AUSTRALIAN farmers need to embrace data in order to stay profitable, according to a young Argentinean entrepreneur.
Co-founder of LESS Industries, Sebastian Cerone, has established himself within the horticulture hub of Bundaberg, Qld in order to help develop his technology which gives growers access to live data to help with on-the-go decision making.
LESS Industries is regarded as an "internet of things company" with paying customers in Australia, Argentina, Chile, Peru and Kenya.
The technology aims to help farmers improve different agricultural processes, reduce the consumption of natural resources and increase efficiency.
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The suite of products includes units which can save water in irrigation, monitor conditions during shipping, and reduce the cost of grain storage through early detection of spoilage.
At the core of LESS Industries is a network of devices that perform sensing of relevant conditions and send the data to the cloud application for visualisation, analysis and decision making.
The cloud application is accessible from any computer or smart phone.
Mr Cerone said one of the main reasons farmers needed to embrace an information flow was because of global warming.
"The weather is changing and it's changing fast. We cannot say, well last year I irrigated that way or I did my practices in that way, and I will repeat the same procedure," he said.
"This year we could have more rain or more sun. You have to change in real time."
INFO UNIT: This device, from LESS Industries, is equipped with soil moisture, soil temperature, air temperature and air humidity sensors.
One example of this on-the-fly adjustment comes via LESS Industries' soil analysis device which has up to eight sensors that measure soil moisture, conductivity and temperature.
This allows the client to measure soil conditions at multiple different depths.
It also measures the ambient temperature and humidity to give advanced warning of frost conditions.
Mr Cerone said having access to this sort of technology gives the smaller producers a leg-up.
"The major players in the industry worldwide are having better prices because of different reasons, generally economics or labour costs, so you need to find competitive ways, you need to be more precise in your production in order to save costs and be able to sell at the same price with more profit or reduce your prices and keep the same profit," he said.
Another device monitors controlled flooding in rice cultivation.
FLOW: An illustration showing how the network of modules feeds information back on soil conditions.
The rice monitoring solution gives the grower the ability to instantly measure the water level as well as water temperature during rice field flooding, allowing fine-grained control of the flooding process and providing timely alerts regarding key conditions.
The device can last up to a year on a single battery charge. The battery is rechargeable with a standard USB charger.
LESS Industries has also developed a solar powered livestock tracking collar that allows the producer to continuously track the position of livestock such as sheep and cattle.
NEW HOME: Sebastian Cerone says he has been overwhelmed by the kindness of locals since moving to Bundaberg from Argentina.
The software provides a geofencing feature where the farmer can define a virtual perimeter and be notified if an animal goes outside the designated zone.
The daily movement by the animal can also be used to assess the health of the animal.
The collar provides an anti-theft feature whereby the farmer is notified if it is removed from the animal.
Mr Cerone came to Bundaberg after being awarded a technology business grant from Advance Qld.
He said there were several options given for places to set up shop in the Sunshine State including Brisbane, Toowoomba, Mackay, Rockhampton and Cairns.
"I thought, if I'm going to spend some time living in Australia, I want to live next to the sea because all the photos and all the pictures I've seen were just amazing," he said.
His decision was reinforced upon his arrival, not only by the diversity of agriculture crops within reach but by the people as well.
IN FIELD: A farmer installing a LESS Industries water level sensor at a rice plantation in Santa Fe, Argentina.
He said he was blown away when he asked someone where a particular place was and they offered to drive him there.
"The people are so friendly, so kind," he said.
Living in the coastal town has led to other opportunities and applications for the technology.
LESS Industries is working with resource management body, the Burnett Mary Regional Group (BMRG), providing a solution for monitoring temperature and sand moisture in turtle nests.
The company is using its technology for monitoring soil moisture and temperature in farms to help increase turtle population
Mr Cerone's work has been recognised on a national level, picking up the 2017-2018 Australia – Latin America Young Entrepreneur Award from the Council on Australia Latin America Relations (COALAR) in June.
Top aluminum smelter China Hongqiao Group Co. ordered to idle some capacity during winter heating season to cut pollution, according to local govt order.
China's economic system is not compatible with the norms of the WTO, the Trump administration has said, asserting that the international trade body is not equipped to deal with Beijing and its industrial policies.
The Trump administration is also seeking to redefine the term 'developing nations' as countries like China, despite being the world's second largest economy, are being considered as developing, that gives them certain benefits under the World Trade Organization (WTO).
In its latest Platinum Quarterly report, the World Platinum Investment Council (WPIC) revised its forecast for oversupply this year to 505,000 ounces from 295,000 ounces, blaming weak demand for platinum jewelery, and said 2019 would see a surplus of 455,000 ounces.d investors pushed demand from 8.5 million ounces in 2013 to an estimated 7.5 million ounces this year, said the WPIC, which is funded by platinum miners.
“Supply will grow (in 2019) but demand will grow even more, and reduce the surplus slightly,” said the WPIC’s head of research Trevor Raymond.
Platinum prices hit a 10-year low in August and are down 9 percent this year.
The market flipped from deep deficit earlier this decade to surplus as falling use by automakers, jewelers anPlatinum market set for big surpluses in 2018 and 2019: WPIC
The global platinum market will be oversupplied by around half a million ounces both this year and next, an industry report said on Wednesday, suggesting little respite for producers facing prices languishing near 10-year lows.
Raymond said the decline in demand from carmakers would slow next year, while jewelery demand would expand for the first time since 2014, and consumption by industry and investors would grow strongly, lifting total demand by 2 percent.
Demand from automakers — which embed platinum in emissions-reducing catalytic converters and account for around 40 percent of platinum use — will fall by 1 percent in 2019 after a 7 percent plunge this year as a decline in sales of diesel vehicles in Europe slows, the WPIC said.
Carmakers use both platinum and sister metal palladium in autocatalysts, but platinum is used more in diesel engines whose popularity plummeted after Volkswagen was found to have cheated emissions tests in 2015.
The WPIC said it assumed no significant substitution next year of palladium for platinum, which is trading at a roughly $300 discount to its sister metal after last year becoming cheaper than palladium for the first time since 2001.
Demand for platinum in jewelery will rise by 1 percent in 2019 after a 2 percent decline this year, the WPIC said.
Use in industry will increase by 4 percent in 2019 after an 8 percent rise this year and demand for platinum bars and coins for investment will double from 125,000 ounces this year.
On the supply side, the WPIC said higher output at mines in South Africa and North America and increased recycling would push supply up 2 percent in 2019 after a 1 percent fall this year.
British banking behemoth HSBC has completed the first overseas financial trade transaction from an Indian conglomerate to a client in the United States by way of blockchain technology.
The transaction involved Mumbai-headquartered Reliance Industries and Tricon Energy in the U.S. Reliance is the second largest publicly traded company in India.
According to a local news source , the transaction included a blockchain-enabled letter of credit (LoC). Joint Chief Financial Officer at Reliance, Srikanth Venkatachari commented on the development:
“The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant seven to ten days to less than a day.”
Integrated within the blockchain platform is an electronic bill of lading (eBL) which allows digital transfer of the title of goods from the seller to the buyer.
The end-to-end transaction was executed on R3’s Corda blockchain platform . R3 is a distributed database technology company. The company was formed by a consortium of nine financial services companies – namely Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P.Morgan, Royal Bank of Scotland, State Street and UBS. It’s Corda platform is geared specifically towards the financial services sector.
The platform has garnered criticism in the past amidst the belief that it’s not actually a blockchain based technology.
The bank acting for the importer (Tricon Energy) was ING Bank. It issued the letter of credit whilst HSBC acted on behalf of Reliance Industries – the exporter.
Hitendra Dave, Head of Global Banking and Markets at HSBC India stated :
“The use of blockchain is a significant step towards digitizing trade. It has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster. The overall efficiency it brings to trade finance ensures cost effectiveness, quicker turnaround and potentially unlocks liquidity for businesses. We’re delighted to partner with Reliance Industries and support enhanced digitization in trade finance. We believe that the collaborative approach adopted to develop this technology has the potential to transform conventional trade finance”.
The conventional means of achieving this type of trade finance transaction encompasses paper based letters of credit to underpin the transaction. This requires the sending of physical documents to each party to the transaction. The time and cost involved in processing such documentation impairs the pace of trade.
HSBC has also been involved with another consortium in an alternative blockchain platform which addresses another aspect of trade financing. Last month, the bank joined with BNP Paribas, Standard Chartered, Deutsche Bank, UBS, and others in launching eTrade Connect. It’s specific purpose is to reduce the time it takes to approve trade loan applications from the current average of one and half days to four hours.
In May of this year, HSBC played it’s part in facilitating the Worlds first trade financing transaction to utilize blockchain. As part of that transaction, the bank processed a letter of credit for Cargill – the largest privately held corporation in the United States based on the revenue metric.
Little has changed in the processes and industry practices associated with trade financing for many years. Blockchain technology is providing the opportunity to revise current practices in favour of more time and cost efficient solutions.
* China’s October scrap metals imports fell to their lowest since at least 2014 at 330,000 tonnes, data from the General Administration of Customs showed on Friday, curbed by China’s tightening regulations on waste imports.
* Arrivals of scrap copper last month fell to 170,000 tonnes, the lowest since February, from 200,000 tonnes in September, customs data showed.
* Scrap aluminium imports also dropped in October, down to 90,000 tonnes from 100,000 tonnes in September, the lowest since February 2016.
* In the first 10 months of the year, China imported a total of 4.39 million tonnes of waste scrap metals, customs data showed.
* Shipments of waste paper were 1.3 million tonnes in October, while waste plastic imports reached 10,000 tonnes.
China will work to achieve its existing greenhouse gas targets and strive to do better as the challenges of climate change become more urgent, Xie Zhenhua, the country’s top climate envoy, said at a briefing on Monday.
“I believe the promises we make will be 100 percent completed and we will strive to do better,” said Xie, speaking to reporters before a new round of climate talks in Katowice, Poland on how to implement the 2015 Paris agreement.
“Although we have encountered a lot of difficulties, a lot of problems, our targets and our resolution will not change,” he added.
China, the world’s biggest source of climate-warming carbon dioxide, has pledged to halt its rise in emissions by “around 2030” through cleaner forms of energy, boosting efficiency and encouraging high-technology industries.
However, overseas researchers have suggested that China’s emissions already reached a peak of 9.53 gigatonnes in 2013 and declined in the three years that followed, suggesting that Beijing’s targets were far too conservative.
U.S. President Donald Trump said last year that he would pull out of the 2015 agreement, arguing that it was too lenient on China.
Xie said Trump’s decision to withdraw hurt the confidence and resolution of many other countries, but its impact was now beginning to wane, and China’s own commitments to clean, low-carbon development were unbending.
China has already met a target to cut carbon intensity - the amount of CO2 emissions per unit of economic growth - by 40-45 percent from 2005 levels by 2020, and it is also on course to bring the share of non-fossil fuels to 15 percent of total energy consumption by the end of the decade, Xie said.
China was the world’s biggest investor in renewable energy and is in the process of establishing the world’s largest carbon trading exchange, he added.
Xie said he hoped developed countries would honor their commitments to the Paris agreement and provide the promised financial and technical support to poorer nations.
He also called on nations to use the upcoming G20 meeting to reaffirm their commitment to combating climate change.
“We hope that this meeting can send out a strong political signal that these economic powers should continue to make efforts to carry out the Paris Agreement and 2030 sustainable development goals,” Xie said.
Cash-strapped Venezuela settled a $1.2 billion arbitration claim that will prevent a creditor from stripping away its crown jewel foreign asset, the U.S.-based Citgo Petroleum Corp refining business, according to Canadian court documents.
The deal with Crystallex International Corp suspends the Canadian mining company’s push for a court-ordered auction of control of Citgo as a way of collecting on an arbitration award against Venezuela that has grown to more than $1.4 billion with interest. Citgo is based in Houston, Texas.
Venezuela completed an initial payment of $425 million, mostly in the form of “liquid securities,” on Nov. 23, according to a filing in the Ontario Court of Justice, where Crystallex sought protection from creditors in 2011.
Part of the payment was made in bonds issued by Venezuela and its state oil company, PDVSA, according to a Venezuelan finance industry source with knowledge of the issue.
Venezuela agreed to pay the remainder in installments by early 2021. If Venezuela fails to post collateral by Jan. 10 for the remaining payments, Crystallex can restart legal proceedings.
A U.S. judge in Delaware was scheduled to hear on Dec. 20 Crystallex’s arguments for a court-ordered auction of control of Citgo. The company’s three U.S. refineries are a key destination for Venezuela’s crude exports, and Citgo has been valued in the billions of dollars.
Venezuela has managed to protect Citgo even though the country has been crippled by an economic crisis and U.S. sanctions, and has halted payments on tens of billions of dollars of debt. Caracas made payments last month to investors who hold bonds secured by Citgo shares.
Holiday shoppers get busy in store and online
Venezuela expropriated a Crystallex gold mining project in 2011, which led to the 2016 arbitration award. Crystallex and Venezuela reached an agreement last year, but Caracas failed to maintain payments after transferring $75 million.
As Venezuela’s debt defaults have piled up and U.S. sanctions have isolated the country, creditors have closed in on overseas assets of PDVSA.
ConocoPhillips said in October it had received $345 million in the third quarter from PDVSA as part of a four-year deal to settle a $2 billion arbitration award stemming from the loss of assets during a 2007 nationalization drive.
Rusoro Mining Ltd reached a settlement with Venezuela in October. The Canadian mining company began pursuing Citgo this year to collect on a $1.3 billion arbitration award over the nationalization of its gold assets in the country.
U.S. President Donald Trump said on Monday he expected to move ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent and repeated his threat to slap tariffs on all remaining imports from China.
In an interview with the Wall Street Journal four days ahead of his high-stakes meeting with Chinese President Xi Jinping in Argentina, Trump said it was “highly unlikely” he would accept China’s request to hold off on the increase, which is due to take effect on Jan. 1.
“The only deal would be China has to open up their country to competition from the United States,” Trump told the Journal. “As far as other countries are concerned, that’s up to them.”
Trump, who is due to meet Xi on the sidelines of the G20 summit in Buenos Aires this week, said that if negotiations were unsuccessful, he would also put tariffs on the rest of Chinese imports.
“If we don’t make a deal, then I’m going to put the $267 billion additional on,” at a tariff rate of either 10 percent or 25 percent, Trump told the Journal.
A Chinese official told reporters last week that the two leaders would look to set guidelines for future talks.
“The main issue is how to settle down the trade war,” the official said on condition of anonymity due to the sensitive nature of preparatory negotiations. “I am conservatively optimistic that can be done,” he added.
Trump said the next round of tariffs could also be placed on laptops and Apple Inc’s iPhones imported from China, which are part of that $267 billion list of goods not yet hit by tariffs.
Cell phones and computers, among China’s biggest exports to the United States, have thus far been spared as the administration has sought to minimize the impact on U.S. consumers. The Journal said the administration has been worried about a consumer reaction to such levies.
“Maybe. Maybe. Depends on what the rate is,” Trump said, referring to the possibility of tariffs on mobile phones and laptops, according to the Journal. “I mean, I can make it 10 percent, and people could stand that very easily.”
Shares in Apple fell in after-hours trading after the interview was published. An Apple spokesman did not immediately respond to Reuters’ queries.
Apple CEO Tim Cook has personally pressed the issue of tariffs with Trump, telling the president that while there are valid concerns about U.S.-China trade relations, tariffs are not the best way to resolve them.
Despite using contract manufacturers to make most of its products overseas, Apple has also sought to emphasize its contribution to the U.S. economy, saying it plans to spend about $55 billion in 2018 with its U.S.-based suppliers.
PLANO, Texas—A half-hour drive straight north from downtown Dallas sits one of the fastest-growing counties in the country. Cotton fields have been replaced with Toyota’s new North American headquarters, a Dallas Cowboys training facility and a sand-colored shopping strip with a Tesla dealership and a three-story food hall.
Yet even with the booming growth, Dallas’s once vibrant housing market is sputtering. In the high-end subdivisions in the suburb of Frisco, builders are cutting prices on new homes by up to $150,000. On one street alone, $4 million of new homes sat empty on a visit earlier this month. Some home builders are so desperate to attract interest they are offering agents the chance to win Louis Vuitton handbags or Super Bowl tickets with round-trip airfare, if their clients buy a home. Yet fresh-baked cookies sit uneaten at sparsely attended open houses.
The U.S. economy just had one of its best six-month stretches in a decade, as the unemployment rate hovers around its lowest level in half a century. Still, along with a recent swoon in the stock market, the housing market—which makes up a sixth of the U.S. economy—has been a troubling weak spot.
U.S. existing home sales have declined on an annual basis for eight straight months, the longest slump in more than four years, according to the National Association of Realtors report Wednesday. The slowdown has been driven by places that had earlier seen some of the strongest price growth during this recovery, including Seattle, Denver, New York City, Boston and the Bay Area.
Profit growth at China’s industrial firms cooled for a sixth straight month in October as factory prices and the pace of sales increases softened amid mounting uncertainties stemming from the U.S.-China trade war.
The figures point to further weakening in China’s vast manufacturing sector and economy days ahead of a high stakes meeting between Presidents Donald Trump and Xi Jinping, which Beijing hopes could avert a major escalation in their trade dispute.
China and the United States have slapped tariffs on billions of dollars of each other’s goods, hurting manufacturing and casting a shadow on the outlook for global growth.
Industrial profits rose 3.6 percent in October from a year earlier to 548 billion yuan ($78.92 billion), a 7-month low and a slowing from September’s 4.1 percent gain, the National Bureau of Statistics (NBS) said on Tuesday.
The slowdown was largely due to cooling factory-gate inflation and a high-base effect, bureau official He Ping said in a statement.
Some economists believe profitability will continue to deteriorate in coming months.
“As the economy slows, profits will only get worse before they get better,” said Yang Yewei, an analyst with Southwest Securities, who forecast an actual decline in 2019’s first quarter.
Nomura economists said the trend will remain down “given weakening domestic demand, already-high financing costs, rising credit defaults and the escalation in the China-US trade conflict”.
Factory-gate inflation has been easing in recent months on sluggish demand, despite government efforts to shore up the economy, including a flurry of credit-easing measures to boost lending to private firms and ramp up infrastructure spending.
TRADE WAR WORRIES
October’s profit data came out as worries about the U.S.-China war were deepened by Trump’s comments to the Wall Street Journal before his meeting with Xi Jinping in Argentina at the end of this week.
On Monday, Trump told the newspaper it was “highly unlikely” he would accept Beijing’s request to hold off on increasing tariffs on $200 million of Chinese goods to 25 percent from 10 percent, as planned for Jan. 1.
China faces slower economic growth thanks to the trade war plus efforts to rein in financial risks and tackle pollution problems.
On Monday, Chinese iron ore futures tumbled nearly 6 percent and steel prices dropped to the lowest in almost five months as worries over weaker steel demand fuelled a sell-off, with raw materials coking coal and coal also down sharply.
Tuesday’s profit data showed industrial firms’ revenue growth slowed to 9.4 percent in the first 10 months from 9.6 gain in January-September.
Upstream sectors such as mining and metal producers and state-owned enterprises still commanded the lion’s share of profit gains but their growth softened in October. Profit gains were concentrated in five industries, including steel and building materials.
Profits earned by state-owned enterprises grew 20.6 percent in October from a year earlier, from 23.3 percent in September.
Shenzhen Energy Group, the southern Chinese city’s largest power producer whose main products include electric power, gas and steam, reported a 83.3 percent decline in net profit for the third quarter.
For the first 10 months, profits for China’s industrial firms rose 13.6 percent from a year earlier, versus a 14.7 percent increase in January-September, Tuesday’s data showed.
Falling business morale points to weak German growth
At the end of October, industrial firms’ liabilities increased 5.9 percent from a year earlier to 63.7 trillion yuan, according to the Statistics Bureau.
The Trump administration on Thursday issued a new round of sanctions banning US citizens from having dealings with anyone involved in "corrupt or deceptive" gold sales from Venezuela, as part of efforts to boost pressure on Maduro. Reuters soucres were unclear, knowing only that the Bank Of England was seeking to clarify what Venezuela wanted with the approximately 15 tons of gold being held in the bank's vaults.
Maduro answered Bolton's comments during a televised speech, saying Venezuela is now certifying 32 gold fields.
The plan has been held up for almost two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo, one of the officials said. The Bank of England declined to comment.
"They are still trying to find insurance coverage, because the costs are high", the source told the agency.
The South American country is now dealing with one of the worst economic crises in history, going through a fifth year of recession and an annual inflation of more than 400,000 percent. The total value of its gold reserves is about $14 billion at today's prices.
The deepening economic crisis in Venezuela means its government wants to get back its gold reserves worth around R8 billion.
Maduro, along with his economic team, announced that Venezuela is installing 54 gold processing plants with new technology to reportedly avoid the polluting use of mercury. Their nearly $700M worth of gold now sitting with the Bank Of England.
While it might seem unusual for one country's gold to be held elsewhere, apparently it's quite common for governments from "emerging-market" countries to store their gold in the banks of countries with a more developed economy.
Venezuela has been exporting gold to Turkey in the a year ago, a business that has grown as Maduro has built up ties with Turkish President Tayyip Erdogan.
Since 2014, Venezuela has been using its gold as collateral to get billions in loans from global lenders. According to the latest data from the country's central bank, gold holdings have dropped to 160 tons in June from 364 tons in 2014.
Caracas has been looking to wean itself off of the US-dominated financial institutions and instruments, ditch the dollar and turn to euros and the yuan for worldwide settlements month amid multilayered United States sanctions Venezuelan officials have described as "illegal". Articles appear on euronews.com for a limited time.
Power consumption of China's four energy-intensive industries rose 5.9% year on year to 1,575.8 TWh in the first ten months this year, accounting for 27.9% of the nations total power consumption.
Chemical industry up 2.7%
Ferrous metallurgy up 10.6%
Non ferrous industry up 4.2%
Buiding materials up 5.8%
France plans to close 14 nuclear reactors by 2035, triple onshore wind capacity and cut fossil fuel use in energy by 40% by 2030, President Emmanuel Macron said Tuesday in a speech on the energy transition.
"Fourteen reactors of the 900 MW [first generation] will close by 2035 starting in summer 2020 with both reactors at Fessenheim," the president said.
However, with only four to six reactors set for closure between 2025 and 2030, the bulk will be going offline after 2030 when France's first generation reactors would have exceeded 50-year operational lives.
Macron did not name any other reactors specifically, but required operator EDF to avoid total site closures, with closures to be focused on sites with at least four first generation reactors: Bugey, Dampierre, Cruas, Chinon, Gravelines, Tricastin and Blayais.
Closure of around one reactor a year between 2025 and 2035 would remove 10.8 GW from the 63 GW fleet.
Macron confirmed the target to reduce nuclear's share in the generation mix to 50% would be achieved by 2035, 10 years later than envisaged when Macron was elected in 2017.
That 50% nuclear target is based on rising power demand due to the electrification of transport, energy minister Francois de Rugy said.
Macron also kept the door open for new nuclear reactors in France, calling on EDF to present proposals by 2021.
RENEWABLES EXPANSION, FOSSIL FUEL REDUCTION
Meanwhile France would expand renewables by tripling onshore wind and increasing solar fivefold by 2030, Macron said.
Annual spending on RES subsidies would rise from Eur5 billion ($5.6 billion) to around Eur7 billion-8 billion, he added.
The president also announced plans for four new offshore wind tenders by 2030 with France's first offshore wind project at Saint-Nazaire set to come online before the next presidential election in 2022, he said.
A major part of the hour-long speech on the energy transformation focused on reducing fossil fuels in energy against the background of protests against planned fuel tax increases.
In the power sector, the president confirmed the planned closure of France's five remaining coal plants before the 2022 election, removing 3 GW from the system.
French grid operator RTE said earlier this month that those coal plant closures would only become possible after winter 2020/21 and under certain conditions with exact details yet to be unveiled.
RTE forecasts French electricity demand to dip to around 460 TWh by 2025, before rebounding to around 480 TWh by 2035 under its high scenario including 15 million EVs.
A 50% share in the mix for nuclear, therefore, would equate to around 240 TWh/year, not including exports with France expected to remain Europe's biggest exporter of electricity especially in the light of the expected gradual coal phase-out in Germany.
Malaysian sovereign wealth fund Khazanah Nasional agreed on Thursday to sell a slice of its controlling stake in IHH Healthcare, the largest hospital operator in Asia, to Japan's Mitsui & Co for 8.42 billion ringgit ($2 billion).
The deal is part of Prime Minister Mahathir Mohamad's drive to ease the government's grip over big companies in Malaysia.
Under the deal, Khazanah will cut its stake in IHH Healthcare to 26% from 42%, selling it for 6 ringgit per share for a total of 8.42 billion ringgit in cash. Trading company Mitsui will become the single largest shareholder in IHH when the transaction is complete, with its stake rising to 34% from 18%. Khazanah and another state fund, the Employees Provident Fund, will collectively retain 35%.
Earlier, Caracas indicated that it was looking to repatriate some 14 tons of gold bars back from the UK out of concern that the bullion may be affected by harsh US sanctions against the Latin American country.
The Bank of England is refusing to release Venezuela's gold bars, worth about $550 million or £420 million, back to Caracas, with British officials understood to have referred to "standard" anti-money laundering measures, The Times reports, citing unnamed sources.
"There are concerns that Mr. [Nicolas] Maduro may seize the gold, which is owned by the state, and sell it for personal gain," the newspaper explains.
On Tuesday, two informed sources told Reuters that the Venezuelan government has been trying to move its gold from Bank of England vaults back to Venezuela for nearly two months, with the shipment thought to be held up over difficulties in obtaining insurance.
© AP Photo / Michael Probst Gold Rush Home: Venezuela Wants $550 Mln Bullion Reserves Back From UK – Reports
Washington imposed new restrictions against Venezuela last week targeting the country's gold exports, accusing the Maduro government of "looting" Venezuela's stocks of the precious metals amid the country's economic crisis. The sanctions, which target US individuals and companies trading in Venezuelan gold, was announced by US National Security Advisor John Bolton last week, with Bolton also branding Caracas a member of a "troika of tyranny" along with Cuba and Nicaragua.
Venezuela has made a concerted effort to become a major gold exporter, and is engaged in certifying some 32 gold fields, and building 54 processing plants in a bid to become what Maduro said would be "the second largest gold reserve on Earth."
The Venezuelan government has made an effort to reduce dependence on US-led or controlled financial institutions and instruments, including the dollar, and committed last month to trading in euros, yuan and "other convertible currencies" amid US restrictions.
In recent years, Venezuela has faced an acute economic crisis accompanied by hyperinflation, the devaluation of its currency, the bolivar, and goods shortages in shops, with the crisis caused by crippling US restrictions as well as mismanagement on the part of state oil company PDSVA. Winning a second term in office in May 2018, Maduro promised to make economic recovery one of the government's top priorities. Amid the difficult situation facing his country, Maduro has repeatedly accused the US and Colombia of plotting to overthrow the Venezuelan government in an invasion or coup.
https://sputniknews.com/world/201811071069596712-uk-refuses-return-of-venezuelan-gold/
Growth in China’s vast manufacturing sector stalled for the first time in over two years in November as new orders slowed, piling pressure on Beijing ahead of crucial trade talks between Presidents Xi Jinping and Donald Trump this weekend.
If the high-stakes negotiations fail, Trump is widely expected to proceed with a sharp tariff hike on Chinese goods in January, which would further strain China’s slowing economy and heighten risks to global growth.
Friday’s downbeat factory activity reading suggested a flurry of stimulus measures by Beijing in recent months has yet to be felt, adding to views that business conditions in China will likely get worse before they get better.
The official Purchasing Managers’ Index (PMI), released by the National Bureau of Statistics (NBS), fell to 50 in November, missing market expectations and down from 50.2 in October. It was the weakest reading in 28 months.
Analysts surveyed by Reuters had forecast little change from October’s already marginal growth levels. The 50-point mark is considered neutral territory, indicating no expansion in activity or contraction on a monthly basis.
“Manufacturing is now swerving oh so dangerously close to contraction territory - this will add further fuel to the global slowdown narrative which is taking hold,” Stephen Innes, head of Asia Pacific trading at OANDA, wrote in a research note.
The Trump administration has pointed to growing signs of economic weakness in China and its slumping stock market as proof that the United States is winning the trade war.
Trump sent mixed signals on Thursday about the prospects for a trade deal with China, saying an agreement was close but he was not sure if he wanted one right now.
Trump and Xi will have dinner on Saturday on the sidelines of a G20 summit in Buenos Aires, their first meeting since the world’s largest economies began imposing tariffs on each other’s goods earlier this year. So far, neither side has indicated any intention of making major concessions.
In a commentary accompanying the latest data, the NBS said China’s exports and imports faced growing downward pressure with increasing uncertainty stemming from trade frictions.
CHINA FACING DOMESTIC AND EXTERNAL RISKS
Even if a trade ceasefire is reached, the latest data suggested China’s economy will continue to weaken in coming months, with new orders faltering both at home and abroad.
The new orders sub-index — an indicator of future activity — declined to 50.4 from 50.8, with export orders shrinking for a sixth straight month.
An employee works at a carbon fibre production line inside a factory in Lianyungang, Jiangsu province, China October 27, 2018. REUTERS/Stringer
Reflecting growing concerns over domestic demand, Chinese factories continued to cut back on their import orders for foreign goods last month. Production growth remained modest but was slightly weaker than in October.
Adding to pressure on manufacturers, factory-gate prices fell sharply amid softer demand, hurting profitability for sectors from petroleum processing to ferrous metal smelting. The factory-gate price sub-index pointed to a contraction for the first time since March.
Profit growth for China’s industrial powerhouses cooled for a sixth straight month in October.
MORE POLICY SUPPORT EXPECTED
A sister survey released by the NBS on Friday showed growth in China’s service sector moderated in November, but remained at solid levels. That is likely to cushion China’s slowdown somewhat, as services account for more than half of the economy.
The official non-manufacturing Purchasing Managers’ Index (PMI) dipped to 53.4 from 53.9 the previous month, with overall business confidence falling to 54.2 from 56.4 in October.
China’s policymakers are widely expected to launch more policy support and stimulus measures in coming months if domestic and external conditions continue to deteriorate and earlier steps prove slower-than-expected to kick in.
The central bank has slashed banks’ reserve requirements four times already this year to free up more money to lend to struggling firms, with more cuts expected soon.
Economists at ING forecast the central bank will cut banks’ reserve requirement ratios (RRR) every quarter in 2019 to save private firms and avoid major job losses, if the trade war with the United States continues to escalate.
In recent weeks, speculation has also swirled over whether China may be considering its first benchmark interest rate cut in three years to give a more forceful push to activity, though that would risk adding to a mountain of debt and pressure the yuan currency.
Capital Economics, which has long predicted a benchmark rate cut, recently forecast China’s central bank will start cutting the reverse repo rate in coming weeks to support growth.
“For now, the official PMIs suggest that policy easing is still struggling to put a floor beneath growth,” the consultancy wrote in a note.
Friday’s survey for the services sector also showed cooling momentum in the construction sector, which the NBS attributed to colder weather.
Regulators have been fast tracking infrastructure approvals to lift investment growth from record lows, but analysts say funding remains a concern and the moves may not put a floor under economic growth until the middle of next year.
While China is still expected to hit its official growth target of around 6.5 percent this year, some analysts believe that will cool to as low as 6 percent in 2019, the weakest expansion the country has seen in nearly 30 years.
Sales of passenger vehicles in China slumped 28% year on year in the first three weeks of November, said Cui Dongshu, general secretary of the China Passenger Car Association (CPCA) to the Economic Observer Online on Friday November 30.
CPACA data showed that about 35,000 passenger cars were sold per day in the first week of this month, down 41% compared to a year earlier.
Average daily sales came in at 51,600 units in the second week with a smaller year-on-year decline of 23%.
In the third week, average daily sales of 52,300 units stood 24% lower from the same period last year.
South Korea's refined oil product exports in October jumped 20.1% year on year to 49.46 million barrels, or 1.60 million b/d, compared with 41.17 million barrels a year earlier, data released late Thursday from Korea National Oil Corp. showed.
This marked the biggest increase in more than two years since April 2016 when shipments jumped 23.5% from a year earlier.
The October shipments were also up 10.4% from 44.78 million barrels in September.
For the first 10 months this year, oil product exports climbed 5.5% year on year to 442.07 million barrels, compared with 419.05 million barrels in the year-ago period. In 2017, oil product exports increased 4.2% year on year to 509.06 million barrels.
Exports of gasoil surged 25.9% year on year to 18.72 million barrels in October, whereas shipments of jet fuel rose 17.7% year on year to 10.82 million barrels last month.
Gasoline shipments jumped 23.8% year on year to 8.20 million barrels in October, while naphtha exports also rose 16.3% year on year to 4.15 million barrels last month.
But bunker C fuel oil exports fell 35.6% year on year to 1.42 million barrels last month.
Meanwhile, South Korea imported 27.70 million barrels, or 893,645 b/d, of oil products in October, up 4.1% from 26.61 million barrels a year earlier. But this was down 4.7% from 29.06 million barrels in September.
Over January-October, oil product imports climbed 6.4% year on year to 280.83 million barrels, compared with 264 million barrels in the same period last year. In 2017, South Korea's imports of oil products dipped 6.1% to 313.89 million barrels
A top aide to Brazilian president-elect Jair Bolsonaro said on Thursday the new government would adopt concession contracts for lucrative pre-salt oil auctions, raising concerns that talks to change the regime would drag and derail much-needed investment.
Later, however, Roberto Castello Branco, who Bolsonaro has tapped to lead state-led oil company Petroleo Brasileiro SA said there was no final decision yet on what contracts the new administration would offer in the highly prized deep water oil tenders.
Bolsonaro, a longtime economic nationalist and far-right legislator, modified his stance on the way to his election last month, declaring himself open to selling state assets and ceding ground over the government’s role in the crucial energy sector.
Investors are eager to win a bigger slice of Brazil’s oil prize, but the shift away from an increasingly successful production sharing auction regime also raises concerns that any changes would require lengthy discussions in Congress, raising uncertainty and causing investment to dry up.
A senior transition official, who was not authorized to speak publicly, said Bolsonaro’s administration would seek to modify the current production-sharing contract in the pre-salt fields. The source said they plan to adopt a concession model that would involve less state interference.
“That’s a clear preference of ours, we will change to concessions instead of production-sharing,” the source said, without elaborating on whether the new policy would require a change in the law.
The production-sharing model, which was rolled out by the leftist Workers Party (PT) and reformed by the center-right government of Michel Temer, gives the state a share of income.
It has proved successful in recent auctions, luring oil majors like Exxon Mobil Corp, Chevron Corp, Repsol SA, Royal Dutch Shell Plc, and BP Plc .
CONCESSION CONCERNS
Asked about the potential shift during an event in Rio de Janeiro on Thursday, Marcio Felix, the minister for mines and energy, said the best solution was to make a relatively simple adjustment to a law that mandates all pre-salt blocks must be tendered with production-sharing contracts.
Nonetheless, Felix said he suggested to the incoming administration that any changes should take place after 2020, once key auctions have taken place.
He said his main concern was that congressional talks would snarl and pause the current round of tenders, which have been successful in attracting much-needed investment.
“If we get into that discussion in Congress, for example, we run the risk of paralyzing auctions and that’s what we do not want. The risks need to be well measured,” said José Mauro Coelho, a director at the Energy Research Company.
Higher oil prices and the need to replace shrinking reserves have boosted oil majors’ appetites for costlier offshore ventures, pumping money into the government’s coffers.
NEW DIRECTION
Last month, newspaper Valor reported Bolsonaro’s team was planning to tweak the production-sharing model to attack some of the political abuses perpetrated by previous administrations.
Petrobras was at the center of an investigation dubbed “Car Wash” that uncovered a massive and long-running pay-to-play corruption scheme.
The government found that political parties and politically appointed executives took over 6 billion reais ($1.58 billion) in bribes, mainly from construction and engineering firms, in exchange for winning contracts with Petrobras.
Scores of powerful businessmen and politicians, including former President Luiz Inacio Lula da Silva, have been jailed in connection to the case.
The PT ran Brazil for 13 of the last 15 years and has been blamed by critics for a weak economy and endemic graft. Temer took office in 2016 after former PT President Dilma Rousseff was impeached.
The race to export U.S. shale oil overseas is about to get fierce, with at least nine proposed terminals angling for a piece of a very limited pie.
Within 18 months, new pipelines opening in the nation’s most prolific shale basin promise to carry an added 2 million barrels of oil a day to the Gulf Coast. But the extra crude will arrive at a time when existing terminals in the Corpus Christi area can already offer about 300,000 barrels a day of unused capacity.
Meanwhile, some of the terminals proposed are being designed to load a supertanker every other day, each capable of carrying 2 million barrels. The result: It’s likely only one or two new terminals are needed, with the edge going to companies such as Enbridge Inc., whose Freeport, Texas, effort could be fed by two pipelines it already owns interests in.
"Anyone can build a terminal," said Chief Executive Officer James Teague of Enterprise Products Partners LP, one of the first companies to export oil from the U.S., in a conference call last month. "But it’s what’s behind that terminal that determines its success."
Or in other words, success in the terminal business is as much about securing the barrels as it is about shipping them out.
U.S. oil exports have soared to nearly 2 million barrels a day since a near four-decade moratorium was lifted in late 2015, just as shale production kicked into high gear. Trafigura Group Ltd. and other trading houses have jumped at the opportunity to send those supplies to Europe and Asia.
But there’s been a problem: Pipeline shortages, particularly in the prolific Permian Basin, have limited how much oil makes it to the coast. Now, anticipating an end to those woes with three major new pipelines expected to open in 2019, several companies -- including Trafigura -- are lining up with plans to provide terminals that can take advantage of the change.
Enbridge hasn’t released many details on its proposal for Freeport, which is about 175 miles northeast of Corpus Christi.
But it would likely be fed by the company’s own Seaway pipeline system, which runs south from the U.S. storage hub in Cushing, Oklahoma, as well as the Gray Oak pipeline it owns a stake in. Once completed, that pipe will run southeast from Midland, Texas, in the heart of the Permian, into Freeport and Corpus Christi.
To date, Singapore-based Trafigura is the only known company that’s submitted a formal permit application to build a deepwater terminal in the Corpus Christi area. The company’s Texas Gulf Terminals would move crude to a single-point mooring system a few miles offshore, where they would plan to load a supertanker every other day.
Drawing Fire
But as the first out of the box, Trafigura is also the first to draw fire. The Port of Corpus Christi has hired a lobbyist to voice their concerns about the plan, according to the Caller Times newspaper. The proposal would include an onshore storage facility and a booster station, the newspaper reported.
The lion’s share of crude exports now leave from around Houston given the expansive network of inbound pipelines, storage tanks and dock space in the Houston Ship Channel. But that activity can also prohibit new growth, some say, with concerns about congestion limits.
That makes Corpus Christi, a steadily growing export hub, an attractive option. Many new Permian pipelines slated to come online are ending up there, pushing an infrastructure bottleneck from the shale play south. That ultimately builds a strong case for new terminals to be constructed.
Five Proposals
Trafigura’s proposal is one of five for the Corpus Christi area that would rely on the three new pipelines coming online in 2019. They comprise the Plains All-American Pipeline LP’s Cactus II conduit, with a capacity of 585,000 barrels a day; Epic Midstream LLC’s EPIC line, with 600,000 barrels a day; and the Grey Oak line, owned jointly by Enbridge, Andeavor and Phillips 66, with about 900,000 barrels.
Beyond Trafigura, the other companies proposing terminals for the area include Magellan Midstream Partners LP, Carlyle Group LP, Buckeye Partners LP and Flint Hills Resources LLC.
For its part, Buckeye said that its marine terminal - a joint venture with Phillips 66 and Andeavor - will have storage capacity and connectivity to the Gray Oak pipeline. Meanwhile, Magellan has floated the idea of building its own pipeline from Cushing to Houston and then to Corpus.
Closely-held JupiterMLP, meanwhile, is following the path of Enbridge, proposing a terminal miles away from the Corpus Christi mash-up.
Brownsville, Texas
Its effort -- in Brownsville, Texas, about 163 miles south of Corpus Christi -- has no domestic crude pipeline connections. Instead, the company aims to build its own pipeline to the Permian Basin.
"The more congested it gets, the longer it takes," said CEO Tom Ramsey of JupiterMLP. On the question of how many will succeed, he said "The number may be two or three, but you’re going to need more than one."
The planned implementation date for IMO 2020 is still more than a year away, but this much already seems clear: even assuming some degree of non-compliance, a combination of fuel-oil blending, crude-slate shifts, refinery upgrades and ship-mounted “scrubbers” won’t be enough to achieve full, Day 1 compliance with the international mandate to slash the shipping sector’s sulfur emissions. Increased global refinery runs would help, but there are limits to what that could do. So, what’s ahead for global crude oil and bunker-fuel markets — and for refiners in the U.S. and elsewhere — in the coming months? Today, we discuss Baker & O’Brien’s analysis of how sharply rising demand for low-sulfur marine fuel might affect crude flows, crude slates and a whole lot more.
As regular readers of RBN’s blogs know, the International Maritime Organization (IMO), a specialized agency of the United Nations, in recent years has been implementing ever-tightening rules to reduce allowable sulfur-oxide emissions from the engines that power the 50,000-plus tankers, dry bulkers, container ships and other commercial vessels plying international waters. In Against the Wind, RBN explained that in January 2012, the global cap on sulfur content in bunker (marine fuel) was reduced to 3.5% (from the old 4.5%) and that on January 1, 2020 — only 13 months away — it is set to be reduced to a much stiffer 0.5%. There are even tougher standards already in place in the IMO’s Emission Control Areas (ECAs) for sulfur, which include Europe’s Baltic and North seas and areas within 200 nautical miles of the U.S. and Canadian coasts. In July 2010, the ECA sulfur limit in marine fuel was reduced to 1% (from the old 1.5%), and in January 2015, the limit was ratcheted down again to a very stringent 0.1% — a standard that will remain in force within the ECAs when the 0.5% sulfur cap for the rest of the world becomes effective on New Year’s Day in 2020.
The Bad Moon Rising series discussed the three primary options for shipowners to achieve compliance with the IMO 2020 rule: (1) continue burning high-sulfur fuel oil (HSFO; sulfur content up to 3.5%) and install an exhaust gas cleaning system (scrubber) to eliminate most of the sulfur dioxide emissions; (2) switch to marine distillates or low-sulfur bunker blends whose sulfur content is 0.5% or less; or (3) use alternative low-sulfur fuels like liquefied natural gas (LNG) or methanol. Then, most recently, in Won't Be Long, RBN noted that, with the long-scheduled IMO 2020 Implementation Day on the not-so-distant horizon, many refiners are making plans to adjust their crude slates to optimize their output of low-sulfur distillates and minimize their production of “bottom-of-the-barrel” residual fuel oil (RFO; also known as resid), the primary source of high-sulfur marine fuel. At the same time, U.S. midstream companies are gearing up to export more light, sweet crude from the Permian and other shale and tight-oil plays to simple refineries overseas that would no longer be able to get by refining primarily crudes that are more sour. Marine-fuel suppliers are testing various blends to see which might produce IMO 2020-compliant fuel at the lowest cost. As for shipowners, they’re preparing for topsy-turvy bunker prices.
Today, we turn our attention to Baker & O’Brien’s latest analysis of how things may play out under the current plan for IMO 2020 implementation. First of all, we assume that current global demand for high-sulfur bunker (HSB; up to 3.5% sulfur) is about 3.2 MMb/d (black bar to far left in Figure 1), and that come 2020 demand for the new shipping pool consisting of low-sulfur bunker (LSB; 0.5% sulfur or less) and HSB would be 3.4 MMb/d (dark green bar to far right) — assuming 100% compliance with IMO 2020 (more on this in a moment) — with the incremental 0.2 MMb/d of demand representing a combination of demand growth and the higher energy density/bbl of the lighter LSB blends. While there’s a good bit of uncertainty around all this, we see seven primary factors — plus the higher energy density/bbl we just noted — working in tandem to bring the bunker market into something approaching balance:
Non-compliance
Scrubbers
Alternative fuels
Blending of existing low-sulfur fuel oil with distillate
Refinery upgrades
Shifts in crude slates and crude oil flows
Increased global refining throughputs
We’ll discuss each of these in sequence (and from left to right in Figure 1), beginning with non-compliance. This analysis assumes some amount of non-compliant bunker fuel to be burned on the high seas, especially in the very early years of IMO 2020. This is attributable to several factors, but most notably a loophole of sorts that relates to fuel availability and a mechanism under the rule for using a “statement of non-compliance” if a shipowner can show that compliant fuel was not available. Estimates of non-compliance from other firms and agencies in 2020 have ranged from less than 10% to as high as 30%. For the purposes of our analysis, we have assumed non-compliance to be 20% in 2020, or just under 700 Mb/d (0.7 MMb/d) of HSB (red bar).
Figure 1. IMO 2020 Bunker Components. Source: Baker & O’Brien
Scrubbers are next. Installing a scrubber allows a ship to continue to use HSB; the scrubber reduces sulfur dioxide from the ship’s stack emissions. This allows a shipowner to minimize daily fuel expenses for the trade-off of a relatively significant capital investment — generally estimated at $3 million to $5 million per vessel. If the price differentials between HSB and LSB are projected to be sufficiently wide and persist long enough to allow a reasonable return on the scrubber investment, scrubbers may well make economic sense, but there are practical limits (scrubber manufacture rate, ship dry-dock requirements, etc.) to the pace at which new scrubbers can be added to the world’s shipping fleet. Similar to non-compliance, estimates for the impact of scrubbers on the 2020 bunker pool have been in the 5%-to-33% range. We assume scrubbers would mitigate demand for LSB on the order of 20% in 2020, or just under 700 Mb/d (0.7 MMb/d; light green bar).
Alternative fuels — especially liquefied natural gas (LNG) — offer promise for compliance in the long run, but it’s likely that their impact would be negligible in the early stages of enforcement. We assume no material displacement of HSB in 2020 with alternative fuels (so this category doesn’t get a colored bar in our graph).
Next up is blending of existing low-sulfur fuel oil with distillate. Certain low-sulfur crude oil refiners currently produce RFO (resid) with sulfur in the range of 0.6% to 1.0%. This fuel oil may be atmospheric (“long resid”) or a combination of straight-run and cracked products, such as residuum, slurry from the fluid catalytic cracker (FCC), and distillate. For example, some refineries that do not have bottoms conversion capability (such as coking) process a premium crude slate, whereby a significant fraction of the residuum is cracked in the FCC. In those cases, RFO yield might be as low as 5-7% and volumes are manageable. (Other refineries without cokers that process higher-sulfur crude oils would produce significantly greater volumes of residual fuel oil at sulfur contents much higher than 1%.) The blue line in Figure 2 shows the amount of ultra-low-sulfur distillate (ULSD) required to blend one barrel of this relatively low-sulfur RFO into IMO 2020-compliant LSB. As you can see, it only takes about 0.5 barrel of ULSD (lower red arrow on y-axis) to blend 1 barrel of 0.7%-sulfur RFO (left red arrow on x-axis) into 0.5%-sulfur bunker, but it takes nearly 1 barrel of ULSD (upper red arrow on y-axis) to blend 1 barrel of 0.9%-sulfur (right red arrow on x-axis) into rule-compliant marine fuel. In short, RFO with higher levels of initial sulfur content require progressively more ULSD blending.
Figure 2. ULSD Needed to Blend Low-Sulfur RFO Into IMO-Compliant Bunker. Source: Baker & O’Brien
We estimate that there might be low-to-moderate-sulfur RFO volumes in the range of 10-20% of the total bunker pool that can be accessed and blended with ULSD distillate to produce rule-compliant LSB. If we assume that 15% (450 Mb/d) of 0.7% sulfur material is available, this would require an additional 225 Mb/d of ULS distillate and result in 675 Mb/d of LSB. (We round that up to 700 Mb/d or 0.7 MMb/d; purple bar in Figure 1).
Then there’s refinery upgrades or, more specifically, upgrades to convert bottom-of-the-barrel residuum to high-value distillates like diesel and vacuum gas oil (VGO). A few notable projects are in progress, including the new, 50-Mb/d delayed coker just placed into operation at ExxonMobil’s Antwerp refinery in Belgium. [Another recent announcement by Valero for a new, 55-Mb/d delayed coker at its Port Arthur (TX) refinery is likewise expected to remove HSB from the market and convert about 50% of its feed into light and heavy distillates, albeit start-up isn’t expected until 2022.] Further, there are reports of new coking units planned for refineries in Russia, but we are not certain of the probability and timing for these projects. On top of that, new refining capacity coming on-stream between now and late 2020 will increase global refining capacity by 3 or 4%. Much of this new capacity will include deep conversion capabilities that will also work toward shifting higher-sulfur RFO to distillate. For example, in Asia, three large grassroots refineries with a total capacity of 1.1 MMb/d — two of them with resid hydrocrackers — have commenced operations or are in the process of starting up: Hengli (Dalian, China); Petronas-Aramco (Johor-Peng, Malaysia); and Zhejiang Petrochemicals (Zhoushan, China). In total, we estimate that up to 200 Mb/d (or 0.2 MMb/d; aqua bar in Figure 1) of “new” distillates produced from up to 400 Mb/d of residuum sources might be available from new conversion capacity (including new refineries).
That takes us to shifts in crude slates and crude oil flow (orange bar in Figure 1), an even more complicated topic that we’ll discuss in depth in Part 2 of this blog series, along with the all-important increased global refinery runs (blue-and-white-striped bar) that would be needed to close the gap. Stay tuned!
Russia shipped record volumes of crude oil to China in October as independent refiners continued to fill import quotas, while Iranian oil shipments fell on uncertainty over Washington’s imposition of sanctions on Tehran, data showed on Monday.
China’s imports from top supplier Russia jumped 58 percent from a year earlier to 7.347 million tonnes, according to the General Administration of Customs data, marking the highest ever and equivalent to about 1.73 million barrels per day (bpd).
For the first 10 months, Russian imports were at 57.91 million tonnes, or 1.39 million bpd, up 16.6 percent.
Chinese customs last month began updating an online database with commodity imports by country of origin, replacing a service that had until March only been available to clients. Percentage changes with year-earlier figures were calculated by Reuters.
China’s crude import demand hit an all-time high in October and is expected to stay strong to year-end as independent refiners snap up cargoes to use up their import quotas.
The strong demand from China’s so-called “teapot” refiners has helped to push spot premiums for popular grades such as Russian ESPO Blend and Oman crude to their highest in more than four years.
Iranian shipments, however, tumbled 64 percent in October from the year-ago month to 1.0496 million tonnes, about 247,160 bpd, ahead of U.S. sanctions that came into effect on Nov. 4.
Month-on-month, imports from Iran in October marked their third fall in a row as China’s state oil firms came under growing pressure to scale back purchases ahead of the sanctions.
For the January-October period, imports from Iran fell 3.4 percent from 2017 to 25.54 million tonnes, or 613,300 bpd.
China is one of eight countries that have been granted a waiver to continue buying some crude oil from Iran. The world’s largest energy consumer is allowed to buy 360,000 bpd of oil from the Islamic Republic for at least 180 days from the imposition of sanctions, Reuters reported.
Saudi Arabia’s shipments last month were 4.77 million tonnes, or 1.12 million bpd, up 3.4 percent from October 2017.
Imports for the first 10 months from the top producer in the Organization of the Petroleum Exporting Countries (OPEC) inched up 0.2 percent to 43.2 million tonnes, or 1.04 million bpd.
A search in the database for U.S.-sourced crude oil imports yielded no results.
Chinese firms stopped importing U.S. crude oil around August and September due to a growing trade spat between Washington and Beijing.
The suspension lasted until November when a cargo of 140,000 tonnes was discharged to a Chinese port.
The Port of Corpus Christi said Monday that the U.S. Army Corps of Engineers has appropriated another $59 million to the port's $360 million channel deepening and widening project.
Another $59 million has been appropriated by the U.S. Army Corps of Engineers for the deepening and widening of the Corpus Christi Ship Channel.
The project will allow larger ships to access the port and widen the channel to allow for two-way traffic as the port prepares to handle increased oil tanker traffic for exports.
Three large crude oil pipelines with capacity for more than 2 million barrels of oil a day are being built from West Texas' Permian Basin oil field to the Corpus Christi region. Analysts have said new U.S. oil production will likely be headed to overseas markets. U.S. oil production is at a record 11.7 million barrels a day.
The Port of Corpus Christi, which announced the funding Monday, said federal officials have now appropriated $95 million to the channel project. The port has contributed $78 million of its own funds to the channel project, which is estimated to cost $360 million when completed. The federal government will pay $230 million to deepen and widen the channel and the port the remainder.
The $360 million price tag is an increase from the original $327 million the port said the channel project would cost. The port's portion of the project has grown from $102 million, making up the majority of the cost increase.
The channel deepening and widening project has been delayed for years and, when complete, will widen and deepen most of the channel to 530 feet wide and 54 feet deep.
China is grappling with overflowing stocks of gasoline on the back of high domestic production, unusually low winter demand and relatively lower availability of export quotas, prompting the country's state-run refiners to cut runs in November.
While some refiners are looking for opportunities to ship out cargoes in an effort to reduce stockpiles, others are making efforts to tweak yields in favor of gasoil.
"Run rates are likely to stay flat in the near future," a Beijing-based analyst said.
This would be an unusual deviation from the norm for the year end when run rates in China typically rise to meet a surge in demand during the winter season.
China's social distributor stocks of gasoline in mid-November were up 3.5% from end-October, according to local information provider JLC's survey, which covers 64 social distributors in 21 provinces.
Stocks data for state-refiners, which account for 70% of China's refining capacity, are not available. But stocks of oil products -- gasoline and gasoil -- with Shandong independent refineries increased 44% from end-September to a 4-month high of 1.13 million mt by end-October, according to JLC data.
Average refinery run rate at state-owned refiners Sinopec, PetroChina, Sinochem and China National Offshore Oil Corporation, inched lower to around 83% of nameplate capacity in November, a monthly survey by S&P Global Platts showed Friday.
The combined average run rate in November was down two percentage points from October, but was three percentage points higher from a year ago.
China's gasoline production was up by 8.2% year on year in October at 12.4 million mt, compared with 11.46 million mt in the same month a year earlier, while gasoil output was down 7.9% year on year to 14.93 million mt, from 16.21 million mt a year earlier, data from the National Bureau of Statistics showed.
BULGING GASOLINE STOCKS
Chinese refiners are seeing a build-up of gasoline stocks, as demand had eased after the peak holiday season.
"Stocks of gasoline have climbed to slightly higher levels as marketing companies have been taking fewer cargoes from our refinery," a source from Sinopec Luoyang in central China said.
Refineries at PetroChina were also grappling with rising gasoline stockpiles.
"We have planned to export more gasoline in order to clear the stocks -- also for next month," a source with PetroChina Guangxi said, which has increased its gasoline exports by 300% in November from October levels.
In addition to boosting exports, some refiners are planning to trim gasoline yields and raise gasoil yields.
China's gasoline demand peaks up seasonally in Q4, bolstered by strong car sales before the year ends, and the uptick in fuel consumption lasts until the Lunar New Year holidays.
Its apparent demand for gasoline in 2017 averaged 3.25 million b/d, rising to 3.31 million b/d in Q4 from 3.12 million b/d in Q3, according to analysts.
This year, however, China's apparent gasoline demand is likely to drop to 3.4 million b/d in Q4 from 3.5 million b/d in Q3, according to Platts China Oil Analytics.
RUN RATES MAY FALL
In the first 11 months, refinery runs averaged 81% of capacity at the state-run companies, up from 79% during the same period last year.
Sinopec's average run rate fell by four percentage points from October as its Fujian refining complex is currently undergoing a full turnaround.
PetroChina's average run rate increased by two percentage points following the restart of its Dalian refinery from partial maintenance.
PetroChina's 20.5 million mt/year (410,000 b/d) Dalian Petrochemical refinery has fully resumed operations around November 10 after completing a month-long maintenance at three major units, including a 6 million mt/year crude distillation unit.
Sinopec shut its Fujian Refining and Chemical Company refinery on November 1 for a complete turnaround lasting around 47-52 days.
Run rates at other refineries under Sinopec and PetroChina have largely remained unchanged in November.
At CNOOC, throughput at its 22 million mt/year Huizhou refinery was unchanged at 94% in November, compared with previous month. Sinochem also kept average throughput at its 12 million mt/year Quanzhou refinery unchanged at 108% for the third consecutive month in November.
The Platts November survey covered 39 refineries: 20 under Sinopec, 17 under PetroChina, CNOOC's Huizhou refinery and Sinochem's Quanzhou refinery. These refineries, with a combined capacity of 8.73 million b/d, plan to process 7.09 million b/d of crude in November.
Credit: Chrispo, Shutterstock Scientists have found that man-made structures in the North Sea could play a crucial role in holding coral populations together and increasing their resilience.
The wide range of industrial activities in oceans, from oil and gas extraction to renewable energy projects involving offshore wind, wave and tidal energy, can present a challenge for marine environments. By creating an ocean sprawl, the growing number of artificial structures can have a negative impact on marine ecosystems, putting further pressure on natural habitats. However, they can also present novel conservation opportunities, according to researchers partially supported by the EU-funded ATLAS project.
The study findings were published recently in the Scientific Reports journal. "Highly connected networks generally improve resilience in complex systems. We present a novel application of this paradigm and investigated the potential for anthropogenic structures in the ocean to enhance connectivity of a protected species threatened by human pressures and climate change."
As summarised in a news release by the University of Edinburgh, the scientists used a computer model to reveal how a protected species of coral might use industrial structures to spread. They found that "coral larvae released near oil platforms would travel between corals that have colonised other structures and reach natural populations located at great distances." The news release also notes that the larvae belonging to the species Lophelia pertusa can "supplement existing populations and recolonise damaged reefs and protected areas in other countries, improving their chances of survival."
Connectivity and infrastructure
In the journal article, the researchers said the study "offers the provocative suggestion that ocean infrastructure can have large-scale conservation significance to protected species. Simulations illustrated how North Sea oil and gas installations have the strong potential to form [a] highly inter-connected regional network of anthropogenic coral ecosystems capable of supplying larvae to natural populations downstream."
Quoted in the news release, co-author Dr. Lea-Anne Henry highlighted the importance of understanding how the North Sea has responded to man-made structures that have been in place since the 1970s. "We need to think very carefully about the best strategies to remove these platforms, bearing in mind the key role they may now play in the North Sea ecosystem."
The ongoing ATLAS (A Trans-AtLantic Assessment and deep-water ecosystem-based Spatial management plan for Europe) project was set up to provide essential new knowledge of deep-ocean ecosystems in the North Atlantic. Research activities focus on deep-sea habitats (200-2 000 m). The partners hope the project will enable the development of science-led marine policy and regulation to ensure efficient management of ecosystems and resources. It will also contribute to the European Commission's long-term Blue Growth Strategy to support sustainable growth in the marine and maritime sectors as a whole, as noted in a project factsheet. To achieve its objectives, ATLAS has assembled 12 cross-cutting case studies spanning the Atlantic to study sponge, cold-water coral, seamount and mid-ocean ridge ecosystems.
Explore further: Oil and gas rigs could help at-risk corals thrive
More information: ATLAS project website: www.eu-atlas.org/
Lea-Anne Henry et al. Ocean sprawl facilitates dispersal and connectivity of protected species, Scientific Reports (2018). DOI: 10.1038/s41598-018-29575-4
The great shale oil consolidation is underway, and it’s happening just in time for the new challenges ahead.
For the past decade, dozens of small, independent oil companies have perfected hydraulic fracturing and horizontal drilling to break oil out of Texas shale. They succeeded beyond their wildest dreams.
The U.S. pumped a record 11.35 million barrels a day in August, according to the Energy Information Administration. That is 2.1 million barrels more than last year, setting a record for the highest year-over-year increase.
The jump came along with oil prices strengthening to $75 a barrel for West Texas Intermediate. Seasoned oil executives know that when both prices and production rise, it’s time to cash out and sell to the big boys.
On HoustonChronicle.com: Responsible shale drilling is not an oxymoron
The flurry of deals started in January when oil prices began to turn. Exxon purchased 275,000 acres in the Permian Basin from Fort Worth's Bass family for $6.6 billion.
BP paid $10.5 billion for BHP Billiton's U.S. shale assets in July. The struggling Australian mining company is getting out of the shale game and gave BP, already the largest foreign player in the U.S., 83,000 acres in the Permian, 236,000 acres in the Eagle Ford and 193,000 acres in the Haynesville.
Midland-based Concho Resources paid $8 billion to buy RSP Permian in March. Concho Chairman and CEO Tim Leach said the purchase will create a “super” Permian Basin player with 640,000 acres.
In August, Diamondback Energy bought Energen in an $8.4 billion deal and Ajax Resources for $1.2 billion, taking two small Permian players out of the game. The deal gives Diamondback, one of the biggest Permian-focused companies with 390,000 acres.
Two more major deals came in last week. Chesapeake Energy said Tuesday it would acquire Houston's WildHorse Resource Development for $3 billion in cash and stock, giving the early shale developer a substantial foothold in the Eagle Ford shale basin.
Canada-based Encana Corp. announced its purchase of Newfield Exploration Co. for $5.5 billion the following day. The deal expands Encana’s reach out of the Permian and into the Oklahoma and North Dakota shale areas.
Other major oil companies were already invested in the shale plays. Chevron has the most valuable portfolio and is expected to spend $54 billion to develop it.
This year alone has seen $43.2 billion in deals. But this is the kind of consolidation investors should expect as shale drilling matures. The small, scrappy companies willing to roll the dice on new technology have succeeded, and from this point forward, large players are needed to maximize efficiency to lower costs, boost production and make more significant capital investments.
Analysts at Wood Mackenzie, an energy data analysis firm, estimate companies can still squeeze out an additional $10 billion a year by optimizing shale operations. Larger companies can perfect the assembly-line approach to drilling and smooth out logistics across more acres.
Fewer operators will also make it easier to inch prices higher to increase capital expenditures. Oil companies slashed spending when oil prices dropped in 2014, and long-term forecasts foretell an oil shortage without more exploration and production.
Globally, oil companies will need to spend 20 percent more to meet demand, and not only in the shale plays, according to Wood Mackenzie.
“Four years of deep capital rationing have had a severe impact on resource renewal, especially in the conventional sector,” said Tom Ellacott, Wood Mackenzie’s senior vice president for corporate research. “Not enough new, high-quality projects are entering the funnel to replace those that have left.”
The industry needs to spend an additional $600 billion a year to meet future demand through the next decade, Wood Mackenzie calculated.
On HoustonChronicle.com: Hard work in 2018 for oil and gas business, balancing costs with price
For now, though, executives are focused on generating good numbers for the next quarter and not worrying about next year, according to a survey by consulting firm Deloitte.
While oil executives are confident that shale will produce crude for decades to come, outside analysts worry this may be the Permian Basin’s last hoorah. Wood Mackenzie predicts shale investments will peak in 2023.
That’s the same year that electric vehicles will likely become cheaper than petroleum-powered cars. How quickly the world will adapt to electric-powered transportation raises fundamental questions about the future of the oil business, but that’s a subject for another column.
This year undoubtedly marks a critical tipping point for the shale oil industry. The wildcatters are cashing out, the majors are moving in and shale drilling is growing up.
Nevertheless, investors will do well to keep up the pressure on oil companies to maximize efficiency and produce profits, because the future is uncertain.
Tomlinson writes commentary about business and economics.
chris.tomlinson@chron.com
The area at stake is the so-called ‘transfer of rights’ area, where Petrobas holds 100% of the rights to produce 5 billion barrels of oil
President-elect Jair Bolsonaro wants to open more of the pre-salt assets, to private investors, hoping to earn US$31bn that could help narrow Brazil’s budget deficit
Over the past few years, Brazil has held several very successful oil auctions under production-sharing contracts in its pre-salt layer, attracting major oil companies to its prized offshore oil area.
Now President-elect Jair Bolsonaro wants to open more of the pre-salt assets—an area currently exclusively in the hands of state oil firm Petrobras—to private investors, hoping to earn US$31 billion (120 billion Brazilian reais) that could help narrow Brazil’s massive budget deficit.
However, as Bolsonaro prepares to take office on first January, 2019, his transition team may need to negotiate how different Brazilian states and municipalities could divide the revenues from the potential sale of stakes in more pre-salt fields to foreign oil firms. This uncertainty is not welcome news for Big Oil, which has expressed interest in the area that has been explored to some extent and proven to hold much more oil than initially thought.
The area at stake is the so-called ‘transfer of rights’ area, where Petrobas holds 100% of the rights to produce 5 billion barrels of oil. The state oil firm has explored the area and found that a lot more oil lies in this low-risk offshore zone. There are estimates that the ‘transfer of rights’ area could hold up to 15 billion barrels of oil in excess of the 5 billion barrels to which Petrobras is entitled to produce when the government transferred the area to the state firm in 2010.^
Brazil has been looking to pass legislation to remove the obligation that only Petrobras can produce oil in the ‘transfer of rights’ area. Far-right President-elect Bolsonaro, who had supported state control over the oil assets in the past, now plans to sell oil and other energy assets and supports the bill to allow foreign participation in the currently Petrobras-only ‘transfer of rights’ area, Bolsonaro’s advisor Luciano de Castro told Bloomberg earlier this month.
But last week, the head of Brazil’s Senate Eunicio Oliveira put on hold a bill authorizing oil auctions in the zone, dealing a blow to the president-elect and potentially stalling the bill further. At a meeting with mayors on Friday, Oliveira said that the bill to authorize the sale of stakes in the ‘transfer of rights’ area to foreign firms would be approved if it guarantees that part of the revenues would go to states and municipalities.
Bolsonaro’s plan for the oil auction in this area hit a snag even before the President-elect takes office. Bolsonaro is the third Brazilian president looking to authorize sales to foreign firms in the ‘transfer of rights’ area. But his transition team will probably have to negotiate with various states and municipalities how future revenues would be divided, if the plan is to pass in Parliament.
In the past, Bolsonaro favored state control over energy assets, but he has changed his stance before the presidential election race and now he is lining up a pro-business team to lead the country and picked a privatization advocate, Roberto Castello Branco, to be Petrobras’s new chief executive officer.
If Bolsonaro and his team manage to push the ‘transfer of rights’ area bill through Brazilian politicians from all sides, the potential resources opening for Big Oil to bid are huge.
The area is low-risk—Petrobras has explored parts of it and has found much more oil than originally thought. According to UBS analyst Luiz Carvalho, projects in the area can be viable even if oil prices were to drop to US$ 20 a barrel, Bloomberg quoted the analyst as saying at an event in Rio last week.
Brazil can become an even more attractive destination for Big Oil than it is now if it manages to remove regulatory and political hurdles to auctioning more of its coveted pre-salt oil fields.
The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by nearly 3.5 million barrels for the week ended Nov. 23, according to sources. The API data also showed gasoline supplies declined by 2.6 million barrels, but distillate stockpiles rose by 1.2 million barrels, sources said.
Inventory data from the Energy Information Administration will be released Wednesday. On average, analysts surveyed by S&P Global Platts expect the EIA to report a decline of 430,000 barrels in crude supplies. That would be the first fall reported by the EIA in 10 weeks. The analysts also forecast a supply rise of 141,000 barrels for gasoline and a 315,000-barrel fall for distillates.
In spite of the US sanctions on Iran, some Iranian crude exports are coming into the international market through non-Iranian companies that are offering their VLCCs for transporting as well as storing Tehran's oil, several oil shipping industry sources in Malaysia, Singapore, the UK and China said this week.
Coming soon after National Iranian Tanker Company-owned VLCC Dover transferring its condensate cargo into the CCPC Vanguard, a floating storage vessel in Malaysia's Batu Pahat, another Iranian VLCC, the Hedy, has just completed the transfer of heavy grade crude into the Alter Ego I, owned by Kunlun Holding, in the same region of Malaysia, sources tracking the developments said.
Kunlun, which bought the Alter Ego I earlier this year, has changed the name of the VLCC to Tian Ying Zuo and received Iranian crude, the sources said.
According to one of the sources, another VLCC, the Ataka, whose name is now changed to Tian Ma Zuo, was scheduled to load heavy Iranian crude from Kharg Island.
An NITC official declined to comment. A Kunlun Holding executive also declined to comment.
"I am not sure and I have not heard about this," a second Kunlun Holding official said when asked about Iranian crude being transferred into the Tian Ying Zuo, and the Tian Ma Zuo loading from Kharg Island.
The second Kunlun Holding official said the company did have 49% ownership of the CCPC Vanguard, but that stake had been sold two months ago. He declined to divulge the name of the buyer and claimed the company did not own VLCCs any more.
However, several owners, brokers and charterers told S&P Global Platts that it is possible for a company to control and still claim a lack of direct ownership of ships that are registered in the name of separate entities for corporate reasons, which can include efforts to reduce taxes.
A reply to an email sent to Kunlun Holding had not been received at the time of publishing this article.
Data from the UK-based global maritime consultancy, VesselsValue, confirmed that the names of both the Ataka and the Alter Ego I have been changed and they are now owned by Kunlun Holding.
Another shipping source separately confirmed that the Alter Ego I was purchased recently by a company that is part of the overall Kunlun Holding Group.
Data from cFlow, S&P Global Platts trade flow software, also showed the former Ataka at the Fujairah/Khor Fakken area when its signal was last received on November 19, while the former Alter Ego I was at Batu Pahat.
SHIP-TO-SHIP TRANSFERS
A Malaysian company, Petrotech Marine, was involved in the ship-to-ship transfer from the Hedy to the former Alter Ego I, a source tracking the movement of crude cargoes in the region said. A Petrotech Marine official declined to comment. A reply to an email sent to Petrotech had not been received at the time of publishing this article.
Iranian VLCCs occasionally do ship-to-ship transfers of crude and condensate in Malaysian ports such as Linggi and Batu Pahat, but a large volume of floating storage involves cargoes from other countries as well, said a shipping agent in Malaysia.
Since the US granted exemptions to importers from eight countries from the sanctions for six months under specific terms and conditions, there should not be any fuss over such trade with Iran, said a shipping consultant in Singapore.
However, sources tracking the Kunlun deal point out that the cargoes recently transferred in Malaysia left Iranian waters before the exemptions were announced.
Kunlun Holding Company Ltd (Kunlun Holding) markets itself as a one-stop solution provider for the oil and gas industry, and undertakes activities from the upstream to the downstream in the oil and gas value chain, an S&P Global Platts Ocean Intelligence, or OI report, said.
The Chinese company owns 50% of Kunlun Trading Co Ltd, which is involved in oil and LPG trading, 80% of Kunlun Shipping Co Ltd, and 100% of China Concord Petroleum Co Ltd, or CCPC, according to OI. Another entity, China Concord Investment Co Ltd, was wholly-owned by Kunlun Holding until May 2018, when its shares were transferred to the ownership of one of the group's directors, Xu Bin, according to OI.
When a group company has several subsidiaries, ships may be owned by one or many among them and tracing actual control is complicated, sources said.
Chinese companies continue to import Iranian crude and shipments are mostly delivered in ships owned by local entities to avoid sanctions-related complications, a shipping broker in Beijing said.
Cargo transfer in ship-to-ship areas of Malaysia ensures that Iranian ships do not always have to directly call Chinese ports and local buyers there can lift parcels in sizes and at times of their liking, sources said.
A SPAC has entered the Williston Basin. Vantage Acquisition Operating Company LLC, a special purpose acquisition company formed by former exploration and production executives, has acquired the Williston Basin assets of QEP Resources. The deal, expected to close in early 2019, is valued at $1.725 billion and includes QEP’s South Antelope and Fort Berthold leasehold positions.
After raising $552 million in 2017 for the purpose of acquiring a leasehold position in a major shale play, the Vantage team will now be focused on further developing the assets developing by QEP, including wells targeting multiple pay zones of the Middle Bakken and one bench of the multi-layer Three Forks formation.
More than two-thirds of the production included in the asset acquisition is oil-weighted. The margins on the producing assets is roughly 10 to 20 percent for free cash flow yields, there is a 5 to 10 percent production growth possibility and a possible initial dividend of 2.5 percent to investors involved with Vantage.
Vantage believes the rock quality attained in the deal offers good porosity and hydrocarbon saturation that is all highly predictable across the geology of the entire QEP field. The assets also allow for new technology advancements to increase well productivity in wells placed in established fields along with the possibility for refracks on previously drilled and completed wells.
Roger Biemans, former executive for EnCana Oil & Gas, will lead the team as it develops more than 100,000 acres in the core of the Bakken.
QEP Resources will use the proceeds from the sale to further develop is Permian Basin asset portfolio. “The Williston Basin assets have been a significant contributor to QEP for many years and were critical in our pivot towards a more oil-focused portfolio,” said Chuck Stanley, president and CEO of QEP. “This transition marks an important milestone in simplifying our asset portfolio as we continue on our path to becoming a Permian pure-play operator.”
U.S. crude oil refinery inputs averaged 17.6 million barrels per day during the week ending November 23, 2018, which was 698,000 barrels per day more than the previous week’s average. Refineries operated at 95.6% of their operable capacity last week. Gasoline production increased last week, averaging 10.2 million barrels per day. Distillate fuel production increased last week, averaging 5.5 million barrels per day.
U.S. crude oil imports averaged 8.2 million barrels per day last week, up by 608,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.7 million barrels per day, 0.8% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 384,000 barrels per day, and distillate fuel imports averaged 186,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.6 million barrels from the previous week. At 450.5 million barrels, U.S. crude oil inventories are about 7% above the five year average for this time of year. Total motor gasoline inventories decreased by 0.8 million barrels last week and are about 5% above the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories increased by 2.6 million barrels last week and are about 6% below the five year average for this time of year. Propane/propylene inventories decreased by 0.6 million barrels last week and are about 3% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 2.4 million barrels last week.
Total products supplied over the last four-week period averaged 21.1 million barrels per day, up by 5.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.2 million barrels per day, down by 0.9% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels per day over the past four weeks, up by 2.0% from the same period last year. Jet fuel product supplied was up 4.1% compared with the same four-week period last year.
Last Week Week Before Last Year
Domestic Production '000.... 11,700 11,700 9,682
Alaska ...................................... 498 503 511
Lower 48 ............................. 11,200 11,200 9,171
Imports ................................. 8,162 7,554 7,329
Exports ................................. 2,442 1,969 1,412
Cushing up 1.2 mln bbls
Iran: Problems related to China’s payment for crude purchased from Iran have been resolved, and a Chinese bank will start its banking exchanges with the Iranian side on Dec. 2, Fars news agency reports.
@staunovo
Canada’s Alberta province is in talks to buy rail cars to transport 120,000 barrels per day of crude oil and expects a deal to be concluded within weeks, Premier Rachel Notley said on Wednesday, as the oil-rich province tries to move oil stuck in the region because of a lack of pipeline capacity.
Notley, who said the cars were needed to help deal with a glut that has slashed the price of Alberta oil, told a business audience she was disappointed the federal government was not helping fund the purchase.
Reuters reported last week that Alberta had proposed a joint purchase of two unit trains worth of capacity and estimated the one-time capital cost at about C$350 million ($263.7 million). Federal officials are cool to the idea, saying that by the time the first cars come on line late next year, the supply problems will have eased.
Alberta estimates it is producing about 250,000 bpd more than can be shipped using existing pipeline and rail capacity.
“Alberta will buy the rail cars ourselves to move this oil,” Notley said in a speech. “We have already engaged a third party to negotiate and work is well under way. We anticipate conclusion of the deal within weeks.”
She later told reporters a deal could be announced before year end.
Based on the initial talks, Alberta expects the first 15,000 bpd of capacity to come online in December 2019, ramping up to the full 120,000 bpd by August 2020, with the agreement running for three years.
“It’s a lot of trains and a lot of cars,” Notley told Maclean’s magazine in a webcast interview on Wednesday evening, noting it took multiple 60,000-barrel unit trains to move the equivalent of 120,000 bpd.
The added transport capacity is expected to improve the Canadian crude discount by about $4 over the three-year term, the provincial government said.
Under that time line, the first rail cars would roll out just as an expansion of Enbridge Inc’s (ENB.TO) Line 3 oil export pipeline is set to start operation, although Notley argued the rail capacity would still be needed.
“Line 3 only clears the market for three months before we find ourselves back in this situation again,” she told Maclean’s.
Notley said the cost of buying the cars would be fully recouped through royalties and the selling of shipping capacity.
Her spokeswoman, Cheryl Oates, said the province did not anticipate keeping the unit trains beyond 2021.
FEDERAL HELP WANTED
Notley said there was “no excuse” for Ottawa not helping and castigated the federal government for proposing tougher environmental standards that she said would make it harder than ever to build pipelines.
The supply glut “is happening because Canada willfully holds Alberta’s economy and Canada’s economy hostage,” she said, estimating the losses at C$80 million a day.
Ottawa denies it is being unhelpful, noting that it bought Kinder Morgan Canada Ltd’s (KML.TO) Trans Mountain pipeline earlier this year.
Vanessa Adams, a spokeswoman for federal Natural Resources Minister Amarjeet Sohi, said Ottawa was analyzing Alberta’s proposal about splitting the cost of the unit trains.
Several Canadian crude producers have curtailed production and asked Alberta to mandate cuts for other producers. Oates said a decision on that would be made within a week.
Oates also said Alberta was not considering a “royalty holiday” to incentivize output cuts, adding a number of tools were being considered, including the way royalties were applied.
Last week, federal Finance Minister Bill Morneau said businesses would be allowed to write off additional capital investments, something that he said oil industry executives had pressed for.
India’s western state of Maharashtra has put on hold the process to buy land for the country’s biggest oil refinery that state-run oil companies are building with Saudi Aramco, Chief Minister Devendra Fadnavis said, after strong opposition from farmers.
The $44 billion refinery was seen as a game changer for both parties - offering India steady fuel supplies and meeting Saudi Arabia’s need to secure regular buyers for its oil.
But thousands of farmers are refusing to surrender land, fearing it could damage a region famed for its Alphonso mangoes, vast cashew plantations and fishing hamlets that boast bountiful catches of seafood.
“The entire (land acquisition) process has been stayed. We haven’t acquired any land,” Fadnavis told state assembly on Wednesday as opposition parties and a coalition partner Shiv Sena were opposing the refinery.
The Ratnagiri Refinery & Petrochemicals Ltd (RRPL), which is running the project, says the 1.2 million barrel-per-day (bpd) refinery, and an integrated petrochemical site with a capacity of 18 million tonnes per year, will help create direct and indirect employment for up to 150,000 people, with jobs that pay better than agriculture or fishing.
RRPL, a joint venture between Indian Oil Corp (IOC) , Hindustan Petroleum and Bharat Petroleum , has said suggestions the refinery would damage the environment were baseless.
Issues related to the land for the refinery will be sorted out by the state government soon given the importance of the project, RRPL Chief Executive officer B. Ashok told Reuters.
Land acquisition has always been a contentious issue in rural India, where a majority of the population depends on farming for their livelihood.
In 2008, for example, India’s Tata Motors had to shelve plans for a car factory in an eastern state after facing widespread protests from farmers.
Russia is becoming increasingly convinced it needs to reduce oil output in tandem with OPEC but is still bargaining with the producer group’s leader, Saudi Arabia, over the timing and volume of any reduction, two industry sources told Reuters.
The Russian Energy Ministry held a meeting with the heads of domestic oil producers on Tuesday, ahead of a gathering in Vienna of the Organization of the Petroleum Exporting Countries and its allies on Dec. 6-7.
“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said one source familiar with the talks between Russian oil firms and the ministry.
“Most people agreed that we cannot reduce immediately, it needs to be a gradual process like last time,” said the source, who asked not to be identified as he is forbidden from speaking to the media. The Energy Ministry declined to comment.
Russian oil companies Rosneft and Gazprom Neft declined to comment. Lukoil , Tatneft, Surgutneftegas, Gazprom and Novatek did not immediately respond to a request for comment.
OPEC and its allies led by Russia have been restraining production under a pact reached in late 2016 to prop up oil prices.
Moscow agreed to curb output by 300,000 barrels per day, or one sixth of the overall cut of 1.8 million bpd, but Russian companies took several months to reach that level of reduction.
Now, Riyadh has suggested OPEC and its allies reduce output by 1 million bpd from January 2019 to arrest a price decline as Brent crude LCOc1 fell below $59 a barrel this week from as high as $85 in October due to concerns about a possible glut.
If Russia bore the same proportion of such cuts as it did under the existing agreement, its share of the reduction would amount to 166,000 bpd.
“It was also said that reducing by one sixth this time is a big ask,” the source said.
A second source briefed on the discussions said: “We need to reduce but would not want to reduce by much.”
OPEC and its allies will be meeting amid concerns over a slowing global economy and rising oil supplies from the United States, which is not involved in the existing pact.
Saudi Arabia is coming under renewed pressure from U.S. President Donald Trump, who has asked the kingdom to refrain from output reductions and help to lower oil prices further.
Possibly complicating any decision at next week’s talks is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul last month. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.
Russian President Vladimir Putin will meet Prince Mohammed in Argentina at this weekend’s G20 summit, which Trump is also to attend.
Moscow has so far not committed to any new production cuts.
On Wednesday, Putin said Russia was in touch with OPEC but Moscow would be satisfied with an oil price of $60 a barrel. Putin previously said Russia would be content with oil at $70.
“We are in contact with OPEC and we are ready to continue our joint efforts if needed,” Putin said.
Saudi Energy Minister Khalid al-Falih said on Wednesday the kingdom would not cut oil output on its own.
“We generally have our reservations about the likelihood of a 2016-style cooperation this time around, though the Russian position will undoubtedly be crucial,” JBC Energy think-tank said in a note.
Libya’s overall production is down by 100,000 b/d due to winds and rain, according to a spokesman for state oil firm National Oil Corp. said.
Libya: NOC may also be forced to start reducing production from the country’s biggest oil field, Sharara, by 150,000 b/d as of tomorrow, also due to bad weather Storage tanks at Es Sider port estimated to be full within two days
@staunovo
The West Virginia Surface Owners’ Rights Organization (WVSORO) is making some big accusations against EQT (perhaps other drillers too) in saying that EQT, which once owned thousands of conventional oil and gas wells in the state, is selling those wells to companies that may go out of business and therefore will not be able to properly plug those wells as they reach end-of-life and no longer produce. Specifically, WVSORO mentions the recent sale by EQT of its WV conventional assets to Diversified Gas & Oil. In June, MDN brought you the exclusive news that Diversified had purchased EQT’s Huron Shale assets in Kentucky, Virginia and West Virginia for $575 million (see Diversified Gas & Oil Adds to Conventional Assets in KY, VA, WV). In October they did it again, announcing a deal to buy out Core Appalachia for $183 million, which includes ~5,000 producing wells (90% of production is natgas) and 1.3 million acres in West Virginia, Kentucky and Virginia (see Diversified Gas & Oil Buys Core Appalachia for $183M). WVSORO’s charge is that Diversified is buying those wells intending to never plug them when they’re exhausted. WVSORO is asking the state to deny transferring those wells from EQT to Diversified.
Shandong pipe network transmitted and sold 6.2 billion cubic meters of natural gas from January 1 to November 16, a year on year surge of 55.68%, China Petrochem reported.
The network operator would take an array of measures to ensure gas supply for heating in northern Cina this winter.
Oil major Total’s output will rise to 3 million barrels of oil equivalent per day in 2019, Chief Executive Patrick Pouyanne said on Friday.
The company has said its production rate stood at 2.8 million barrels of oil equivalent per day during the third quarter of this year.
China will have 19 liquefied natural gas (LNG) receiving terminals by the end of 2018, and target for 26 such terminals by 2021,said an expert at CNOOC.
Of 19 terminals 9 belong to CNOOC. CNPC, Sinopec operate three each. The combined regasification of all 19 should reach 699 million tonnes per annum by end December. Utilisation of all terminals will likely be 70%.
Seven more terminals should bring LNG receiving capacity to over 920 MTPA
Strong European distillate cracks amid a closed product arbitrage have supported certain sweet crude oil grades in the Mediterranean and West African markets to reach three-year highs to Dated Brent.
Strong distillate yields were driving demand for grades such as Libya's Es Sider and Azerbaijan's middle distillate-rich crude Azeri Light, said traders. Es Sider was heard at premiums as high as 50 cents/b to its official November selling price of Dated Brent minus $1.55/b, while S&P Global Platts on Thursday assessed Azeri Light at a premium of $2.85/b to the BTC Dated Strip, its highest level since February 2015.
Most available cargoes of Azeri Light have been cleared up to the third decade of December, sources said.
"People are looking for gasoil-rich barrels on the sweet side," a crude trader said.
Russia's Siberian Light was seeing a similar high, assessed at a premium of 80 cents/b versus the Mediterranean Dated Strip Thursday, its highest level since August 2015.
Looking further afield, strengthening distillate cracks across the December-loading trade cycle also helped cargoes of Nigerian grades Forcados, Bonga and Erha clear despite strong freight rates putting pressure on arbitrage opportunities for Nigerian crudes to Europe, sources said.
In the December trading stem, distillate rich grades saw their price differentials rise in comparison to the naphtha- and gasoline-rich grades such as Bonny Light and Qua Iboe.
On Thursday, Platts assessed Forcados at Dated Brent plus $1.35/b, a 30 cents rise from the start of the trading cycle. The spread between distillate-rich and naphtha-rich grades widened over the month, with the gap between Qua Iboe and Forcados assessed at minus 25 cents/b Thursday -- the widest spread since June 2015.
TIGHT DIESEL
The diesel complex has been particularly tight over the last few weeks, with very limited prompt availability of barges and cargoes of ultra-low sulfur diesel in Northwest Europe and the Mediterranean.
This is due to a previously closed arbitrage from the US and the East of Suez region, lower exports from the Black Sea and the Baltic earlier this month and higher cargo demand into Germany to offset the loss of flows from the Amsterdam-Rotterdam-Antwerp hub to Germany and Switzerland via the Rhine, which remained very shallow impeding transportation of barrels by barge.
"The market is very tight...There is nothing available prompt in ARA," a trader said.
According to another trader, increased arbitrage supply from the Middle East and west coast of India won't arrive until the end of the first decade of December. "I don't think there is any real oil on the front, there are very few available cargoes...There are a lot of places running on very low stocks," he said.
As a result of the supply tightness, cash differentials for NWE and Mediterranean ULSD cargoes as well as FOB ARA barges jumped to multi-year highs last week.
Meanwhile, the physical crack for FOB ARA ULSD barges hit a six-year high of $24.46/b versus Dated Brent November 14, up $2.18/b on the day, and was still trading above $21/b this week, assessed at $21.70/b Thursday, according to Platts data.
Gasoil prices were similarly supported by a general tightness in the European middle distillates complex.
The premium of CIF Mediterranean cargoes of 0.1% gasoil over ICE low-sulfur gasoil reached an 11-month high of $4/mt Monday, the highest since December 2017.
CIF NWE 0.1% gasoil cargoes flipped to a premium of $1.25/mt Monday from a discount of $1.50/mt Friday, and reached a fresh one-and-a-half-year high of $2.50/mt Wednesday, a value last surpassed in February last year.
Additionally, refineries along the Rhine, such as the Rhineland refinery, had to cut production due to low water levels limiting barge activity, leading to less available product.
One trader active in the region said Thursday this tightness was "clearly reflected in the premium [of physical gasoil over the frontline ICE LSGO future]." Rising demand further supported prices, with traders saying winter buying activity had slowly kicked in.
Meanwhile, the physical crack of FOB ARA 50 ppm gasoil barges hit a six-year high of $23.86/b versus Dated Brent November 14 and was still trading above $20/b this week, assessed at $20.39/b Thursday, according to Platts data.
China’s state-owned CNPC has replaced France’s Total in Iran’s multibillion-dollar South Pars gas project, Iranian Oil Minister Bijan Zanganeh said, according to the semi-official news agency ICANA on Sunday.
“China’s CNPC has officially replaced Total in phase 11 of South Pars but it has not started work practically. Talks need to be held with CNPC ... about when it will start operations,” Zanganeh told ICANA, without giving further details.
Total, which had a 50.1 percent stake in the project, and CNPC could not immediately be reached for comment.
The French company said in August it had told Iranian authorities it would withdraw from the South Pars gas project after it failed to obtain a waiver from U.S. sanctions against Iran..
In May, industry sources said CNPC was ready to take over Total’s stake in the project.
The offshore field, which Iran calls South Pars and Qatar calls North Field, holds the world’s largest natural gas reserves ever found in one place.
CNPC already holds a 30 percent stake in the giant field, while National Iranian Oil Company subsidiary PetroPars holds the remaining 19.9 percent.
Norwegian oil firm DNO said today that it would make an offer to buy the remaining shares in Aberdeen-headquartered Faroe Petroleum.
DNO, which currently owns around 28% of Faroe, will offer £1.52 for each share. The proposal values Faroe at £607.9 million.
Bosses at the Norwegian firm said they attached great importance to retaining the “skills, knowledge and expertise” of Faroe’s operational management and employees.
They vowed to retain Faroe’s Aberdeen head office.
Update: Rungne well a ‘disappointment’ for Faroe Petroleum
Faroe to ‘keep drilling’ as acquisitions prove elusive in ‘tricky’ market
Faroe to ramp up exploration, pursue M&A opportunities as profits appear
In its statement, DNO described Faroe’s share price performance as “stubbornly disappointing” and said the London-listed firm’s assets would be better placed “in the bosom” of Norway’s oldest independent oil and gas company.
The value of the offer on a fully diluted basis is about £443.8m, which represents a premium of 20.8% to Faroe’s share price of £1.25 pence at the close of business on November 23.
DNO has steadily increased its equity in Faroe this year, prompting speculation that a takeover bid was on the cards.
DNO had asked for a meeting of shareholders to discuss proposals to put two of its own nominees on Faroe’s board.
But DNO dropped its request in August, complaining about Faroe’s “disdainful attitude” to its largest shareholder.
Faroe said it did not give any “credence” to DNO’s reasons for withdrawing the request.
Faroe chief executive Graham Stewart subsequently said “anyone was welcome” to buy the company “at the right price”.
DNO executive chairman Bijan Mossavar-Rahmani said: “We are pleased now to engage directly with the Faroe shareholders with a proposed all-cash voluntary offer of £1.52 per share which represents a premium of 44.8% to the closing price of £1.05 on the day before DNO announced its first acquisition of Faroe shares last April, and a premium of 20.8% to the closing price of £1.25 last Friday.
“In the period between our first acquisition, triggering significant bid speculation, and this offer, the price of Brent crude has dropped 13 percent and oil and equity markets have entered a period of great uncertainty.
“For those shareholders who wish to exit, DNO is therefore offering a considerable premium.
“For those who wish to remain, there is no assurance of Faroe achieving its full value potential in a volatile commodity and financial markets environment as a relatively small scale, financially constrained UK-AIM listed company whose share price performance has remained stubbornly disappointing, with the very notable exception of short-term spikes following the sale of a particular large block of shares by one investor to another (most recently to DNO) and the attendant speculation about an impending takeover premium with each such transaction.
“We firmly believe that Faroe’s assets, the substantial part of which are Norwegian, are better placed in the bosom of DNO, Norway’s oldest independent oil and gas company, currently operating gross production of 125,000 barrels per day which compares with the 7,500 barrels of oil equivalent a day of gross production operated by Faroe.
“DNO’s proven and probable reserves were nearly four times those of Faroe’s as reported at 31 December 2017.”
Parsley Energy, Inc.PE recently reported third-quarter 2018 adjusted net earnings per share of 45 cents, beating the Zacks Consensus Estimate of 44 cents. The bottom line also improved from the prior-year quarter's adjusted earnings of 12 cents per share.
Operating income in the third quarter of 2018 was $219.6 million, significantly higher than the year-ago quarter's $63.1 million.
Parsley Energy's total revenues in the third quarter amounted to $511 million, increasing substantially from $241 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $491 million.
The strong third-quarter results were supported by higher oil equivalent prices and overall production. Other companies from the industry that benefited from increasing commodity prices in the quarter include Apache Corporation APA , Continental Resources, Inc. CLR and Chesapeake Energy Corporation CHK .
Notably, the Permian Basin-focused upstream company has finalized some previously announced agreements to add more takeaway capacity for its 2019 production.
Parsley Energy, Inc. Price, Consensus and EPS Surprise
Parsley Energy, Inc. Price, Consensus and EPS Surprise | Parsley Energy, Inc. Quote
Production Rises
Parsley Energy's average quarterly volume increased 62.4% year over year to 116.2 thousand barrels of oil equivalent per day (MBoe/d) - comprising 84.6% liquids - on the back of rising production of oil, natural gas and natural gas liquids (NGLs). In the quarter under review, the company put 46 net horizontal wells in production.
Price Realizations
Average realized oil price jumped about 37.1% from the year-ago quarter to $62.78 per barrel while average natural gas price realization decreased 47.8% to $1.30 per thousand cubic feet. Realized price for NGLs in the quarter was $31.26 per barrel, higher than the year-ago quarter's $22.23. Overall, the company fetched $47.58 per barrel compared with $36.62 a year ago.
Expenditure
The company's total operating expenses rose to $291.4 million from the year-ago figure of $177.9 million. Lease operating costs rose to $39.8 million in the quarter under review from the year-ago period's $29.5 million. Exploration and abandonment expenses in the quarter were $11.1 million, higher than the year-ago period's $88,000. Moreover, transportation and processing costs of $8.5 million were incurred in the quarter in contrast to no such expense in the year-ago period.
However, lease operating expenses per barrel decreased to $3.72 from $4.49 in the third quarter of 2017.
Capital Expenditure & Balance Sheet
During the quarter under review, capital expenditure of the company totaled $444 million, of which 86.3% was attributed to drilling and completion activities, and 11.7% was spent on facilities and infrastructure.
As of Sep 30, Parsley Energy had cash and cash equivalents of $167.8 million. The company's total liquidity came in at around $1.2 billion, including an undrawn credit revolver amounting to $991 million.
Long-term debt of the company stands at around $2.2 billion, representing a debt-to-capitalization ratio of 25.9%.
Guidance
Parsley Energy is raising around $170 million through asset divestures, which can impact the company's fourth-quarter oil equivalent production by a few hundred barrels a day. Weather-related downtimes in the fourth quarter are also expected to impact production volumes. For full-year 2019, oil equivalent production is expected to fall 1,000 barrels per day due to divestitures. However, this fall in volumes is not expected to offset the 50% yearly volume growth of the company.
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https://www.nasdaq.com/article/parsley-energy-pe-q3-earnings-beat-on-production-oil-price-cm1051902
China's liquefied natural gas (LNG) price decreased by 1.3% to 4,482.5 yuan/t ($645.6/t) averagely over November 11-20 compared with early November, data from NBS.
Relaxed supply-demand conditions in gas market has knocked down the gas price.
At the same time some downstream users headed for other energy substitutes to scale down gas shortage riosks. The predicted warm winter weather in 2018 may result in lower heating demand
The Canada Border Services Agency (CBSA) said on Friday that the modules to be used in a liquefied natural gas export terminal near Vancouver should be subject to hefty import tariffs on certain steel elements, in a blow to the proposed C$1.6 billion ($1.2 billion) project.
In its decision, the CBSA said the fabricated industry steel components (FISC) of an LNG module are not transformed when non-FISC elements are connected, and therefore the 45.8 percent anti-dumping tariffs on the FISC portion should apply.
Woodfibre LNG has estimated that FISC makes up roughly 40 percent by weight of the modules it plans to use to build its LNG export plant.
“We’re reviewing the ruling and evaluating our options,” said Jennifer Siddon, a spokeswoman for the company, without providing further details on Woodfibre’s next steps.
Woodfibre applied for the CBSA scope proceeding in June, in hopes the border agency would determine its modules were not covered in a 2017 ruling by a Canadian trade court that found certain FISC from China, South Korea and Spain were being dumped into the Canadian market, harming local producers.
Woodfibre argued that its modules should not be subject to the tariffs as they are not basic steel structures, but rather manufactured goods that include “a myriad of complex and specialized machinery.” It said applying the tariffs to its FISC modules would be like applying sugar tariffs to the import of bottled soda.
Woodfibre is backed by Indonesian billionaire Sukanto Tanoto’s RGE Group.
Woodfibre and the companies behind other Canadian projects have further argued that LNG modules are complex units that have never been built domestically, with the vast majority of global production concentrated in specialized steel yards in Asia.
The CBSA said Woodfibre could appeal its decision to the Canadian International Trade Tribunal (CITT), which made the original ruling.
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The original CITT ruling is currently being considered in Canada’s Federal Court of Appeal, with a decision expected sometime this year.
Construction is expected to start on Woodfibre LNG early next year, with first shipments in 2023. The plant, located some 60 kilometers (37 miles) north of Vancouver, will liquefy and export some 2.1 million tonnes of supercooled gas each year.
The Abu Dhabi Government and the Abu Dhabi National Oil Company (ADNOC) have added Wintershall to the Ghasha ultra-sour gas mega project with a 10 per cent stake.
The Ghasha Concession consists of the Hail, Ghasha, Dalma and other offshore sour gas fields including Nasr, SARB and Mubarraz. Wintershall will contribute 10% of the project capital and operational development expenses, ADNOC said on Monday.
Germany’s largest crude oil and natural gas producer and a wholly owned subsidiary of BASF, the world’s largest chemicals company by sales, joins Italy’s Eni as partners with ADNOC in the project.
Eni was awarded a 25 per cent stake in the Ghasha concession earlier this month. The agreement marks the first time a German oil and gas company has been awarded a stake in an Abu Dhabi concession area.
The concession agreement, which has a term of 40 years, was signed by Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, and Mario Mehren, CEO of Wintershall.
The announcement builds on the momentum generated by the Supreme Petroleum Council’s (SPC) approval of ADNOC’s new integrated gas strategy, targeted to unlock and maximize value from Abu Dhabi’s substantial available gas reserves, as the UAE moves towards gas self-sufficiency and aims to transition from a net importer of gas to a net gas exporter.
Dr Al Jaber said: “The gas, extracted from the concession area, at commercial rates, will make a significant contribution to fulfilling our commitment to ensuring a sustainable and economic gas supply, and achieving our objective of gas self-sufficiency for the UAE.
“In common with ADNOC, Wintershall has extensive experience of appraising and developing ultra-sour gas resources in technically complex fields. It is a partnership in which each company will benefit from the experience of the other as, together, we optimize costs and ensure we extract the maximum value from all the available gas resources.”
The Ghasha ultra-sour concession will tap into the Arab basin, which is estimated to hold multiple trillions of standard cubic feet of recoverable gas. According to ADNOC, the project is expected to produce over 1.5 billion cubic feet of gas per day when it comes on stream around the middle of the next decade, enough to provide electricity to more than two million homes. Once complete, the project will also produce over 120,000 barrels of oil and high value condensates per day.
Mehren said: “We have been working since 2010 on strengthening the Middle East region by investing here and developing it into another growth region for Wintershall. And, we achieved that goal today by signing the contract.”
He added: “Natural gas production in Abu Dhabi complements our existing portfolio in an ideal way. We have decades of experience to offer in safely developing sour gas fields. We will contribute our technical know-how, strength in implementing projects and cost-effectiveness, in Abu Dhabi, in the coming decades.
“Wintershall is particularly qualified for the offshore operations in the Ghasha Concession. We are experts in drilling technically demanding wells and developing fields efficiently. And we know precisely what counts in ecologically sensitive areas,” Mehren added.
In addition to developing the Ghasha Concession area, ADNOC plans to increase production from its Shah field to 1.5 billion cubic feet per day and move forward to develop the sour gas fields at Bab and Bu Hasa. ADNOC will also unlock other sources of gas which include Abu Dhabi’s giant Umm Shaif gas cap and the emirate’s unconventional gas reserves, as well as new natural gas accumulations which will continue to be appraised and developed.
Wintershall has more than 40 years of experience in the production of sour gas. It has developed 16 fields in Germany, produced 30 billion cubic meters of sour gas and built four gas purification plants.
https://www.offshoreenergytoday.com/wintershall-joins-eni-as-partner-in-adnocs-mega-project/
Saudi Aramco said on Tuesday its gas program would attract $150 billion worth of investments over the next decade with production growing to 23 billion standard cubic feet a day from the current 14 billion.
“We also have world-class unconventional gas resources that are rapidly supplementing our large conventional resources ... currently we have 16 drilling rigs concentrating on unconventional gas and more than 70 wells completed this year,” CEO Amin Nasser said at a conference in Dubai.
Nasser also said Aramco plans to invest $100 billion over the next 10 years in chemicals globally, in addition to potential acquisitions.
Gazprom Neft’s Board of Directors has reviewed information on further improving the efficiency of the oil business’s operational processes through the use of innovative digital technologies.
Digital transformation is a priority area of focus in Gazprom Neft’s activities, creating new opportunities for improving economic efficiency in the face of increasing business complexity and ever decreasing potential for process improvements through traditional approaches. New management strategies based on innovative digital technologies are making it possible to move over to fully integrated, end-to-end management of every stage of the production process, as well as improving the efficiency of specific business areas through the use of predictive analytics and recommendation systems, and the creation of cross-functional operations management centres and digital platforms.
Gazprom Neft has implemented a range of successful projects following the adoption of digital technologies, including blockchain, artificial intellect (AI), Big Data, and the Internet of Things (IoT). The considerable effectiveness of these has, already, been proved in developing "digital twins" for wells, drilling rigs, and refining facilities.
Gazprom Neft is gradually introducing "Industry 4.0" IoT technologies and new methodologies in operations process management. The company has begun developing its strategy for the business’s digital transformation, which is bringing together key program across 14 areas over the entire value chain, including "Cognitive Geology", "The Intelligent Oilfield", "The Digital Filling Station" and other initiatives. The first stage of this digitization program is expected to be completed by 2022.
Gazprom Neft is developing an integrated digital platform for continuous production management through which to implement its digital transformation program, intended to ensure the full and holistic integration of the company’s processes and functions, facilitate a fast rate of change and the speedy implementation of technologies, and allow the scaling-up of digital projects.
By implementing its digital strategy to 2030 Gazprom Neft plans a 1.5-fold reduction in exploration and field development lead-times and costs, a 40% reduction in major project lead times, and a reduction in production costs of 10%. Implementing this strategy will also allow the company to further improve industrial and workplace safety by significantly reducing employee involvement in higher-risk industrial processes, and by introducing unmanned production.
Permian natural gas markets felt a cold shiver this week, but not a meteorologically induced one of the types running through other regional markets. Gas marketers braced as prices for Permian natural gas skidded toward a new threshold: zero! That’s not basis, but absolute price, a long-anticipated possibility that became reality on Monday. The cause is very likely driven, in our view, by continued associated gas production growth poured into a region that won’t see new greenfield pipeline capacity for at least 10 months. What happens next isn’t clear, but expect Permian gas market participants to be a little excitable or jittery over the next few months. Today, we review this latest complication for Permian natural gas markets.
Permian gas markets were sent for a spin on Monday, with prices at the key Waha benchmark averaging just $0.625/MMBtu (see Figure 1). This is the second lowest price we have in our dataset from our friends at Natural Gas Intelligence (NGI), which dates to 2007. That’s not all though, as that average is based on trading throughout a period spanning roughly three hours between 7 and 10 a.m. Central Time. Prices near the end of this period traded one penny below zero at Waha, according to the daily range posted by NGI. Some trades at other points on pipelines in the Permian also traded in negative territory yesterday. That’s right, someone was paid to buy gas in the Permian on Monday. While we’d like to tell you this was some sort of transient, one-off event that led to a day of dramatically low gas prices, that isn’t likely the truth of the matter. The Permian gas market is flooded with associated gas and won’t see significant new takeaway capacity until the start-up of Kinder Morgan’s Gulf Coast Express (GCX) pipeline in late 2019. The problem is here to stay, at least for a few months. Take a deep breath if you trade the Permian gas markets.
We’ve written extensively about the Permian gas market this year, focusing on the deterioration in basis and outlook for new gas pipeline takeaway capacity. The last time we discussed basis was a couple of months ago in L.A. Freeway, which outlined how maintenance events led to Waha prices averaging below $1.00/MMBtu for the first time in recent history. Before that, we focused on new infrastructure in blogs such as Whatever It Takes and P.H.P., Dynamite!, the former focused on the proposed Whistler Pipeline and the latter on Kinder Morgan and EagleClaw Midstream’s under-construction Permian Highway Pipeline. Earlier this summer, in Trouble Every Day, we outlined potential options for Permian natural gas should pipeline capacity out of the basin fill up before GCX comes online. Finally, we devoted an entire day to Permian Basin fundamentals — with a few hours dedicated to gas — at our PermiCon conference in Houston in October.
As shown in Figure 1 below, Waha prices have been volatile lately. After dropping below the $1.00/MMBtu level back in September, prices quickly rallied to just over $2.00/MMBtu in mid-October. That rally was likely caused by the end of maintenance plaguing prices in late September and cold weather that hit in mid-October. While prices quickly fell back to near $1.00/MMBtu by early November, the Permian gas market was roiled by an NGL pipeline outage the week of November 12. During that week, the DCP Sand Hills Pipeline was offline for about five days, severely curtailing natural gas production in the Permian and sending the Waha gas price up to almost $4/MMBtu. While we didn’t blog about that outage, refer to our NATGAS Permian report for more information.
Figure 1. Waha Daily Cash Prices. Source: NGI
Prices quickly retreated after Sand Hills was repaired and Waha priced at $1.29/MMBtu for the Thanksgiving weekend, which was more than $3.00/MMBtu below Henry Hub (see Figure 2). However, it was the first trading day after the holiday weekend when things really came unglued and Permian gas prices folded like Auburn in the second-half at Tuscaloosa and sent basis to more than $3.50/MMBtu below Henry Hub. So, what happened on Cyber Monday? We’ve reviewed all the available pipeline maintenance calendars, and nothing stands out. No major outages are under way like those that occurred back at the end of September, when both the SoCal Gas system and Kinder Morgan’s NGPL were undergoing major maintenance. We should caveat that by saying that no notices of maintenance were posted on the interstate pipelines’ electronic bulletin boards. There could be maintenance currently impacting the Texas intrastate pipelines, but that information isn’t publicly available. The apparent cause of the blowout then? In our view, the crash is very likely a consequence of rising associated gas production, due in part to Plains All American’s recent Sunrise Expansion.
Figure 2. Waha Daily Cash Basis Prices. Source: NGI
You read that right, we think the single largest fundamental factor currently impacting natural gas has very little to do with changes in natural gas infrastructure but is being driven by a major oil pipeline expansion. A little background on the Sunrise Expansion. Plains brought this project online at the beginning of November, adding 500 Mb/d of new capacity via a 24” pipeline from Midland to Wichita Falls, TX. Without diving too deeply into the interconnected pipelines at Wichita Falls, which we recently did in NATGAS Permian, the new pipeline provided, by our estimate, just over 400 Mb/d of new oil takeaway capacity out of the Permian. Plains confirmed on its recent quarterly conference call that these volumes are between 300-350 Mb/d, so our estimate wasn’t too far off.
What does all that mean in gas terms? Well, if we use the Permian’s current gas-to-oil production ratio of 2.5, then 300 Mb/d of oil equates to 750 MMcf/d of associated natural gas. While it’s likely that some of Sunrise’s initial volumes were made up of barrels pulled away from trucks, trains and storage tanks, it’s just a matter of time before those volumes come directly from the field. When they do, associated gas will come with it. By our estimate, November natural gas volumes are currently around 8.8 Bcf/d and are set to increase another 0.20 Bcf/d in December, but that estimate could prove low based on our understanding of the potential impact from Sunrise. Even at just 0.20 Bcf/d, that’s more than enough new supply to overwhelm the one brownfield takeaway project coming in December: the 0.16 Bcf/d Old Ocean project under construction by Energy Transfer and Enterprise Products Partners. (See Where Do We Go From Here for more on that project.) In fact, our projections show that the takeaway issue at Waha isn’t going away anytime soon.
Figure 3 below shows our forward production outlook, less the modest amount of local demand in the Permian, versus current pipeline takeaway capacity. Note that our capacity estimate includes the pipelines that move gas west, north and east out of the Permian, plus an estimate of the amount of gas we expect to flow on pipelines to Mexico. We don’t currently use the full capacity of the pipelines to Mexico as those routes remain constrained by infrastructure projects on the Mexican side of the border. (See No Surprises for more on the pipeline buildout within Mexico.) What is clear from Figure 3 is that the Permian gas market is set to enter a period where takeaway capacity is completely exhausted. Note that under the dashed-green oval in Figure 3, the red takeaway line sits directly on the line for production net of local demand. It’s in this period that we would expect the worst Waha pricing to occur, maybe even worse than Monday.
Figure 3. Permian Gas Production Versus Takeaway. Source: RBN NATGAS Permian Report
We expect the situation for Permian natural gas to remain dynamic, as winter can bring higher demand to Texas and result in production freeze-offs in the basin. It’s also possible that prices are currently being limited by a situation on the intrastate pipelines we can’t assess. That said, it’s clear to us that these blowout events are becoming more frequent –– just glance again at Figures 1 and 2 for proof –– and the forward fundamentals suggest we are about to enter a period of complete exhaustion of Permian natural gas takeaway (Figure 3). Depending on your role in Permian gas markets, this could lead to either a shortness of breath or heavy breathing.
https://rbnenergy.com/keep-breathin-sky-falls-for-permian-gas-prices-on-cyber-monday
In a report published on Tuesday, WoodMac said that the deepwater industry appears in good health, following a sustained cost reduction through the downturn.
However this hard work, according to the company, is in danger of being undone, as impending cyclical cost inflation could raise break-even costs once again.
WoodMac’s data indicates that the cost of developing new deepwater barrels has fallen over 50% since 2013.
The most important steps deepwater operators have taken to achieve lower costs, and therefore better returns, include downsizing projects, a greater focus on subsea tiebacks and brownfield developments over greenfield, reduced project lead times, reduced well counts, and more phasing of larger developments.
Other steps include faster well completions, better project execution, and lower rig/service sector costs.
The most competitive region is the Americas and in particular Brazil, Guyana, and the Gulf of Mexico, where over 50 billion boe of pre- and post-sanction deepwater developments are now profitable under an oil price of $60/bbl, based on break-even costs.
Angus Rodger, research director at WoodMac, said: “One of the key drivers in cost reduction in deepwater projects is lower rig costs, which is a cyclical factor.
“But more importantly, there have also been big structural changes, such as the faster drilling of wells. For example, in the US Gulf of Mexico, it now takes half the time to drill a deepwater well compared to 2014.”
Also, better project execution reduced overspend and improved returns. The average deepwater project sanctioned between 2014 and 2016 has started-up around 5% under budget, compared to projects from 2006 to 2013 when cost overruns between 10 and 15% were the norm.
WoodMac added that, encouraged by this progress and the growing importance of deepwater projects for future growth, the industry was increasing investment in the sector. Total annual deepwater capital expenditure is expected to rise from around $50 billion currently to nearly $60 billion by 2022. The company predicts that the rise will be driven by big projects in Guyana, Brazil, and Mozambique.
But the increase in spend and activities will accelerate a return to cyclical cost inflation in the offshore sector. With total deepwater rig capacity expected to fall over the next few years – as older, less efficient units are scrapped – rig day rates could double by the early 2020s.
“The return of cyclical inflation could see this epic period of deepwater cost reduction come to a close. The question now is how much of the ‘structural’ cost savings we have seen through the downturn will prove sustainable through the investment cycle, and which are just short-term company adaptions,” added Rodger.
China, the world’s second-largest importer of LNG, is continuing to boost its imports of the chilled fuel and has reached a new record high as it is pursuing its strategy for cleaner air.
China imported 41.6 million tonnes in the January-October period, surpassing the 39 million tonnes it imported for the whole year of 2017 when it took over South Korea as the world’s second-largest LNG importer last year.
Compared to the January-October period last year, China’s LNG imports rose 43 percent, according to the data from the General Administration of Customs.
During the month of October, China received 4.6 million tonnes of LNG, a rise of 29.8 percent year-on-year, the data shows.
https://www.lngworldnews.com/chinas-lng-imports-hit-record-high/
Northern Norway’s small port of Honningsvag will host between 150 and 160 ship-to-ship transfers of liquefied natural gas (LNG) cargos from Russia’s Yamal by mid-2019, the local council that owns the port said on Tuesday.
The first transfer in Norwegian waters took place last week as part of Yamal operator Novatek’s plan to free up its ice-breaker LNG vessels, allowing them to return sooner to the plant to pick up more cargos.
From Honningsvag, shipments to global markets are made by regular LNG ships.
The port expects to earn around 10 million crowns ($1.16 million) for the service, while the local retail and hotel industry will see additional benefits, harbour council spokeswoman and local mayor Kristina Sigursdottir Hansen said.
Norway’s Tschudi Shipping will provide the ship-to-ship transfers, its chief executive Jon Edvard Sundnes said.
“There is a contract until June ... (It’s( a big deal and very promising for the future,” he said, but declined to comment on its commercial details.
Transferring cargoes in Norway cuts the journey of ice-breaking tankers — limited in number — by around 2,000 kilometres (1,243 miles), enabling more Yamal LNG to be shipped.
The first ship-to-ship transfer in Norway was conducted last week between the Arc7 Vladimir Rusanov tanker and the Pskov tanker, with five more empty vessels converging there this week.
Some liquefied natural gas sellers aren’t in a rush to deliver their multimillion-dollar cargoes.
With uncertain demand and no signs yet of bitter cold, some traders are preferring to keep their fuel inside vessels in the hope prices will rise. While the sight of stationary cargoes might not be unusual in the more-established oil market, technology has only recently made it feasible to keep LNG at minus 162C for longer periods.
“There are cargoes parked close to Singapore, apparently waiting for the right market conditions to be delivered,” said Dumitru Dediu, an associate partner at McKinsey Energy Insights, which monitors LNG flows. “Some of the players are speculating.”
There are about 30 vessels currently flagged as floating storage globally, two-thirds of which are in Asia, the biggest LNG consuming region, according to cargo-tracking company Kpler. That’s still a fraction of a global fleet of more than 500 vessels.
The practice of using tankers as floating storage is common in the more developed oil market. It happens during periods of contango -- when storage on land is used up, immediate demand is weak and the cost for later delivery is high enough to cover the expense of storing crude on a tanker.
Trading houses and oil majors from Vitol Group and Glencore to BP and Royal Dutch Shell collectively made billions of dollars from 2008 to 2009 stockpiling crude at sea. At the peak of the floating storage spree, sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa each hosted dozens of supertankers.
Boil Off
LNG, the fastest-growing fossil fuel, is starting to resemble the oil market in that sense. Holding it back is that some LNG is lost to keep it cool during its journey, known as boil off, and that most sales are through traditional long-term contracts without destination flexibility.
But that’s rapidly changing. Modern tankers are capable of serving as floating storage, especially for markets such as China that lack that capacity. They have lower boil-off rates, bigger capacity and re-liquefaction units on board to keep the cargoes cool.
The global LNG fleet has transportation capacity of about 44 MM tons, which pales beside the 372 MM tons of the crude oil tanker fleet, according to Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. LNG tankers working as storage can tie up transport capacity, even if volumes are not significant in a global context, Alastair Maxwell, chief financial officer of LNG ship owner and operator GasLog, said earlier this month.
The biggest contributor to flexible supplies is the U.S., where destination-free LNG exports started in 2016. The nation is adding production terminals and will compete with Australia and Qatar for a top place in LNG trade, which the International Energy Agency expects will overtake volumes delivered by pipelines in the middle of the next decade.
Developers of U.S. LNG export projects will be among key speakers at the annual CWC World LNG Summit which starts Tuesday in Lisbon and gathers executives and traders of the super-chilled fuel.
If a cold snap suddenly comes and the spot price rises, a well-diversified player storing fuel may boost earnings by $2 million to $5 million, despite current high shipping rates and boil off, Dediu said.
“Playing contango on LNG has not been traditionally popular, but given the price volatility for gas we do see a lot more players doing this,” he said. “With higher volatility and given the unpredictable winter weather patterns, from one week to another, it might be a real option for some of the players."
Ecopetrol S.A. said that in 2019 the Ecopetrol Business Group or GEE expects to invest between US$3.5 billion and US$4 billion, up 16% to 33% over the projected 2018 figure.
Brent price is expected to range between US$55 and US$65 per barrel. The net profit breakeven price for 2019 is expected to remain at approximately US$ 36 per barrel, demonstrating the Company's resilience in the face of fluctuations in the price of oil. The plan is centered on disciplined growth in the Upstream segment, which accounts for 81% of total expected investment, enabling projected production for 2019 to be between 720,000 and 730,000 barrels of oil equivalent per day (oil and gas) and the addition of proven reserves equivalent to 100% of oil and gas production.
Greater activity in the various operating regions is currently projected for 2019. Highlights are expected to include the drilling of over 700 development wells, at least 12 exploratory wells on Colombia onshore, the acquisition of over 50,000 kilometers of seismic and the development of 15 improved recovery pilots.
Ninety-two percent of total capital investment is expected to be allocated to projects in Colombia, while the remainder is expected to be invested in positioning the Ecopetrol Group in prospective basins in the United States, Mexico and Brazil.
The plan assigns capital for initiatives associated with a non-conventional hydrocarbon pilot in the Middle Magdalena basin, and expects to continue the valuation and development of gas discoveries on Colombia'sCaribbean coast.
Investment in the Downstream and Midstream units is expected to be focused on ensuring the reliability, integrity, performance standards and operating efficiency of the Barrancabermeja and Cartagena refineries, and of the entire oil and polyduct pipeline network.
The increased synergy and integration between the two refineries is expected to continue, as well as the assessment of particular opportunities for profitable growth aimed at increasing the supply of clean fuels to the local market, in line with growing demand.
Throughput of 223,000 barrels per day at Barrancabermeja and 152,000 barrels per day at Cartagena is expected (under the scenario of the projected 375,000 barrels per day).
The Midstream segment is expected to continue strengthening profitability by leveraging on better operating results and less capital employed. Transported volumes are expected to be in line with Colombia's expected crude oil production and the expected increase in demand for refined products.
To maintain reliable, efficient and safe operations in all business units, investments in the integrity and sustainability of the oil infrastructure are expected to increase by 15% compared to 2018.
The plan includes development funds to promote the incorporation of renewable energy sources, the Company's digital transformation program and the development and implementation of technologies to optimize the operation through the value chain.
The organic investment plan that has been approved is expected to be financed by the Company's own funds.
https://www.upstreamonline.com/live/1643012/ecopetrol-boosts-capex-to-usd-4bn-next-year
Mexico's state oil company said Tuesday that it is tripling the reserve estimates for its biggest onshore oil and gas discovery in 25 years.
Pemex Chief Executive Carlos Trevino said exploration results at its Ixachi exploratory wells indicate the light oil and natural gas discovery near the eastern state of Veracruz holds more than 1 billion barrels of proven, probable and possible reserves. That's up from the prior estimate of more than 350 million barrels announced a year ago.
Pemex said the discovery is one of the 10 largest worldwide made this decade.
The news is potentially a boost to Mexico, which has suffered declining oil production in recent years and leaned more on the United States to import gasoline and natural gas for electricity generation.
This is especially the case because the development time is not expected to be extensive. Pemex plans to bring more wells into production within a relatively short time frame, especially compared to frontier exploration projects in the deep-water Gulf of Mexico.
Two subsidiaries of Singapore-based Keppel Corporation have partnered to develop and operate their first greenfield data centre in Malaysia.
The Keppel subsidiary fund Alpha Data Centre Fund (ADCF) and Keppel Data Centres Holdings have joined forces to develop the data centre in Johor, the southern-most state of peninsula Malaysia.
ADCF entered into agreements with a technology company [the customer] to develop the data centre. The asset will sit on 261,000sqft of land and, upon expected completion in 2020, will be fully leased by the customer.
A spokesperson for Keppel declined to disclose the value of the deal, saying it was “commercially sensitive”.
Alvin Mah, the CEO of Alpha Investment Partners, manager of the ADCF, said demand for data centres had been increasing with the expansion of the digital economy, and the addition of the greenfield investment provided diversification to the fund’s existing portfolio.
Wong Wai Meng, CEO of Keppel Data Centres, said: “Enterprises have been moving to rationalise their ageing data centre infrastructure, including moving many workload requirements to the cloud.
“In response, to cater to this demand, major cloud service providers and technology companies are expanding rapidly outside of top-tier data centre markets.”
The investment is structured to include put and call options exercisable under certain conditions, the partners said.
BEIJING, November 29. /TASS/. The current international conditions, increasing protectionism and threat of trade wars serve as additional incentives for developing economic cooperation between Russia and China, head of Russia's major oil company Rosneft Igor Sechin said on Thursday.
"Certain aspects of the current political conditions in the world, increasing protectionism and threat of trade wars in the world economy serve as additional incentives to cooperate more closely and make decisions faster," Sechin said at the opening ceremony of the Russian-Chinese Energy Forumin Beijing.
"In many ways, Russia ties prospects for increasing economic growth to advancing development of eastern territories and development of natural resources there. China, in turn, is interested in ensuring its energy security and reliable supply channels," Sechin said. "High level of connections between our energy infrastructures is a guarantee of strategic stability in bilateral relations, a factor of energy security for both partners, a reassurance of high level of mutual trust," he added.
The 1st Russian-Chinese Energy Forum is held in Beijing. Around 300 representatives of Russian and Chinese energy companies take part in the event. In the framework of the forum, several roundtable meetings will be held on topics of coal and electric power, as well as oil and gas.
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World’s largest exporter of liquefied natural gas Qatar has shown interest in the German LNG import facility proposed for the port of Wilhelmshaven.
During a visit to the port of Wilhelmshaven, Qatar’s ambassador Saoud bin Abdulrahman Al Thani exchanged information on the construction of the LNG import infrastructure and said the country is interested in growing its support to build the facility in Germany.
He said Wilhelmshaven is preferred as a location for an LNG terminal due to advantages over other port locations. He also noted Qatar is interested in long-term investment in the project and is currently looking for a local partner.
MARIKO, the Leer-based maritime consultancy and training company is currently working with Wilhelmshaven Port Industry Association and the Oldenburg Chamber of Industry and Commerce to establish an office with the task of developing LNG infrastructure on the North Sea.
The trio is also partnering on the development of the LNG terminal in Wilhelmshaven, MARIKO said in its statement.
The company representatives have shown potential sites for the terminal to the Qatari ambassador during his visit focusing on the plan to set up a large-scale facility linked to the national and international gas grids. Three potential terminal sites have been presented.
MARIKO noted that until now the preference and final decision of the federal and state governments are expected to support Qatar’s decision for the right port location at which Qatar is willing to investing in an LNG terminal.
https://www.lngworldnews.com/qatar-eyes-involvement-in-german-lng-terminal-at-wilhelmshaven/
Beijing's surprising release on Tuesday of a fourth batch of oil product export quotas for the year, totaling 2 million mt, is expected to weaken the Asian gasoline and gasoil markets.
The Asian gasoline and gasoil markets have been steeped in bearish sentiment amid concerns of oversupply and soft regional demand.
"I do worry China's heavy [gasoline and gasoil] outflow in December will dampen international market, which has already been quite weak," a source with China's export-oriented refinery West Pacific Petrochemical said.
"We will try all means to use up the [export] quotas by year-end," a Beijing-based trader said Tuesday, adding that the award came as a surprise. "The Ministry of Commerce gave us a verbal notice this morning telling us that we have new quota allocation," the trader said.
China had been widely expected to award only 46 million mt of export quotas for gasoline, gasoil and jet fuel in 2018 to cap refining activity and control pollution. But unlike the winter of 2017, this year, the government has not limited refinery runs in order to boost the domestic economy, thereby increasing supply in the domestic market.
The new allocation will lift the total export quota in 2018 to 48 million mt and help offset oversupply in the domestic market.
The new quotas are shared by state-owned CNPC, Sinopec, Sinochem, CNOOC and China National Aviation Fuel, but quota allocation by product was unclear.
GASOLINE, GASOIL SURPLUS
Sources with two quota holders said the latest quotas were likely to cover both gasoline and gasoil, without any specific split between the two, and this is likely to result in a strong rise in product exports from China in December.
Several quota holders held meetings last night to figure out export plans for next month, sources said.
"We have already doubled our December gasoil export plan to 120,000 mt, thanks to the last quota," a source with Sinopec's Shanghai Petrochemical said Wednesday.
Meanwhile, CNOOC was expected to resume gasoline and gasoil exports next month with the new 240,000 mt quotas, sources said. The company had suspended exports due to no quota availability. It's monthly gasoline and gasoil exports could hit 190,000 mt and 180,000 mt respectively, they added.
The WEPEC source also said they will lift their gasoline and gasoil exports in December with the new quotas.
Without the fourth round of quotas, China's monthly average of quota availability was only 776,000 mt for gasoline and 1.02 million mt for gasoil over November-December. These were far below the average exports of 1.1 million mt for gasoline and 1.57 million mt for gasoil over January-October.
BEARISH ASIAN MARKET
The FOB Singapore 92 RON gasoline crack spread against front-month ICE Brent crude oil futures -- which measures the relative value of the refined product to crude oil - has been on a downward trajectory since the start of November and even went into negative territory for the first time in nearly seven years, tumbling to minus $1.17/b on November 8, S&P Global Platts data showed.
The spread rose marginally by 4 cents/b to 2 cents/b at 0830 GMT close of Asian trade Tuesday, stepping out of the negative territory momentarily, Platts data showed.
Month to date, the FOB Singapore 92 RON gasoline crack against front-month Brent futures averaged around 60 cents/b, down 94% from $10.30/b a year ago, the data showed.
The Asian gasoil market has also been under sustained pressure since late October. Market participants said many barrels are struggling to find homes due to falling demand from Taiwan and Australia by year-end, while regional refinery production levels were healthy following the end of the autumn turnaround season.
"Clearly there is very poor demand [for gasoil] in North Asia," an industry source said Tuesday.
The weakness has been reflected in the benchmark FOB Singapore 10 ppm sulfur gasoil cash differential sinking to an all-time low of a discount of 40 cents/b to MOPS Gasoil, basis the new 10 ppm assessment, at the Asian close on Monday.
This is the lowest the cash differential for the benchmark 10 ppm sulfur grade has been since the sulfur content for Platts benchmark gasoil was changed to 10 ppm from 500 ppm on January 1.
Brazil’s state-run oil company Petroleo Brasileiro S.A. said on Tuesday that it lost two cases before the CARF tax appeals board that would cost it about 7 billion reais ($1.8 billion).
Both cases involved taxes on remittances abroad to pay for the rental of drill ships used for exploration, the company said in a securities filing.
The trend of telecoms and energy companies converging could be a sign for telecoms that communications services are well on their way to becoming a utility, according to one global analyst firm.
Analyst GlobalData made the observation in the wake of the deal by telco Optus and Australian-based gas and electricity retailer Sumo, for a range of telco products which will allow Sumo to offer NBN and broadband services to eligible households and small businesses.
Under the agreement, Sumo will introduce a “whole of house” offering which bundles Internet, telephone, gas and electricity for the home owners or small business operators and, in turn Optus Wholesale will provide Sumo with residential broadband services over NBN, mobile broadband and home wireless broadband.
According to data from GlobalData Research, demand for energy services in Australia is expected to grow at an average rate of 1.6% over 2018 to 2020, faster than that for mobile communications (1.4%) or fixed communications services (1.3%).
The company also noted that, meanwhile, churn in the energy space is incredibly high, with retail energy providers constantly changing pricing schemes to lure new customers.
Malcolm Rogers, Telecom Technology and Software analyst at GlobalData, says: “The shift for telecoms companies into the energy market comes as competition is driving down communications services prices and margins. Several telecoms providers have seen margins on core businesses like fixed-line voice and basic broadband decline as consumers increasingly see communications services as a basic utility like electricity or water.
“Utilities by their nature fetch lower margins as customers see them as easily interchangeable substitutes, fuelling the process of commoditisation. Commoditisation of telecoms services has been a topic of concern in the industry for a while, with many telecoms companies investing in other industries like software or entertainment to try and diversify their revenue.”
GlobalData notes that Optus is competing with Telstra and TPG for market share on Australia’s government-owned national broadband network, and Optus and Telstra are looking into ways to secure as many customers as possible ahead of the merger between TPG and Vodafone Hutchison Australia.
“As part of the deals, Origin Energy and Sumo Power will sell Optus NBN home broadband, voice and Optus mobile fixed broadband in a bundle with residential energy services. Both the companies hope to add postpaid mobile services from Optus to their bundling options in the near future,” GlobalData says.
“The deals seem to benefit the energy companies and Optus, as increasing competition from disruptive players is a challenge for both industries. If all goes well for Optus, making deals with energy providers to resell Optus NBN broadband will help to increase its NBN market share."
DALLAS, Nov. 7, 2018 /PRNewswire/ -- Goodnight Midstream, LLC, a leading midstream produced water infrastructure company, announced today it has expanded its revolving credit facility to $420 million from $320 million. ABN AMRO Capital USA, LLC ("ABN AMRO") and Wells Fargo Bank, National Association ("Wells Fargo") served as joint lead arrangers. Additionally, ABN AMRO served as administrative agent.
The increased facility will fund Goodnight's continued strategic growth initiatives in the Permian, Bakken and Eagle Ford shales as well as support working capital requirements. Texas Capital Bank, Regions Bank, East West Bank and Cadence Bank acted as co-agents. The syndicated bank group also includes Citizens Bank, BOKF and Iberia Bank.
Andrejka Bernatova, Chief Financial Officer of Goodnight Midstream commented, "We appreciate the continued support of our syndicate group of banks, who provide us the financial flexibility to support our infrastructure growth as we continue to expand with our producer customers."
Casey Lowary, ABN AMRO Managing Director, said, "This increase is representative of the success and hard work of Goodnight Midstream and will continue to fund their growth into the future. We look forward to our continuing partnership with the Company and are excited about their prospects going forward."
About Goodnight Midstream, LLC.
Goodnight Midstream provides trusted oilfield water infrastructure to oil and gas producers. The Company owns and operates an extensive network of water gathering pipelines and saltwater disposal wells focused on gathering and disposing of produced saltwater for its customers. Goodnight's midstream approach minimizes environmental impact and improves health and safety while lowering lease operating expense and improving reliability for its customers. The Company is supported by a team of highly experienced engineers and operating professionals. Goodnight Midstream operates in the most active basins in the United States with significant positions in the Permian Basin and the Bakken Formation as well as an expanding footprint in the Eagle Ford Shale and the Powder River Basin. For more information, please visit www.goodnightmidstream.com.
Contact
Julie Walter
Goodnight Midstream, LLC
214-347-4454
jwalter@goodnightmidstream.com
SOURCE Goodnight Midstream
Related Links
http://www.goodnightmidstream.com
Image copyright Google Image caption The platform will be installed to explore oil reserves between Purbeck and the Isle of Wight
An energy firm plans to drill a well more than 1,000m (3,280ft) below the seabed in Poole Bay in a bid to explore oil reserves.
Corallian Energy hopes to erect a temporary oil platform later this month before drilling the "appraisal well".
Environmentalists have said an accident at the site could "devastate" the coast.
But Corallian said "all practicable measures" would be taken to avoid "spill scenarios".
The 98/11-E well aims to investigate reserves found by British Gas and BP in 1986, called the Colter prospect.
The platform, which would be visible from Bournemouth, Purbeck and the Isle of Wight, and the vertical well are subject to approval by the Department for Business, Energy and Industrial Strategy (BEIS).
Drilling would take take place over 45 days. The well would then be plugged and the platform removed.
Image copyright Paul Naylor Image caption Protected short-snouted seahorses have been recorded in the licensed area of Poole Bay
If oil can be economically produced, Corallian proposes extracting it by drilling horizontally from the shore, although such a scheme would require a separate licence.
A petition to Parliament is calling for drilling to be stopped, claiming "a blowout could result in 20 million gallons of leaked oil over thousands of square miles".
But Corallian's environmental report said blowouts - where pressure control systems fail, leading to an uncontrolled flow of oil - were extremely rare and could only happen if procedures and controls were ignored.
However, it acknowledged there had been about 228 smaller spills from mobile offshore drilling units between 1990 and 2005.
In reviewing the environmental statement for the well, BEIS said there were "no valid grounds for objecting to the proposals".
It added the agreement was not subject to the inclusion of any specific environmental conditions.
Dorset Wildlife Trust said it was concerned about the scheme's effect on species in the bay such as protected short-snouted seahorses.
Chief executive Dr Simon Cripps said the money "would be better used on renewable energy alternatives and not drilling in such a sensitive area".
Regina – As the story goes, twenty years ago, then-Saskatchewan Minister of Energy and Mines Eldon Lautermilch and Ralph Goodale, who was then federal Minister of Natural Resources, were having a smoke in Kirghizstan. Over cigarettes, they decided on the need to push for petroleum research in Saskatchewan.
“This landed squarely on my desk,” recalled Dr. Malcolm Wilson back in 2009, then director of the Office of Energy and Environment at the University of Regina. He recalled being told, “Malcolm, create a petroleum research facility.”
Thus begat the Petroleum Technology Research Centre (PTRC), a not-for-profit research company located in a dedicated building at Innovation Place in Regina, beside the university.
“From nothing in 1998, by 2002 the University of Regina had the largest petroleum engineering program in Canada,” Wilson said in 2009. The creation of that program was largely because of funding provided through the PTRC and its public and private sector partners.
In later years (2011 to 2013) Wilson would head up the PTRC, the organization whose purpose is to help figure out how to get as much of Saskatchewan’s oil out of ground as possible, with a particular focus on our billions of barrels of heavy oil.
The PTRC celebrates its 20th year in operation this November, and in September invited Wilson, along with past CEOs, researchers and industry leaders, to a one-day conference at Government House in Saskatchewan to recount successes and talk about the future.
Most of the PTRC’s work has focused on heavy oil, but the use of carbon dioxide for enhanced oil recovery (EOR) became a key area of research when the Weyburn oil field in Southern Saskatchewan began to inject it in 2000, and the resulting Weyburn-Midale Project garnered strong industry interest.
Wilson, who was one of the scientists responsible for the first report from the Intergovernmental Panel on Climate Change (IPCC), knew that the utilization of CO 2 for oil recovery was a win-win for Saskatchewan. The IPCC shared the 2007 Nobel Peace Prize with former Vice President Al Gore.
In more recent years, under the direction of new CEO Dan MacLean, the PTRC has turned some of its attention to light oil, particularly the hard-to-access deposits in the Bakken and Viking formations in southern Saskatchewan.
Over the years, the PTRC has been involved in several major research initiatives.
JIVE
“JIVE was a very big success for us,” said Norm Sacuta on Oct. 12. He has handled the PTRC’s communications for over a decade. JIVE, Sacuta explained, stood for Joint Implementation of Vapour Extraction. “It was started about 2005. Over the course of the project, there were four field trials, injecting different kinds of gas (solvent) vapour into heavy oil fields.”
That included propane, methane, butane and CO 2 . The field trials included Nexen, Husky and Canadian Natural Resources Limited.
“Different trials had different levels of success. The main obstacle in those field trials that limited advancement for some of those companies to move to full-scale demonstration, was not being able to get back the solvent during oil production. With propane, butane and methane, you’ve got to get the solvent back in a decent amount that oil recovery doesn’t become too expensive.
“Husky’s field trials were the most successful, which is why they went on and did industrial-scale projects involving solvents and CO 2 .Those were direct results (the decision to go forward) based, in part, on the results of JIVE.”
Husky went on to continue to develop CO 2 usage in enhanced oil recovery.
As part of the JIVE project, a substantial three-dimensional model that looks like a giant R2-D2 was developed at the Saskatchewan Research Council to model the underground reservoirs at different pressures and depths. It’s still in use in the PTRC building.
Another solvent project was worked on with Statoil on the Alberta/Saskatchewan border, to reduce CO 2 emissions in oilsands operations. It was eventually turned completely over to Statoil.
Weyburn-Midale
Very shortly after the PTRC got going, PanCanadian and Apache got going with their enhanced oil recovery carbon dioxide miscible floods at their respective Weyburn and Midale units.
Perhaps one of the most visible projects PTRC has been involved with was the International Energy Agency Greenhouse Gas (IEAGHG) Weyburn-Midale CO 2 Monitoring and Storage Project.
It was considered the world’s largest natural laboratory, covering an area 200 kilometres wide, 200 kilometres long and 4 kilometres deep, encompassing much of southeast Saskatchewan. It’s been dubbed the largest CO 2 sequestration project in the world, and acted as a test bed to hone skills in geologic storage.
There were four technical themes to the project.
Site characterization developed a model for the selection of suitable CO 2 geological storage sites.
Wellbore integrity looked at increasing the knowledge and assessment of risk associated with leakage from abandoned wells caused by material and cement degradation.
Monitoring and verification looked at assessing techniques to quantify CO 2 volume and distribution.
Finally, performance assessment involved a reliable, integrated simulation model to predict long term storage accurately, and to develop reliable probabilistic methods of predicting leakage from storage sites.
Weyburn was not about oil production for the PTRC. When PanCanadian began planning the carbon dioxide flood, it was a unique opportunity to do observations at a commercial level. Eventually the Weyburn field was bought by EnCana, and they agreed to the research side of the project. Cenovus split from EnCana in 2009.
Apache Canada came onstream with the project in 2005, adding the Midale field to the mix.
The research is wrapped up now, and Whitecap Resources now has the operating stake in the Weyburn Unit, while Cardinal Energy Ltd. is the operator of the Midale Unit. PTRC has made itself available to both operators should questions arise about the research that was conducted.
PTRC provided information during the project, both to the public and to policy makers, on CO 2 sequestration. Its information was meant to be used in cap-and-trade policy decisions, regulatory advice for wellbore completions, and the like. In the end, the PTRC quite literally wrote the book about geological storage.
Aquistore
Another major project for the PTRC is the Aquistore project, part of the Boundary Dam Unit 3 Integrated Carbon Capture and Storage Project.
Initially the plan was conceived in partnership with the Regina Co-op Refinery. The original plan was a project to capture a portion of the refinery’s carbon dioxide emissions and pump them into a nearby deep saline aquifer. However, the project evolved to become part of the Boundary Dam initiative when it became clear the CO 2 source would be coming from there.
The $26 million Aquistore project involved drilling the two deepest wells in the province, two kilometres west of the Boundary Dam Power Station and carbon capture unit. One well acts as an injection well, the second as an observation well. The wells themselves are highly instrumented, as is the surrounding area, with various kinds of measurement and monitoring technologies (31 in total). This included the installation and periodic usage of a permanent seismic array around the Aquistore site, allowing for 4D seismic monitoring – three physical dimensions, and the fourth dimension being time –tracking the progress of the carbon dioxide just under 3,400 metres underground. SaskPower now owns and operates the wells, but PTRC continues to conduct the research project, providing data and modeling to SaskPower and to some 7 project partners.
Networks of Centres of Excellence
Starting in 2009, the PTRC was able to get $10 million in funding over four years from the Government of Canada through the Networks of Centres of Excellence program to do research at the lab level, and in the field, to look at enhanced oil recovery technologies that would have a direct impact on improving environmental impacts. The program set up by the PTRC was called STEPS (Sustainable Technologies for Energy Production Systems).
STEPS was a business-led network of centres of excellence. Of 40 applicants to the Federal government’s NCE secretariat, ten went onto final proposals, and only four, including PTRC, were chosen to receive funds
Some of the projects in the STEPS program were tied to early stage development in the Saskatchewan oilsands. This included looking at electrical heating for oilsands.
“It didn’t really go anywhere because of significant challenges with a lack of caprock above our oilsands. And Oilsands Quest eventually stopped operating. When prices tanked, that was it for Oilsands Quest,” Sacuta said.
U of R CO 2 initiatives
For a time, the University of Regina had a suite of organizations involved with carbon dioxide, quarterbacked by Office of Energy and Environment. One focused on capturing CO 2 on a commercial scale, another on putting it in the ground and making sure it stayed there, and the third on developing standards to make sure these efforts were recognized.
The International Test Centre (ITC), which worked on coming up with their own carbon dioxide capture technologies. Their method ultimately was not chosen for the Boundary Dam project.
Then there was the International Performance Assessment Centre for the Geologic Storage of Carbon Dioxide, or IPAC-CO 2 , which focused on coming up with standards for the capture and storage of carbon dioxide. The PTRC’s involvement, especially with the Weyburn-Midale project, brought things full circle, working on the research of geologic storage and enhanced oil recovery.
IPAC-CO 2 was shut down in 2013. ITC has been re-organized into Clean Energy Technology Research Institute (CETRi).
Sacuta said, “We tended to be more of a funder for those research areas – never capture. We were not interested in capture. We did tend to fund, at the U of R, CO 2 -EOR research. That involved both heavy oil, where CO 2 had not yet been injected.”
Future
Light and tight oil is getting more attention from the PTRC now as it enters its third decade in operation. “We just bought, for use by the SRC and the university, a high resolution CT (computerized tomography) scanner. We got Western Diversification funding for that this past year,” Sacuta said.
“They’re going to be using that as part of this tight-oil research.”
Dan MacLean, president and CEO of the PTRC, was in Kuwait on PTRC business during the time of this interview. Regarding the future of the organization, he said by email, “We are proud of what PTRC has accomplished in its twenty years, and more importantly where we are headed. It’s the company’s goal to realize 5 billion additional barrels of reserves in the next five years by developing technologies that will help turn that stranded Saskatchewan oil into recoverable assets. And we plan to do that in the most energy efficient means possible.”
Energy Transfer LP and its Sunoco pipeline subsidiary have racked up more than 800 state and federal permit violations while racing to build two of the nation’s largest natural gas pipelines, according to a Reuters analysis of government data and regulatory records.
The pipelines, known as Energy Transfer Rover and Sunoco Mariner East 2, will carry natural gas and gas liquids from Pennsylvania, Ohio and West Virginia, an area that now accounts for more than a third of U.S. gas production.
Reuters analyzed four comparable pipeline projects and found they averaged 19 violations each during construction.
The Rover and Mariner violations included spills of drilling fluid, a clay-and-water mixture that lubricates equipment for drilling under rivers and highways; sinkholes in backyards; and improper disposal of hazardous waste and other trash. Fines topped $15 million.
Energy Transfer also raised the ire of federal regulators by tearing down a historic house along Rover’s route.
The Appalachia region has become a hub for natural gas as it increasingly replaces coal for U.S. power generation, creating an urgent need for new pipelines. But the recent experience of residents and regulators with the two Energy Transfer pipelines has state officials vowing to tighten laws and scrutinize future projects.
“Ohio’s negative experience with Rover has fundamentally changed how we will permit pipeline projects,” said James Lee, a spokesman for the Ohio Environmental Protection Agency.
Problems with Mariner prompted Pennsylvania legislators to craft bills tightening construction regulations, which have drawn bipartisan support.
“Any pipeline going through this area is going to face resistance which it would not have faced before,” said Pennsylvania State Senator Andy Dinniman, a Democrat.
Energy Transfer spokeswoman Alexis Daniel said the firm remained committed to safe construction and operation and at times went “above and beyond” regulations for the two projects.
Construction of the 713-mile, $4.2 billion Rover started in March 2017 and was planned to proceed at about 89 miles a month, while work on the 350-mile, $2.5 billion Mariner East 2 started in February 2017 and was planned at 50 miles a month, according to company statements on construction schedules. Both were targeted for completion late last year.
Regulators and industry experts said the pace of both projects far exceeded industry norms.
Construction takes place after sinkholes appeared in the backyards of houses in a cul-de-sac outside of Philadelphia, Pennsylvania April 5, 2018. REUTERS/Stephanie Kelly
The four other projects examined by Reuters were mostly completed at a pace averaging 17 miles per month. Reuters selected the projects for comparison because, like Rover and Mariner, they cost more than $1.5 billion, stretched at least 150 miles and were under construction at the same time.
Construction on both Energy Transfer pipelines was ultimately slowed when state and federal regulators ordered numerous work stoppages after permit violations. Energy Transfer completed the last two sections of Rover in November and said it expects to put Mariner East 2 in service soon.
In February, Pennsylvania fined the company $12.6 million for environmental damage, including the discharge of drilling fluids into state waters without a permit. After further problems, including the sinkholes, a state judge in May ordered work halted on Mariner East 2.
Administrative Law Judge Elizabeth Barnes wrote that Energy Transfer’s Sunoco unit “made deliberate managerial decisions to proceed in what appears to be a rushed manner in an apparent prioritization of profit over the best engineering.”
While pipeline construction schedules vary, the planned timelines for Rover and Mariner were ambitious, said Fred Jauss, partner at Dorsey & Whitney in Washington and a former attorney with the U.S. Federal Energy Regulatory Commission (FERC), which regulates interstate gas pipelines.
“They aren’t taking their time ... we’re all concerned about it,” said Pennsylvania State Senator John Rafferty, a Republican, referring to other state politicians, constituents and first responders.
Energy Transfer spokeswoman Lisa Dillinger told Reuters the schedules were “appropriate for the size, scope, and the number of contractors hired.”
Other companies that planned slower construction of comparable projects have finished mostly on schedule with almost no violations. Canadian energy company Enbridge Inc, for instance, recently finished a $2.6 billion, 255-mile pipeline - following a path similar to Rover through Ohio and Michigan - with just seven violations. Enbridge did not respond to a request for comment.
HAZARDOUS SPILLS
Energy Transfer, now one of the nation’s largest pipeline operators, encountered large protests led by Native American tribes and environmental activists over the route of its Dakota Access crude oil line in North Dakota in 2016 and has seen protests of Mariner East 2 in Pennsylvania, where opponents have highlighted its safety record on existing pipelines.
The company has had a relatively high incidence of hazardous liquid spills and other problems, according to a Reuters review of data from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA).
Energy Transfer’s Sunoco unit ranked third worst among all pipeline companies in average annual incidents between 2010 and 2017, according to the PHMSA data. In total, Energy Transfer and its affiliated companies released more than 41,000 barrels of hazardous liquids causing more than $100 million in property damage, PHMSA data shows.
Bibianna Dussling of Media, Pennsylvania, joined a group of activists protesting Mariner East after learning the project’s route would pass near her daughter’s elementary school.
“The violations are really meaningless to them,” she said. “You do so much to protect your children day-to-day, and to face something like this, that you feel is so much out of your hands.”
Energy Transfer’s Dillinger said incidents have been sharply reduced since the merger of Sunoco Logistics and Energy Transfer Partners into one company, Energy Transfer, in the spring of 2017. Incidents this year are “trending below industry average,” she said.
HISTORIC HOUSE DEMOLITION
The Rover pipeline attracted additional federal scrutiny when Energy Transfer demolished a historic house along its route.
After Energy Transfer bought the 1843 Stoneman house in Ohio, FERC staff in February 2016 required the firm to come up with a plan to prevent adverse effects on the property, according to a staff’s environmental report.
Instead, the company tore down the house in May 2016 without notifying FERC or the Ohio State Historic Preservation Office.
That led FERC to deny Energy Transfer a so-called blanket certificate that would have allowed the company to construct Rover with less oversight, noting the demolition convinced regulators the company “cannot be trusted” to comply with environmental regulations.
Energy Transfer did not comment on the denial but said in a statement that it had “resolved all outstanding issues” with the demolition and donated more than $4 million to the Ohio preservation office.
DAMAGED WETLANDS
Once Energy Transfer started building Rover, FERC and West Virginia regulators required the company to halt work on parts of the project after violations, including the release of an estimated 2 million gallons of drilling fluid into wetlands near the Tuscarawas River in Ohio in April 2017.
In Pennsylvania, Mariner East 2 has received more than 80 notices of violation from the state’s Department of Environmental Protection, mostly for accidental release of drilling fluids.
Drilling fluids can impair the natural flow of streams and rivers and harm an area’s ecosystem, said Lynda Farrell, executive director of the Pipeline Safety Coalition.
The Ohio Attorney General filed a lawsuit in November 2017 seeking about $2.6 million from Rover and some of the construction companies building the pipeline for the alleged illegal discharge of millions of gallons of drilling fluids into state waters, among other things. That lawsuit is ongoing.
Energy Transfer’s Dillinger said the company was “disappointed” that the Ohio AG sued after the company tried to resolve issues amicably and that it would continue cooperating with regulators.
“We continue to work closely with both state regulators to resolve any outstanding issues related to our construction,” she said.
At first glance, it seems that rising oil prices (33 percent growth in 2018) and low production costs can still generate petrodollars for Iran, even though its exports have declined by 40 percent to around 1.5 million barrels per day (mb/d) since the U.S. withdrew from the nuclear deal and announced the reimposition of sanctions in May.
In reality, however, Iran’s oil industry suffers heavily from financial shortfalls and continuing embargoes on technology which can cripple not only the oil industry, but eventually the whole economy. Oil constitutes 60 percent of Iran’s exports and a third of the government budget.
Washington allows the purchase of Iranian oil only through deposits in a special account that Iran can only use to purchase humanitarian goods, meaning Iran cannot use it’s oil revenues to revitalize the oil industry infrastructure and increase efficiency.
Investment and operating needs
Iran needs at least $20bn in annual investments in upstream (oil and gas exploration, development, and production) projects—of which 80 percent was expected to come from foreign partners in the absence of sanctions—to fulfill both employment plans and development projects.
The National Iranian Oil Company (NIOC), with 87,500 workers is responsible for the upstream sector. NIOC receives 14.5 percent of oil export revenues, but derives no revenue from domestic sales. Iran’s net oil export revenue was $55bn last year. This means NIOC's finances and investment plans will be hit hard by falling exports.
Another major problem is that 80 percent of Iran’s active oil fields are old and lose about 8-12 percent of their production capacity annually. The average oil flow from a single well in 1980s was 12,500 b/d, but now it has declined to one tenth of that figure. Four decades ago, Iran was producing above 5 mb/d of oil from 400 wells, but according to OPEC figures, it produced just 3.8 mb/d last year from 3,130 wells and has had to drill 216 new ones in that time.
Iran also has to re-inject about 30 billion cubic meters of gas into its oil fields to decelerate the production fall, meaning a significant increase in production costs.
If the low oil production cost mentioned earlier can offer a glimmer of hope to Iran, other expenses cancel out that advantage.
The operating expenditures of Iran’s oil and gas industry are also very high. According to official figures, the value of Iran’s oil and gas industry facilities and properties is about $400 billion, and about $20 billion annually (2.5 times more than global average) is needed for maintaining and upgrading the aging facilities.
Then there are the huge subsidies the government provides to domestic consumers. Iranians use 660 million barrels of oil and 215 billion cubic meters of gas annually, and the government is burdened with $45.1bn in fossil fuels consumption subsidies (equal to 10 percent of GDP) last year, about 55 percent more than in 2016. This is a built in shortcoming in Iran’s hybrid economy of heavy state ownership and a weak private sector.
Human resource challenge
Iran’s Oil Minister Bijan Zanganeh said in September 2017 that during Mahmoud Ahmadinejad’s presidency (2005-2013), the number of Oil Ministry employees tripled to 220,000. These numbers have since decreased, but pensions are still due to retirees. The NIOC has always guaranteed good pensions to its employees.
According to official figures, the number of retired workers is currently about 85,000, with an average of 56 million rials ($1,100) pension per month based on the official government exchange rate.
According to unions, the average oil worker salary is about 80 million rials ($530 based on a free market exchange rate). While this is still considered a good salary in Iran, many professional oil and gas workers have been leaving the country to work in Gulf states since Iran’s currency began to nosedive earlier this year.
The Iranian government had planned to create at least 600-700 thousand new jobs on the back of foreign investment in oil, gas, and petrochemical projects, but those plans have been scrapped due to sanctions, and now layoffs are imminent because of the declining production and closing of some fields.
https://en.radiofarda.com/a/the-future-of-iran-s-oil-and-gas-sector/29587566.html
China's natural gas apparent consumption leapt by 15.3% from the same period last year to 23.17 billion cubic meters in October this year, as end users ratcheted up stock replenishment.
The October output of natural gas rose 7.5% on year to 13.4 cubic meters.
China imported 10.07 billion cubic meters of natural gas during October ramping up 25.6 compared to a year ago.
Russian gas giant Gazprom may pay a double-digit dividend on its 2018 results compared to 8.04 rubles per share on its 2017 profit, Interfax cites company’s Deputy Chief Executive Officer Andrei Kruglov as saying on Wednesday.
“Dividends for 2018 will be higher, at least the management board will propose to raise the dividends,” he said, according to Interfax.
Commodity trading company Vitol signed a binding heads of agreement with the Malaysian energy giant Petronas for a long-term LNG sale and purchase deal.
Under the terms of the agreement the LNG supply to Vitol commencing in 2024 will be approximately up to 0.8 million tonnes per annum for a period of up to 15 years on both delivered ex-ship (DES) and free on board (FOB) basis, Vitol said in its statement.
The primary supply to Vitol will come from LNG Canada as well as from other Petronas’ global LNG supply portfolio.
Shell-led LNG Canada is located in Kitimat, British Columbia, Canada with a planned initial export capacity of 14 million tonnes per annum (mtpa) of LNG from two liquefaction trains, with the potential to expand to four trains in the future.
Shell and its partners reached the final investment decision on the project at the beginning of October.
Petronas joined the venture by acquiring a 25 percent stake in the project from Shell.
Speaking of the deal with Petronas, Vitol’s head of LNG, Pablo Galante Escobar, said it will further strengthen the company’s ability to respond to market demands noting that Vitol is eyeing long-term development of the LNG market towards becoming a more tradeable commodity.
https://www.lngworldnews.com/vitol-inks-lng-supply-deal-with-petronas/
Asian spot prices for liquefied natural gas (LNG) continued their downward spiral this week, falling to a four-month low as demand from top buyers Japan and China failed to materialize amid ample inventory.
Spot prices for January delivery in North Asia were estimated at about $9.80 per million British thermal units (mmBtu), down 20 cents from the previous week, while spot prices for cargoes delivered in February were estimated at about $9.70 to 9.80 per mmBtu, according to trade sources.
The market structure has flipped into a backwardated one, where prices for cargoes loading in the current month are higher than those loading in the forward months, making storage of the super-chilled fuel uneconomical.
Several of the tankers storing LNG off Singapore and Malaysia waters recently appear to be on the move, likely prompted by the change in market structure, traders said.
Demand from China, the world’s second-largest LNG importer, appears to be tepid with top supplier China National Offshore Oil Corp (CNOOC) offering to sell cargoes for January, traders added.
“The three oil majors’ storage tanks are very full and so far, north China is not cold,” a China-based LNG trader said referring to natural gas storage tanks of CNOOC, Sinopec and CNPC.
Industrial gas demand in North China is showing signs of a sharp slowdown as small manufacturers shut their doors or buy less gas, unable to cope with a drop-off in export orders and costs related to Beijing’s pollution control and reform measures, Reuters reported earlier this month.
Natural gas inventory levels in Japan and South Korea are still high, trade sources said.
“There is lots of LNG in Europe too. I expect prices to fall further,” an European trader said.
“China and South Korea have taken more cargoes than they expected they would need. Singapore stocks are also full.”
TENDERS AND DEALS
Indian Oil Corp likely bought two LNG cargoes on a delivered ex-ship basis into Gujarat between Jan. 7 and Jan. 14, and from Jan. 21 to Jan. 28 from trader Glencore at close to $9 per mmBtu, traders said, though the deal could not immediately be confirmed.
Gail India is proposing to swap three LNG cargoes across the first quarter of next year, trade sources said. Gail is offering a cargo a month from Cove Point for loading in the first quarter of next year in exchange for corresponding deliveries to India, one of the traders said.
Abu Dhabi National Oil Co (ADNOC), Angola LNG and Nigeria LNG offered cargoes this week, adding to the glut.
Britain’s Drax has started a pilot project to capture and store carbon dioxide emissions at its biomass plant, the first of its kind in Europe, Drax said on Monday.
Carbon capture and storage (CCS) involves the capture of emissions from power plants and industry to allow them to be stored underground or compressed in containers to be used for industrial applications such as making drinks fizzy.
The technology is also likely to be needed to help limit a rise in global temperatures at 1.5 degrees Celsius, according to a recent U.N. report.
Drax said using the technology at the plant in North Yorkshire, England, that burns biomass - wood pellets, often made from compressed sawdust – could enable the company to operate the world’s first carbon negative power station.
When coupled with CCS, the overall process of generating electricity from biomass removes more carbon dioxide from the atmosphere than it releases, the company said.
“If successful, the six-month pilot project will capture a ton of CO2 (carbon dioxide) a day from the gases produced when renewable power is generated,” Drax said in a statement.
Drax said the CO2 will initially be stored on site but that eventually it will seek to find a use for the gas, such as in the drinks industry which earlier this year was hit with a CO2 shortage.
Britain has a target to cut its greenhouse gas emissions by 80 percent compared with 1990 levels by 2050, but has asked its climate change experts to advise on whether it should set a date to meet a net zero emissions target.
A report by the United Nations’ Intergovernmental Panel on Climate Change in October warned not meeting the goal to limit rising temperatures at 1.5 degrees would mean huge changes to the world such as rising sea levels, life-threatening heat and loss of species.
Collaborate to Innovate 2018
Category: Energy and environment
Winner: Balanced Energy Network
Partners: ICAX Ltd; London South Bank University (LSBU); Upside Energy; Origen Power; Cranfield University; Mixergy
A system for decarbonising heating by sharing energy between buildings and using heat pumps is under trial in London
Intended to create and develop a new type of heating network described as an “Internet for heat”, that is currently reaching the end of a 27-month program funded by Innovate UK, BEN is part of an effort to decarbonise heating, which accounted for over 30% of the UK’s total carbon emissions in 2016. The government describes this effort as the most difficult policy and technical challenge in meeting carbon reduction targets, and in 2017 a requirement was set to supply 40TW hours of heat through low carbon networks by 2030, and 10TW hours by 2020. As some 80% of homes built today will still be around in 2050 the project was set up both to be suitable for installation in new-build housing and to retrofit to existing buildings.
The members of the collaboration team are seeking to demonstrate a concept for heat sharing known as a Cold Water Heat Network (CWHN), which is suitable for delivering heat from a new type of advanced heat pump operating at a normal heating circuit temperature at 80°C, alongside existing gas boilers. The CWHN is intended to be able to expand organically and link piecemeal across a city, and is linked to large-scale seasonal thermal storage from a natural aquifer and shorter term high-temperature storage in advanced water stores; all of these are to be capable of operating under control of a cloud-based demand-side response aggregator.
The CWHN was developed by ICAX, which is acting as the coordinator of the project; it also designed and developed a new type of high-temperature pump which is central to the concept. LSBU, meanwhile, is acting as the host site for an experimental network, while also providing system modelling and assessment of the network. Upside Energy provided demand side management analysis and cloud-based control of the electrical elements of the system; Mixergy, designed and developed the thermal storage cylinders; and Origen Power developed a device called a fuel cell calciner in partnership with Cranfield University, which enables electricity to be generated in a way that removes carbon dioxide from the atmosphere.
Put simply, the heat sharing network works by transferring warmth via piping circuits between buildings at near ground temperature, and recovering it via heat pumps in each building. These heat pumps are designed to replace gas boilers in existing buildings without the need to replace existing heat distribution systems.
The advantages of this type of system over conventional CHP (combined heat and power) district heating systems include integration of diverse heating systems through the recovery of low-grade waste heat; delivery of simultaneous heating and cooling, and reduction installation costs through making use of the existing infrastructure. When builders require cooling the heat can be released into the district circuit to warm those buildings that need it. The result is a flexible network which advantages both those releasing heat and those extracting it. Built into the system is equipment to exchange information about sources and needs for heating and cooling that allows this flexible use of the available energy.
“There are tremendous energy efficiency gains in heat networks, and we’ve known this for a long time,” says Aaron Gillich, senior lecturer in energy and building services engineering at LSBU. But there are significant engineering challenges to establishing such networks, he adds, not least their size. “These things are big. We have to plan them decades in advance, we have to know what demand is going to be, who the clients are going to be. The long-term legal issues of clients and suppliers become very tricky to plan that far in advance.”
One difficulty, Gillich says, is that traditional systems only do heating; the UK is a very heating oriented country, but with climate change we may have to think more about limiting summertime overheating. The use of heat pumps in the system represent the electrification of heating, he says, a vital component in decarbonisation at their power can come from low carbon sources. At LSBU, Gillich explains, the heat pump system is linked to borehole thermal storage, with two 100m bores drilled into the chalk aquifer by drilling specialist TFGI from where water can be drawn when needed at around 15°C to regulate temperature of the loop. “We haven’t really done this in the UK yet for some reason,” he says. “There are boreholes serving individual buildings, but they haven’t been linked into networks.”
The other essential component of the system is demand-side response, Gillich said. This is analogous to a battery management system in the electrical grid, he explained: it turns on charging and discharging when needed to balance the entire system; in this case it shuttles heat between buildings, dumping it into 10,000l hot water storage tanks when necessary. The fuel cell calciner component provides a non-intermittent way of generating electricity to power the heat pumps.
The calciner works by feeding natural gas into a standard fuel cell to generate electricity. This process generates heat, and this is used to break limestone down into lime (CaO) and pure CO2 which can be used or stored underground. The line produced can also be used in industrial processes, during which it absorbs carbon dioxide and is converted back into calcium carbonate – the original limestone. Overall, the process is carbon negative, absorbing 800g of carbon for every kilowatt hour of electricity generated as opposed to releasing 400g of carbon dioxide for every kilowatt hour with conventional combustion technologies. Origen Power’s Tim Kruger suggests using the lime to counter ocean acidification. “You absorb about twice as much carbon dioxide when you add it to seawater as when you use it industrially.”
The project is already reaping rewards for the partners. ICAX and LSBU have won two further collaborative R&D programs and are collaborating on a further R&D proposal; Origen has won a major further R&D award and is working on proposals with both ICAX and LSBU; Upside and Mixergy have also won an R&D award. Commercial gains have also been forthcoming for ICAX, Upside, Mixergy and Origen.
https://www.theengineer.co.uk/c2i-2018-balanced-energy-network-ben/
Canadian fertilizer giant Nutrien will auction its 23.77 percent share in Chile´s SQM on Dec. 3, the Chilean stock exchange said on Wednesday, a final step toward completing the sale of a coveted stake in the world´s No. 2 lithium producer to China´s Tianqi.
In a statement, the local stock exchange said the minimum bid would be set at $65 per share, for a total package price of $4.066 billion.
China’s Tianqi has agreed to purchase the shares. The company struck a deal earlier this year to buy nearly a fourth of SQM from Nutrien, which must offload the stake to meet regulatory commitments after it was formed in January by the merger of Agrium and Potash Corp of Saskatchewan.
Tianqi’s interest in the Chilean lithium producer comes as Beijing is aggressively promoting electric vehicles to combat air pollution and help China’s domestic carmakers leapfrog the combustion engine to build global brands.
Lithium is a key ingredient in the batteries that power everything from cellphones to electric vehicles.
The deal to purchase the shares from Nutrien has overcome repeated legal challenges in Chile.
Chilean authorities initially expressed concerns that a tie-up between Tianqi and SQM would give the Chinese company control of 70 percent of the global lithium market and unprecedented pricing power.
Tianqi, through Talison Lithium which it controls, is also in a joint venture with SQM´s top competitor, No. 1 lithium producer Albemarle Corp in Australia, where they own the world’s biggest lithium mine, Greenbushes.
But a Chilean antitrust court blessed the transaction, placing conditions on the sale that limit Tianqi´s access to SQM business secrets and sensitive information.
Several groups, including SQM itself, filed appeals against the antitrust court’s decision to authorize the deal, but each was struck down, allowing the sale to proceed.
The country´s Constitutional Court in late October also rejected a last-ditch lawsuit by SQM majority shareholder Julio Ponce Lerou to overturn the antitrust court´s decision.
Nutrien has said it plans to use proceeds from the sale of stakes in SQM and two other companies in part to expand its network of farm retail stores in the United States, and to establish a network in Brazil.
Wind turbine maker Vestas sees U.S. demand peaking in 2020 as government incentives, which have spurred investments in the sector, are phased out.
The Danish company is the turbine maker most exposed to the U.S. market, where it competes with General Electric and Siemens Gamesa.
Strong interest from utilities looking to replace retiring coal assets and big companies looking to buy renewable power will ensure U.S. demand does not fall off a cliff, as some analysts have predicted, Vestas’ North American chief said.
“There’s no such thing as a cliff,” Chris Brown said at the firm’s capital markets day on Thursday.
“I think that 2020 is going to be the peak of where the demand is and you’re going to see it fall off a little bit as you lose the PTC (production tax credit). And then you’re probably going to see it come back,” he later told Reuters.
The PTC scheme has been critical to enabling wind projects to compete with fossil fuel plants but will start being gradually phased out from 2020.
Brown pointed to 22 gigawatt (GW) of unmet demand by 2030 from so-called RE100 companies, which is an alliance of firms including Goldman Sachs, Walmart and Starbucks that aims to get 100 percent of electricity from renewable sources to combat climate change.
Another 11 GW of unmet demand comes from utilities across the United States looking to replace coal plants with new wind generation, Brown added.
Russian oil producer Lukoil and Italy's Eni signed an agreement on the mutual purchase of participation interests in Blocks 10, 12 and 14 on the Mexican shelf in the shallow waters of the Gulf of Mexico, according to Russian company’s statement on Tuesday.
In line with the agreement, Lukoil will assign a 40 percent stake in Block 12 to Eni while remaining a project operator with a 60 percent interest.
In turn, Eni will assign a 20 percent share in Block 10 and 20 percent in Block 14 to Lukoil, but will act as the project operator for both projects.
Blocks 10, 12 and 14 are located in the Sureste Basin.
The agreement enables Lukoil to expand its portfolio in the region, diversify risks and build up competences in the exploration area, the statement said.
A mandatory condition for completion of the deals is to obtain approval from the National Hydrocarbons Commission of Mexico, according to the statement.
In 2017, following the first phase of the second licensing round in Mexico, Lukoil and Eni were awarded the licenses for the blocks.
In March 2018, the outcome of the first phase of the third licensing round in Mexico saw both companies awarded rights to Block 28 in the Sureste Basin. The Italian company was awarded a 75 percent stake and became the operator while Lukoil received a 25 percent interest.
(Anadolu Agency)
https://www.iene.eu/lukoil-eni-sign-offshore-mexico-exploration-block-deal-p4695.html
Global miner Rio Tinto Ltd said on Monday it will sell its entire stake in Rössing Uranium Ltd to China National Uranium Corp Ltd for up to $106.5 million.
The sale of the 68.62 per cent stake in Rössing Uranium Ltd, which owns the Rössing mine in Namibia, ends a period of extensive strategic assessment, the miner said in a statement.
“The sale of our interest in Rössing once again demonstrates our commitment to strengthening our portfolio and focussing on our core assets,” Rio Tinto Chief Executive Jean-Sébastien Jacques said.
The deal is subject to certain conditions, including approval by the Namibian Competition Commission.
Americans can now taste the exquisite organic rambutan harvested in Honduran lands, as Honduras has now exported its first container of organic rambutan to the United States market.
The country was able to ship the fruit thanks to the good agricultural practices used in its production and the registry of the farms La Caridad and the Processing Plant Abel, located in the village Los Achiotes of the municipality of Santa Cruz de Yojoa, Cortes, northern Honduras.
Jose Isaias Martinez, the owner of the farm and processing plant, said he was happy to make this first export as he had worked hard for a long time to achieve that goal.
"The fruit has had good acceptance, as these product was unavailable there and there are many supermarkets that demand organic products. We are taking advantage of this opportunity," he said.
Martinez said that they were sending rambutan in small amounts, as each box contained five pounds and they are only sending it depending on the demand of the buyer.
He also said that they grew different varieties of rambutan in the farm, such as the Hawaiian rambutan, R134, R164, and R152 varieties.
The price of organic rambutan is much higher than the conventional one in the international market, which demands a high quality product.
The National Service for Agrifood Health and Safety (Senasa), a unit attached to the Secretariat of Agriculture and Livestock (SAG), participated in the sanitary registration process to guarantee this fruit complied with all the requirements to be consumed.
The rambutan is known among Hondurans as licha. It was introduced to Honduras in 1990 and has become one of the most popular fruits on the market in recent years.
Source: proceso.hn
http://www.freshplaza.com/article/9040022/americans-enjoy-honduran-organic-rambutan/
Argentina loads up on cheap U.S. soybeans
A ship named the Torrent is nearing the end of a 5,000-mile trip carrying soybeans from the U.S. Great Lakes to Argentina - a journey that only makes economic sense because of the U.S.-China trade war.
The ship is scheduled to dock in the Rosario grains hub on Dec. 4, days after the leaders of the world’s two largest economies, U.S. President Donald Trump and Chinese counterpart Xi Jinping, hold high-stakes trade talks in Buenos Aires.
They will meet on the sidelines of a Group of 20 nations summit and are expected to discuss how to roll back tit-for-tat tariffs - covering goods worth hundreds of billions of dollars - that have skewed global trade flows.
The Torrent’s 20,000-tonne soybean cargo is one such distortion, and just one of 14 ships the Argentine soy crusher Vicentin has lined up to import U.S. soybeans, according to port data reviewed by Reuters. The previously unreported shipments are among the first significant Argentine purchases from the United States in two decades, according to Vicentin’s broker and port data, as the nation’s government and industry moves to capitalize on the tumult of the U.S.-China conflict.
Argentina - one of the world’s top soybean exporters, and the top exporter of processed meal and oil - usually has no reason to import beans. But this year, the South American nation has raced to the top of the list of U.S. soybean importers because the prices of U.S. beans have fallen by 15 percent since late May, when China first threatened tariffs on them.
“One of the consequences of the trade war is that U.S. beans have to find a new home,” said Thomas Hinrichsen, president of Buenos Aires-based brokerage J.J. Hinrichsen SA, which cut the deals for Vicentin. “You are in the money to ship cheaper U.S. beans into efficient crushing plants in Argentina.”
Beyond price, Argentina needs U.S. beans to feed its massive soy-crushing industry after a punishing drought. What is left of the nation’s own crops are going to feed pigs in China - where buyers are paying a premium for South American soybeans to fill the gap left by virtually halted imports from the United States.
“The combination of the drought in Argentina and the soy glut in the United States caused by the trade conflict has directed U.S. soybeans toward Argentina,” said Guillermo Wade, manager of Argentina’s Port and Maritime Activities Chamber. “They are being used to keep our crushers working while freeing Argentine soybeans to go to China.”
Argentina’s International Trade Secretary, Marisa Bircher, told Reuters Argentina was also seeking to export more soy and byproducts to India and Southeast Asia. Argentina’s current top soymeal buyers include the European Union, Vietnam and Indonesia.
“Clearly, this U.S.-China conflict is generating a change in the grain trade,” Bircher said.
The grains powerhouse is even negotiating a license to export soymeal directly to China - which has until now only imported Argentine beans for crushing in China.
“We have a very good relationship with China... we are negotiating to open the market to soybean meal before the end of the year,” said Bircher.
Argentina collects export taxes from companies on agricultural goods like soy, corn and wheat shipments, providing it with much needed revenue in the midst of an economic crisis.
The country, which is in the global spotlight as G20 host, has good relations with both the United States and China and has sought deals with both in recent weeks as it seeks to cash in on opportunities that have arisen due to the trade war.
Besides seeking the soymeal deal with China, it has negotiated a deal to export beef to the United States for the first time in 17 years.
The Torrent, which loaded a month ago at a Toledo, Ohio facility operated by Ohio-based The Andersons, is one of 43 U.S. soybean ships that have sailed for Argentina since July and the second to sail from the Great Lakes region, on the other side of the world from the South American country. Just nine have sailed for China.
A year ago, 282 soybean cargo vessels were loaded in the United States bound for China in that time and none to Argentina, according to U.S. Department of Agriculture data.
‘UNNATURAL DESTINATIONS’
China’s soybean tariffs, which have virtually halted purchases of U.S. soybeans that last year totaled $12 billion, came in retaliation for Trump’s duties on Chinese steel and aluminium. That has left U.S. farmers and grains merchants with huge inventories of soybeans because China typically buys 60 percent of U.S. soy exports.
Grains companies have had to adapt quickly to keep massive volumes of perishable goods moving at the lowest possible cost.
Bulk grain terminals in the U.S. Pacific Northwest, the most direct outlet for Asia-bound shipments, are handling a quarter of their normal autumn soybean volume. The beans that are hauled there by rail are instead heading east to Great Lakes terminals or south to Mexico or Gulf Coast ports bound for countries other than China.
“By shipping soybeans out of the U.S. to unnatural destinations - and moving Brazilian and Argentine soybeans in place of that into China when they should have come out of the U.S. West Coast - there’s an inherent logistics cost in this,” Soren Schroder, Chief Executive of global grain trader Bunge Ltd (BG.N) told Reuters in a recent interview.
The inefficiencies amount to “many, many millions” of dollars in new costs, borne by the whole industry, he said.
TARIFF ARBITRAGE
The changes have also presented opportunities for agricultural trading giants such as Bunge, Louis Dreyfus Company and Cargill Inc, who are making money processing cheaper U.S. soybeans in Argentina and Canada. They’re also selling those countries’ unprocessed beans at a premium to Chinese buyers who are struggling to replace the huge volume of soybeans they typically buy from the United States.
Nimble traders are reaping big profits, but the opportunities may be fleeting.
“Everyone’s getting on the ‘Make America Great’ Trump gravy train for soybeans from Canada,” said Dwight Gerling, president of Toronto-based DG Global, a Canadian exporter of soybeans by container.
On a delivered basis to China, Canadian soybeans were fetching a premium of up to $3 per bushel this fall over the Chicago futures price, more than double the premium U.S. soybeans make in export markets, he said.
DG Global has increased soybean sales volumes by 80 percent year to date, due entirely to the U.S.-China trade fight, Gerling said. DG buys cheap U.S. soybeans to ship to its regular southeast Asian buyers - who would normally buy Canadian soy - and this autumn sent its Canadian soybeans to China, a new market for the company.
The sales to China have recently slowed, however, with winter shipping restrictions approaching on the Great Lakes, Gerling said. Chinese bids for Canadian soybeans are now only slightly higher than bids from other countries for American soybeans.
While companies are finding new ways to make money, U.S. farmers in the export-focused Dakotas are feeling the sting of the trade battle as prices at their local elevators for their newly harvested soybeans are the lowest in more than a decade.
The concern there and elsewhere among U.S. farmers is that the damage to their relationships with Chinese buyers - built up over three decades - will be difficult to repair even if Trump and Xi strike a deal in Buenos Aires.
“The Chinese can get soybeans from other places if we’re not a reliable supplier,” said Bob Metz, a fifth generation farmer in Peever, South Dakota. “They have 1.4 billion people to feed. They don’t want to be dependent on us.”
Canada-based Iamgold has a robust pipeline of development projects and is looking to bolster its credit facility to facilitate its growth strategy, president and CEO Steve Letwin said on Tuesday, after reporting lower third-quarter production and revenue.
The company, which operates mines in the Americas and Africa, is in advanced discussions with a syndicate of lenders to increase its existing credit facility from $250-million to $500-million to provide additional flexibility to execute its growth plans. The facility is expected to close before the end of the year.
Letwin said in a news release announcing the third-quarter results that Iamgold’s development projects were “looking more robust than ever”, listing several upcoming “growth catalysts”. These include an oxygen plant at the Burkina Faso-based Essakane mine to improve recoveries, forthcoming investment and construction decisions for the Senegal-based Boto project and the Canada-based Côté projects, as well as a production start at Saramacca, in Suriname, and a ramp-up to full production at Westwood, in Canada.
“The declaration of reserves at Saramacca, with the grade nearly double that of Rosebel's, drove Rosebel's reserves up 51% adding five years to the life of the mine,” he said.
Letwin also noted that shifting heap leach construction at Essakane until closer to the end of the mine life would free up capital for other high-value growth projects.
Commenting on the recent feasibility studies for the Côté and Boto projects, he said they showed increased reserves and significant improvements in project economics compared to earlier studies.
The company has applied for a mining concession for the 140 000 oz/y Boto project and expects a decision in the first half of 2019, after which an investment decision will follow.
A construction decision for Côté - a 70:30 joint venture between Iamgold and Sumitomo Metal Mining - is expected in the first half of 2019, with production to begin in mid-2021. The company last week unveiled the feasibility study results for the project, which is expected to produce 367 000 oz/y over a 16-year mine life in a base case scenario. An extended mine plan scenario adds two years to the base case mine pan and increases average production to 37 000 oz.
When compared with the prefeasibility study, the Côté feasibility study base case net present value (NPV) increases by 13% to $795-million and the extended mine plan NPV increases by 29% to $905-million. The base case has an internal rate of return (IRR) of 15.2%, with a payback period of 4.4 years and the second option has an IRR of 15.4%, with a similar payback period.
Both plans will require $1.15-billion in initial capital.
Meanwhile, Iamgold maintained its 2018 guidance of 850 000 oz to 900 000 oz at an all-in sustaining cost (AISC) of $990/oz to $1 070/oz, despite the third-quarter production falling to 208 000 oz – down 9 000 oz from the third quarter of 2017. AISC increased by $117/oz to $1 086/oz.
The production decrease was owing to lower throughput and head grades at Rosebel (8 000 oz) and Westwood (3 000 oz), as well as lower head grades at the joint ventures (1 000 oz), partially offset by higher head grades at Essakane (3 000 oz).
Attributable gold sales decreased by 8 000 oz to 202 000 oz, resulting in lower revenue of $244.8-million. The company posted a net loss of $9.5-million, or $0.02 a share, compared with net earnings of $30.8-million, or $0.07 a share, in the third quarter of 2017.
Its adjusted net loss amounted to $6.9-million, or $0.01 a share, compared with adjusted net earnings of $33.7-million, or $0.07 a share, in the prior-year quarter.
EganStreet Resources Ltd ( ) has hit bonanza gold grades in diamond drilling outside the current resource of its wholly-owned Rothsay Gold Project in Western Australia.
Assay results from the 16-hole resource extension program confirm that Rothsay’s high-grade mineralisation extends to the south and at depth on the Woodley’s and Woodley’s East shears, respectively.
Highlighted intersections include: 2 metres at 116.9 g/t gold from 264 metres, including 0.3 metres at 776 g/t; and 2.63 metres at 57.2 g/t from 185.1 metres, including 0.5 metres at 216 g/t and 0.48 metres at 66.3 g/t.
The results will be included in Rothsay’s upcoming revised mineral resource estimate.
EganStreet managing director Marc Ducler said the company was continuing to pursue opportunities to grow its gold inventory while also completing final-phase permitting and advancing funding discussions and pre-development activities.
He said: “The diamond drilling program targeting southern extensions of the two main gold-hosting structures, the Woodley’s and Woodley’s East shears, has been very successful.
“With all of the assay results now to hand, work will begin shortly on an updated mineral resource.”
The drilling program was designed to target the Woodley’s shear extension up-dip and to the south of an offset of the lode interpreted from magnetics.
A further 200 metres of strike has been added to the south of the known mineralisation, which will be confirmed with the mineral resource estimate.
Woodley’s East was tested outside its known mineralisation and the bonanza hit of 776 g/t indicates the mineralisation is high-grade and the ore body is open at depth.
Ducler added: “We are also about to commence a major new 5,000 reverse circulation (RC) drill program targeting mineralisation beneath the historical Orient open pits, where we believe there is excellent potential to define additional mineralised positions.
“Historical drilling completed in this area some 30 years ago returned spectacular intercepts of 2 metres at 84.12 g/t gold, including 1 metre at 145.9 g/t, and will be followed up as part of the impending drilling program.
“In the meantime, the permitting process is now entering its final stages with the last two applications for approval now submitted to the Department of Water and Environmental Regulation (DWER) and the WA Department of Mines, Industry Regulation and Safety (DMIRS).”
Drilling at Orient will initially consist of 65 RC holes.
DMIRS has approved EganStreet’s project management plan for Rothsay while both the mining proposal and works approval and licence application have been submitted to the DMIRS and DWER, respectively.
La Mancha Group plans to buy more underground gold mines in Africa and is ready to snap up mines that Barrick Gold (ABX.TO) and Randgold Resources (RRS.L) will sell after their merger, its billionaire chairman Naguib Sawiris said on Tuesday.
“(The Barrick disposals) might be in geographies where we are very strong and that makes sense for us,” Sawiris told reporters on the sidelines of the Mines and Money conference in London. “We can extend the mine lives.”
Sawiris said he was looking for mines with lives of at least 10 years and with output of 150,000 to 250,000 ounces per annum.
La Mancha is a private gold company with investments in Toronto-listed Endeavour Mining (EDV.TO), Australia’s Evolution Mining (EVN.AX) and in August bought a 30 percent stake in Ghana-focused Golden Star Resources (GSC.TO).
Golden Star will look for assets in east Africa and mainly Sudan, Sawiris said.
Canada’s Barrick has said it will sell some non-core assets following its $6.1 billion takeover of Africa-focused Randgold in a deal set to close on Jan. 1.
Sawiris said the mining industry still needed some consolidation even after the Randgold-Barrick deal which will create the world’s top gold producer.
“We believe today is the problem is the whole mining industry needs consolidation and the proof to that the two big ones decided to merge but what about the smaller ones,” Sawiris said.
“There is more sense and more urgency for the smaller mining companies to come together than for the bigger ones.”
Sawiris also said he could pursue a secondary listing for Endeavour Mining (EDV.TO) or one of the gold companies he plans to invest in Africa on the London Stock Exchange.
Sawiris said he would not work with Chinese companies in gaining a bigger footprint in Africa as China had “closed its borders” to investors.
Financial technology company Tradewind Markets has made its VaultChain metals-trading blockchain platform available for silver producers, building on the company's work with gold mining companies that began earlier this year.
One of the first clients of the new service, Tradewind says, is Japan’s Sumitomo Corporation Global (SCMI US Inc), but the company is confident there will be more miners using it in the near future.
“Our customer base has expressed strong interest in a digital silver solution to complement our gold products, making it a logical next step in our development,” Steve Lowe, head of business development at Tradewind says. “Users can now digitally trade and custody silver alongside their gold positions, and importantly, offer another compelling investment solution to their end clients.”
There are already examples of the use of blockchain in the mining industry, particularly in the diamond sector, which uses the technology to track the precious stones.
There are already examples of the use of blockchain in the mining industry, particularly in the diamond sector, which uses the technology to track the precious stones. But the application of the revolutionary technology behind cryptocurrency Bitcoin among gold and silver producers is not that clear.
“Blockchain technology is perfectly suited to the precious metals market,” Fraser Buchan, Tradewind co-founder tells MINING.com. “It is a secure and durable solution for maintaining title to hard assets — no one party can control access to, or tamper with, the records of ownership — and it allows the market to tap into all of the efficiencies that come along with digital trade execution and settlement,” he says.
According to Buchan, the fact that VaultChain supports different use cases and business models provides miners with an opportunity to execute sales with a diverse set of market participants.
“Using a blockchain allows parties to settle these transactions more securely and efficiently,” Buchan says. The platform allows users to run “smart contracts,” which are computer programs stored in a blockchain that automatically move digital assets between accounts when conditions encoded in it are met.
Tradewind was a finalist in Goldcorp’s Disrupt Mining competition in 2017. The gold producer later became a shareholder in the company.
VaultChain Silver is backed by the Royal Canadian Mint, and Tradewind plans to bring it to large banks that perform physical metal trading.
http://www.mining.com/tradewind-expands-vaultchain-metals-trading-blockchain-platform-silver/
In its latest Platinum Quarterly report, the World Platinum Investment Council (WPIC) revised its forecast for oversupply this year to 505,000 ounces from 295,000 ounces, blaming weak demand for platinum jewelery, and said 2019 would see a surplus of 455,000 ounces.d investors pushed demand from 8.5 million ounces in 2013 to an estimated 7.5 million ounces this year, said the WPIC, which is funded by platinum miners.
“Supply will grow (in 2019) but demand will grow even more, and reduce the surplus slightly,” said the WPIC’s head of research Trevor Raymond.
Platinum prices hit a 10-year low in August and are down 9 percent this year.
The market flipped from deep deficit earlier this decade to surplus as falling use by automakers, jewelers anPlatinum market set for big surpluses in 2018 and 2019: WPIC
The global platinum market will be oversupplied by around half a million ounces both this year and next, an industry report said on Wednesday, suggesting little respite for producers facing prices languishing near 10-year lows.
Raymond said the decline in demand from carmakers would slow next year, while jewelery demand would expand for the first time since 2014, and consumption by industry and investors would grow strongly, lifting total demand by 2 percent.
Demand from automakers — which embed platinum in emissions-reducing catalytic converters and account for around 40 percent of platinum use — will fall by 1 percent in 2019 after a 7 percent plunge this year as a decline in sales of diesel vehicles in Europe slows, the WPIC said.
Carmakers use both platinum and sister metal palladium in autocatalysts, but platinum is used more in diesel engines whose popularity plummeted after Volkswagen was found to have cheated emissions tests in 2015.
The WPIC said it assumed no significant substitution next year of palladium for platinum, which is trading at a roughly $300 discount to its sister metal after last year becoming cheaper than palladium for the first time since 2001.
Demand for platinum in jewelery will rise by 1 percent in 2019 after a 2 percent decline this year, the WPIC said.
Use in industry will increase by 4 percent in 2019 after an 8 percent rise this year and demand for platinum bars and coins for investment will double from 125,000 ounces this year.
On the supply side, the WPIC said higher output at mines in South Africa and North America and increased recycling would push supply up 2 percent in 2019 after a 1 percent fall this year.
It recorded cash operating margins of 90% from royalty and stream interests, "maintaining the highest margin in the metals and mining sector, generating $28.1 million in addition to a cash operating margin of $0.8 million from offtake interests," the company said.
It said it had earned 20,006 gold-equivalent ounces for the quarter and expected to meet its 2018 forecast of 77,500-82,500oz AuEq.
Osisko reported adjusted earnings of $5.7 million (US$4.3 million) or 4c per share, compared with 6c a year earlier, and declared its 17th consecutive dividend.
The fourth quarter dividend of 5c per share will be paid in January, or shareholders can opt into a dividend reinvestment plan at a 3% discount.
"With the payment of this dividend, we will have distributed approximatively C$78.5 million (US$60 million) since 2014," chair and CEO Sean Roosen said.
The company said it had $137.2 million (US$104 million) in cash and equivalents and $364.5 million (US$277 million) in equity investments at the end of September, and up to $364 million in available credit after repaying US$10 million into a revolving credit facility last month.
Roosen said Osisko had continued to increase its royalty and overall exposure to the most prospective exploration camps in Canada, while its investment in Falco Resources' Horne 5 project brought in "a new generation of assets that will become anchor assets".
"Osisko's performance during the first nine months of 2018 demonstrates its unique approach to investing in all areas of the mine development cycle and its dedication to creating its own high-return and high-margin investment opportunities, adding near, medium and long-term cash flow to its growth pipeline," Roosen said.
Osisko shares were worth above C$15 a year ago but lost 10c yesterday to close at $10.29, capitalising it at $1.6 billion.
Alumina output in Shandong province, the biggest alumina producer in China, registered 1.74 million mt in October, up 39.7% from October 2017, showed data from the National Bureau of Statistics on Monday November 19.
On a monthly basis, production dipped 5.2% in October. This brought overall production in the province during January-October to 17.84 million mt in, down 6% on the year.
Output for October in five major production provinces, including Shandong, Shanxi, Henan, Guangxi, and Guizhou, stood at 5.53 million mt, accounting for 97.9% of domestic total production that month.
In January-October, the five provinces produced some 54.57 million mt of alumina, and accounted for 96.4% of China’s overall output during the same period, according to data.
https://news.metal.com/newscontent/100856526/oct-alumina-output-in-shandong-rises-nearly-40-yoy/
Copper output in Democratic Republic of Congo rose 8.7% year on year through the first nine months of 2018 to 908 695 tonnes while cobalt production jumped 92.5% to 115 116 tonnes, the central bank said on Thursday.
Congo is Africa's top copper producer and the world's leading miner of cobalt, which is a key component in electric vehicles and other electronic products.
Gold production rose 20.2% over the same period to 28 064 kg, central bank data showed.
(Updates with closing prices, recasts) By Peter Hobson LONDON, Nov 7 (Reuters) - Zinc prices on Wednesday fell to a seven-week low on expectations that a supply crunch will ease. Benchmark zinc on the London Metal Exchange (LME) closed down 1.8 percent at $2,455 a tonne after touching $2,445, the lowest since Sept. 21. "Smelter margins in China are picking up and the expectation is that production is set to trend higher into year-end," said Deutsche Bank analyst Nick Snowdon. "There has been a big build in (zinc) concentrate stocks (in China) in the last quarter or so ... with treatment charges picking up and prices stabilising there's a clear incentive for smelters to ramp up output," he said. Prices of zinc, used to galvanise steel, fell 26 percent over June-August but have recovered from August's low of $2,283. China is the biggest producer and consumer of zinc. ZINC STOCKS: Headline inventories in the LME warehouse system continue to fall. At 134,750 tonnes they are close to a 10-year low of 131,775 tonnes reached in March. SPREAD: The premium for cash zinc over the three-month contract MZN0-3 at $47.50 has eased from highs around $60 in late October, but signals that shortages of nearby supply remain. DEFICIT: The roughly 13.5 million tonne global zinc market had a deficit of 292,000 tonnes in the first eight months of the year, the International Lead and Zinc Study Group (ILZSG) said. DOLLAR: Providing some support to metals prices was the dollar, which weakened after gains by the Democrats in U.S. elections cast doubt on further tax cuts. A lower dollar makes metals cheaper for buyers with other currencies. CHINA: Despite fears that a U.S.-China trade dispute will undermine China's economy, exports from the country are expected to have expanded at a healthy clip in October as businesses frontal orders before higher U.S. tariffs set in at the turn of the year, a Reuters poll showed. YUAN: In a sign that authorities may be stepping up interventions to keep the yuan from weakening, China's foreign exchange reserves fell more than expected to an 18-month low in October. CHINA ALUMINA: China's exports of aluminium raw material alumina last month were roughly equal to September's bumper volumes, the president of Aluminium Corp of China said. PRICES: LME copper closed down 0.1 percent at $6,153 a tonne, aluminium finished 1.7 percent higher at $1,984.50, lead rose 1 percent to $1,927.50, tin ended unchanged at $19,050 and nickel rose 0.4 percent to $11,820. (Additional reporting by Mai Nguyen; Editing by Adrian Croft and David Evans)
China smelters trim 2019 term copper concentrates buying amid spot TC/RCs at $90-$94/mt
Spot treatment and refining charges for imported copper concentrates for Chinese smelters stood at $90-$94/mt and 9-9.4 cents/lb in the week to November 24, unchanged from the week before, prompting some smelters to cut concentrate purchase volumes for 2019 as current spot fees are higher than 2019 term fees, Chinese industry sources said Monday.
Jiangxi Copper Corp in a weekly report said some smelters in China were opting to cut 2019 term concentrate purchase volumes, or delay inking term concentrate deals, as they could still get spot fees of over $90/mt and 9 cents/lb, which was higher than the 2019 term TC/RC benchmark.
Annual term TC/RCs have dipped for a fourth consecutive year, with Jiangxi Copper and Chilean miner Antofagasta inking the term fee for 2019 at $80.80/mt and 8.08 cents/lb, lower than 2018 rates of $82.25/mt and 8.225 cents/lb, according to Jiangxi Copper.
In 2014 and 2015, term fees were much higher at $97.35/mt and 9.735 cents/lb, and $107/mt and 10.7 cents/lb, respectively, S&P Global Platts reported earlier.
TC/RCs are the fees smelters charge miners for processing concentrates.
Shanghai-based Chinese brokerage Everbright Futures in its latest copper report said most smelters in China were unhappy with the 2019 annual term fee as $85/mt and 8.5 cents/lb was lowest they had wanted to accept.
It noted the 2019 term fee was $10/mt and 1 cent/lb less than the spot fee, as market players forecast copper smelting capacity growth in China to exceed that of its mined copper sector, resulting in a poorer 2019 term fee outcome.
Tongling Nonferrous Metals in its November copper report forecast spot concentrate supply to remain sufficient into Q1, citing a possible concentrate deal for a batch of clean ores with TC/RC offers of around $94/mt and 9.4 cents/lb for January shipment.
Jiangxi Copper similarly forecast China's Q4 copper concentrate supply to remain ample, keeping spot fees at high levels until at least year end.
China is forecast to add 780,000 mt/year of new copper smelting capacity in 2019 and 600,000 mt/year in 2020, Jiangxi Copper said, noting that market players were concerned with a possible conflict in future domestic copper smelting growth and concentrate demand.
China's mined copper output growth is lagging behind its smelting sector, with concentrate demand poised to exceed supply, according to Chinese industry sources.
China imported 1.57 million mt of copper ore and concentrate in October, down from 1.93 million mt in September, while imports over January-October totaled 16.558 million mt, up 19% year on year, latest General Administration of Customs data showed.
A hive of mine exploration activity is underway in a remote corner of Western Australia’s Great Sandy Desert, led by Rio Tinto Ltd , which has boosted its holdings 10-fold in the little explored Paterson province in the past year.
Rio’s interest in the area – flagged by its application for nearly 30 exploration licenses - has sparked a stampede into adjacent lots by other explorers, who see Rio’s aggressive activity as an indicator of a highly promising find.
Interest was further intensified by the global mining giant’s recent application to build an airstrip in Paterson - roughly halfway between Perth and Darwin, indicating it’s in for the long haul.
“The smoke signals are all telling us they have made a discovery but it remains to be seen ... whether they will consider it significant enough to go and release to the market,” said analyst James Wilson of broker Argonaut Securities in Perth.
Aerial photographs circulated in local media this month showed signs of a camp being set up and analysts said drill rigs they could identify suggested the miner was preparing for some very deep and expensive holes.
A spokesman for Rio Tinto said the miner typically does not comment on exploration.
Excitement about the region has been further fuelled by London-based explorer Greatland Gold which this month reported “world class” copper-gold drill results from its Havieron licence in the province.
Rio Tinto is also exploring Antipa Minerals’ Citadel project after agreeing to spend up to A$60 million ($43 million) to earn up to a 75 percent farm-in.
Lying east of the better-known Pilbara iron ore region, the Paterson province has long been recognised as an area prospective for copper. It hosts two of Australia’s biggest copper and gold mines, Telfer operated by Newcrest Mining , and Metals X Ltd’s Nifty.
However, sandy soil and the remote desert location have made exploration both difficult and expensive.
Renewed interest has come as miners have increased exploration spending following a commodity price recovery and as technological advances have opened the region’s potential.
“The thing that stopped people has been the sand dunes. As we are running out of places to look for mineralisation that is sticking out of the ground, the obvious place to start to look is underground,” said Lynda Burnett, managing director at Sipa Resources, which is active in the region.
“People are drilling better. There are other more experimental techniques, people are sampling the sand dunes and picking up trace elements of mineralisation, they are sampling plants,” said Burnett, who as a geologist first worked in the region in the 1980s.
Sipa Resources has stepped up its exploration in the Paterson region in the past three years and in August applied for more ground. It’s not the only one, as shown by an analysis of government data for Reuters by McMahon Mining Title Services, with unclaimed tenements now scarce.
Metalicity lodged nine permit applications in the first half of November, while Independence Group took a stake in exploration rights holder Encounter, at a 60 percent premium to its 20-day share price average mid month.
Iron ore miner Fortescue Metals Group, led by billionaire Andrew Forrest, is also exploring in the region, taking out six exploration permits in March and another six in June.
“There’s now absolutely no ground available. You’d struggle to find a square kilometre,” said McMahon principal Shannon McMahon.
A consortium of the Societe Miniere de Boke (SMB) and Singapore’s Winning Shipping signed an agreement on Monday with Guinea’s government to build the country’s first refinery of alumina, which is used to make aluminium.
The 1 million tonne per year refinery is part of a $3 billion project to develop Guinea’s bauxite industry, the largest in Africa.
The West African nation is home to about a third of the world’s bauxite reserves, and output of the aluminium ore more than doubled last year to about 50 million tonnes on the back of investments by aluminium giant Alcoa , Rio Tinto Alcan and private investment gorup Dadco.
But the country has no facilities to transform those reserves into higher-grade alumina, which can fetch higher prices on world markets.
In a statement on Monday, the consortium said it had signed three agreements with the Guinean government for construction of the project, which is due to start next year and is expected to be completed in 2022.
In addition to the refinery, the agreements include access to new mining areas and the construction of a 135 km (83.89 miles) railway line in a corridor connecting SMB’s bauxite mines in Boke to reserves in the northwestern region of Boffa.
Production is projected to reach 10 million tonnes in the first year of operations, rising to 20 million tonnes in 2023 and 30 million tonnes in 2024, said the statement.
The bauxite industry has taken on greater significance for the economy in Guinea, where the development of huge iron ore deposits in its forested interior stalled due to a slump in global commodities prices in 2014.
But the industry has been rocked by riots and strikes in the mining town of Boke over a perceived failure of the mining sector to raise living standards.
SMB - owned by Guinea, China’s Winning Shipping Ltd, Shandong Weiqiao and UMS International Ltd - lost between 1 million to 1.2 million tonnes of bauxite production following a nearly two-week strike in May this year.
Capstone Mining mulls selling stake in Chile-based copper-iron project
Canada's Capstone Mining is considering selling a portion of its large scale 70%-ownedSanto Domingo copper-iron project in Chile, as part of a strategic process kicked off today after the release of a positive technical report.
The Vancouver-based company said the project, is located 50 km southwest of Codelco's El Salvador copper mine, said the report reveals that Santo Domingo has an after-tax net present value of $1.03-billion and an internal rate of return of 21.8%.
“This positive technical report reconfirms the value of Santo Domingo as a desirable copper-iron-gold project that has an approved environmental impact assessment in a mining-friendly jurisdiction with local community support," Capstone president and CEO Darren Pylot said in the statement.
Construction at the copper-iron Santo Domingo project is expected to start in 2020.
Construction at the project, in which Korea Resources has a 30% interest, is expected to start in 2020. The technical report estimates that Santo Domingo would cost $1.51-billion to build, an 11% decrease from what stated in the feasibility study. That would be paid back in 2.8 years.
Over its almost 18-year mine life, the project is slated to produce an average of 134-million pounds a year of copper, 4.2-million tonnes a year of iron concentrates and 17,000 annual ounces of gold.
In the meantime, Capstone is studying the potential of producing cobalt as a by-product and planning additional metallurgical work with the goal of improving gold recoveries.
The company is also considering the potential to utilize autonomous equipment and infrastructure sharing.
Capstone has two producing copper mines — the Pinto Valley Mine in Arizona, and the Cozamin Mine in Mexico.
http://www.mining.com/capstone-mining-mulls-selling-stake-chile-based-copper-iron-project/
Aurubis AG, Europe’s biggest copper smelter, warned on Monday it would miss analysts’ profit forecasts for its 2018-19 financial year due to shutdowns at its main smelters, sending its shares down as much as 9 percent.
The company said it expected operating earnings before taxes (EBT) for the year that started on Oct. 1, 2018, to be “moderately below” the previous year.
“This means a decrease of between 5.1 and 15 percent,” it said.
On Nov. 1, Aurubis announced a preliminary operating EBT of 328 million euros ($372.4 million) for 2017-18.
The company said analysts had been expecting 2018-19 operating EBT of around 330 million euros.
“The main reasons for this deviation are various unscheduled shutdowns at the Hamburg, Luenen, and Pirdop plants in the first quarter of fiscal year 2018/19, which is currently underway,” it said.
Aurubis shares were down 8.9 percent at 1500 GMT.
The company said fourth-quarter 2017-18 operating profit fell by 28 percent, blaming unscheduled maintenance shutdowns at its sites in Hamburg and Luenen.
Aurubis, in which German steelmaker Salzgitter owns a fifth, is scheduled to release full 2017-18 results on Dec. 11.
BHP Group has identified a potential new iron oxide, copper and gold mineralized system near its Olympic Dam operations in South Australia as part of a copper exploration program, the miner said on Tuesday.
It said in a statement that the project was still in its infancy and that it was planning a further drilling program, slated to commence in early 2019.
The project is in a copper-rich region between the company’s Olympic Dam mine and Oz Minerals’ Carrapateena project. Copper is a major point of focus for BHP.
BHP’s announcement coincides with investor excitement over a potential copper find by its arch rival Rio Tinto in Western Australia. Rio Tinto has not commented on reports of the WA find.
RIO DE JANEIRO (Reuters) - A federal court in Brazil once again upheld a decision by a state court forcing aluminium-maker Norsk Hydro to run its Alunorte alumina refinery, the world’s largest, at half capacity, state prosecutors said on Wednesday.
The decision, made on Tuesday, is part of a months-long environmental dispute with Brazilian authorities, after the metals maker admitted to making unlicensed emissions of untreated water during severe rains in February.
As a result, the company was ordered to slash output by half at the refinery, located in the Brazilian Amazonian state of Para.
The federal court also upheld a ban on the company using a second waste deposit area near the plant, state prosecutors said in a statement on Wednesday. A violation of either measure would result in a fine of 1 million reais ($267,465.50) per day, prosecutors added.
“It’s our understanding that this is a necessary procedural step the court must take,” a Norsk Hydro spokesman said. “It ratifies a decision from a lower court, which is required before a potential further processing of the case, but we don’t know whether they plan to take any further steps.”
A federal judge already upheld the state court decision in February forcing Norsk Hydro to cut output.
At full capacity the plant can produce some 6.4 million tonnes of alumina, or 10 percent of the world’s capacity outside China. Alunorte transforms bauxite into alumina, which is turned into aluminum at huge smelters.
Alunorte’s output, enough to produce more than 3 million tonnes of aluminum per year, is sold to metal plants around the world, including Hydro’s own facilities in Norway and Brazil.
($1 = 3.7388 reais)
Global mining group Anglo American has refined its copper production forecast for its mines in Chile, affirming a 660 000 t/y forecast for 2018 and announcing new targets for the following three years.
The company raised the bottom range of its 2019 guidance to 630 000 t, from 600 000 t, while keeping the top-end at 660 000 t.
For 2020, the forecast increased to between 620 000 t and 680 000 t, from 600 000 t to 660 000 t previously and a new guidance of 590 000 t to 650 000 t has been set for 2021.
At the same time, Anglo American also announced a lower unit cost guidance of 140 c/lb for 2018, compared with 145 c/lb previously, and 135c/lb to 140c/lb for 2019.
Anglo American owns the Los Bronces and Collahuasi mines, in Chile, and earlier this year also started construction of the $5-billion Quellaveco mine, in Peru. The Quellaveco mine, in which Mitsubishi has a stake, is forecast to start production in 2022, producing 300 000 t/y of copper equivalent at a cash cost of $1.05/lb of copper.
The group, which is hosting an analyst and investor visit to its South American operations this week, stated on Tuesday that it would aim to produce one-million tonnes a year of copper in the medium term and said that it was confident that it could meet that target through expansions at Quellaveco and other organic growth opportunities.
In a news release, Anglo American CEO Mark Cutifani said that he expected the supply of copper to become constrained in the years ahead, citing the key role that the metal played in the renewable energy and electric vehicle markets.
Russian businessman Vladimir Potanin plans to appeal a London court decision to block him from buying shares in mining company Norilsk Nickel (GMKN.MM) from fellow investor Roman Abramovich, representatives at Potanin’s investment firm said on Tuesday.
The ruling, taken in June, was considered to be advantageous for Russian tycoon Oleg Deripaska, who controls aluminum giant Rusal (0486.HK), and has long been at loggerheads with Potanin over control of Norilsk Nickel.
He wanted to stop Abramovich, owner of England’s Chelsea soccer club, from selling shares in the company to Potanin, saying that would violate a 2012 shareholder agreement.
Representatives of Interros, which manages Potanin’s assets, said they had filed a request together with Abramovich’s investment vehicle Crispian, to be allowed to appeal the decision.
“Today the judge satisfied our request,” Interros said. “Within 21 days after receipt of the court decision we have to submit our appeal to London’s Court of Appeal.”
Rusal, which holds a 27.8 percent stake in Nornickel, declined to comment. A representative for Abramovich did not respond to requests for comment.
In September, Potanin returned a 2 percent stake in Nornickel to Abramovich and his partners, that he had previously bought from them for about $800 million - a move which had increased his holding in the miner to 32.9 percent.
He had previously promised to return the stake to Abramovich if the London court ruled against the deal.
Deripaska and Potanin have battled over control of Nornickel ever since Rusal, the world’s largest aluminum producer outside China, bought a stake in the miner just before the 2008 global financial crash.
Abramovich stepped in as a “white knight” minority shareholder in 2012 to act as a buffer between Potanin and Deripaska.
Mitsubishi ousts Ghosn as chairman
The long-running conflict was overshadowed in April this year by U.S. sanctions imposed against Deripaska and some of his companies, including Rusal.
Nornickel competes with Brazil’s Vale for the rank of the world’s top nickel producer and is also the world’s largest palladium producer.
A global aluminium producer has offered Japanese buyers a premium of $91 per tonne for primary metal shipments during the January to March quarter, down 12 percent from the current quarter, two sources directly involved in pricing talks said on Wednesday.
Japan is Asia’s biggest aluminium importer and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.
For the October-December quarter, Japanese buyers agreed to pay a premium of $103 per tonne PREM-ALUM-JP, down 22 percent from the prior quarter to reflect a slide in Asian spot premiums amid ample supply.
The workers union at BHP’s Spence copper mine in Chile started a strike after layoffs earlier this week, the union leader said on Wednesday, shutting down operations at the northern Chilean deposit.
Union President Ronald Salcedo told Reuters that about 50 workers had been laid off, in addition to eight supervisors, raising safety concerns for the mine’s remaining workers and prompting the shutdown.
“None of our people are working, which means the entire operation is shut down at this time,” Salcedo told Reuters.
BHP said in a statement that it was “implementing an optimization plan that would affect 57 workers” but did not reply to requests for comment about the walk-off.
The Spence deposit near the Chilean coastal city of Antofagasta is BHP’s second largest in Chile, after its sprawling Escondida copper mine, the world’s largest.
BHP has said it will spend nearly $2.5 billion to extend the life of the Spence deposit by more than 50 years, creating up to 5,000 jobs and bringing new output online in 2021.
“These layoffs are strange given that costs are under control at the mine and even more so given that the company is pushing the upgrade project, which should mean contracting more workers,” Salcedo said.
Spence produced 198,600 tonnes of copper in 2017.
First there was IQ, or intelligence quotient, to test how clever we are. Then came EQ, for emotional intelligence, to test how well we engage with the world.
Now, Mercedes-Benz is introducing a new form of EQ, for electric intelligence, or how well our cars prepare us for the future.
That will be the branding for a new range of vehicles being developed by the world’s leading luxury German carmaker, as it aims to drive automotive technology beyond connected and self-driving cars.
Last week, the carmaker unveiled Concept EQA, a compact, sporty electric car that is expected to have a range of 400km on one charge. It has one electric motor on the front axle and one at the rear, allowing for greater flexibility in driving settings.
More important, though, it will have zero carbon emissions and is part of Mercedes-Benz’s push into the electric car market.
According to Johannes Fritz, the company’s co-chief executive in South Africa, battery-electric models will account for 15% to 25% of total unit sales by 2025. The big variation in forecasts is a result of uncertainty around both customer preferences and public infrastructure.
The common perception is that the lack of government interest in an electric vehicle future will hamper the rollout of a charging network. And that lack of public interest means there is little incentive for carmakers to increase production.
To counter this perception, and advance its vision of EQMercedes-Benz combined the unveiling of the Concept EQA with the opening of a unique pavilion at the V&A Waterfront in Cape Town.
It commissioned designer Es Devlin to create an interactive sculpture in a solar-powered pavilion, called the Zoetrope. It will be open to the public, at no cost, for the next 12 months. The thinking is that, in future, a global network of solar-powered pavilions will act as charging stations.
At present, Nissan and BMW lead both the electric vehicle (EV) and charging station market in South Africa. The BMW i3 and Nissan Leaf are synonymous with EVs in South Africa, and were recently joined by the Jaguar E-Pace. The Leaf has not only been a popular choice in the market, but has also helped Nissan advance a vision called Intelligent Mobility. The concept incorporates driving technology, battery technology and the car’s integration with a broader ecosystem.
It is clear that Mercedes-Benz’s Electric Intelligence is a direct challenge to Nissan’s thought leadership in this arena. To this end, the German carmaker has come up with an additional framework it calls Case. That’s a loose acronym for networking (connected), autonomous driving (autonomous), flexible use (shared & services) and electric drive systems (electric).
That doesn’t mean the existing petrol-driven range will take a back seat. Says Fritz: “We need the core business to invest in the electric future.”
Selvin Govender, marketing director of Mercedes-Benz Cars SA, points out that the new technology is still evolving. “The Mercedes-Benz EQ brand and technology encapsulates all the electric know-how of Mercedes-Benz cars,” he says. “By 2022, Mercedes-Benz will offer more than 10 purely electrically driven vehicles in every production series.”
The EQA will be part of this rollout, but won’t be the first electric Merc in South Africa. That honour will go to the EQC, a sedan with an expected range of more than 450km on one charge.
Launched a few weeks ago, it will be produced at a plant in Bremen next year, and is set to be delivered to South African customers in 2020. By then, Govender believes, charging stations will be commonplace. “They are popping up around the country. There is one at the Zoetrope, and four below it in the parking garage.
“Every new mall that’s coming up, they’re building with charging stations in mind. This rollout is happening, whether or not government or manufacturers support it. Society is supporting it.”
Meanwhile, Mercedes-Benz has invested R100 million on a South African plant building hybrid petrol-electric cars. This makes it the only manufacturer on the African continent to build hybrid vehicles for export to the rest of the world.
“Plug-in hybrids represent a key technology on the road to a locally emission-free future for the motor vehicle,” says Govender. “This is because they offer customers the best of both worlds; in the city they can drive in fully electric mode, while on long journeys they benefit from the combustion engine’s range.”
Parent company Daimler AG is investing about €1 billion (R16 billion) in battery production. It is developing a new flash charge technology that allows an EV battery to be charged from 10% to 80% in 40 minutes.
However, he is under no illusion that the public will embrace the EV. “It’s not going to be a switch we turn from nonelectric to electric. We have to slowly build up demand.”
Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za Follow him on Twitter and Instagram on @art2gee
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Most Shanghai base metals rose on Thursday, tracking equities after investors saw comments from the U.S. Federal Reserve chair as a sign the central bank's
interest rate hike cycle is drawing to a close.
Jerome Powell said at a lunch on Wednesday that the Fed's policy rate is now "just below" estimates of a level that neither brakes nor boosts a healthy U.S. economy.
Higher interest rates mean higher borrowing costs, which can reduce economic activity and consumption, and see capital flow into assets with higher yields than commodities.
Trade uncertainty continues to weigh ahead of a meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping at the G20 summit in Argentina, ANZ wrote in a note.
"Investors will be looking for progress at the Trump-Xi meeting this weekend, after it was reported that President Trump is weighing up more tariffs," it said.
Outotec has signed a contract for the Front-End Engineering Design (FEED) of a new copper smelter to be located at Benete Bay in Sumbawa, Indonesia. The contract partner is PT Amman Mineral Industri, a subsidiary of copper and gold producer PT Amman Mineral Nusa Tenggara. The approximately EUR10 million contract has been booked in Outotec’s 2018 fourth quarter order intake.
Outotec’s scope of engineering covers the design of the entire copper smelter. The engineering will be based on Outotec® Flash Smelting and Flash Converting technology, and include an electrolytic refinery, slag concentrator, precious metals refinery, wet gas cleaning and Lurec® sulphuric acid plant as well as effluent treatment plant and its associated infrastructure.
Outotec’s design work will take place in the following nine months and is a continuation of the feasibility study conducted in 2017. Once completed, the new smelter is planned to primarily process Indonesian copper concentrate.
“PT Amman Mineral Industri set the overriding design criteria to be proven technology that fulfills the strict international environmental standards. We are happy to help them to meet their sustainability goals by designing a copper smelter based on the most advanced technology in the world”, says Kalle Härkki, Head of Outotec’s Metals, Energy & Water business.
https://im-mining.com/2018/11/07/outotec-design-copper-smelter-indonesia/
Norwegian aluminium and energy company Norsk Hydro ASA NHY said Thursday it expects global demand for primary aluminium to grow by 2% to 3% in 2019 and to continue growing at that rate over the next 10 years, but warned that trade sanctions and tariffs are impacting global flows of aluminium.
In slides accompanying its capital markets day presentation, Norsk Hydro said the following factors are all impacting flows: U.S. duties on aluminium imports, sanctions against Russia's United Co. Rusal PLC, Indian duties on imports, and Chinese limitations on scrap imports--which is leaving more scrap in North America and Europe.
Chief Executive Svein Richard Brandtzaeg said that due to the long-running production problems at its Alunorte alumina refinery in Brazil, the company won't be able to deliver on its efficiency program that targeted improvements of 3.0 billion Norwegian kroner ($349.3 million) over a four-year period until end 2019.
The company said that in the short-term it is working hard to resume full operations at Alunorte, following nine months of running at 50% production.
"We are aiming to establish a common platform with authorities and the court system to have an aligned way forward towards full production, utilizing the best available technology," Norsk Hydro said.
Total capital expenditure is estimated to average NOK6.5 billion to NOK7.0 billion between 2018 and 2021. The total capital expenditure estimate for 2019 is NOK10 billion to NOK10.5 billion.
https://www.marketwatch.com/story/norsk-hydro-sees-aluminum-demand-warns-on-trade-2018-11-29
Chinese miners are expected to produce 1.633 million mt in Cu content of copper concentrate in 2019, up 103,000 mt in Cu tent, or 6.7%, from 2018, SMM estimates.
Zijin Mining’s Duomaoshan copper mine is expected to commission its second phase earlier in 2019 and the technological upgrading at the first phase is coming to an end. SMM expects Duobaoshan mine to see an output growth of 25,000 mt in Cu content in 2019, being the biggest contributor to China’s output expansion next year
As a major project of Zijin Mining, Duobaoshan produced copper concentrate of 18,800 mt in Cu content in the first half of 2018, up 17% from a year earlier.
Jiama mine in Tibet, owned by China Gold International Resources, is estimated to ramp up its copper concentrate output by 10,000 mt in Cu content in 2019 after the capacity expansion of the second phase of the mining project was put into commercial production on July 1, 2018.
The full design capacity of ore processing at Jiama mine has increased to 50,000 mt per day from the previous capacity of 28,000 mt per day.
About 15,000 mt in Cu content of copper concentrate output increase would be brought by Pulang copper mine in Yunnan, owned by Yunnan Copper. The mine produced 17,700 mt in Cu content of copper concentrate in January-July, accounting for 49% of its annual production target and far below its target capacity of processing 12.5 million mt of ore per year.
The government’s intensive environmental protection drive shut some small and medium-sized mines in recent years and prompted some large mines to undertake environmentally-friendly upgrading. This accounted for the copper concentrate output decline in 2016. Output recovery from technological upgrading would help buoy 2019’s copper concentrate output in China.
The Russian government could buy up to 50,000 tonnes of aluminium for the state reserve, a government decree showed on Wednesday, in a move that would support sanctioned Russian aluminium producer Rusal.
The decree, dated Nov. 26, allocated up to 10 billion roubles ($149 million) for the plan and is the initiative of Russian tycoon Oleg Deripaska, a government source told Reuters.
Deripaska is a major shareholder in Rusal through its parent company En+ Group. He was hit by U.S. sanctions in April together with other companies in which he is a large shareholder.
The purchases are currently being considered as a one-off step, the government source told Reuters.
The text of the decree did not specify the reason for the potential purchases and did not give a timeframe.
Rusal and its parent company En+ Group declined to comment. Russia’s Industry and Trade Ministry did not immediately respond to a request for comment.
Industry and trade minister Denis Manturov said in August that the government had a back-up plan if sanctions on Rusal were not lifted, which included buying aluminium for the state reserve.
At 50,000 tonnes, the volume covered by the decree is small, accounting for around 17 percent of the company’s monthly exports, Maxim Hudalov, an analyst at Russian ratings agency ACRA, said.
But it could serve as a form of insurance for Rusal if it should face a cash shortage, he said.
“In a situation where Western financial institutions refuse to extend credit, there’s a guaranteed buyer,” Hudalov added.
“...As a way to support the liquidity of the company, I think it will be useful. I don’t think the state reserve will actually buy anything, but having the opportunity to realise a delivery will be valuable for the company,” he said.
China’s imports of refined base metals have been running at a robust pace this year, with flows of copper, zinc and nickel up on a year ago and the country on track to be a net importer of lead for a second year running.
Six months after the China’s customs department stopped publishing detailed monthly reports via companies such as Reuters, some light has returned to what is happening with the world’s largest metals buyer.
It has done so in the form of a new customs department website with a searchable database for this year's trade flows. (43.248.49.97/)
It’s in Chinese only and decidedly user-unfriendly, but it’s the real thing, cross-checking accurately with the first-quarter figures released under the old distribution system.
Analysts at Refinitiv have reconstructed the country’s headline trade in the six months of statistical darkness that followed the suspension of the old service.
The picture that emerges is one of robust import appetite for refined metal but significant changes in flows of raw materials.
COPPER
Refined copper imports rose by 20 percent to 3.1 million tonnes in the first 10 months of this year.
Although there has been a steady monthly flow of exports over the course of 2018, the pace has dropped 15 percent on 2017 levels, meaning that net imports are up by 24 percent at 2.9 million tonnes.
Imports of concentrates have climbed by 19 percent to 16.6 million tonnes (bulk weight), a record for the first 10 months of the year.
A combination of increased supply and smelter outages in India, the Philippines and Europe has allowed Chinese concentrate buyers to step up purchases from the international market.
Scrap imports, on the other hand, have slumped by 36 percent, reflecting China’s crackdown on imports of lower-quality material and the retaliatory duties the country slapped on U.S. scrap in August.
However, the million-tonne drop in scrap imports has been largely mitigated by a sharp rise in the copper content of the scrap.
Refinitiv analysts use an implied content calculation to determine that, in terms of contained metal, this year’s imports are down only 6 percent on last year.
ALUMINIUM
Imports of primary aluminium were 21,000 tonnes in October, the highest monthly total since January 2017.
However, cumulative imports over the first 10 months of this year fell by 33 percent to 69,000 tonnes, still only a drop in the aluminium ocean and dwarfed by the flow of semi-manufactured aluminium products out of China.
October’s spike may reflect temporary tightness in ingot availability in the east of the country as shipments of aluminium from smelters in the northwest are displaced by high-priority coal freight ahead of the Chinese winter.
The real stand-out in the aluminium figures has been China’s flip from net importer to net exporter of intermediate material alumina.
October’s exports of 460,000 tonnes bring the year-to-date total to almost 1 million tonnes.
China has never exported such quantities of alumina in the past and the turnaround speaks volumes about how tight the market outside China has become after the enforced curtailment of Hydro’ s Fluorite refinery in Brazil.
Imports of aluminium scrap, by contrast, are steadily falling in response to the same drivers as those affecting copper - namely higher purity requirements and duties on U.S. scrap flows.
Headline imports have dropped 27 percent to 1.3 million tonnes, with both September and October imports falling below the 100,000-tonne level for the first time since February 2016.
ZINC AND LEAD
Imports of refined zinc hit a year’s high of 80,600 tonnes in October, the highest monthly figure this year.
Cumulative imports have risen 13 percent from last year’s record flows to 508,000 tonnes.
Mined concentrates imports have also been running at a healthy clip, up 19 percent to 2.4 million tonnes bulk weight.
The root cause of both higher raw material and metal imports is the strain on domestic concentrates availability as a host of smaller operators have been forced out of the market by Beijing’s environmental crackdown.
Even with compensatory offset from increased imports, China’s smelters have been struggling to cope with margin compression, resulting in five consecutive months of falling domestic refined zinc production, official figures show.
China’s net imports of refined lead have bucked the broader trend, falling 35 percent year on year to 47,000 tonnes for January-October.
However, until last year the country was a net exporter of lead in this form and the flip to net importer status is set to continue for a second year.
Drilling a little deeper into the figures shows imports are booming again after a five-month lull in the January-May period, when China was again a net exporter.
October’s tally of 20,000 tonnes was the highest monthly import total since May 2009.
It’s worth noting that, unlike zinc, lead raw material imports have also been declining. Inflows of concentrates dropped 8 percent for January-October, extending a three-year slide.
A shortage of raw materials, both of mined concentrate and scrap, has hit domestic refined lead production, explaining the stepped-up imports of metal.
NICKEL
Refined net nickel imports in the first 10 months of this year increased by 14 percent to 177,000 tonnes.
The real story, however, is what has been happening in intermediate and raw material flows.
Imports of ores and concentrates have risen by 37 percent to 40.2 million tonnes, almost back to the levels before Indonesia banned exports of unprocessed nickel ore in 2014.
Indonesia has since relaxed its ban and the resumed flow of ore in such quantities suggests that China’s nickel pig iron (NIP) sector is also in robust good health.
The flip side of Indonesia’s changing nickel landscape has been a sharp drop in China’s imports of Indonesian NIP as more material is diverted into a growing domestic processing sector, led by Chinese stainless giant Tsingshan.
Chile’s Codelco produced 1.2 million tonnes of copper from its mines between January and September of 2018, down 3 percent from the previous year, the company reported in its third quarter results on Thursday.
The world´s top copper miner posted a pretax profit of $1.418 billion in the same period, down 12 percent year-on-year, with a production cost per pound of copper of $1.389, an increase of 5 percent from 2017, the company said.
Poland declares 8-GW offshore wind goal, onshore auction poised to be a success
November 7 (Renewables Now) - Poland will aim to add 8 GW of offshore wind capacity by 2035, Grzegorz Tobiszowski, State Secretary for Energy, announced today.
Details on annual capacity additions are expected in the country’s National Energy and Climate Plan for 2030, which has to be released by the end of 2018.
WindEurope welcomed the news and revealed some details on the 1-GW onshore wind auction in Poland, opened Monday. It said the auction would be oversubscribed and that an average price of EUR 51 (USD 58.4) per MWh can be expected. The wind industry body cited a non-exhaustive survey of bidders, according to which the bids will be between EUR 43 and EUR 63 per MWh.
“Building 1 GW of new onshore wind makes perfect economic sense for Poland. It’s cheaper than building new coal or nuclear. And we expect prices to be cheaper than recent auctions in France and Germany,” said WindEurope Chief Policy Officer Pierre Tardieu.
Tobiszowski today also said that another onshore wind tender can be expected in the coming months.
In 2017, the share of coal was over 78% in Polish power generation, while onshore wind accounted for 8.8%. A significant volume of coal-fired power generation is expected to disappear from the system in the coming decade. Joanna Pandera, head of Warsaw-based think tank Forum Energii, told journalists in October that the gap could reach 50 TWh around 2030. Offshore wind, which has much more stable and predictable output than onshore renewables, is seen as one of the possible replacements.
Already, there are some projects in progress by Polish power group Polska Grupa Energetyczna SA (WSE:PGE). Its head of strategy, Monika Morawiecka, confirmed last month that PGE has three projects of 2.5 GW in total, the first one of which will be commissioned around 2025.
“With its onshore auction and plans for offshore wind, Poland is now sending a powerful signal to other countries in Central and Eastern Europe that being ambitious on wind energy makes economic sense,” WindEurope’s Tardieu said.
(EUR 1 = USD 1.14)
State-run mineral producer NMDC’s decision to suspend production at one of its largest iron ore mine at Donimalai in Karnataka is expected to push up iron ore prices in the e-auction conducted in the State.
The move may cripple operations of over 20 small- and medium-sized steel-making units with capacity of about 25 million tonnes per annum (mtpa). NMDC suspended iron ore mining at Donimalai following Karnataka’s decision to impose 80 per cent premium on the existing Indian Bureau of Mines (IBM) rates for the extracted ore.
JSW Steel, the largest steel producer in the State with its 18 mtpa capacity Vijayanagar plant, has made stopgap arrangements to meet the shortfall by sourcing ore from Odisha and captive mines, and through imports.
Seshagiri Rao, Joint Managing Director, JSW Steel, said the company has been sourcing part of its ore requirements for the Karnataka plant from outside the State because of uncompetitive pricing and persistent shortage.
JSW Steel needs about 20 mtpa of iron ore for its Vijayanagar plant, and depending on the pricing, it buys about 5 mtpa from NMDC’s Donimalai mine.
Captive sourcing
JSW Steel recently acquired six category ‘C’ iron ore mines in Karnataka and started producing 0.7 mtpa at two mines. Another two mines are expected to go on stream by next month, taking the captive sourcing to 2 mtpa.
The company expects to increase captive sourcing to 5 mtpa by the second quarter of next year by putting the other two mines into operation. The State Government’s decision to charge 80 per cent premium will lead to a loss of ₹1,348 per tonne and ₹944 crore per annum as NMDC mines about 7 million tonnes of iron ore per annum from Donimalai.
NMDC’s mining lease, which expired this month, was renewed till November 2038, on the payment of 80 per cent of the average sale value as published by the IBM.
NMDC has said such an imposition of premium is not in accordance with the Mines and Minerals (Development and Regulation) Act and “is also not economically viable”.
https://www.hellenicshippingnews.com/jsw-steel-gears-up-for-iron-ore-shortfall-in-karnataka/
Vale Mozambique, the Vale group of Brazil's subsidiary in the African country, has expressed that it plans to produce 20 Mtpa of coal by 2021.
In previous production reports Vale had cut its production forcasts for this year from 16 million tonnes to 12 million tonnes in two stages.
$6 billion has been invested in creating the conditions to allow the company to mine in the country.
Indonesia's Ministry of Energy and Mineral Resources set its November thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $97.90/mt, down 2.96% on month but up 3.27% on year.
The ministry had set the price for October at $100.89/mt, and for November 2017 at $94.80/mt.
The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).
In October, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $72.39/mt, down from $73.32/mt in September, while the daily 7-45 day Platts Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $108.10/mt, down from $114.43/mt in September.
The HBA price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and calculating the royalty producers have to pay for each metric ton of coal sold.
It is based on 6,322 kcal/kg GAR coal with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.
Britain’s Banks Mining has won a high court challenge to the government’s decision to reject its application to develop a new coal mine in northeastern England, the company said on Friday.
Northumberland County Council agreed last year that the mine’s developer, Banks Mining, a division of The Banks Group, could extract 3 million tonnes of coal by cutting an open cast, or surface, mine near Druridge Bay, Highthorn.
But the local government minister at the time, Sajid Javid, rejected the application in March following a public inquiry, saying the proposal could hamper the country’s efforts to reduce greenhouse gas emissions and curb climate change.
Banks Mining challenged the decision and on Friday said it had been successful in Britain’s High Court, which quashed the government’s rejection of the plan on the grounds that the minister did not provide adequate evidence for his decision.
The application will now go back to the government, and the current local government minister James Brokenshire, for further consideration.
“Banks Mining is urging the present incumbent... to permit the company to progress its significant investment and job creation plans as soon as possible,” the company said in a statement.
Environmentalists had criticized the plans, saying the mine would destroy an area of natural beauty and that extracting more coal is at odds with international pledges to reduce greenhouse gas emissions under the Paris climate pact.
Supporters of the project had said it could bring much-needed jobs to the region, and help to reduce Britain’s reliance on coal imports.
Banks said the project would create at least 100 well-paid full-time jobs.
Britain plans to close all coal-fired power stations by 2025 unless they are fitted with technology to capture and store carbon dioxide emissions, as part of efforts to cut greenhouse gases by 80 percent from 1990 levels by 2050.
Britain’s energy mister Claire Perry has also spearheaded an international campaign to phase out coal fired power plants across the globe.
Germany will start to shut down coal-fired power plants in the west of the country, Der Spiegel magazine reported on Friday, citing an internal document of the governmental coal commission which is currently evaluating Germany’s strategy for exiting coal energy.
Most power plants in west Germany, corresponding to 37 gigawatt of electricity in total, will go offline between 2022 and 2030, the report added, whereas plants in east Germany would not go offline before a second phase starts in 2030.
The coal commission will summon the government to negotiate a compensation agreement with utilities, Der Spiegel said, adding that the commission would opt for a solution in which companies would get more money the sooner they shut down their plants.
World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 156.6 million tonnes (Mt) in October 2018, a 5.8% increase compared to October 2017.
China’s crude steel production for October 2018 was 82.6 Mt, an increase of 9.1% compared to October 2017. India produced 8.8 Mt, an increase of 0.4% on October 2017. Japan produced 8.6 Mt of crude steel in October 2018, a decrease of 4.5% compared to October 2017. South Korea’s produced 6.2 Mt of crudes steel, up 3.5% on October 2017.
In the EU, France produced 1.3 Mt of crude steel in October 2018, a decrease of 3.5% compared to October 2017. Italy’s crude steel production for October 2018 was 2.3 Mt, up by 1.1% on October 2017. Spain produced 1.3 Mt in October 2018, a decrease of 7.4% on 2017.
Turkey’s crude steel production for October 2018 was 3.2 Mt, a decrease of 4.3% compared to October 2017.
Crude steel production in Ukraine was 1.8 Mt this month, down 6.7% on October 2017.
The US produced 7.6 Mt of crude steel in October 2018, an increase of 10.5% compared to October 2017.
The Queensland Coordinator General has approved the A$6.7-billion China Stone coal mine, in the Galilee basin, planned by MacMines Austasia.
The China Stone mine is planned to produce up to 55-million tonnes a year of run-of-mine coal, equating to some 38-million tonnes a year of thermal coal destined for the export market.
The project is expected to have a 50-year mine life.
MacMines Austasia has said that the project would create some 3 900 jobs during construction and about 3 400 jobs while in operation. It would contribute around A$1.7-billion annual to the Queensland economy.
“I conclude that there are significant local, regional and state benefits to be derived from the China Stone Coal project, and that environmental impacts can be acceptably managed, minimised or offset, through the implementation of the measures and proponent commitments outlined in the environmental impact statement,” the Coordinator General said.
The Queensland Resources Council (QRC) has welcomed the Coordinator General’s approval, with CEO Ian Macfarlane saying every new investment in the resources sector was good news for Queensland.
“The resources industry adds A$62.9-billion to the Queensland economy and supports 316 000 direct and indirect jobs. Our resources sector puts money in the bank for every Queenslander, from the Cape to the Gold Coast.”
Macfarlane said new projects in the Galilee basin would further strengthen the long-term outlook for the resources sector and provide direct benefits to nearby regions.
“That means more high-paying jobs for regional Queenslanders, especially in places like Mackay, Townsville and Rockhampton.
“There are up to six mines that could open in the Galilee basin. That’s just the shot in the arm that regional towns need.”
However, Australian Conservation Foundation CEO Kelly O’Shanassy has expressed concern about the impact of the new mine on Queensland’s water resources and the natural habitat for native species. The group also argues that the world should move away from burning coal.
“We’ve always said that if the Adani coal mine goes ahead it would be the thin edge of the wedge that opens a major new coal basin right at the time when we must ditch coal for clean energy.
“It’s clear that if the dangerous Adani coal mine goes ahead others, like China Stone, will soon follow. Our elected representatives are wilfully gambling the future safety of our planet by approving these coal mines.
The China Stone project was still subject to Ministerial and environmental approval.
Iron ore miner Cleveland-Cliffs Inc. said Monday its board has approved a share buyback program of up to $200 million shares.
"The disconnect between our strong profitability and the current volatility in the capital markets has created a highly accretive use of capital by buying back our own common shares," Chief Executive Lourenco Goncalves said in a statement.
https://www.marketwatch.com/story/cleveland-cliffs-to-buy-back-up-to-200-million-of-stock-2018-11-26
Chinese steel producers ran up losses for the first time in three years this month as prices slid into a bear market on weak demand and near-record supply, ending years of solid profit margins.
And with the world’s No. 2 economy cooling and facing increased risks from a growing trade war with the United States, China’s steelmakers are likely to feel more pain unless Beijing launches fresh stimulus measures, traders and analysts say.
Amid tumbling prices, Chinese mills - which make half the world’s steel - are reining in costs by returning to cheaper, low-grade raw material iron ore, in a boon for miners like Australia’s Fortescue Metals Group .
China’s steel production hit a record 82.55 million tonnes in October, but steel prices and margins have since shrunk as China dialed back on winter output curbs aimed at cutting smog, while demand weakened as cold weather slows the construction sector.
“Fat margins were caused by firm demand and tight supply, which is unsustainable in the long term,” said CRU analyst Richard Lu. “This decline is not temporary but the start of a downward trend.”
China’s steel producers had been in party mode since 2016 when prices doubled as a strong infrastructure push boosted demand, and supply tightened as the country’s tough anti-pollution campaign disrupted production.
Beijing also removed 140 million tonnes of low-end steel capacity in 2017, equal to about 17 percent of that year’s total output.
Profit margins surged to a record 1,706 yuan ($246) a ton for rebar and 1,326 yuan for hot rolled coil in December 2017 and have stayed high this year, pushing mills to ramp up output.
But as demand began to falter this month, mills were left with surplus steel, compounded by more lenient production curbs this winter as China allowed regions to set their own output restrictions based on emission levels.
The price of China’s rebar - used in construction - has fallen 21 percent to a low of 3,496 yuan a ton on Monday from a seven-year peak reached in August, putting it in a technical bear market.
Profit margins fell. Rebar producers in top steelmaking city Tangshan saw margins narrow to 297 yuan a ton on Monday from 889 yuan at end-October, according to data tracked by Jinrui Futures.
Makers of hot rolled coil (HRC) - used in manufacturing - incurred a loss this month for the first time since November 2015, Jinrui Futures said, estimating it at 130 yuan ($18.75) a ton on Nov. 21.
Tivlon Technologies, a Singapore-based steel and iron ore data analytics company, expects Chinese HRC producers to realize a loss of 150 yuan per ton in the second half of November compared with a loss of 200 yuan in the first half. Most rebar producers are at breakeven, according to Tivlon.
HIGH-GRADE ORE PREMIUM DROPS
Anticipating further steel price declines, traders who typically replenish over winter ahead of a pickup in demand by spring are shunning restocking, pulling inventories to the lowest this year.
“The risk of hoarding physical steel products right now is too high,” said a rebar trader from China’s northern Liaoning province who gave his surname as Wang. “The market generally believes prices will not stop falling unless steel mills voluntarily cut output.”
Amid weaker steel prices, the average utilization rate at Chinese mills dropped to 67.54 percent last week after rising for three straight weeks, data compiled by Mysteel consultancy showed.
Mills which had previously favored high quality iron ore to achieve maximum output with lowest emissions are also reining in costs by using more lower grade material with iron content below 60 percent.
The shift is benefiting miners like Fortescue, which have been marked down against high-grade producers like Brazil’s Vale .
“We have seen increased demand recently with mills procuring more 58 percent material in response to declining steel margins,” Fortescue Chief Executive Elizabeth Gaines told Reuters by email.
The price of 65-percent grade iron ore for delivery to China SH-CCN-IRNOR65 fell to a 7-1/2-month low of $81 a ton on Monday, while 58-percent ore similarly slid to $36.50, its weakest since June SH-CCN-IRNOR58, according to SteelHome consultancy.
That cut the premium for high-grade to $44.50, the smallest since March. In July, the premium hit a record $54.70 as China’s bid for clearer skies increased preference for higher quality ore.
“If the margins continue to drop, more mills will use low-grade iron ore,” said a senior manager at a mill in southern China that produces both rebar and HRC.
Steel mills, coke plants and coal-fired utilities in China’s second-biggest steelmaking hub Jiangsu will have to slash their production capacity as the provincial authorities have escalated smog alerts for the next three days.
Air pollution is expected to worsen from Nov. 27 until Nov. 30, triggering second-level orange smog alerts in the country’s four-level system, the Department of Ecology and Environment of Jiangsu Province said in a statement.
Heavy industry in Jiangsu will have to cut more of their production capacity by at least 50 percent from 30 percent, and stop transportation of raw materials during the orange-level alerts.
The eastern province had escalated the alerts on Sunday to “yellow level”, the third-highest in China’s pollution warning system, from the least severe “blue level”.
Concentration of lung-damaging PM2.5 particles reached 155 micrograms per cubic meter in Jiangsu’s provincial capital city Nanjing on Monday, according to data from China National Environmental Monitoring Centre, more than four times the state standard of 35 micrograms.
Northern China has also been blanked by heavy smog from last week, with at least 28 cities issuing orange-level alerts.
Seaborne thermal coal traders are facing significant losses on their positions after prices plunged in the past few weeks due to a weak Chinese demand despite this being the seasonally strong fourth quarter.
The calendar fourth-quarter of each year has always been seen as a strong period of demand, especially from China, as utilities replenish their stock levels to brace for the Northern Hemisphere winter season.
However, this year’s fourth-quarter took many by surprise as China continues to impose more restrictions on thermal coal imports and, in fact, at some provinces have totally stopped seaborne coal from entering Chinese ports for the rest of the year.
Traders, who had taken positions for the fourth quarter in anticipation of a strong demand, are left with no option other than performing on their existing contracts and raking up huge losses.
Seaborne thermal coal prices have already plunged to two-year lows and as of Friday and are still expected to weaken further to fresh all-time lows in the near term.
“I read the market incorrectly. Now I still have to perform on the contracts and probably I will have to divert the cargoes to India,” a trader said. “But seeing that China is on the sidelines, India will only bid $25/mt FOB for 4,200 kcal/kg GAR now,” he said.
The price of Indonesian 4,200 kcal/kg GAR coal — a grade popular among Indians, Chinese and other Asian nations, has slumped 38% so far this year to be assessed Thursday at $29.25/mt, S&P Global Platts data showed.
The price had touched $25.70/mt in October 2015, the lowest level ever seen since Platts started assessing this price in 2012.
Many market participants say that it is just a matter of time for 4,200 kcal/kg GAR price to breach fresh lows as both major coal importers in India and China remain dormant in the spot market.
INCREASING INDONESIAN PRODUCTION
The last two years had been quite significant for the coal industry because of the steep increase in prices that were seen after a long period of bearishness.
The seaborne thermal coal prices had seen a continuous downtrend since 2012, and only began to increase since the latter half of 2016, mainly driven by Chinese demand.
However, apart from China’s huge influence, there were also several other factors like labour strikes and weather-related disruptions seen at most of the coal producing regions across the globe, which lent support to prices. But market participants are now wondering if prices will ever pick up in the near to medium term as several countries in Asia try to embrace the cleaner renewable energy and as investments in new coal-fired power plants slump.
While demand appears to sag, Indonesia, on the other hand, is keen to ramp up production. The Indonesian government had approved of a plan to increase total coal production target to 507 million mt from its previous target of 485 million mt.
Several market participants feel that this increased production would only put additional downward pressure on prices if China does not emerge from its hibernation any time soon.
PRODUCTION COSTS UP
With oil prices also having increased from 2015 levels, Indonesian producers may not be able to withstand any further price falls as production costs are high, sources said.
“Either they will have to shut down or cut production. In fact, we are already seeing very low cv coal producers shutting shop as prices are not at all favourable and stripping ratios are also very high,” an Indonesia-based trader said.
“Miners can go down till $25/mt [for 4,200 GAR] in the worst case scenario,” a south India trader said. “From what I know $25/mt is the cost of production and beyond which it doesn’t make sense to sell anymore.”
Indonesian suppliers still seem to be hoping to see a pick-up in demand from China post the Lunar New Year holidays in 2019.
However, some of the market participants remain bearish as China’s domestic production remains robust and new coal-fired power plant additions slow.
Indian power utilities imported around 6.61 million mt of thermal coal in October, up 27% year on year, according to latest data from India's Central Electricity Authority released Tuesday.
Of the total, around 1.92 million mt was imported by 18 utilities for blending purposes, while 4.69 million mt was imported by eight utilities that run their thermal power stations on imported coal only.
Adani Power's Mundra thermal power plant imported the highest volumes of thermal coal in October, at around 1.33 million mt, followed by Tata Power's Mundra ultra mega power plant at around 1.25 million mt and JSW Energy at 754,000 mt.
As many as 35 utilities did not import any coal last month.
During April-October, thermal coal imports stood at 33.95 million mt, up less than 1% year on year.
Power utilities imported 56.41 million mt steam coal in fiscal 2017-18, down 13% year on year.
China’s coal imports are set to slump in December as traders and utilities wind back purchases following signals from Beijing that it will stop clearing shipments until next year, trading companies and utilities told Reuters.
Coal imports by the world’s top consumer of the material used for power generation, heating and steelmaking rose in the first 10 months of 2018 to 252 million tonnes, up 11 percent from a year ago and not far below last year’s total of 279 million tonnes, according to official data.
However, domestic coal prices have eased in recent months, even as China enters its peak demand season over winter, with utilities sitting on record coal stocks amid a slowdown in electricity demand growth.
“Customs have tightened up imports because domestic supplies are abundant,” said Zhang Min, senior coal analyst with Sublime China. “We did not see the usual winter stocking activities from utilities because they have so much inventory.”
China National Building Materials International (CNBM), a major buyer of Indonesian and Australian coal, will stop buying foreign supplies in December for its utility clients, a senior executive with the company said.
“Although Beijing did not issue an official document, we were told by utility clients that they need to keep imports this year below last year’s level,” said the executive, who declined to be named as they are not allowed to be quoted by media.
A manager at Huaneng Group, one of China’s major utilities, confirmed that he was told by the country’s chief economic planner, the National Development and Reform Commission (NDRC), to rein in purchases to ensure China’s imports do not exceed last year’s level.
He declined to be named because he is not authorized to speak to media.
The NDRC and China’s General Administration of Customs did not respond to faxed questions on the issue.
Huaneng Group did not respond to calls, an email and a fax seeking comment. CNBM declined to comment.
International markets are taking note, with prices for Australian thermal coal cargoes for prompt loading from its Newcastle terminal falling this week below $100 per tonne for the first time since May.
IMPORT CURBS
China has in the past imposed coal import restrictions, which has had the effect of increasing local prices by lowering competition. Earlier this year it banned smaller ports from receiving coal and it has also carried out strict inspections on low-quality coal.
Customs also said that cargoes arriving in November will not be able to clear customs until late December or early January next year, the CNBM executive said.
Huaneng currently has some cargoes on the water near ports, unable to dock because of the delayed import clearance, the manager said.
Two coal traders based in eastern Zhejiang province said November arrivals in line with the trend so far this year would likely trigger a ban on imports. Both declined to be named because of the sensitivity of the matter.
Domestic thermal coal futures prices have fallen more than 5 percent so far in November, compared with an 8 percent gain in November last year, while domestic output has risen 5.4 percent in the first 10 months of the year to 2.9 billion tonnes.
Coal inventory at the six largest coastal power plants, a benchmark for stocks, rose to 17.32 million tonnes on Nov. 20, equivalent to 33 days of consumption, up from only 20 days a year ago, data from Qinhuangdao port showed.
A renewed ban on imports would still not be enough to revive the market as appetite from power plants remains weak, the Huaneng manager said. The utility’s bookings in November had dropped sharply from previous months, he added.
“It’s another bad year for utilities,” he said, pointing to Beijing’s shift to support clean energy, including gas for residential heating and industrial boilers, and the impact of slower economic growth.
Russian steel and coal producer Mechel (MTLR.MM) has postponed completing a painful and lengthy debt restructuring process to 2019, the company said on Tuesday.
Mechel, at one point on the brink of bankruptcy, has been in restructuring talks with its lenders for several years.
On Tuesday the company said the share of its unrestructured debt portfolio was now down to 9 percent. It had planned to complete the process by the end of this year, but has now postponed this to 2019.
“We continue working on restructuring the remainder of our loans and expect to complete this process next year,” Mechel chief executive Oleg Korzhov said on Tuesday.
The company said its net debt, excluding fines and penalties on overdue amounts, stood at 464.2 billion roubles ($6.97 billion) as of Sept. 30.
Mechel, controlled by Russian businessman Igor Zyuzin, borrowed extensively during the commodities boom in the 2000s. Its lengthy restructuring following the 2008 financial crisis was exacerbated by Russia’s economic crisis in 2014.
Russia’s three largest state-controlled banks - Sberbank (SBER.MM), VTB (VTBR.MM) and Gazprombank - subsequently confirmed, in April 2017, a restructuring of $5.1 billion of Mechel’s more than $6 billion debt.
In July made significant progress in restructuring the remainder of its debt after obtaining a loan to refinance an earlier pre-export financing agreement worth $1 billion.
Mechel’s third-quarter financial results, published on Tuesday, were weaker than in the second quarter, the company said, due to planned repairs at steelmaking facilities and transport limitations due to railway car shortages.
This did not significantly impact revenues, Mechel said, as the price environment was strong. Revenues were down 3 percent to 79.97 billion roubles compared to the previous three months.
Operating costs did rise, however, bringing down earnings before interest, taxation, depreciation and amortization (EBITDA). Core earnings dropped 17 percent in the third quarter, compared to the second, to 19.21 billion roubles.
“Later this year and next year we still have several major repairs ahead of us, necessary for increasing production and further expansion of our product range,” Korzhov said in a statement
Iron ore futures in China fell more than 4 percent on Tuesday to their lowest in over four months, extending losses into a third session on expectations that slower demand will keep steel prices under pressure.
China’s steel sector slid into a bear market on Monday, with the benchmark rebar contract down more than 20 percent from this year’s peak, fuelling a selloff in raw materials iron ore and coking coal.
The January contract slumped by its downside limit of 5.9 percent on Monday, fuelling a slide in physical iron ore prices.
Spot iron ore for delivery to China tumbled 12.3 percent to $63.90 a tonne on Monday, the lowest since July 18 and marking the steepest fall since May 2014.
Tivlon Technologies, a Singapore-based steel and iron ore data analytics company, is seeing selling pressure on iron ore from participants in China’s physical steel market.
“This is due to steel participants hedging their forward production profit-margin as they expect less strict sintering cuts into the first quarter of 2019 which will increase steel production,” said Darren Toh, steel and iron ore data scientist at Tivlon.
“Hence the expectation over the next few months will be more steel production but in a period where steel demand is low due to the cold temperature.”
China has allowed northern cities and provinces to set their own production curbs aimed at tackling smog during winter, instead of repeating last winter’s blanket restrictions.
Analysts say that would allow mills to produce more even during the seasonally weak winter period when most construction projects are halted.
The most active January rebar on the Shanghai Futures Exchange was off 0.1 percent at 3,584 yuan a tonne. The contract touched 3,496 yuan on Monday, its lowest since June 26 and 21 percent below a seven-year peak of 4,418 yuan reached in August.
Coke dropped 1 percent to 2,116 yuan a tonne, while coking coal gained 0.2 percent to 1,308 yuan.
By Masumi Suga
(Bloomberg) -- Japanese orders for steel dropped the most
in nine years after a string of natural disasters reduced output
at mills and affected distribution.
Orders for steel products fell about 12 percent to 5.1
million metric tons in September from a year earlier, according
to the Japan Iron and Steel Federation. That’s the biggest drop
since August 2009, when demand for metal slumped amid a global
economic downturn, according to the group. Domestic orders fell
9.1 percent, while exports declined 19 percent.
Japan’s economy shrank last quarter and steel supply was
disrupted by Typhoon Jebi in early September, the strongest to
strike the country in 25 years, and an earthquake just days
later that knocked out power to all of Hokkaido. The nation’s
top steelmaker, Nippon Steel & Sumitomo Metal Corp., said this
month the events weighed on profit. JFE Holdings Inc., the
second-biggest, cut its full-year earnings target citing
production losses stemming from the disasters and operational
troubles at domestic facilities.
The ongoing uncertainty surrounding China's import quotas getting reset in January is casting mixed sentiments on the seaborne thermal coal market.
Outlook for the seaborne market turned more bearish as the country's National Development and Reform Commission (NDRC) imposed further port restrictions on coal imports, after a meeting on November 14, to ensure this year's total coal import volume does not exceed that of 2017.
There was no official announcement, but according to market sources, imported coal would no longer be able to clear customs until end of 2018.
As the year end approaches, there had been more inquiries for imported coal for January arrival as market players were expecting the quotas to be reset by then.
However, not all players were confident about the reset or the lifting of current import restrictions.
"We've not heard of any updates regarding the import policies," a source close to NDRC told S&P Global Platts.
A source from the NDRC said no further information could be revealed at this time and reiterated that "total volume this year cannot exceed that of last year."
China's total coal import volume for 2017 stood at 271 million mt, while total coal imports from January to October this year had reached 252 million mt, according to official import statistics.
This would mean a remaining 19 million mt left for imports for November and December.
In October alone, China had imported a total of 23.08 million mt of coal, down from 25.14 million mt in September.
"We can't be sure if the restrictions will be lifted by January," a trader said, "but we might book more cargoes when the restriction is lifted," the trader said.
"Traders are likely to use this time to maintain a good relationship with power utilities, so once restrictions are not as tight, they can start to purchase right away and don't have to scramble for end-users," a south China-based trader added.
END-USERS DELAYING LAYCAN
In view of the current import situation, end-users told Platts that they had delayed the laycan for previous purchases.
However, despite citing policy issue as a major risk, some end-users did not appear to have plans to change their import strategies for 2019.
A buyer said there were no firm plans avoid the seaborne market at the moment.
The buyer said it would need about 100 million mt of thermal coal per year, with spot cargoes and term contracts from the seaborne market accounting for about 10% of the total volume.
"We'll probably still import as usual, but we will need to be cautious not to exceed the annual volume," the buyer said.
He added that the import policy was still at its initial stage and the regulations would likely to be clearer next year.
Another end-user said imported coal amount to about 25% of its company's total purchase.
"We will still run on term contract, as procurement of spot cargoes is very uncertain, but our import volume will likely be about the same as last year," the end-user said.
MORE EMPHASIS ON DOMESTIC COAL MARKET
Various market sources, however, said that Chinese buyers would be very cautious in signing long term import contracts now, and some traders were heard to have cut down on the import volume for next year.
"We do not have firm figures, but our company might place more emphasis on domestic market next year to support the call from the State to buy domestic coal," a northern China-based trader said.
Another trader said they would be taking a wait-and-see approach while hoping the demand to pick up as "policies are due to change".
CHINESE MEDIA CALLS FOR STRICTER POLICY
In July 2017, China had imposed import restrictions on coal but the grip was relaxed in mid-December 2017 amid a harsh winter. The talk of restrictions was back again in April as some ports in southern China were faced with some form of import curbs.
There had been no official explanation for placing these restrictions. Chinese media and market players had cited various reasons, including cutting down the reliance on imports, as well as protecting domestic producers.
Some media had called for stricter policies to control imports of "lower quality coal" that would cause air pollution.
However, market participants said that China would not completely close its doors on imports as the seaborne market would continue to supplement the domestic market and serve as a mechanism to control domestic prices.
At an industry gathering in Beijing earlier this month, market participants expected China's thermal coal consumption for 2018 to reach 3.2 billion mt.
According to the data from China's National Bureau of Statistics, the country produced about 3.45 billion mt of raw coal in 2017.
The price of seaborne thermal coal in Asia had come under pressure in recent months as Chinese import restrictions bite.
The price of Indonesian 4,200 kcal/kg GAR coal -- a grade popular among Indians, Chinese and other Asian nations, has slumped by almost 40% since the start of the year to be assessed Tuesday at $28.50/mt, S&P Global Platts data showed.
Meanwhile, the price of Australian 5,500 kcal/kg NAR coal hit a two-year low to be assessed at $58/mt FOB Newcastle on Tuesday.
Junior iron-ore company Tacora Resources is bringing back to life the defunct Scully mine in Labrador West, Canada, and announced on Tuesday that it had secured the necessary financing to restart operations.
The company closed $212-million in private equity and senior secured debt financing, which together with existing commitments for up to $64-million in mining equipment debt financing, means it is fully funded to resume operations.
Tacora last year purchased substantially all the assets associated with the Scully mine, which was shut by Cliffs Natural Resources in 2014, leaving about 400 workers out of jobs.
The company has subsequently completed a feasibility study, which delivered robust economic results with an after-tax net present value of C$1.12-billion and an internal rate of return of 40.7%. Initial capital is estimated to be C$205.5-million and sustaining capital C$441.7-million, with a payback period of 2.6 years.
The mine is set to produce an average of six-million tonnes a year of concentrate at a grade of 65.9% - exceeding the industry standard 62% benchmark and the high-grade 65% benchmark. China's crackdown on pollution, along with the higher margins at steel mills, has seen demand for high-grade iron-ore increasing substantially.
CBC News reports that Tacora is aiming to produce its first concentrate in June 2019.
US group Cargill will buy 100% of the mine’s output and as part of the financing agreement, the company had made an equity investment and extended its long-term offtake agreement to 2033.
Tacora has secured life-of-mine access to rail transportation services and ship loading infrastructure, including access to a deep-water port with Société ferroviaire et portuaire de Ponte-Noire and the Port of Sept-Iles, and concluded various regulatory matters with the government of Newfoundland and Labrador, including consultations with local indigenous peoples.
http://www.miningweekly.com/article/canadian-iron-ore-mines-restart-fully-financed-2018-11-28
The chief executive officer of Argentine-Italian steel company Techint was charged with graft in Argentina on Tuesday, a source close to the case said, and shares in two subsidiaries declined.
Paolo Rocca, CEO of Techint, the parent company of steel firms Tenaris and Ternium, was charged by an Argentine federal judge, said the source, without elaborating.
The source did not want to be identified because he was not authorized to speak publicly about the issue.
Reuters could not immediately reach Rocca.
The sprawling “notebooks” corruption case, centered on bribes allegedly paid by businesses to secure contracts from the administration of former President Cristina Fernandez, has already ensnared dozens of business owners and politicians.
Argentine media reported on Tuesday that Rocca was charged with illicit association and payment of bribes. Authorities froze 4 billion pesos (some $104 million) of his assets, according to local media reports.
“I was not involved in the payments, nor did I authorize them or was I aware of them,” Rocca told local media outlet Perfil.
The office of Claudio Bonadio, the federal judge who issued the indictment, did not immediately respond to a request for comment.
The “notebooks” scandal, as the case is known in Argentina, broke in August after a local news outlet published diaries kept by a former government employee.
The employee claimed the notebooks documented millions in bribes paid to officials of former administrations of Fernandez and her late husband and former president, Nestor Kirchner.
China's coal shipment via railways came in at 1.97 billion tonnes over January-October this year, rising 9.5% from the year ago levels according to the NDRC.
China's key power plants held coal stocks of 91.99 mln tonnes enough to cover 28 days use at the end of October.
In the first ten months major coal producers churned out 2.9 billion tonnes of coal up 5.4% year on year.
Rio Tinto, the world’s No. 2 iron-ore miner, gave the long-awaited green light for an “intelligent” iron ore mine in Western Australia on Thursday, raising its expected cost by nearly 20 percent from the original plan.
Approval for the $2.6 billion Koodaideri mine marks Rio Tinto’s biggest investment commitment since 2016, when it signed off on a $5.3 billion underground expansion of the Oyu Tolgoi copper mine in Mongolia.
Rio has previously called Koodaideri its first “intelligent” mine, as it will be using systems that connect driverless trucks, trains and drills for the first time, using data analytics to optimize production, improve safety and cut downtime.
“Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry,” Chief Executive Jean-Sébastien Jacques said in a statement.
Costs for Koodaideri, due to start producing in 2021, have risen as Rio expanded the planned capacity to 43 million tonnes from 40 million tonnes and added an airport, new roads and safety features to the project.
Rio Tinto said rising labour and materials costs had also added to the original cost estimate of $2.2 billion. It expects construction will involve more than 2,000 people.
The project will be competing for workers and equipment in the iron-rich Pilbara region, where rivals BHP Group and Fortescue Metals Group are also digging new mines.
Koodaideri is expected to underpin Rio’s production of its flagship Pilbara Blend iron ore, sustaining its current output of more than 330 million tonnes a year.
It is still considering a second phase to expand the mine to more than 70 million tonnes.
Rio Tinto’s shares jumped 3 percent in early trade on Thursday, outperforming the broader market and BHP, but just behind Fortescue.
CSC Steel Holdings Bhd’s third quarter ended Sept 30, 2018 (3QFY18) net profit fell by 78.78% to RM2.98 million or 0.81 sen per share versus RM14.04 million or 3.8 sen per share a year ago.
The decline in profits was largely due to the increase in raw material prices and transportation cost that are greater than the increase in average selling price of the steel products.
Meanwhile revenue increased slightly by 3.35% to RM336.59 million from RM325.68 million a year ago, mainly due to higher average selling price, which was offset by reduced sales volume of certain steel products.
For its cumulative nine-month period (9MFY18), net profit dropped 46.72% to RM23.97 million from RM44.99 million due to higher raw material and transportation costs. However, revenue rose 7.4% to RM1.03 billion from RM956.07 million a year ago, primarily due to increase in average selling prices and total sales volume.
Going forward, the group said in its filing with Bursa Malaysia that the impact of the ongoing trade wars has continued to affect the supply chain of global steel industry especially in the Southeast Asian region (SEA) as steel demand in SEA has grown tremendously in the last few years.
“The group has further noticed that there are more sources and volume of steel being brought into Malaysia since middle of the year which poses an adverse effect on the market share of the local steel manufacturers as well as the steel prices.
“Hence, the local steel manufacturers are unable to sustain reasonable margin to compete with the imports. In view of the above and the lack of mega projects to support the demand of steel locally, the group foresees slow improvement in the steel demand which negatively impacting the local steel industry this year,” the filing said.
Barring any unforeseen circumstance, the group is cautiously optimistic of achieving profitability for the rest of the year.
No dividend was recommended during the quarter reviewed.
CSC Steel’s share price fell 3 sen or 2.65% to close at RM1.10 with a market capitalisation of RM406.24 million.
https://www.hellenicshippingnews.com/higher-raw-material-prices-pull-down-csc-steels-3q-net-profit/
India's Adani Enterprises will fully fund its coal mine and rail project in Australia itself, the company said on November 29th taking a big step closer to building the long touted project.
It now plans to start by producing 10 million tonnes a year for the companies own use, eventually ramping up to 27.5 million tonnes per year
Australia's Fortescue Metals Group is set to ship the first cargo of its new mid-grade iron ore next month just as a rout in Chinese steel prices helps it improve its margins in competition with higher grade products.
The world's fourth-largest iron ore miner will make the first shipment of its 60.1% West Pilbara Fines product to customers in China, in a step that is set to bolster its margins, CEO Elizabeth Gaines said.
"If you think about West Pilbara fines...in context of margin... That could actually add an extra, in this current market, $10 a tonne," Gaines told a media briefing in Port Hedland on Wednesday.
Fortescue sold its ore in the September quarter for an average of $45 per dry metric tonne.
"It won't increase our cost base, but even if it did cost by an extra 10 or 20 cents, you'd do that any day of the week."
The new product is a major step in the miner's strategy to wring more value from its iron ore after profits halved last financial year, while shipments dropped 8.6 percent in the September quarter amid plant maintenance and a pollution crackdown in China.
Fortescue's lower grade ore has fallen out of favour in recent years as Chinese mills enjoying high steel prices and eager to cut emissions have preferred higher grade product from rivals such as Brazil's Vale and Rio Tinto.
Fortescue gave the go-ahead for its higher-grade Eliwana mine in May, and is blending output from existing mines with lower-grade ore to produce its new mid-grade product.
COST FOCUS
The development comes at an opportune time for Fortescue, as Chinese steel prices slide on weak demand, with margins turning negative for some products this month, and spurring some mills to turn to lower grade ore.
"We suggested that if and when profitability starts to decline we would expect steel mills to have more of a cost focus and that our products would likely come more into favour," said COO Greg Lilleyman.
"We are starting to see that in the last month in particular and even over the past week."
Fortescue expects falling margins at mills will fuel demand for its cheaper mid-grade ore, as well as for its 58% iron-ore, which is priced well below premium product.
Citi said this week that the price gaps between different iron ore grades are set to converge, which would benefit Fortescue.
But Australia's major miners BHP Group , Rio and Fortescue are also facing increasing costs after launching major expansion projects this year, with prices for everything from labour to equipment starting to rise.
"We expect rising costs and lower realized prices for Fortescue's 58 percent Fe ores to continue to put downward pressure on the company's earnings," Jefferies Group said in a November 1 note, maintaining an "underperform" rating.
