comes mostly from offshore, will climb to 18.1 million tonnes, or about 362,000 barrels per day (bpd), this year, up from 16.7 million tonnes in 2015.

    The annual oil and gas conference at Sakhalin has gathered mid-tier officials from Russian and western oil and oilfield services companies to discuss the prospects of the region that accounts for around 3 percent of Russia's total output.

    Production of oil and gas at Sakhalin, which is also famous for being the home of one of Russia's largest oysters, comes mostly from two offshore projects - Sakhalin-1 led by ExxonMobil and Sakhalin-2 led by Russia's Gazprom.

    Sakhalin-1 shareholders also include Russia's Rosneft , Japan's Sodeco and India's ONGC. Apart from Gazprom, Sakhalin-2 shareholders include Royal Dutch Shell, Mitsui and Mitsubishi.

    "Our key task is to maintain production levels we have now," Sherbina told reporters. She did not provide an outlook for oil production for the island for the years to come.

    Sakhalin-2 also operates Russia's sole LNG plant, with Sakhalin-1 also looking at building its own LNG facility that could start production after 2023.


    Russian oil production is growing despite western sanctions and low oil prices, as previous investments come online. Output is expected to be as high as 547 million tonnes in 2016, or almost 11 million bpd, which would be a new record.

    Rosneft, Russia's biggest oil producer, is under sanctions over Moscow's role in the Ukraine crisis, with restrictions both on supporting the firm financially as well as getting access to exploration technology.

    In June, Rosneft said it started exploration drilling in the Sea of Okhotsk in Russia's Far East, northeast of Sakhalin, along with Norway's Statoil.

    Alexander Zharov, a department head at Rosneft, said that the sea depth at the drilling area was less than 150 metres, which is not covered by the sanctions. He said it was too preliminary to comment on the results.

    "Sakhalin remains one of a few places in the world where operations remain profitable even at oil prices of $50 per barrel," said a manager with western oilfield services company, who came to Sakhalin looking for new contracts but declined to give his name.
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    Greka Drilling announces 2016 half-year report

    Greka Drilling Limited, the largest independent and specialised unconventional gas driller in China, is pleased to announce its results for the six months ended 30 June 2016.


    Revenue of US$2.6 million (H1 2015: US$11.9 million)
    US$8.1 million of cash as at 30 June 2016 including restricted cash (US$2.4 million as at 31 December 2015)
    US$3.8 million bank loans as at 30 June 2016 (US$5.9 million as at 31 December 2015)
    Loss of US$5.5 million (H1 2015: loss of US$4.8 million)
    Secured US$5 million in loan financing from Guaranty Finance Investors LLC


    In line with our guidance in February this year, activity levels have been very limited in the first half of 2016. GDL has drilled 10 wells (3 in China and 7 wells in India) in the first 6 months compared to 28 wells in the same period last year
    Of the wells drilled there was:

    1 Vertical well in China with a total depth ('TD') of 789 metres and completed in 13 days (spud to completion)
    7 Directional wells in India which averaged 12 days, a 42% improvement on the average of 20 days in the same period in 2015. The fastest Directional well was drilled to TD 1,036 metres in 9.3 days
    2 Horizontal wells in China with the fastest being drilled to TD of 1,658 metres in 28 days (spud to completion)

    In total there were 12,458.31 metres drilled (4,128.31 metres in China and 8,330 metres in India) compared to 26,367 metres in H1 2015
    The 8,330 metres drilled in India compares with a total of 9,920 metres in India for the FY 2015



    Essar Oil Limited:

    Expected to drill 30 wells with 2 rigs deployed under the current contract
    Potential for deployment of a third rig under the current contract

    In advanced talks with new potential clients for deployment of three rigs in 2017


    Green Dragon Gas has begun mobilising for a programme of up to 8 wells
    Bids to conclude multi-well programme prior to year-end

    Randeep S. Grewal, Chairman and Chief Executive of Greka Drilling, commented:

    'We have previously advised that we expected this year to be very challenging while the oil and gas operators realign their portfolios to the new oil price environment. Unconventional drilling, the Company's niche, has been largely suspended by most of the operators. During this period, we continued to take steps to reduce costs, improve our drilling efficiency and diversify our services and customer base. Indeed, this year we expect to have an equal client base between China and India.

    Attached Files
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    Plans proceeding for Colombia's second LNG regasification facility: minister

    Colombia is moving forward with plans to build a second 400 MMcf/d LNG regasification plant to be located near its Pacific coast to assure adequate gas supplies, mining and energy minister German Arce has said.

    Speaking Friday to business leaders in the southwestern city of Cali, Arce said such a plant was necessary to assure "reliability of supply" in western Colombia. The country is self-sufficient in gas, but with reserves in decline it may have to begin imports as soon as next year.

    Colombia's first LNG regasification plant is under construction near Cartagena on the Caribbean Coast and will be operational by year-end. The $800 million facility will process up to 348 MMcf/d of gas, destined mainly to fuel thermo-electric power plants serving northern and central Colombia.

    Colombia consumes about 1 Bcf/d of gas, all supplied from its rapidly depleting fields. Promising offshore fields being developed by state-controlled Ecopetrol and partners Anadarko and Repsol are not expected to enter production until 2022 at the earliest, assuming they prove commercially viable.

    Arce did not give a target date for a construction of such a plant. But the ministry's planning agency, known by its Spanish initials UPME, has said that such a facility should be operational no later than 2024. However, thermo-electric power plant owners in the region want such a plant to be on line by 2020 at the latest, regulators have told S&P Global Platts.

    Regulators have told Platts the second regas plant is likely to be built in or near Buenaventura, Colombia's largest Pacific Coast port city.

    The regas plant near Cartagena is expected to import LNG from Trinidad and Tobago and the US. The Pacific plant may seek LNG from Peru or Asian LNG producers, sources have said.

    How fast demand for imported LNG grows will depend in part on climate and rainfall levels. Normally, Colombia generates 70% of its electricity at hydro power facilities, but droughts caused by the El Nino weather phenomenon over the last year forced the country's electricity grid at times to use as much thermo-electric power as hydro.

    Also boosting gas demand is the growing popularity of so-called hybrid cars and buses that use a mixture of gas and gasoline for fuel. The government is promoting such power sources as environmentally friendly.
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    Two Years Into Oil Slump, U.S. Shale Firms Are Ready to Pump More

    When oil prices began to plunge two years ago due to a global glut of crude, experts predicted U.S. shale producers would be the losers of the resulting shakeout.

    But the American companies that revolutionized the oil and gas business with hydraulic fracturing and horizontal drilling are surviving the carnage largely unbowed.

    Though the collapse in prices caused a wave of bankruptcies, total U.S. oil production has only fallen by about 535,000 barrels a day so far this year compared with 2015, when it averaged 9.4 million barrels, according to the latest federal data.

    As the oil markets ponder where production will resume when prices pick back up, one clear answer has emerged: America. Goldman Sachs forecasts the U.S. will be pumping an additional 600,000 to 700,000 barrels of oil a day by the end of next year—making up for every drop lost in the bust.

    Few predicted that in the fall of 2014, when Saudi Arabia signaled that it wouldn’t curb its output to put a floor under crude prices. Oil pundits concluded that a brutal culling would force higher-cost players known as marginal producers—a group that includes shale drillers—out of the market.

    But the greatest consequence of the Saudi decision and subsequent price drop is that it has delayed costly oil megaprojects, from deep-water platforms off Angola to oil-sands mines in Canada.

    “The U.S. isn’t the marginal barrel but the most flexible,” said R.T. Dukes, an analyst at Wood Mackenzie. “We’ll be the fastest to snap back.”

    More than 100 North American energy producers have declared bankruptcy during this downturn, but even companies working through chapter 11 keep pumping oil and gas. Many exit bankruptcy stronger thanks to a balance sheet that has been wiped clean.SandRidge Energy Inc., which filed in May, will exit next month after erasing nearly $3.7 billion in debt.

    Many shale operators are still struggling at current prices, drilling at a loss and tapping Wall Street for new infusions of cash. But the strongest producers, including EOG Resources Inc. and Continental Resources Inc., soon will be able to generate enough money to pay for new investments and dividends—as well as boost production—even at low prices, analysts say.

    U.S. production began inching up in July, shortly after oil prices rebounded to $50-a-barrel territory. Producers quickly put 100 rigs back to work this summer.

    The ramp-up spooked the market, sending oil prices plunging 20% back toward $40. They have recently rebounded back to about $46.

    The gyrations will continue for months as shale producers go back to work, said Eric Lee, an analyst at Citibank, who predicts crude will stabilize around $60 a barrel in late 2017.

    Though oil storage tanks around the world are brimming, new sources will be needed soon because older oil fields decline by 5% a year and global demand continues to rise 1.2% a year. Demand will break through the 100 million barrel-a-day mark by 2020, according to the International Energy Agency.

    The looming gap between supply and demand is one reason the easy money that fueled the American drilling boom hasn’t dried up, saidLewis Hart, senior vice president of corporate advisory and banking for Brown Brothers Harriman in New York.

    Even as banks and other traditional lenders tighten their purse strings, alternative sources of money are cropping up, from private-equity funds to distressed-debt specialists.

    “The very existence of that capital means prices are likely to be lower for longer, because it compounds the supply problem,” Mr. Hart said.

    Jesse Thompson, an economist with the Federal Reserve Bank of Dallas, said this oil bust is different from the downturn that crippled American producers in the 1980s.

    Back then, Saudi Arabia initially shut down production as it tried to put a floor under prices, then changed course and began selling crude into an already glutted market. By 1986, the world’s oil supply capacity was 20% higher than demand, Mr. Thompson said. He estimates that today, the world is oversupplied by about 1%.

    A big reason U.S. oil production has been so resilient is that U.S. producers found ways to cut costs and enhance efficiencies during the lean years. Those innovations are now poised to propel the industry’s resurrection.

    In May,  Halliburton Co. helped tap the longest shale well on record—26,641 feet deep and another 18,544 feet long—for Eclipse ResourcesCorp. in Ohio, 130 miles south of Cleveland.

    That well was fracked—the process of injecting water, chemicals and sand to coax out oil and gas—an extraordinary 124 times. Typical shale wells are fracked between 30 and 40 times, up from just nine fracks in 2011 at the start of the oil boom, according to Drillinginfo, a data provider for the energy industry.

    To put that engineering feat in Manhattan perspective, that is equivalent to burrowing down to the depth of 15 World Trade Centers at One World Trade Center, turning 90 degrees and drilling underground 3.5 miles to Grand Central station. Eclipse saved 30% by supersizing the well, said Chief Operating Officer  Tom Liberatore.

    The industry’s cost-cutting has been painful for many. Nearly 160,000 energy employees have been laid off around the country, according to the latest tally by Graves & Co.

    Even so, plenty of companies that didn’t accumulate debt or spend beyond their means during the boom years have the resources to take advantage of financial fallout from the downturn.

    Albert Huddleston, founder and managing partner of Aethon Energy, said the Dallas-based producer spent more than $600 million on distressed oil-and-gas properties from Wyoming to Louisiana since prices started to fall in 2014.

    “Can you kill off shale? The answer is no,” he said.

    Attached Files
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    Cabot Hits Major Milestones In The Marcellus

    The following is a memo sent to all Cabot employees by Dan Dinges, Chairman, President and Chief Executive Officer, which highlights the last 18 months of milestones in Cabot’s Marcellus operations.

    TO: All Employees
    FROM: Dan O. Dinges
    DATE: September 26, 2016
    RE: Marcellus – Game Changer for COG Shareholders, Employees and Communities

    Today marks a major milestone in the history of this company: 10 years ago today, we began drilling our first well in the Marcellus, the Teel 1.

    In the last 18 months we have achieved three additionally impressive milestones in the Marcellus. In April 2015 the 500th well was drilled and just last month the 10,000th frac stage was completed. At the end of last month our cumulative Marcellus production hit 2.5 trillion cubic feet of natural gas – a stunning amount of production by just one company over the past decade.
    Make no mistake; these operational records would have been unachievable if not for the dedication, innovation, and knowledge of the Cabot team across the country. I have said time and again that Cabot has access to a world class asset in the Marcellus – but the reality is, without the right employees with the right skill sets employed in each and every one of our departments, we would not achieve this level of success.

    The last 24 months have been challenging. We have all seen firsthand the effects of a down market on our industry and the communities where we live and work. But we have all found ways to increase our efficiencies to not just maintain Cabot, but to keep the company positioned to take advantage of the eventual return to better pricing.

    Ten years ago we began operations in what is now one of the largest shale gas fields using the knowledge of our employees gained from their experiences around the country and around the world. That experience and work has led us to: 2.5 TCF, 500 wells, and 10,000 frac stages. As many of you are aware, we have new infrastructure scheduled for completion during the next couple of years. Upon commissioning this infrastructure we will be working to more than double our current production levels towards 4 BCF per day in the Marcellus.

    Knowing all we have learned and pioneered during the last decade, the prospect of what we will accomplish and the value we will create for shareholders in the years to come is exciting.
    I offer my sincere congratulations on these accomplishments to each and every one of you. As we transition to move rigs back into our areas of operation, keep in mind every creative idea you have as an employee of Cabot moves us closer to the next big milestone.

    Dan O. Dinges
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    Freeport’s $2bn Anadarko sale said to face lender snag

    Freeport-McMoRan’s bondholders are creating a potential obstacle for a $2-billion asset sale designed to inject cash into the debt-laden commodities producer, according to people with knowledge of the matter.

    Some of the creditors want more money and greater protection for  allowing the sale of oil and gas assets to Anadarko Petroleum – a proposal that requires changes to Freeport’s existing agreement with the lenders. Freeport, which wants to keep the debt on its own balance sheet even as the assets shift to the buyer, is seeking majority approval from five sets of bondholders who together own $2.3-billion of notes to complete the asset sale.

    Freeport has been struggling to lift earnings amid a two-year long commodities rout and had its credit ratings cut to  junk earlier this year as it grapples with more than $18-billion of debt. The company announced the sale of its Gulf of Mexicoassets to Anadarko this month in a move that would allow it to cut debt and clean up its balance sheet.

    The bondholders are demanding a bigger consent fee, a higher interest rate on the debt and additional protective covenants to approve the sale, according to a creditor letter to the company obtained by Bloomberg. Without that, they want the debt to move with the assets to Anadarko, which has a stronger credit profile than Freeport. The dissenting creditors together own $1.1-billion of the notes, according to the September 22 letter.


    Freeport CFO Kathleen Quirk said the company plans to push ahead with the sale of its assets to Anadarko even without the consent of the bondholders. If it can’t secure bondholder consent for the proposed deal, Freeport will instead strike a merger with its subsidiary Freeport-McMoRan Oil & Gas, the entity that issued the bonds. That deal would allow for the transaction with Anadarko to take place while keeping the debt on the Freeport balance sheet, she said.

    “There is no reason” for the company to offer better terms to bondholders, Quirk said. Freeport is offering the creditors holding about $2.3-billion of bonds 25 basis points, or about $2.50 for every $1 000 to obtain the covenant amendment approval.

    But law firm Paul, Weiss, which is representing a majority of bondholders in at least two of the series of notes, argues thatFreeport’s alternate plan isn’t allowed under the company’s current credit pact because it’s a “related transaction," according to the people with knowledge of the discussions.Paul, Weiss has said Freeport’s credit pact doesn’t allow it to directly or indirectly sell the assets unless the debt is assumed by the buyer, the people said, asking not to be identified because the matter is private.

    The bondholders also complained that the company neglected to inform them of all the facts they needed to make an informed decision on whether to approve the sale, the letter showed.

    Freeport has already had to extend a consent deadline and the next one is set to expire on Wednesday, according to company statements.
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    Petronas to review Canadian LNG project after approval: CEO

    The President and Chief Executive of Malaysia's state-owned oil firm Petronas said on Wednesday that the company will review a liquefied natural gas plant project in northern British Columbia that was approved by the Canadian government.

    "The announcement was just made this morning. We need time to look at the conditions and then we will have a review of the project," Wan Zulkiflee Wan Ariffin told reporters at the sidelines of an event.

    The Canadian government on Tuesday approved the project, ending a three-year wait for a decision and drawing condemnation from environmentalists.

    Approval comes with 190 conditions including capping direct emissions
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    $900M Utica Gas-Fired Electric Plant Coming to Harrison County, OH

    Several news sources are reporting that EmberClear has committed to fund and build a new $900 million, 1,000-megawatt electric generating plant in Harrison County, OH.

    The new plant will be fed by Utica Shale gas. Officials in the county have been working on a deal to lure the plant to the county since December of last year and stress it is a “long-term project” and “not a slam-dunk” because of extensive regulatory hurdles.

    If the project happens, it will generate 500 temporary construction jobs and 30 permanent jobs and use a huge amount of natural gas to power it (good for drillers!).

    MDN did some checking and found one potential cloud over the deal. EmberClear was, until July, a Canadian-based company. But it went bankrupt and after emerging from bankruptcy it changed its name to Ember Partners, now based in Houston, TX. Apparently the bankruptcy hasn’t slowed them down–but it does raise a question about the financial stability of the company and its ability to fund a big-money project like the Harrison Power Project.

    However, these projects are typically funded by one or several investors and not by the company that builds and operates the facility…
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    DTE Energy spending $1.3B for natural gas assets in 2 states

    DTE Energy Co. plans to spend $1.3 billion for natural gas assets in Pennsylvania and West Virginia.

    The Detroit-based company announced Monday that an agreement calls for DTE to purchase all of Appalachia Gathering System in Pennsylvania and West Virginia and 40 percent of Stonewall Gas Gathering in West Virginia from energy company M3 Midstream.

    In addition, DTE plans to purchase 15 percent of Stonewall Gas Gathering from Vega Energy Partners.

    The assets will become part of DTE’s non-utility Gas Storage and Pipeline business, which owns and manages a network of natural gas gathering, transmission and storage facilities serving the Midwest, Northeast and Ontario markets. The deals are expected to be completed this year.
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    Alternative Energy

    Apple bets the house on electric, shared and autonomous vehicles

    Have you come across the term “share mobility” yet? If you haven’t already, you are about to. It refers to the new concept of electric, autonomous and shared vehicles – and it will be huge” So huge in fact that some analysts put the value of the market at $US2.6 trillion, by 2030.

    The concept of electric, autonomous and shared vehicles is likely to have a major impact on the global transport industry – cars and the massive fuel industry – and in the way we run our lives. There may be no more individual ownership of vehicles, humans might even be banned from driving. And it is also presenting either massive headaches, or massive opportunities for the big corporates, and there are signs that they are investing heavily.

    This graph from a Morgan Stanley report on software giant Apple is a case in point. It shows that Apple has spent more on R&D into car and related services in the past few years than it did on the Apple Watch, iPad and iPhone combined. And it still doesn’t have any products to show for its efforts.

    Even more astonishingly, Apple is outspending the major car manufacturers at a rate of 20:1. The near $US5 billion it has spent in the last three years compares to the average spend of $US192 million at the top 14 auto makers. It even outranks Tesla by a factor of more than 10:1.

    So what market is it addressing?

    According to Morgan Stanley, it is a $2.6 trillion market that will emerge by 2030. It bases that calculation on  26 per cent of the 20 trillion miles driven in 2030 are through “shared vehicles” and that this will be worth around US50c/mile.

    To give that market size some context, this compares to the roughly $800 billion market Apple addresses with its iPhone, iPad and associated products today.

    Morgan Stanley notes that “shared mobility” is the intersection of three disruptive forces – electric, autonomous, and shared vehicles, the need for improved “digital experience in vehicles, and faster technology cycles, which now average 1-2 years, at most, compared to auto design cycles of 5-7 years.

    “With Apple outspending the major auto (manufacturers) on this opportunity, we believe Apple could gain at least 16 per cent of the shared mobility market, similar to the company’s share in smartphones today,” Morgan Stanley writes.

    “This translates to over $400 billion of revenue and $16 earnings per share for Apple in 2030 – more than the rest of Apple generates today ($234 billion/$9.22 EPS in FY15). Which may explain why Apple is betting the house on new car technology.
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    Europe ‘far from being leader in renewables without ambitious policies’

    Europe needs more ambitious policies that give clear stable signals to investors if it wants to play a leading role on renewables.

    It should also raise its target of generating green energy to at least 30% by 2030, a report from industry body WindEurope stated.

    According to the group, new wind installations were down 9% in the first half of 2016 year-on-year.

    It added the upcoming revision of the EU’s Renewable Directive will be the main policy instrument to support what the region does on renewables and to raise investor confidence if the more ambitious target was adopted.

    It also called for continued innovation to reduce costs and support the integration of these technologies in the energy system.

    WindEurope also said the electricity market needs further reform to make them fit for more renewables and boost investment.

    It added legislation on energy market design is also critical for the successful deployment of wind power and other green sources and to create a level playing field for players.

    Giles Dickson, CEO of WindEurope said: “Wind energy is no longer a nice-to-have add-on in the power mix. It’s a mainstream and essential part of electricity supply, now able to meet up to 12% of Europe’s power needs. It has also become a mature and significant industry in its own right, now providing 330,000 jobs and billions of euros of European exports.

    “Government policy on energy across Europe is less clear and ambitious than it was. Only seven out of 28 EU Member States have targets and policies in place for renewables beyond 2020. We have dysfunctional electricity markets. The transition to auctions has been less smooth than it should have been. And we’re lacking long term signals for investment.”
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    Canada's Ontario says to scale back renewable energy purchases

    Ontario will scale back its purchase of renewable power in a move expected to result in savings of up to $C3.8 billion ($2.86 billion) from a 2013 forecast, the provincial government said on Tuesday.

    It's not clear consumers will benefit directly, though the province's Energy Minister Glenn Thibeault told a news conference a residential household can expect to save C$2.45 a month on electricity bills.

    The government said it will immediately suspend the second round of its Large Renewable Procurement process and the Energy-from-Waste Standard Offer Program, halting procurement of over 1,000 megawatts of solar, wind, hydroelectric, bioenergy and energy from waste projects.

    Ontario's Liberal government has pledged to lower electricity costs for residents as it sought to provide balm for an issue that has become an irritant with voters.

    Rising energy bills have hurt the popularity of the Liberals, who lost a by-election earlier this month to the Conservatives for a long-held Toronto seat.

    Thibeault said the Sept. 1 planning outlook of the province's Independent Electricity System Operator determined Ontario already has an ample supply of electricity for the next decade.

    "Given this strong energy position, it only makes sense that ... we take a careful look at procurements and make common-sense adjustments," Thibeault said.
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    Caught On Tape: Hackers Take Control Of A Moving Tesla From Miles Away

    Caught On Tape: Hackers Take Control Of A Moving Tesla From Miles Away

    Tesla can't seem to catch a break this year with multiple accidentsblamed on the company's autopilot feature, earnings misses and huge cash burns on lower than expected deliveries that have resulted in the company hitting its bank "funding limit", and a controversial proposed merger with SolarCity.  Fortunately, none of this has really mattered to shareholders who keep supporting the stock near its all time highs.

    As such, we suspect that Chinese hackers posting the first-ever evidence on youtube that they can hack into moving Teslas and control the vehicles from miles away won't be of much concern to shareholders either.

    Nevertheless, we present the following startling footage of Tesla Model S vehicles being remotely controlled by hackers who demonstrate the ability to manipulate everything from overriding the internal displays to opening locked doors and slamming on the brakes while the car is moving.  Seems pretty safe, right?

    The following footage shows a hacker slamming on the brakes of this Model S from 12 miles away.

    See the video at :
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    U.S. farmer lawsuits over Syngenta GMO corn granted class status

    A U.S. district court judge in Kansas this week said lawsuits brought by U.S. farmers against seed company Syngenta AG over sales of biotech corn seeds not approved for import by China can proceed as a class action, according to a court filing.

    Farmers from the largest U.S. corn-producing states sued the seed maker in 2014 after grain shipments containing traces of Syngenta's Agrisure Viptera corn were rejected by China, which had not approved the variety for import before it was launched.

    Farmers who did not plant Viptera corn claimed they suffered losses when the rejections that began in November 2013 disrupted trade and dragged down corn prices. Plaintiffs' attorneys estimate hundreds of thousands of corn growers lost $5 billion to $7 billion in current and future profits.

    Judge John Lungstrum certified a nationwide class and statewide classes in Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio and South Dakota.

    "The Court's ruling will make it easier and less expensive for farmers to pursue their claims against Syngenta," said Scott Powell of Hare Wynn Newell & Newton, one of the attorneys appointed by the Court to represent the class.

    Syngenta has said it is not responsible for the losses and that it launched Viptera corn in full compliance with all regulatory and legal requirements. The Swiss company is a major agricultural seed producer and the world's largest crop chemical maker.

    The company said it may appeal the District Court's decision.

    "Syngenta respectfully disagrees with this ruling, particularly given the widely varying ways in which farmers grow and sell corn in different markets across the U.S.," Syngenta spokesman Paul Minehart said.

    The multi-district litigation case is No. 14-md-2591-JWL.
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    Heavy rains expected to curb Australia wheat output

    Australian wheat output will likely fall short of official estimates of near record volumes as heavy rains exacerbate recent damage to crops in the east of the world's fourth largest exporter, farmers and analysts said on Tuesday.

    The country's east coast is expected to receive as much as 100 millimetres of rain later this week and to see wetter-than-average conditions until November, according to forecasts from the Bureau of Meteorology.

    That would add to crop losses after near record rains earlier in September, farmers said, with damage across New South Wales, but most notably in the central west region of the state.

    "We are starting to see some crop losses after it has been too wet for too long," said Dan Cooper, a farmer in Caragabal, 460 kilometres west of Sydney.

    "We have been pretty lucky, but we have probably lost 5 percent of our wheat crops."

    Australia's east coast produces the country's high protein wheat, meaning output losses would limit the country's exportable supplies of the more desirable grain.

    Lower wheat production from Australia could support global benchmark prices,, which earlier this month hit a 10-year low due to ample global supply.

    Australia's chief commodity forecast earlier this month raised its 2016 forecast for wheat output by more than 14 percent to 28.1 million tonnes, which would be the second highest level on record.

    "There is a risk to production estimates," said Phin Ziebell, agricultural economist at National Australia Bank.

    "The headline number may be affected but perhaps the bigger issue is quality downgrades to feed wheat. Australia is already a bit priced out of international trade and if we see quality downgrades, it is going to be very tough to find a market for those supplies."
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    Base Metals

    China's MMG in deal to sell long-idle Australian nickel mine

    China's MMG Ltd on Wednesday said it will sell its long-idle Avebury nickel mine in Australia to a private exploration company for A$25 million ($19.19 million).

    The sale, which MMG expects to finalise by the year-end, requires Australia-based Dundas Mining to pay a deposit of A$1.5 million. According to MMG, the sale agreement will be completed only when the full payment is done.

    The deal comes amid concerns over global supply of the metal after the Philippines said 20 more mines may be suspended for environmental violations, threatening supply from the world's top nickel ore exporter. MMG, which has been trying to sell the 7,000-tonnes-per-year mine in Tasmania state since 2009, said the sale offers the best hope of operations restarting.

    "Following an internal review, MMG initiated an expression of interest process for the asset and believes that this transaction provides the best opportunity to restart the mine," MMG said.

    MMG put the mine on the block after acquiring it in a takeover of Oz Minerals in 2009.

    It halted operations shortly afterwards as the cost of mining nickel exceeded the going price at the London Metal Exchange. This week, the LME three-month nickel price traded for around $10,600 a tonne , roughly the same price as in 2009.

    Plans to sell the mine in 2014 to another Australian private firm for A$40 million collapsed before the deal got finalised.

    MMG is the Hong Kong-listed arm of state-owned China Minmetals Corp.
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    Steel, Iron Ore and Coal

    NDRC calls 4th meeting in a month to ensure winter thermal coal supply

    China's top economic planner held a coal industry meeting on September 27 to discuss measures to secure an abundant supply for the coming winter season amid recent price rally.

    This is the fourth time in a month the National Development and Reform Commission (NDRC) arranged such kind of meeting in Beijing, as the country is in urgent need to curb rapid price rise, a prominent problem in the nation's coal sector.

    Some advanced coal mines would continue to be allowed to boost output within 276-330 working days, after 74 mines were allowed to do so to add 0.5 million tonnes of thermal coal output each day.

    As China is about to enter the winter season of peak coal demand, utilities will gradually start building up stocks. But the domestic supply remains tight at mines and leading transfer ports, which drives prices to further pick up.

    The unbalance in supply and demand needs the government's efforts to adjust, insiders said.

    China has seen a notable decrease in raw coal output and stocks since early this year when a de-capacity drive was initiated in the sector.

    Official data showed raw coal output fell 10.2% on year to 2.18 billion tonnes over January-August this year, pulling down social stocks to 460 million tonnes by the end of August, a year-on-year decline of 12.2%.
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    China's govt tells mines to raise thermal coal output again -sources

    China's state planner has told 74 major coal mines to increase thermal coal output by another 500,000 tonnes per day to ease supply shortages to the nation's utilities ahead of the winter, according to two sources briefed on a meeting on Monday.

    The National Development and Reform Commission (NDRC) did not immediately respond to requests for comment.

    The move comes just days after the government partially reversed sweeping capacity cuts enforced earlier this year that have triggered a frenzied price rally and depleted domestic stockpiles this year.
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    China's small miners to follow Shenhua to increase output

    Some small and medium-sized coal miners may resume production after 14 coal mines of Shenhua Group been allowed to increase output by combined 2.79 million tonnes a month from September, part of the central government's effort to curb rapid price rises in domestic market, said analysts.

    The sentiment is likely to be further bolstered by the decision of the National Development and Reform Commission to permit some coal firms with advanced mines to boost production.

    Improved profitability amid rising coal prices undoubtedly encourage more miners to get back into operation, industry insider said.

    Doubts also came whether the move in boosting coal production goes against the national policy of cutting capacity. Yet, analysts believed that production increase is just allowed in some mines, which will bring little influence as the 276-workday regulation remains in effect.

    In the first half of this year, China Shenhua Energy realized net profit of 9.83 billion yuan ($1.48 billion), sliding 18.6% on year; its operating revenue dropped 12.5% on year to 78.72 billion yuan over the same period.
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    India seeks to stop thermal coal imports by 2017, but private power utilities may not comply

    The Indian government is working on a plan to completely stop thermal coal imports by state-run power utilities by next year, sources said Tuesday.

    While central government owned power utilities like NTPC Ltd. have been asked not to import any coal now, power utilities owned by state governments are being pursued to follow suit, a source at Central Electricity Authority said Tuesday.

    He added that the existing contracts would have to be fulfilled but no new contracts will be signed. Next year, there will be almost negligible coal imports by government-owned power companies, he said.

    NTPC, which is the country's largest electricity generator imported around 736,000 mt of thermal coal over April-August, down from 5.7 million mt imported in the same period last year, according to CEA data.

    NTPC has not placed any new orders this year and was currently getting the coal, which was contracted last year, an NTPC official said.

    In view of the surplus coal available with state-run coal producer Coal India Ltd., the government was also holding talks with private power utilities to make them shun imported coal and consume domestic coal instead, said sources.

    CIL's production over April-August was 194.81 million mt as against the targeted 213.61 million mt, up 1.3% year on year, while offtake was 211.38 million mt as against the target of 240.95 million mt.

    According to the CEA source, the main concern with private power producers was that of the grade slipping, but recent third party sampling by the Central Institute of Mining and Fuel Research has ensured that end-users get quality coal.

    He, however, added that if it was economically viable for private players then they would go for Indian coal, otherwise they would continue to use imported coal.

    A south India-based power producer source said that the government could not force them to use domestic coal, though his company had been buying domestic coal since March this year.

    Currently, domestic coal was cheaper as imported coal prices have gone up. His company buys 5,500 kcal/kg NAR South African coal, which is now being sold at around $65/mt CIF levels, up from around $50/mt CIF levels around two months ago, he said, adding that he will keep buying domestic coal for at least another six months.

    Another south India-based end-user source at a power plant said that for coastal power plants imported coal will always be economical so they will not buy domestic coal.
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    Shanghai Jan-Aug coal imports nearly double

    Imports of coal and lignite through Shanghai customs stood at 8.74 million tonnes in the first eight months of the year, jumping 92.7% year on year, the latest local customs data showed.

    Of this, 57% (4.98 million tonnes) was imported by state-owned enterprises, rising 67% from a year ago; 37.2% (3.25 million tonnes) by private enterprises, rising 130% on year; and the remainder was imported by foreign-invested enterprises, jumping 360% from the year prior.

    Total value of the imports rose 42.4% from the year-ago level to 2.55 billion yuan ($382.33 million), translating to the average price of 291.7 yuan/t, down 26.1% year on year, data showed.

    Shanghai's monthly coal imports have been rising since January this year, except July, but the average price fell for eight consecutive months. The August imports jumped 170% on year and up 55.6% on month to 1.59 million tonnes, with average price down 5.8% on year to 340.1 yuan/t.

    Shanghai's coal imports from ASEAN countries reached 5.78 million tonnes in the first eight months, up 130% year on year and accounting for 66.1% of its total imports. Among this, coal imports from Indonesia rose 120% on year to 5.39 million tonnes.

    Over January-August period, Australia exported 1.51 million tonnes of coal to Shanghai, up 28.6% on year; and coal imports from Russia rose 250% to 849,000 tonnes.

    During the same period, Shanghai's lignite imports stood at 5.47 million tonnes or 62.6% of the total, up 130% on year, with average price down 16.7% to 204.2 yuan/t, data showed.

    Meanwhile, coking coal imports via Shanghai customs increased 5.1% on year to 1.81 million tonnes, accounting for 20.7% of the total, with import price averaging at 548 yuan/t, down 10.4% from the year-ago level.
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    China's Dongbei Special Steel makes revival plan after defaults: newspaper

    Dongbei Special Steel Group, the struggling Chinese steelmaker, has ironed out a business revival plan, aiming to return to profit and slash leverage ratio in three years' time, the Economic Observer reported on Wednesday, citing unidentified sources.

    According to the plan, made at an internal meeting on Sept. 20, Dongbei Special Steel aims to make a profit of 300 million yuan ($44.98 million) in 2018 on total revenue of 35 billion yuan, while reducing debt-to-assets ratio to below 60 percent, the newspaper said, without giving comparative figures.

    Dongbei Special Steel, owned by the Liaoning provincial government in China's northeast rust belt, said on Monday it had defaulted on a one-year bond, marking the firm's ninth default this year. 

    Calls to the company's media department for comment were not answered.

    Earlier on Wednesday, a Chinese bond supervisory body said the unlisted steelmaker will be penalized for failing to release financial data on time.

    Dongbei Special Steel is seeking government support for its debt restructuring plans, and will improve its operation, as part of efforts to turn the company into a special steel maker with global competitiveness by 2020, the article said.
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