Most Economists See U.S. Recession by 2021, NABE Survey Shows
2019-02-25 05:01:00.0 GMT
By Alex Tanzi
(Bloomberg) -- More than three-quarters of business
economists expect the U.S. to enter a recession by the end of
2021, though a majority still estimate the Federal Reserve will
continue raising interest rates this year.
Ten percent saw a recession beginning this year, 42 percent
project one next year, while 25 percent expect a contraction
starting in 2021, according to a semiannual National Association
for Business Economics survey released Monday. The rest expect a
recession later than 2021 or expressed no opinion, the Jan. 30-
Feb. 8 poll of nearly 300 members showed.
The projections come ahead of the Commerce Department’s
release this week of the advance reading for fourth quarter
gross domestic product, which was delayed by the government
shutdown. Economists surveyed by Bloomberg projected as of
Friday that growth cooled to a 2.5 percent annualized rate in
the final months of 2018 from 3.4 percent in the third quarter.
NABE members were divided on the impact of the Fed’s
balance sheet normalization process. Asked about the effect of
the tightening on short-term funding rates, a fifth said saw no
impact, a fifth said it would raise rates by 25 basis points,
and a fifth said said they would rise 50 basis points or more.
The remaining respondents didn’t know or express an opinion.
“There is a schism between what the NABE panel and the
markets think about the Fed’s rate path and the shrinking of its
balance sheet,” said Megan Greene, chief economist at Manulife
Asset Management and chair of the survey. “Markets are pricing
in no more interest-rate hikes in 2019, whereas a majority of
the NABE panel expects one or two rate hikes.”
A plurality of 23 percent expected the Fed to raise the
main rate 50 basis points to 3 percent before beginning to cut
rates. Eleven percent said the next rate move will be an easing.
President Donald Trump’s trade policies remained a concern
for most of the panelists. Thirty-six percent said the existing
tariffs, if they remain in place, will reduce 2019 gross
domestic product growth by 25 basis points, while 26 percent saw
a drag of 50 basis points and 15 percent of panelists expect the
reduction to exceed 50 basis points.
Economists also expected the tariffs to boost inflation
this year.
Offshore wind could be America's biggest bipartisan clean energy success story in the next two years. But how policymakers design related policies will determine how fast project costs fall.
The following is a Viewpoint by Mike O'Boyle, Energy Innovation's Director of Electricity Policy.
Offshore wind could be America's biggest bipartisan clean energy success story in the next two years: Six Atlantic states now target a combined 12 GW of capacity, and the Trump Administration is "bullish" on offshore wind, considering it key to American "energy dominance."
But how policymakers design offshore wind policies will determine how fast project costs fall. While still nascent, United States offshore wind project costs have fallen 75% since the 2014 Block Island Wind Farm in Rhode Island, in contracts for 1.2 GW of projects awarded for the next five years. Offshore wind is following a similar learning curve to other clean power technologies, particularly onshore wind and solar photovoltaics (PV).
Offshore wind's continued success and further cost reductions will depend on continued de-risking of project investment through competitive auctions, stable power purchase agreements, transmission and siting.
Learning curves explain the relationship between deployment — how much product has been sold — and price.
Nascent technologies are often more expensive per unit than mature competitors, but marketplace success drives a virtuous cycle. Producers can reinvest profits into capital and process improvements, further reducing production costs and improving competitiveness.
Graphically represented, the learning curve takes an "S" shape, with slow initial price reductions ramping up as the product matures, then leveling off as efficiencies and greater scale become harder to achieve in a saturated market.
This relationship between deployment and price has been crucial in providing the right amount of financial support for new renewable energytechnologies without overpaying.
For example, California's renewable feed-in tariffs (FiT) phased down as total capacity increased. By contrast, Germany's renewable energy FiT phased down as a function of time, generating huge profits for developers who were able to reduce costs faster than Germany's administratively determined forecasts. Here, the result was mixed — renewable energy development far exceeded forecasts and helped meet emissions goals early, but FiT costs have reached about 25% of customers' bills.
Both economies have accelerated the wind and solar learning curves through policy-led deployment. In 2008, Germany had 38% of the world's installed solar capacity, while California composed more than 50% of U.S. solar production through 2015.
Today, building new renewables is cheaper than running existing coal generation in many parts of the country — this is as much a policy success as a market success.
According to Lawrence Berkeley National Laboratory (LBNL), more than half of U.S. non-hydro renewable energy additions were due to state-level renewable portfolio standards (RPS) requiring utilities to purchase a set amount of renewable energy. As those technologies were deployed, their costs dropped dramatically.
Today, offshore wind has similar characteristics to solar power in the early 2010s, and wind power thirty years ago. Only 30 MW of offshore wind has actually been built, and consumers paid a heavy price for the technology at $244/MWh, roughly four times what utilities pay for wholesale electricity.
Trump’s Trade Czar Urges Patience on China Deal President Craves
2019-02-27 19:31:12.342 GMT
By Andrew Mayeda and Jenny Leonard
(Bloomberg) -- Donald Trump’s top trade negotiator is
dialing back expectations for a sweeping trade deal with China
just days after the president suggested he was already planning
to sign an accord with Chinese leader Xi Jinping.
Trump this week raised the prospect that he could meet Xi
for a “signing summit,” possibly at the Mar-a-Lago resort in
Florida as early as next month. Trump has extended the deadline
for talks beyond March 1, buoying hopes among investors that an
end to the trade war could be in sight.
But U.S. Trade Representative Robert Lighthizer took a more
cautious tone on Wednesday, telling lawmakers that much work
needs to be done before the administration reaches a trade pact
with Beijing, and after that, the tough task of implementing it
will get underway.
Lighthizer, speaking before the House Ways and Means
Committee, said he wants a deal that’s enforceable and has
commitments by China to make deep reforms to its state-driven
economy, especially in the areas of intellectual-property rights
and technology transfers.
But the crux of any agreement will be a mechanism to ensure
China is complying with the rules, said Lighthizer, revealing
plans for regular meetings to review the trading relationship
between lower- and mid-ranking officials and semi-annual
meetings at the ministerial level. Violations by China would
prompt the U.S. to react with a “proportional” and “unilateral”
response, Lighthizer said, likely referring to tariff actions
and other measures.
Soybean Solution
The U.S. won’t accept a deal that merely commits the
Chinese to buy more American goods, a scenario Lighthizer
dismissed as the "soybean solution," in reference to promises to
buy more American soybeans.
“This administration is pressing for significant structural
changes that would allow for a more level playing field,”
Lighthizer said. “We need new rules.”
With a presidential election looming next year, Trump is
keen to keep the world’s biggest economy humming and avoid
another steep drop in U.S. stocks, like the late-2018 sell-off.
But the hearing also demonstrated the political pressure he
could face if he’s seen as caving to China, with lawmakers
urging the administration not to accept a stopgap deal.
“I am concerned that we have some sort of agreement that
results just in purchasing soybeans and airplanes. That’s not
sustainable,” said Earl Blumenauer, a Democratic Congressman
from Oregon.
Big ’If’
The U.S. is “very aware of the history of our trading
relationship with China, and the disappointments that have
resulted from promises that were not kept,” Lighthizer said.
“If we can complete this effort -- and again I say ‘if’ --
and can reach a satisfactory solution to the all-important
outstanding issue of enforceability as well as some other
concerns, we might be able to have an agreement that turns the
corner in our economic relationship with China,” he said. “Much
still needs to be done, both before an agreement is reached, and
more importantly, after it is reached.”
Trump’s hint at a deal-clinching summit with Xi underscores
the sense that the two nations are approaching an agreement,
more than seven months since the U.S. first imposed tariffs on
Chinese imports, setting off a tit-for-tat conflict that has
cast a cloud over the global economy. Treasury Secretary Steven
Mnuchin said this week that a leaders’ meeting for late March at
Trump’s Mar-a-Lago resort in Florida is being tentatively
planned.
But with Trump holding another summit with North Korean
leader Kim Jong-Un this week in Vietnam -- a diplomatic effort
in which China will play a critical role -- the risk of a
setback remains significant.
Mar-a-Lago Summit
“President Trump has already started promoting a ‘signing
summit’ at Mar-a-Lago before an agreement has even been inked,”
Democratic Minority Leader Chuck Schumer said Wednesday. “I say
to President Trump, it would be a momentous failure if you
relent now and don’t receive meaningful, enforceable and
verifiable commitments on structural reforms to China’s unfair
trade policy.”
On another key issue in the talks, Mnuchin on Friday said
the U.S. and China had reached an agreement over currency,
describing it as the “strongest ever,” though he offered no
details. However, Bloomberg reported that the sides are still
trying to figure out how to monitor the pact to ensure Beijing
lives up to its pledge not to depreciate the yuan.
Asked about the currency deal at the hearing on Wednesday,
Lighthizer said “there’s no agreement on anything until there’s
agreement on everything. But the reality is we have spent a lot
of time on currency and it will be enforceable.”
To contact the reporters on this story:
Andrew Mayeda in Washington at amayeda@bloomberg.net;
Jenny Leonard in Washington at jleonard67@bloomberg.net
To contact the editors responsible for this story:
Brendan Murray at brmurray@bloomberg.net
Sarah McGregor
As the treadmill of production decline grows stronger, the pressure on producers keeping production flat increases.
Centennial Resources is the latest example to show a drastic growth slowdown as implied decline rates skyrocket.
Capex for Permian producers may be lower y-o-y and that bodes badly for growth.
Welcome to the faster and harder treadmill edition of Oil Markets Daily!
In December last year, we published an article titled, "For The Permian, It's Not 2016 - And That's Bad News For U.S. Shale." At the time, Parsley Energy (PE) released its capex budget for 2019 and we noted how terrible it was that it was outspending cash flow by $250 million or less just to grow production by 20% y-o-y with exit production closer to ~16%.
We also noted at the time that Mark Papa's Centennial Resources (CDEV) announced that it would reduce capex for 2019 following the oil price decline and focus on balance sheet and liquidity. Well, it released its capex budget today and let's just say that the theme continues for the Permian.
In CDEV's budget release, it's targeting:
$845 million of capex, a reduction of 15% from 2018.
Oil production growth of 12% y-o-y.
Now what the company doesn't seem to highlight is that given the expected production volume and flat y-o-y realized barrel of oil equivalent pricing (~$40/boe), it will be outspending cash flow by ~$70 million. Keep in mind that for the duration of 2018, CDEV averaged 61,082 boe/d with 34,737 b/d of oil. It exited Q4 2018 at 39,978 b/d of oil production.
If it was growing oil production by the targeted 12% y-o-y, that puts oil production for 2019 at:
34,737 x (1+12%) = 38,905 b/d
That is actually less than the oil production it realized in Q4 2018.
Now here's an even more staggering statistic.
Given that CDEV's capex budget is $845 million, we can make a few assumptions. Permian producer, Diamondback Energy (FANG), has a capital efficiency of ~$16,500 boe/d (or the cost of replacing a barrel of oil equivalent).
Now take CDEV's capex budget of $845 million, and the implied barrels of oil equivalent it can produce on this budget is:
$845 million / $16,500 boe/d = 51,212 boe/d
But the company is only growing production by 12%.
61,082 boe/d (2018 average boe/d) x 1.12 = 68,412 boe/d
68,412 boe/d - 61,082 boe/d = 7,330 boe/d (rounded)
Now do you see the issue?
Implied growth of 51,212 boe/d compared to just 7,330 boe/d? Where is the other 43,882 boe/d of production going to?
Well, it's going to replace existing production declines you see. CDEV wanted to grow production so fast this year (92%) that the capex next year will simply go towards just replacing existing declines. In fact, if you take the boe/d and calculate an implied decline rate, it's ~71.82%.
Yes, the decline rate is ~71.82% on its existing production base. That's one heck of a treadmill.
Why is this significant?
CDEV has been a good barometer of private equity-backed shale companies. CDEV's rampant growth last year should have been a big red flag at the beginning of the year for us, but the slowdown is equally alarming. As you can see from the chart above, private equity-backed share producers grew production over ~40%+ last year. But as we wrote in the December article, capital for private equity-backed shale companies is drying up, leaving capex budgets for 2019 in limbo.
This combined with the fact that public shale E&Ps are also suffering from an exodus of investor capital, and the recipe for more disciplined capital spending is born.
What's clear from CDEV's capex guidance is that if you grew production a lot last year, a flat to slightly lower capex budget will push growth rates substantially lower as most of the capital will go towards replacing the decline. Or in other words, the treadmill of decline is getting faster.
Over the weekend, we released a report detailing the set-up we see coming up this April. Our early estimates point to some sizable relative US crude storage draws taking place. For those interested, we are offering a 2-week free trial so you can see for yourself. We hope to see you join the HFI Research community!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
https://seekingalpha.com/article/4245135-oil-permian-treadmill-decline-getting-faster
Utility Engie is poised to cut back its geographical spread of businesses and focus on grids and renewables in a 1 billion euro cost-cutting drive to bolster revenues, sources familiar with the matter said.
Engie has been criticised for being too complex and conglomerate-like and CEO Isabelle Kocher is expected to address this in a 2019-2021 corporate strategy plan to be announced next Thursday, when the company also releases 2018 results.
Two sources with knowledge of the company’s plans said Kocher was likely to scale back the number of countries Engie operates in - it is present in some 70 countries - notably in central Europe.
Both said Kocher would focus the gas and power group more strongly on grids and renewables after selling some 15 billion worth of fossil-fuel related assets in 2016-18.
One of the two sources, a union official, said Kocher would aim to cut costs by 1 billion over three years, extending a 1.3 billion euro cost reduction plan in 2016-18.
Daily business newsletter La Lettre A had first reported that Engie was targeting a billion-euro profit-boosting plan.
Engie will also need to acquire at least one well-established, cash-generating business too make up for cash flow lost in its move away from fossil fuels, two sources, including a banker, said.
“The plan will have to involve major acquisitions. The planets are aligned, but the target remains to be decided,” one of them said.
Potential targets include the Transportadora Associada de Gás pipeline owned by Petrobras, Dutch renewables utility Eneco, or the U.S. renewable energy assets of Portugual’s EDPS, sources said.
Engie cut is net debt to core earnings ratio to 2.2 at the end of 2017 from 2.5 two years earlier. It can further boost its financial firepower by selling part of its 75 percent stake in French gas transport firm GRTgaz, which will become possible under the government’s new “Loi Pacte” law.
Engie declined to comment on strategy or potential targets ahead of next week’s presentation.
ACTIVIST INVESTORS
More than anything, Kocher and new chairman Jean-Pierre Clamadieu have to come with plan that reduces Engie’s conglomerate discount and boosts its shares. This is because the government’s plan to cut its 23.64 percent holding will remove Engie’s best defence against activist investors.
“For now, the state’s presence is a deterrent for activist investors, but once it leaves, Engie becomes a possible target,” said an investment banker familiar with the company’s thinking.
Activist investor Elliott Management’s acquisition of a 2.5 percent stake in drinks firm Pernod Ricard in December has focused minds across France’s CAC40 bluechip index on the need for a clear strategy, attractive valuation and close relationships with major shareholders.
At German rival Uniper, the presence of Elliott and activist investor Knight Vinke has become a source of tension in the company’s relationship with Finnish shareholder Fortum.
BELGIAN POISON PILL
Engie’s deeply discounted stock price shows the valuation potential of splitting off some of the group’s assets.
With a 0.95 price/book ratio, Engie is the second-most undervalued share in the Stoxx European utilities index, with only Uniper more undervalued by that measure, Refinitiv Eikon data shows.
More focused utilities trade at much higher multiples, with renewable energy group Orsted and Innogy around 2.5 times book and grid pureplays like Red Electrica and Terna trading at nearly three times book.
“Engie’s conglomerate discount is due to its complexity,” one banker said.
A large UK-based institutional investor said the company was “a black box”, incomprehensible to investors.
Bankers and advisers say Kocher’s biggest problem - Engie’s nuclear assets in Belgium - may offer its strongest defence against an activist attack.
Belgium plans to phase out nuclear energy by 2025, which will leave Engie the decades-long expensive task of decommissioning its seven nuclear plants there.
“When an activist takes aim at a company, it is usually because he sees something that management doesn’t. But I don’t see what solution an activist could bring for Belgian nuclear,” the banker said.
* Soybeans rebound as Trump says he would delay tariffs increase * U.S. wheat gains for 3rd day on expectations of strong demand (Adds details, quote) By Naveen Thukral SINGAPORE, Feb 25 (Reuters) - Chicago soybeans climbed nearly 1 percent on Monday to their highest in nearly two weeks as expectations of a trade agreement between Washington and Beijing underpinned the market. Wheat rose for a third consecutive session on support from tightening global supplies. The most-active soybean contract on the Chicago Board of Trade gained 0.8 percent at $9.17-1/2 a bushel by 0250 GMT, after marking its highest since Feb. 13 at $9.20 a bushel. Wheat was up 0.1 percent at $4.92-1/4 a bushel while corn added 0.5 percent to $3.77-1/4 a bushel. "China buying U.S. beans in Brazil's soybean marketing season will increase competition in the market," a Singapore-based trader said. President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods, thanks to "productive" trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued. China committed to buy an additional 10 million tonnes of U.S. soybeans in a meeting in the Oval Office on Friday, U.S. Agriculture Secretary Sonny Perdue said on Twitter. The commitments are a "show of good faith by the Chinese" and "indications of more good news to come," Perdue wrote. U.S. corn and soybean stockpiles are projected to tighten by the end of the 2019/20 marketing year, the U.S. Agriculture Department said on Friday. The corn crop was seen rising 3 percent to 14.890 billion bushels, based on an average yield of 176.0 bushels per acre, USDA said. Ending stocks for the 2019/20 crop year were pegged at 1.650 billion bushels, 5 percent lower than the prior marketing year. For soybeans, USDA estimated the crop at 4.175 billion bushels, 8 percent lower than 2018. Ending stocks were seen falling to 845 million bushels, a figure that the USDA said was "historically high" but still down 65 million bushels from a year earlier. Grains prices at 0250 GMT Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 492.25 0.50 +0.10% +0.15% 517.78 27 CBOT corn 377.25 2.00 +0.53% +0.47% 377.01 55 CBOT soy 917.50 7.25 +0.80% +0.71% 912.27 60 CBOT rice 10.40 $0.01 +0.05% +0.05% $10.59 47 WTI crude 57.17 -$0.09 -0.16% +0.37% $53.81 Currencies Euro/dlr $1.134 $0.000 -0.04% +0.03% USD/AUD 0.7136 0.001 +0.13% +0.62% Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential (Reporting by Naveen Thukral; Editing by Rashmi Aich)
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President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods thanks to “productive” trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.
The announcement was the clearest sign yet that China and the United States are closing in on a deal to end a months-long trade war that has slowed global growth and disrupted markets.
Trump had planned to raise tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports into the United States if an agreement between the world’s two largest economies were not reached by Friday.
After a week of talks that extended into the weekend, Trump said those tariffs would not go up for now. In a tweet, he said progress had been made in divisive areas including intellectual property protection, technology transfers, agriculture, services and currency.
As a result, he said: “I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
Mar-a-Lago is the president’s property in Florida, where the two men have met before.
The president did not set a new deadline for the talks to conclude, but he told U.S. state governors gathered at the White House that there could be “very big news over the next week or two” if all went well in the negotiations.
The White House did not provide specific details on the kind of progress that had been made.
China’s official Xinhua news agency said in a commentary that the goal of an agreement was getting “closer and closer”, but also warned that negotiations would get more difficult as they approached the final stages.
“The emergence of new uncertainty cannot be ruled out, and the long-term nature, complexity, and difficulty of China-U.S. trade frictions must be clearly recognized,” Xinhua said.
“We can’t be sure whether this constitutes a major cave or success because we don’t know the details of what has been negotiated. But ... agreeing to extend negotiations a few more weeks definitely is in China’s interests,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington.
“At this point, the U.S. has likely gotten all it’s going to get out of China.”
J.P. Morgan Asset Management market strategist Tai Hui said the move suggested both sides wanted a settlement of the dispute and added that further tariff escalation would have added to concerns about the U.S. growth outlook.
Trump leaves on Monday for Vietnam, where he will hold a summit with North Korean leader Kim Jong Un. The president, who faces a re-election battle next year, has portrayed his engagement with Kim and forcefulness with China as key successes of his presidency.
ENFORCEMENT STICKING POINT
Trump said on Friday there was a “good chance” a deal would emerge. But his lead trade negotiator, U.S. Trade Representative Robert Lighthizer, emphasized then that some major hurdles remained. Lighthizer has been a key voice in pushing China to make structural reforms.
China’s negotiators stayed for the weekend and the two sides discussed the thorny issue of how to enforce a potential trade deal on Sunday, according to a person familiar with the talks. Tariffs and commodities were also on Sunday’s agenda, he said.
Negotiators have been seeking to iron out differences on changes to China’s treatment of state-owned enterprises, subsidies, forced technology transfers and cyber theft.
Washington wants a strong enforcement mechanism to ensure that Chinese reform commitments are followed through to completion, while Beijing has insisted on what it called a “fair and objective” process. Another source briefed on the talks said that enforcement remained a major sticking point as of Saturday.
Reuters reported on Wednesday that both sides were drafting memorandums of understanding (MOUs) on cyber theft, intellectual property rights, services, agriculture and non-tariff barriers to trade, including subsidies.
Trump said he did not like MOUs because they are short-term, and he wanted a long-term deal. That sparked a back-and-forth with Lighthizer, who argued that MOUs were binding contracts, before saying they would abandon the term altogether going forward.
The source familiar with the talks played down the apparent tension between the top trade negotiator and the president, saying Trump, a former New York businessman, had viewed MOUs from a real estate perspective, while Lighthizer had done so from a trade perspective. There was no daylight between the two men, the source said.
Cadenza Innovation, a US-based provider of low-cost, high-performance lithium-ion (Li-ion) energy storage solutions to battery manufacturers, has announced a licensing agreement with Australian Li-ion battery manufacturer Energy Renaissance. The agreement pairs Cadenza Innovation’s patented technology, design and global battery industry expertise with Energy Renaissance’s advanced manufacturing and sales capability, along with its commitment to employ Australian resources.
Initially targeting the utility/grid, electric vehicle (EV) and industrial markets, Cadenza Innovation’s patented supercell serves as the cornerstone of its novel architecture. Providing simplification in battery pack design, it is said to reduce production and manufacturing costs, overcome safety issues and improve energy density.
In addition to its battery technology platform, Energy Renaissance will leverage the Cadenza Innovation team’s multidecade experience in designing facilities, sourcing and qualifying materials, planning and deploying production lines, and defining optimal supply chains and workflows for battery manufacturing sites. This will complement Energy Renaissance investors’ prowess in engineering, construction, mining and mineral operations, and power industry infrastructure.
The agreement coincides with Energy Renaissance’s development of the 1.3 GWh Renaissance One facility — a utility-scale battery manufacturing facility dedicated to providing commercial-scale, high-value, reliable and safe energy storage systems specifically designed for hot and humid climates. Given such conditions, the batteries used in those systems have different and demanding requirements that far exceed the capabilities of typical Li-ion batteries.
“Australia is gaining global attention as a nation with all the resources needed to capitalise on the unprecedented demand for batteries, energy storage systems and renewables,” said Energy Renaissance Chair Su McCluskey. “With rapidly expanding end markets ranging from utilities, transportation and industrials to standalone solutions for remote areas, the time is now for our country and our company to step up to this massive, immediate opportunity.”
“Today, there is an insatiable need for reliable batteries to facilitate renewable energy from solar, wind and hydro as well as for enabling better efficiency for traditional energy sources,” added Cadenza Innovation’s founder and CEO, Dr Christina Lampe-Onnerud. “Energy Renaissance is moving aggressively to address those requirements in a country that is proving itself a global leader in this transition. We’re excited to play a key role in those efforts.”
Image credit: ©stock.adobe.com/au/Sergey Nivens
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Langfang city of China's biggest steelmaking province of Hebei escalated the smog-alert from orange to red effective from February 23 to March 2, local environmental authorities said on Saturday February 23.
Under the most-severe red alert, heavy industries will have to suspend or cut production.
Taiyuan city in another northern China's province of Shanxi decided to extend its second severe pollution alert till February 28, said environmental authorities of the city on Sunday February 24.
Pakistani military spokesperson says they shot down two Indian aircraft inside its airspace and captured one pilot.
One Indian fighter jet pilot was allegedly captured after his plane was shot down
Pakistan confirmed on Wednesday that it had carried out air raids in Indian-administered Kashmir and shot down two Indian jets in its own airspace, capturing one of the pilots as tensions escalate a day after India bombed targets in Pakistan.
"Today, Pakistan Air Force undertook strikes across Line of Control from within Pakistani airspace," the foreign ministry said in a statement on Wednesday.
Earlier, Major General Asif Ghafoor, spokesperson of the Pakistani army, said Indian jets had entered Pakistan in response and two fighter jets had been shot down, with one pilot captured.
The development comes as Indian officials said at least three Pakistani combat jets entered the airspace over Indian-administered Kashmir on Wednesday but returned after being intercepted by Indian planes.
In response to PAF strikes this morning as released by MoFA, IAF crossed LOC. PAF shot down two Indian aircrafts inside Pakistani airspace. One of the aircraft fell inside AJ&K while other fell inside IOK. One Indian pilot arrested by troops on ground while two in the area.
At least four airports in the northern part of the country, including the main airport in Indian-administered Kashmir, were shut down indefinitely on Wednesday amid warnings of a retaliatory attack by Pakistan.
Also on Wednesday, an Indian Air Force plane crashed in Kashmir, killing two pilots and a civilian, a police official said. It was unclear whether the the plane was shot down or faced a technical snag.
India on Tuesday said it had launched an air attack inside Pakistan and that its warplanes killed "a very large number" of fighters at a rebel training camp, raising the risk of conflict between the nuclear-armed neighbours.
Pakistan denied there had been casualties, but has warned that it will respond to Indian aggression.
Tensions have risen since a suicide car bombing by Pakistan-based armed group in Indian-administered Kashmir killed at least 42 Indian paramilitary police on February 14.
Rio Tinto on Wednesday reported its highest annual underlying earnings since 2014, beating market expectations on robust commodity prices, and announced a bumper dividend on divestments and an upbeat iron ore outlook.
Underlying earnings for the 12 months ended Dec. 31 rose to $8.81 billion, from $8.63 billion a year earlier. The figure was significantly higher than a consensus estimate of $8.47 billion compiled by Vuma Financial.
Rio, flush with cash from recent sale of its Grasberg copper mine in Indonesia and other non-core assets, declared a final dividend of $1.80 per share and a $4 billion special dividend of $2.43 per share.
“We have once again announced record cash returns to shareholders,” Chief Executive Jean-Sébastien Jacques said, pointing to the miner’s ‘value over volume’ strategy.
Returns of $7.2 billion from a series of divestments also erased Rio Tinto’s net debt, leaving it with a net cash position of $255 million.
Iron ore prices have surged after last month’s deadly collapse of a dam operated by Vale SA in Brazil that forced the world’s top iron ore miner to cut production, likely boosting earnings this year for its global rivals.
Rio’s Australia-listed shares have risen 21 percent so far this year, compared with a near 15 percent jump for its larger, but more diversified, peer BHP Group.
The disaster has considerably raised scrutiny of safety standards throughout the industry, in particular tailings facilities. Rio some 100 tailings facilities across 32 sites.
Rio, which also mines aluminum and copper, said in last month’s fourth-quarter production update that it expects Pilbara iron ore shipments in 2019 to be between 338 and 350 million tonnes. It maintained that guidance in its results statement.
Last week, the world’s biggest miner BHP kicked off the reporting season for global majors and reported a drop in first-half 2019 profit citing rising costs.
Rio Tinto has made a promising find of copper, gold and silver at its Winu prospect in Western Australia, Chief Executive Jean-Sébastien Jacques said on Wednesday.
“What is clear is there’s a lot of copper, a lot of gold, a lot of silver,” he said, speaking to reporters after the miner reported its 2018 earnings, adding there had been some “interesting” drilling results.
Nigerian President Muhammadu Buhari won a second term at the helm of Africa’s largest economy and top oil producer, the electoral commission chairman said on Wednesday, following an election marred by delays, logistical glitches and violence.
He defeated his main opposition candidate Atiku Abubakar, a businessman and former vice president. Buhari secured 56 percent of votes, compared with 41 percent for Atiku, a candidate for the People’s Democratic Party (PDP).
Buhari faces a daunting to-do list, including reviving an economy still struggling to recover from a 2016 recession and quelling a decade-old Islamist insurgency that has killed thousands of people in the northeast, many of them civilians.
Addressing supporters at the campaign headquarters of his All Progressive Congress (APC) party in the capital Abuja, he promised increased efforts to tackle these issues.
“The new administration will intensify its efforts in security, restructuring the economy and fighting corruption,” he said.
The president won by 3.9 million votes, having garnered 15.2 million to Atiku’s 11.3 million. The election turnout was 35.6 percent, the electoral commission said, which compared with 44 percent in the 2015 presidential election.
“Muhammadu Buhari of the APC, having satisfied the requirement of the law and scored the highest number of votes is hereby declared the winner,” Mahmood Yakubu, chairman of the Independent National Electoral Commission (INEC), told election officials and reporters in the early hours of Wednesday.
A message on Buhari’s Twitter feed late on Tuesday showed him smiling and surrounded by applauding staff at his campaign office.
“I met the very hardworking members of our team, many of them young people, and was briefed on the performance of our party so far in the Presidential Elections. I am very proud of what has been accomplished,” he said on Twitter.
Buhari’s supporters gathered at the party’s headquarters to celebrate, many of them holding flags and dancing.
“As a youth of Nigeria I believe this is the way forward for this country and for my generation and that is why we choose to bring him back for the second time,” said Juwarat Abubakar, a Buhari supporter.
Osita Chidoka, a representative of the PDP and its defeated candidate Atiku, repeated the party’s stance that it does not accept the election result.
“We will explore all options including the belief that the legal process in Nigeria is one of the ways to resolve issues,” he said.
Buhari’s party has said the opposition was trying to discredit the returns from Saturday’s election.
The accusations have ratcheted up tensions in a country whose six decades of independence have been marked by long periods of military rule, coups and secessionist wars.
Observers from the Economic Community of West African States, the African Union and the United Nations appealed to all parties to await the official results, expected later this week, before filing complaints.
The candidate with the most votes nationwide is declared the winner as long as they have at least one-quarter of the vote in two-thirds of Nigeria’s 36 states and the capital, Abuja. Otherwise there is a second-round run-off.
MARRED BY VIOLENCE
Buhari, 76, took office in 2015 and sought a second term with pledges to fight corruption and overhaul Nigeria’s creaking road and rail network.
Atiku, 72, had said he would aim to double the size of the economy to $900 billion by 2025, privatise the state oil company and expand the role of the private sector.
Voting took place after a week-long delay which the election commission said was due to its inability to get ballots and results sheets to all parts of the country.
The event - Africa’s largest democratic exercise - was also marred by violence with at least 47 people killed since Saturday, according to the Situation Room, a monitoring organisation linking various civil society groups.
Some deaths resulted from clashes between groups allied to the leading parties and the police over the theft of ballot boxes and allegations of vote fraud.
Police have not yet provided official casualty figures.
More than 260 people have been killed since the start of the election campaign in October. The toll so far is lower than in earlier elections, but the worst violence occurred previously only after results were announced.
Mining major Rio Tinto is hoping to leverage is fossil-fuel-free portfolio to assist in reducing its carbon footprint, and to help battle climate change.
“Given our decision to strengthen our business and exit coal, we are now the only major mining company with a fossil-fuel-free portfolio, which means we are well-positioned to contribute to a low-carbon future,” said Rio CEO Jean-Sebastian Jacques on Wednesday.
“The materials we produce, from infinitely recyclable aluminium, to copper used in electrification, to our higher grade iron-ore product, all play a part in the transition to a low-carbon economy.”
Rio on Wednesday launched its climate change report, using recommendations from the Task Force on Climate-related Financial Disclosures, as a framework to assess the potential risks and opportunities of climate change.
The company has outlined that it would take action on four key areas: supplying essential metals and minerals for the transition to a low-carbon economy, reducing emissions from its own footprint, identifying and assessing physical risk exposures, and partnering to advance climate goals.
“At Rio Tinto, we have reduced our emissions-intensity footprint by almost 30% since 2008, putting us on track to beat our targets. Renewable energy is now used to produce nearly three-quarters of the electricity we use,” Jacques said.
“We are aware that we have more to consider on climate change and will work with partners such as the members of the Energy Transitions Commission, Alcoa and Apple, the World Bank and others, to look at further sustainable solutions that enable us to continue to generate profits and contribute to people, the planet and prosperity.”
http://www.miningweekly.com/article/rio-unveils-climate-change-report-2019-02-27
BHP Group Ltd, the world’s biggest miner, announced a raft of management changes on Thursday, in line with its “transformation agenda” led by Chief Executive Andrew Mackenzie.
The executive-level changes at BHP include the appointment of a chief commercial officer and the resignation of its president of petroleum operations.
Mackenzie late last year set up a so-called transformation office that reports directly to him to help with the next phase of growth and maximize the productivity of operations.
The global miner said Vandita Pant will on July 1 assume the role of chief commercial officer, taking over from 25-year veteran Arnoud Balhuizen.
The company also said that Steve Pastor, president of petroleum operations, will step down following the completion of BHP’s sale of U.S. onshore assets.
“These management changes are an important step as we plan for the future of BHP,” Mackenzie said.
The official Purchasing Manager's Index (PMI) fell to 49.2 in February, data showed on Thursday, the weakest level since February 2016.
This comes as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in an economy facing weak demand at home and abroad.
"Unless the trade war truly turns into an extended truce, the weakening trend may not end quickly," Iris Pang, Greater China economist at ING, said in a note. "As such we expect March's PMI to fall, too."
Factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in an economy facing weak demand at home and abroad.
The gloomy findings are likely to reinforce views that the world's second-largest economy is still losing steam, after growth last year cooled to a near 30-year low.
Even with increasing government stimulus to spur activity, concerns are growing that China may be at risk of a sharper slowdown if current Sino-U.S. trade talks fail to relieve some of the pressure.
https://www.cnbc.com/2019/02/28/china-economy-february-manufacturing-and-services-pmi-release.html
The US "very much" wants to come to an agreement with Canada and Mexico regarding alternate arrangements to the US Section 232 tariffs on steel and aluminum, however, whether such an agreement will be reached remains unclear, United States Trade Representative Robert Lighthizer said Wednesday.
Testifying to the House Ways and Means Committee in a hearing on current trade negotiations between the US and China, Lighthizer said discussions with Canada and Mexico on the tariffs are ongoing.
"On Canada and Mexico, in the context of maintaining the integrity of the steel and aluminum program, we want very much to work out an agreement with Canada and Mexico and we're in the process of doing that," Lighthizer said. "Whether we will succeed or not, I don't know, but it certainly my hope we will do that."
Canada and Mexico were granted a temporary exemption from the tariffs of 25% on steel imports and 10% on aluminum imports when they took effect in March 2018 as the countries were in the midst of broader trade discussions; however the US ended the temporary reprieve June 1.
The tariffs on steel and aluminum remain a sticking point in passing an updated trade agreement between the US and its North American trading partners. The US, Canada and Mexico reached a deal to replace the existing North American Free Trade Agreement in November, but legislators in all three countries must approve a final agreement. Several US lawmakers have called for an end to the tariffs on Canada and Mexico before the trade deal is approved.
The passage of the USMCA is a top priority because if Congress rejects the deal, it would harm the US trade negotiation team's credibility with China and other trading partners, Lighthizer said.
"If the Congress doesn't see fit to pass [the USMCA], then everything else we're talking about is kind of like a footnote because it will mean we can't do trade deals and we're not going to be in the trade space," he said. "It would be such an admission of failure by all of us. ... There is no trade program in the US if we don't pass USMCA."
A private survey on China's manufacturing sector showed Friday that factory activity shrank for a third straight month in February.
The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) came in at 49.9 for February — higher than January's reading of 48.3, and better than the 48.5 that economists polled by Reuters had forecast.
However, it showed that manufacturing activity in February remained around contractionary levels not seen since early 2016. A reading below 50 signals contraction, while a reading above that level indicates expansion.
The Caixin PMI is a private survey focused on smaller businesses and offers a first glimpse into the operating environment. It is closely watched as an alternative to the official PMI.
"Domestic manufacturing demand improved significantly, and foreign demand was not deteriorating as quickly as last year," wrote Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.
Still, new export orders slipped back into contractionary territory, he noted.
The results of the private survey came on the heels of official PMI China released on Thursday which showed manufacturing activity fell for the third straight month, dropping to 49.2 in February from 49.5 in January, according to data released by the country's National Bureau of Statistics. The official manufacturing gauge also hit a three-year low.
The two surveys offered mixed signals about the strength of the manufacturing cycle in February as the private poll offered some hope that there was uptick in activity from the month before.
"But on balance, they remain consistent with our expectation for a further slowdown in economic growth in Q1," wrote Julian Evans-Pritchard, senior China economist at Capital Economics, in a note on Friday.
"The sharp movements in the Caixin PMI during the past two months hint at possible residual seasonality caused by shifts in the timing of Chinese New Year," Evans-Pritchard added. The week-long public holidays in China started in early February this year.
Still, averaging the indices for January and February showed activity still looked to have softened at the start of 2019, he added.
"The upshot is that it is probably too soon to call the bottom of the current economic cycle. Indeed, we expect growth to continue to come under pressure until the middle of this year," Evans-Pritchard wrote.
Investors have been closely watching economic indicators from the world's second-largest economy for signs of trouble amid domestic headwinds and the ongoing U.S.-China trade dispute.
The manufacturing data come days before China's annual meeting of parliament which starts on March 5. Top officials are widely expected to announce more support measures such as sweeping tax cuts to reduce the strains on the economy.
Chinese leaders will also reveal Beijing's key economic and financial targets for the year which may provide clues on their future policy stance.
Actual growth in the world's second-largest economy cooled to 6.6 percent in 2018 — the slowest in 28 years — from 6.8 percent in 2017.
Final Eurozone Manufacturing PMI at 49.3 in February (Flash: 49.2, January Final: 50.5) ▪ Concurrent declines in output and new orders seen during February ▪ Prices pressures continue to soften
Japanese goods producers recorded a sharper downturn in output during February, while new order intakes declined at a quickened pace.
As a result, the headline PMI dipped into contraction territory for the first time in two-and-a-half years.
New export business also continued to decline amid lower sales to China.
They are slowly plowing their way across thousands of miles of ocean toward America’s Gulf of Mexico coastline. As they do, twelve empty supertankers are also revealing a few truths about today’s global oil market.
In normal times, the vessels would be filled with heavy, high sulfur Middle East oil for delivery to refineries in places like Houston or New Orleans. Not now though. They are sailing cargo-less, a practice that vessel owners normally try to avoid because ships earn money by making deliveries.
The 12 vessels are making voyages of as much as 21,000 miles direct from Asia, all the way around South Africa, holding nothing but seawater for stability because Middle East producers are restricting supplies. Still, America’s booming volumes of light crude must still be exported, and there aren’t enough supertankers in the Atlantic Ocean for the job. So they’re coming empty.
“What’s driving this is a U.S. oil market that’s looking relatively bearish with domestic production estimates trending higher, and persistent crude oil builds we have seen for the last few weeks,” said Warren Patterson, head of commodities strategy at ING Bank NV in Amsterdam. “At the same time, OPEC cuts are supporting international grades like Brent, creating an export incentive.”
The U.S. both exports and imports large amounts of crude because the variety it pumps — especially newer supplies from shale formations — is very different from the type that’s found in the Middle East. OPEC members are likely cutting heavier grades while American exports are predominantly lighter, Patterson said.
Gasoline Glut
By industry standards, American oil is considered light and low in sulfur, making it great for churning out gasoline, with the result that a glut of the automotive fuel is starting to build up. By contrast, Middle East crude often needs more processing — not a problem for Gulf of Mexico plants that were designed specifically for that task — but it can have a smaller gasoline yield.
“There is still going to be a lot of growth from U.S. tight oil this year,” said James Davis, director of short-term global oil service at Facts Global Energy. “This will continue to push U.S. exports up.”
Shippers are counting on the U.S. exports to help the tanker market withstand supply restrictions by the Organization of Petroleum Exporting Countries and allies including Russia. Industry analysts, who actually raised their estimates for what they think the ships will earn this year after the OPEC+ pact was announced in December, are citing rising American shipments as a contributing factor.
There are usually three or four empty supertankers — very large crude carriers in industry jargon — that would sail empty to the U.S. at any one time, according to shipbrokers.
The shift has produced knock-on effects around the shipping market. Daily earnings for the VLCCs, which can haul two million barrels of oil, on the benchmark Middle East-to-China route doubled to $29,337 in the past week, according to Baltic Exchange data.
“Following a fixing frenzy from the U.S. Gulf Coast late last week, most available tonnage in the Atlantic basin has been soaked up,” said Espen Fjermestad, an analyst at Fearnley Securities AS in Oslo. “With ships ballasting West, rates have shifted up also in the East.”
https://www.oilandgas360.com/empty-supertankers-illustrate-a-strange-oil-market/
2012: Shale is small and high cost.
2018: Shale is large and pari passu with conventional.
The oilfield services sector in the Permian Basin could be getting action-packed.
Hydraulic fracturing operations appear to be ramping up in the Permian Basin, suggesting that the region’s oilfield services sector is regaining strength after suffering a dip in activity in recent months.
“Operators have gone from full-go planning mode in December to slowing things down since pricing took a dive over the holidays,” said Matt Johnson, Principal with Los Angeles-based Primary Vision, Inc. “A combination of improved crude pricing, global supply and demand and favorable pressure pumper contracts may be just the three-pointer that operators need to make spring/summer action-packed.”
Through its “Primary Vision Frac Spread Count,” Johnson’s firm gauges the health of the upstream oil and gas industry through the lens of hydraulic fracturing activity. The indicator hinges on frac spreads, or frac fleets, which comprise the equipment that a pressure pumper – an oilfield service company – uses to perform a frac stimulation job. By Primary Vision’s reckoning, an increase in the number of frac spreads translates into an uptick in activity and growth in production – and vice versa.
On Feb. 18, Primary Vision reported that the national frac spread count had risen by 11 week-on-week to 452 and that the Permian accounts for approximately one-third of that figure. The Permian gained four frac spreads during the period to hit 147, Johnson told Rigzone.
“The rig count is diverging from the frac spread count as we predicted earlier this year,” Johnson told Rigzone. “The Permian Basin has seen a decline of almost three percent of rigs and an increase in frac spreads of eight percent since early January. The perception is that U.S. operators are satisfied pushing their completion programs forward with WTI/NYMEX pricing above $50.”
On Thursday, the price of a barrel of West Texas Intermediate (WTI) crude oil for April delivery settled at $56.96.
“Some operators took their ball and went home in Q3, per rumors, however this won’t really be seen until all of the data has rolled in,” continued Johnson. “Over Q4 we saw a slowdown of active frac spreads of up to 30 percent from 2018 highs.”
Pointing out that the panic that set in amid the pricing shock that occurred around Christmas was genuine, Johnson pointed out that operators’ year-end meetings focused on performance.
“They talked about improvement and now it was about hyper-targeting completions even more methodically in 2019,” explained Johnson. “Then a crude pricing anomaly happened over the holidays and everyone hit pause.”
Although concerns about market risk and perceived global demand linger, service companies have had the opportunity to put the less frenetic pace to their advantage by refining some of their internal processes, Johnson added.
“With a bit more patience this year operators can have their logistical systems improved (think water and proppant strategy), oilfield services will continue to give further pricing incentives to pump and more pipelines will come online,” said Johnson. “These are all considerations that make both logical and economical sense.”
Although his firm holds the view that much of the downward spiral in crude pricing was algorithmic, Johnson opined that operators “wanted the dust to settle first and see the market act more rationally.” Now, he added, “smart operators” hold the advantage.
“Strategic planning and expert-level execution takes position and timing, all things smart operators have on their side now,” said Johnson. “We’ve heard of stories where the biggest operators in the world have break-evens in the teens and low-20s in the Permian. Kudos to the operators that learned their lessons from the rough patches of last cycle and improved every department under the sun.”
Crude inventories in West Texas dropped this week to the lowest in four months after a converted pipeline began transporting crude from the nation’s biggest shale oil field to the U.S. Gulf Coast, data from market intelligence provider Genscape showed.
The drop in storage in the Permian Basin is another sign that new pipelines out of the region have begun to alleviate a crude bottleneck that depressed local crude prices as production overwhelmed pipeline capacity and filled storage tanks.
Crude inventories in the Permian Basin fell to 15 million barrels in the week to Feb. 19, the lowest since October and down from a record 22 million barrels in November. That glut had doubled in size from 11 million barrels in June, according to the Genscape data.
The decline began in mid-November after Plains All American Pipeline LP expanded the capacity of its about 300,000 barrels per day (bpd) Sunrise Pipeline.
The drawdown accelerated this month when Enterprise Products Partners LP began shipping crude on a converted natural gas liquids pipeline, the 200,000 bpd Seminole-Red line, two months ahead of schedule.
West Texas Intermediate crude at Midland traded at a $1.30 per barrel premium to U.S. crude futures on Thursday, its strongest since January 2018. Midland crude in late August had sold at a $18.25 discount to the U.S. benchmark.
Permian area storage levels could rise again in mid-2019, weakening Midland prices, before other pipeline projects begin, analysts said.
Permian Basin output is expected to hit 4 million bpd in March, a year-on-year surge of over 1 million bpd, the U.S. Energy Information Administration projected this week.
Smollett staged ‘hate crime’ to advance career: Police
“The next outbound pipeline capacity expansions are not expected until the third quarter of 2019, potentially leading to further constraints and storage builds,” said Dylan White, an analyst at Genscape.
Three major pipelines transporting more than 2 million bpd from the Permian Basin to the Gulf Coast are scheduled to open over the next 18 months. They include the 900,000 bpd EPIC pipeline, the 670,000 bpd Cactus II pipeline and the 800,000 bpd Grey Oak pipeline.
U.S. producers, responding to lower crude prices and pipeline constraints, have idled 20 oil drilling rigs in the Permian since December, bringing the region’s oil rig count to 473, the lowest since June, according to General Electric Co’s Baker Hughes energy services firm.
Abu Dhabi’s flagship Murban crude has sold at a discount in Asia to its official selling price (OSP) for four straight months - the longest stretch in nearly two years - as buyers opt for cheaper U.S. and European supplies, according to trade sources and Refinitiv data.
Cargoes bought for loading in the first four months of 2019 were sold at discounts ranging from 5 cents to 40 cents a barrel, even as producer Abu Dhabi National Oil Company (ADNOC) cut the grade’s benchmark price for four consecutive months.
Murban is the most liquid light-sour oil in Asia’s physical spot crude market. The discounts were unusually steep for this time of the year as Asian refiners typically process more light grades to increase diesel and kerosene output for heating during winter.
However, Asia has experienced an influx of cheaper light oil from the United States as U.S. oil production and exports soar to all-time highs, while the arbitrage from Europe has opened. Kuwait and Abu Dhabi have also added new light oil grades in 2018.
“Lights are still in oversupply,” said a Singapore-based trader.
All Middle East crude has become more expensive after regional benchmark Dubai rose above dated Brent as OPEC has continued to cut production and U.S. sanctions on Iran and Venezuela tightened supplies.
Dated Brent slipped to a discount of about 50 cents a barrel against Dubai for February and March contracts while the discount is about 11 cents a barrel for April, traders said.
“We bought some WTI and CPC in the spot market and covered the rest of our demand with term barrels,” a trader with a north Asian refiner said, referring to its purchases for May.
Kazakhstan’s CPC Blend and U.S. WTI Midland crude have sold at just under $2 to Dubai quotes on a cost-and-freight (C&F) basis to north Asia, while Murban cost about $1 a barrel more than CPC and WTI for oil delivered in May, the sources said.
Murban could continue to face similar pressure next month as refinery maintenance in Asia cuts demand and as refining margins for light distillates remain weak, the sources said.
The influx of cheaper light oil from the United States is expected to continue even though the arbitrage window for U.S. Mars to Asia has shut after sanctions on Venezuela pushed up its price, they said.
U.S. oil production and exports hit all-time highs last week, the Energy Information Administration said on Thursday.
Record shipments of U.S. oil to Europe have also displaced CPC Blend demand in the Mediterranean.
Libya’s state-run National Oil Corp. refused to restart the country’s biggest field after militants seized and declared it secure earlier this month.
The standoff over Sharara, which can pump about 300,000 barrels of crude a day, is entering its third month. NOC won’t resume production while armed groups are there, the company’s chairman Mustafa Sanalla said on Sunday. The Libyan National Army, loyal to eastern leader Khalifa Haftar, controls the field and said it’s ready to restart.
“The circumstances that made us declare force majeure still exist now and therefore we can’t lift the ban,” Sanalla said, referring to a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. The “reality is the field is still not safe.”
Libya, one of the most volatile and politically fragmented members of OPEC, has been suffering from major oil disruptions, with multiple battles and blockades hindering efforts to revive output. The country pumped about 1.1 million barrels a day last year, the highest since 2012, which was still just about two-thirds of its production before the 2011 civil war.
Haftar and the United Nations-backed government of Fayez al-Sarraj in the western city of Tripoli are competing for control of Libya. Haftar’s self-styled national army, the country’s most powerful militia, controls a coastal area containing the major exporting terminals, and said its recent operations in the southern part of the country, including the capture of Sharara and the nearby El-Feel fields, is intended to expel militants and secure energy facilities.
Sharara is a joint venture between Libya’s NOC, Repsol SA, Total SA, OMV AG and Equinor ASA. It has been shut since December when state guards and armed residents seized it for financial demands, the latest in several such closures over the past few years.
Despite the assurance that Sharara is secure and ready to restart, Sanalla said the NOC’s safety concerns haven’t been addressed. The security forces currently protecting the field are the same guards who have “committed violent and terrorizing acts against workers,” he said.
Petrobras said about 188 m3 of oil was spilled at platform P-58 at Bacia dos Campos during a routine transfer to a vessel.
P-58 is located at the south coast of Espirito Santo state and the company said there’s no risk of the oil reaching shore, which is 80 km away.
In a regulatory filing, Petroleos Brasileiros SA said two vessels are on site to try to contain the incident, and that it’s investigating what went wrong.
https://www.worldoil.com/news/2019/2/24/petrobras-says-oil-spilled-in-campos-basin-in-espirito-santo
Exxon Mobil said it will deploy technology from Microsoft to make its massive Permian Basin development the largest oil and gas acreage in the world to use cloud computing technology.
Exxon Mobil predicted its new Microsoft partnership in the Permian will help it generate billions of dollars in cash flow over the next decade through improvements in data analysis and operational efficiencies as companies move toward more digital and automated oilfield operations.
"The combination of Microsoft's technologies with our unique strengths in oilfield technologies, production efficiency and integration will help drive growth in the Permian and serve as a model for additional implementation across the U.S. and abroad," said Staale Gjervik, senior vice president of Permian integrated development for Exxon's shale subsidiary, XTO.
"The unconventional (shale) business is fast moving, complex and data rich, which makes it well suited for the application of digital technologies to strengthen our operations and help deliver greater value," he added.
West Texas' booming Permian currently is Exxon Mobil's largest and fastest-growing investment focus in the world.
The Microsoft partnership includes an integrated cloud system that collects real-time data from oil field assets spanning hundreds of miles. Exxon said the data will help it make faster and better decisions on drilling optimization, well completions and personnel deployment.
Environmentally, leak detection and repair response times could be further reduced with enhanced access to emissions data, Exxon Mobil said, strengthening its recent voluntary actions to manage methane emissions.
Exxon Mobil's Permian position covers more than 1.6 million acres.
Oil fell on Monday, reversing earlier gains after U.S. President Donald Trump told OPEC producers to “relax” as prices were too high.
Brent crude oil futures were down 91 cents at $66.21 a barrel at 1246 GMT, having earlier risen to a 2019 high of $67.47, while U.S. West Texas Intermediate (WTI) crude futures were down 74 cents at $56.52 a barrel.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!” Trump tweeted.
Members of the Organization of the Petroleum Exporting Countries together with non-OPEC producers such as Russia have agreed to cut production by 1.2 million barrels per day this year to help balance the market and support prices.
The oil price has risen by around 20 percent this year, aided primarily by OPEC’s production cuts, as well as U.S. sanctions on exports of crude from Iran and Venezuela.
Trump has frequently blamed high oil prices on OPEC while the United States has become the world’s largest supplier thanks to shale output.
Adding to the uncertain supply picture are Libya, where production has been frequently undermined by political tensions and violence, and Nigeria, Africa’s largest oil exporter, where as many as 39 people were killed in election violence over the weekend.
“Supply risk is ever present with Venezuelan tensions brewing a notch higher ... the National Oil Corporation in Libya refusing to start production at the El Sharara field,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.
Goldman Sachs analysts said on Monday that “the near-term outlook for oil is modestly bullish over the next two to three months”, but added that the outlook for later in 2019 was weaker due to surging U.S. exports and an “an increasingly uncertain economic, policy and geopolitical backdrop”.
Welcome to The GERM Report by Dan Graeber, a commentary on the intersection between geopolitical events and the price of oil. GERM stands for Geopolitical Energy and Risk Monitoring. Our indicator is based on the expected price volatility by the end of the current trading week.
Risk level: Orange
RED: Severe (+/- 4%) ORANGE: High (+/- 2%) YELLOW: Elevated (+/- 1%) BLUE: Guarded (+/- ½%)
THE BOOSTER SHOT
Regime change in Venezuela may be imminent.
Trump kindly asks OPEC to please help bring the price of oil lower.
Socialism is dead. Long live socialism.
Crude oil prices tested new heights last week, even against record-high production levels from the United States. Price support continues to come from US-led efforts to hobble Iran and Venezuela, two of OPEC’s founding members, through economic sanctions. While the 40-year-old Islamic Republic continues to hold, such durability is unlikely in Venezuela. The socialist experiment in Venezuela is likely to fail in one way or the other. Already buckling under rampant inflation, US sanctions on oil – Venezuela’s life-line – are crippling the nation’s economy. Rousseau, and later Marx, observed that conflict is bred from economic issues. Coupled with regime change, and broader economic trends, regime change in Venezuela may have widespread consequences.
The steady loss of Iranian and Venezuela barrels, coupled with OPEC+ discipline and tentative optimism that something positive will happen in US-Chinese trade talks, all stirred up Brent tailwinds last week. The global benchmark for the price of oil ended the week up 1.1 percent to close Friday at $67.25, its highest level since mid-November.
Venezuelan President Nicolas Maduro recognized the economic experiment has failed. The IMF predicts real GDP for the oil-rich country will contract by 18 percent this year. Inflation, meanwhile, is expected to hit a mind-boggling 1.4 million percent.
“The production models we’ve tried so far have failed, and the responsibility is ours—mine and yours,” Maduro said last year.
Economic power and national power are integrally linked. By that test alone, Venezuela is failing. Change, then, is inevitable. National Assembly President Juan Gauido has already declared himself the interim leader of the once-mighty OPEC nation with promises of change. Given growing international pressure, Maduro’s days are certainly numbered. But change is rarely, if ever, peaceful. And the US track record with overseeing a change of regime is anything but stellar.
US President Donald Trump spoke of the “horrors of socialism and communism” at a speech in Miami last week. Socialism, the president said, is a misguided ideology that eventually leads to tyranny.
Socialism aims in part to address the link between economic development and conflict. Rousseau wrote that one of the causes of social conflict was economic development. Conflict arises because of the competition for the limited resources that each unit in the system needs to survive. Rousseau warned that once we enter into a situation where man is bold enough to state "this is mine," society threatened by a jealous man that is "bloodthirsty and cruel." For Marx, society could only enter the “realm of freedom” if it can escape the bondage of economic development and competition.
“The freedom in this field cannot consist of anything else but of the fact that socialized man, the associated producers, regulate their interchange with nature rationally, bring it under their common control, instead of being ruled by it as by some blind power,” he wrote.
Both Rousseau and Marx felt that once competition is eliminated, or at least muted, mankind will be free. The US president has cast at least some of this vision as a blight that must be eliminated. Socialism, according to Trump, is dying. Freeing up social and corporate wealth, Trump has thrived on one of the longest stretches of economic expansion in world history. For these thinkers, competition breeds progress and there should therefore be no artificial constraints like treaties and multilateral trade agreements. Adam Smith wrote that it is not benevolence that breeds wide-spread success, but self-interest.
To facilitate the passing of socialism in the Western Hemisphere, administration officials have said all options are on the table in Venezuela. The United States will take action, said US Secretary of State Mike Pompeo, against those in Venezuela standing in the way of democracy. But the administration should heed the warnings from Elliot Abrams, the veteran diplomat tasked with vetting regime change in Venezuela.
“This crisis in Venezuela is deep and difficult and dangerous,” he warned.
US efforts in regime change, from Iraq to Libya to any number of Latin American countries, have rarely been easy and never been quick. US economic expansion, meanwhile, is winding down. The Institute for Supply Management said at the beginning of February that last month marked the 117th consecutive month of growth for the United States. The manufacturing sector, an economic component integrally linked to national power, continued to expand. But underneath, there are signs that momentum is petering out. US exports are expanding, but at their slowest pace since fourth quarter 2016, coincidentally when Trump was elected.
Respondents in the chemical products sector told the ISM that while business was good, there are growing concerns. Already, higher oil prices and a concerted effort to erase the glut of gasoline are showing up at the gas pump. US taxpayers, meanwhile, are waking up to the stark reality that feeling flush from new US tax codes means lower, if any, federal refunds. Rousseau stated that a surplus awakens greed; the more one gets, the more one desires. The opposite scenario does not, however, hold up.
On Monday, the Dallas Fed releases its report on manufacturing activity in its sector for February. Tuesday brings a handful of housing barometers in the United States. US Fed Chair Jerome Powell also testifies Tuesday before a Senate banking panel. Wednesday will be the day to watch for heightened volatility as President Trump meets in Hanoi with North Korean leader Kim Jong Un. That meeting extends into Thursday, when data on US GDP for the fourth quarter are released. Friday, the start of the new month, brings a trove of data, from Canadian and Italian GDP to consumer confidence in Japan. The summit in Hanoi, and Trump’s early Monday plea to OPEC, warrant an Orange alert for the coming week.
Updated: U.S. net imports from OPEC & NON-OPEC
Crudeoil in 2018:
OPEC 2,591K b/d down16.8% Y/Y NON-OPEC 3,333K b/d down 9.8%
Y/Y 2008-2018 (10yrs)
OPEC down 52.15% or 2,824k b/d NON-OPEC down 23.2% or 1,007k b/d
@JRJ_ALHAJRI
UNITED NATIONS (UrduPoint News / Sputnik - 26th February, 2019) The UN Security Council is set to hold a meeting on the situation in Venezuela on Tuesday while the United States and its allies escalate tensions via a multi-pronged strategy that combines sanctions with attempts to deliver so-called aid.
Venezuelan President Nicolas Maduro has refused to allow any US-sponsored aid into the country, calling it a "fake show" and accusing Washington of trying to use it as a ploy to oust him from power. Moreover, the United Nations and the International Committee of the Red Cross have urged Washington not to deliver aid without the consent of the Venezuelan government.
Venezuelan opposition leader Juan Guaido conspired with the United States to try and force unauthorized humanitarian aid across Venezuela's borders on Saturday. The move led to border clashes and prompted Caracas to sever diplomatic and political relations with neighboring Colombia.
On Monday, in the wake of the failure to deliver aid to Venezuela, US officials called for a UN Security Council meeting.
The meeting is scheduled to take place at 3:00 p.m. EST (8:00 p.m. GMT) at UN headquarters in New York.
The United States is expected to urge the Security Council to call for new presidential elections in Venezuela.
Earlier in the month, media reported that the United States would like to submit its own draft UNSC resolution.
Russia had prepared its own draft document in support of Venezuela, calling on UN member-states to halt attempts to intervene in the Latin American country's foreign affairs and stressing the need for a peaceful settlement to the crisis.
South African Ambassador to the United Nations, Jerry Matthews Matjila, told Sputnik that any humanitarian aid to Venezuela must be with the agreement of the government of Maduro.
Guaido and the opposition-led National Assembly disputed Maduro's May re-election victory. As a result Guaido declared himself interim president last month and was backed by the United States and several US allies, who are all now calling for new elections.
The scheduling of the Security Council session comes after the United States imposed more sanctions on Venezuelan officials while US and opposition leaders vowed to intensify efforts to deliver aid.
Earlier on Monday, the US Treasury Department sanctioned four Venezuelan governors while Vice President Mike Pence announced that the United States would impose new, stronger sanctions against Venezuela's government in coming days. He also called on the Lima Group countries to freeze the assets of Venezuela's oil giant PDVSA.
Pence visited Bogota, Colombia, on Monday where he met with Venezuelan opposition leader Juan Guaido, as well as other participants of the Lima Group to discuss the latest developments in Venezuela.
During the meeting, Pence said that the United States will continue its efforts to deliver humanitarian assistance to Venezuela and will provide an additional $56 million to US allies in the region to help Venezuelan refugees.
During the attempted delivery of humanitarian aid on the border with Colombia on Saturday, several trucks were burnt. However, no evidence has surfaced to support who is responsible for burning the vehicles.
According to Luis Almagro, the secretary general of the Organization of American States (OAS), 335 people were injured as a result of clashes between law enforcement officers and protesters on Venezuela's borders with Colombia and Brazil.
Venezuelan Vice President Delcy Rodriguez dismissed allegations that there is a humanitarian crisis and noted that, according to international law, foreign aid should only be delivered in cases of natural disasters and armed conflicts, unless the government requests it.
Clashes on the border of Venezuela and Colombia continued on Sunday with the participation of Venezuelan migrants who were trying to get back into their country.
Russia, China, Cuba, Bolivia and a number of other states reaffirmed their support for Maduro as Venezuela's only legitimate president after the United States and several allies recognized Guaido.
https://www.urdupoint.com/en/world/preview-unsc-to-hold-meeting-on-venezuela-c-559936.html
Clearly, we are seeing a weakening growth picture and demand for copper leading to the weaker picture for copper. However, with a six-month high for copper prices over the past two months, there is a high degree of respect for the potential future pathway for growth.
US-Chinese trade talks appear to be reaching a crescendo, with the US President Donald Trump postponing the 1 March deadline which would have seen tariffs ramped up to 25%. With the prospect of improved relations between the world’s two largest economies, we are clearly seeing markets front-run any actual improvement to the economic picture. This could be a risky business if we fail to see that expected breakthrough take shape, yet when taking the technical picture into account, there is certainly an argument for further gains if things continue to head in the right direction.
Looking at the weekly chart, there is a clear double bottom formation that has completed last week, bringing about a picture of impending upside to come. However, this wider picture also highlights the major resistance zone we have seen reached, with the price turning lower from the area encompassing the March 2018 low and July 2014 peak. Given the lack of any data to highlight an economic recovery in play, we could see some doubts come into play over a prospective deal between the US and China, with the price looking at risk if we remain below $2.958, there is a good chance that we could see this market retrace from here. However, such downside would likely provide us with a precursor to further upside as US-China trade talks progress. Thus, the short-term outlook remains reliant upon the ability or inability to break through $2.958 resistance. In either case, with US-China trade talks moving in the right direction, there is a good chance that we have bottomed out. However, if we did see prices turn south over the near term, this would likely provide us with a buying opportunity unless we see a drop below $2.5439.
BP Chief Executive Bob Dudley described the United States' high-pace shale oil sector as a "market without a brain" that, unlike Saudi Arabia and Russia, only responds to market signals.
The U.S. shale oil sector, which has helped the country to become the world's biggest oil producer last year, needs oil to sell at between $40 to $60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable.
In its biggest deal in around 20 years, BP bought U.S. assets from BHP for $10.5 billion last year.
"The U.S. is the only country that completely responds to market signals ... like a market without a brain. It just responds to price signals," Dudley told the International Petroleum Week conference in London.
"Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the U.S. shale market responds purely to oil prices."
Not least in reaction to surging U.S. output, Russia joined a global supply cut deal with the members of the Organization of the Petroleum Exporting Countries to prop up prices.
Overall U.S. crude production has climbed to a weekly record of 12 million barrels per day (bpd), the U.S. Energy Information Administration said in its latest report, mainly due to increases in the Permian and the Bakken in North Dakota.
Crude stockpiles have built for a fifth straight week to their highest since October 2017 and exports hit an all-time high.
Reporting by Ron Bousso and Shadia Nasralla
https://www.oedigital.com/news/463312-bp-chief-u-s-oil-sector-a-market-without-brain
El Feel oilfield located in southwest Libya, is operated by state-owned NOC (National Oil Corp) and Italian multinational Eni, and features output totaling roughly 75,000 barrels per day.
“At no stage was El Feel field staff or facilities at risk. No impact on activities has been reported, the field is producing regularly,” said a spokesperson for Eni, according to news site Kallanish Energy.
“The Libyan National has peacefully extended control over Al Feel oilfield, we are securing the location, and it will be handed over to oil facilities guards shortly,” tweeted the forces spokesman Thursday.
Last Thursday, the Karama operations room of the Libyan National Army, led by Marshal Khalifa Haftar, announced it had take control of El Feel oilfield, "peacefully" and securing it, in preparation for handing over it to the oil facilities guards.
In response to questions from the Kalanish Energy News, the Eni spokesman said the production activities in El Feel oilfield were not affected in any way, noting that the production process in the field is regular.
In the past month, two integrated majors with strong footprints in the Permian Basin announced plans to increase their refining capacity along the Texas Gulf Coast. During the last week of January 2019, ExxonMobil announced a final investment decision to expand its Beaumont, TX, facility’s capacity by 250 Mb/d, making it the largest U.S. refinery, and then confirmed an investment with Plains All American and Lotus Midstream to build a 1-MMb/d pipeline to ship crude to its Beaumont and Baytown, TX, refineries. In the same week, Chevron announced its purchase of the 110-Mb/d Pasadena, TX, Houston Ship Channel refinery from Brazil’s national oil company, Petrobras. Both Exxon and Chevron boasted record Permian production in their fourth quarter 2018 earnings calls. Today, we review Chevron’s purchase and Exxon’s expansion in light of Permian production growth and the changing Gulf Coast refining market.
Independent producers and domestic refiners alike have enjoyed the bounty of cheap domestic shale oil since 2012. The latest investments by Exxon and Chevron suggest major oil companies are firmly placing their big-boy stamp on the shale turf and claiming it as their own. They are doing this by employing industrial-scale production techniques in the Permian to extract more for less over the long term. This strategy is an integral part of their exploration and production portfolio — just as valued as Exxon’s investment in offshore Guyana and Chevron’s continued investment in deepwater Gulf of Mexico plays. These investments in shale are now being consolidated into their vertically integrated operations through the expansion of their downstream refining capacity along the Gulf Coast.
Chevron Pasadena (TX) Refinery Purchase
The 110-Mb/d Pasadena Refining System Inc. (PRSI) plant was acquired by Petrobras at the end of 2008 after it bought an initial 50% stake costing $360 million in 2005 and paid a reputed $639 million for the remaining 50% from joint venture partner Astra Oil three years later. Petrobras recently agreed to sell the refinery to Chevron for $350 million — about one-third of what the Brazilian company had paid for it. The acquisition, which is expected to close during the first half of 2019, includes 5.6 MMbbl of storage capacity and access to Houston Ship Channel docks, as well as area crude and refined product distribution systems.
PRSI is configured to process light crude to produce gasoline and distillate components. Data from the Texas Railroad Commission (TRRC) shows the plant is primarily supplied with crude from the Enterprise Houston Terminal (formerly OilTanking) — likely a mixture of Permian and Eagle Ford shale grades. Figure 1 shows the percentages of monthly refinery output by product between January 2014 and July 2018, as reported to the TRRC. The refined product yield has changed over the past five years, with an increase in gas liquids (propane and butane) from 3% of output in 2014 to 9% in 2018 (bottom blue layer for LPGs). Gasoline output of 63% in 2014 has fallen to 50% in 2018 (red layer) due to increased production of gas liquids and naphtha petrochemical feedstocks. Diesel output (green layer) is also lower today, at 16% versus 22% in 2014, probably because lighter shale crudes produce less distillate material. Average refinery throughput in January-July of 2018 was 101 Mb/d, or 92% of operable capacity.
Figure 1. Pasadena Refinery Output Yields (% of Total). Source: TRRC
The PRSI acquisition becomes the fifth refinery in Chevron’s U.S. fleet, which also includes the El Segundo (269 Mb/d) and Richmond (245 Mb/d) plants in California; the Salt Lake City (52 Mb/d) plant in Utah; and the 352-Mb/d Pascagoula plant in Mississippi. The company sold the 55-Mb/d Burnaby refinery north of Vancouver, BC, to Parkland Fuels in April 2017. The PRSI addition brings Chevron’s North America refining capacity to 1.0 MMb/d and its worldwide fleet to 1.8 MMb/d.
A big selling point for PRSI is its location adjacent to the Houston Ship Channel (HSC), which hosts four refineries and has great access to domestic crude supply and refined product distribution. Unlike many of its Gulf Coast counterparts, PRSI is a relatively unsophisticated plant that does not process heavy crude. Two years ago, Pasadena’s refining margins were the lowest of the four HSC rivals because the Petrobras plant could not process cheaper heavy crude. However, the recent narrowing of the sweet-sour spread amid sanctions on Venezuela (see El Diablo Suelto) and transport challenges with delivering more heavy Canadian crude to the Gulf Coast (see Stealing People’s (R)ail) mean that a refinery configured to process abundant light domestic shale may well retain a longer-term advantage.
Chevron plans to integrate PRSI with its eastern Gulf Coast Pascagoula refinery operation as well as to distribute refined products into the Gulf Coast and Midwest regions via the Explorer and Colonial pipelines (Figure 2). Naphtha and LPG petrochemical feedstock from PRSI could also be used by Chevron’s joint venture with Phillips 66 (CP Chem) that brought a new 1.5-million tonnes per annum (MMtpa) ethylene plant online at Cedar Bayou near Baytown, TX, in April 2018. The PRSI refinery marks a clear pivot away from heavy crude processing by Chevron, whose Pascagoula refineryprocessed 66 Mb/d of heavy Venezuelan crude during 2018. Chevron remains a partner with Venezuelan national oil company Petróleos de Venezuela, S.A. (PDVSA) in the production of heavy Boscan crude.
Figure 2. Chevron Pasadena Integration. Source: Chevron Presentation
Exxon Beaumont Expansion
We previously detailed Exxon’s Gulf Coast refinery expansion plans, including adding capacity to its 366-Mb/d Beaumont, TX, plant in Beaumont-ian Rhapsody. In that blog, we described how the complex Beaumont plant is currently equipped to process a mixture of heavy-sour and light-sweet crudes and how the refinery’s crude import diet has evolved over the past four years with a reduced dependence on supplies from Mexico, Colombia, and the Middle East and an increase in Canadian heavy crude. The refinery is also integrated with a petrochemical cracker and a lubes plant as well as a downstream polyethylene plant.
Exxon Beaumont is the eighth-largest refinery in the U.S. and the third-largest in Exxon’s U.S. fleet behind its 561-Mb/d Baytown, TX, and 503-Mb/d Baton Rouge, LA, plants. The plan to add 250 Mb/d at Beaumont will make it the largest refinery in the U.S. at 616 Mb/d, edging ahead of neighboring Aramco Motiva’s 603-Mb/d refinery in Port Arthur, TX. Exxon is also expanding processing capacity at Baytown by 60 Mb/d and at Baton Rouge by 17 Mb/d. After these expansions, Exxon’s five U.S. refineries will have a combined 2.1 MMb/d of capacity, pushing the company ahead of Phillips 66 (with 1.9 MMb/d across 11 plants) into third place among U.S. refiners — behind only Valero (2.6 MMb/d) and Marathon Petroleum (3 MMb/d). Worldwide, Exxon’s total fleet is estimated today at 4.9 MMb/d and will increase to 5.2 MMb/d, leaving it in second place behind leader Aramco, with 5.4 MMb/d.
Although all of Exxon’s U.S. refineries are sophisticated plants with heavy crude coking capacity, the Beaumont expansion is designed to process light domestic crude, marking a move away from high-conversion refining by the world’s largest major oil company.
Permian Crude Supply
Although Exxon is choosing to build new capacity while Chevron is buying an existing plant, both companies are expanding downstream refining at the Gulf Coast for the same reason: to process more of their growing crude production from the Permian in West Texas. In January 2018, Exxon announced plans to triple its daily production in the Permian to more than 600 Mb/d by 2025. This increase is made possible by the company’s $6 billion acquisition of premium Permian acreage from the Bass companies in 2017. On Exxon’s fourth-quarter 2018 earnings call, it stated that its Permian production increased by 93% over the level in the fourth quarter of 2017.
Shortly before announcing a go-ahead on the Beaumont expansion, Exxon confirmed plans for a 1-MMb/d-plus crude pipeline from Wink in the West Texas Permian production region to the Houston and Beaumont refining regions on the Gulf Coast. Known as the Wink-to-Webster Pipeline, the project will be built with partners Plains All American and Lotus Midstream. The new conduit will ship Permian crude to Webster Junction in the Houston area, as well as to Exxon’s Baytown and Beaumont refineries, and is expected online in the first half of 2021. By providing investment and anchor-shipper support for this project, Exxon is securing its supply of crude for the Beaumont expansion as well as a route to export docks on the Gulf Coast. The new pipeline will increase Exxon’s supply optionality at Beaumont, which is already served by Energy Transfer’s Permian Express pipeline from West Texas. Another project — the 600-Mb/d Permian Gulf Coast Pipeline (PGC) being developed by Energy Transfer, Magellan Midstream Partners, MPLX and Delek US — was announced in 2018 and will also ship Permian crude to Houston and Nederland. We understand there has been discussion between some of the PGC partners and Exxon about the possibility of combining the two projects.
Chevron also has amassed substantial holdings in the Permian and ranks among the biggest producers in the region. The company’s fourth-quarter earnings presentation stated that its Permian crude production increased by 71% in 2018 to 310 Mb/d, up from 181 Mb/d in 2017.
With most Gulf Coast refineries not equipped to process more light crude, both Exxon and Chevron need to find a home for their increasing Permian output. Owning refineries to process shale crude provides both companies with optionality to sell shale domestically as well as into the export market. Chevron’s acquisition of an existing refinery would appear to be a lower-risk approach since the market for the PRSI plant’s output is already established. Exxon may be taking a larger gamble that it can sell more refined product from the Beaumont expansion. The only logical market for that product is international sales — which have been booming in recent years but which could see headwinds in the future. Exxon’s investment in downstream Mexican markets, for instance, is now threatened by a less friendly regime there. However, a brand-new Gulf Coast 250 Mb/d crude unit at Beaumont should be competitive with any rival plant worldwide. We expect that these investments will be the first of many moves by Gulf Coast refiners to expand light crude processing capacity in the face of ever-growing domestic output and geopolitical threats to heavy crude supplies.
https://rbnenergy.com/big-time-major-permian-producers-expand-downstream-processing
NOC Chairman has arrived in UAE to meet with a number of Libyan and international parties to discuss security measures necessary to find a solution to the Sharara crisis, that guarantee staff safety, and pave way for the lifting of force majeure at the field.
@NOC_Libya
The Exhaust Gas Cleaning Systems Association said Monday that fanning unnecessary concerns over the use of open loop scrubbers were adding to the uncertainty around compliance to the International Maritime Organization's global sulfur limit for marine fuels.
"With emotive coverage fanning the flames of debate over open loop EGCS use, the shipping industry is plagued by uncertainty on how to comply with MARPOL Annex VI regulation 14.1.3. It is therefore still not sure that there will be high levels of compliance," Donald Gregory, director EGCSA said in a statement.
"Those owners who have fitted EGCS have invested in compliance. That investment should not be undermined by controversial claims that EGCS are dirty or harmful," he added.
The IMO will cap global sulfur content in marine fuels at 0.5% starting January 1, 2020, from 3.5% currently. This applies outside the designated emission control areas where the limit is already 0.1%.
Shipowners will have to switch to more expensive cleaner fuels or use HSFO with scrubbers to comply with this rule.
Scrubbers have already come under fire after some ports dismissed the use of open-loop scrubbers in their waters.
In January, the Port of Fujairah issued a notice banning the use of open-loop scrubbers in its port waters.
Singapore is set to implement the ban from January 1, 2020, while China has already done so from January 1, in its emission control areas covering inland waters and most of its coastline, including Bohai Bay waters.
Open-loop scrubbers have also been banned earlier in many other regions including Belgium, California and Massachusetts in the US and along Germany's Rhine River.
More recently, the European Commission submitted a proposal to the IMO on February 8 for consideration by the 74th session of the IMO's Marine Environment Protection Committee, or MEPC, which meets in May, calling for an "evaluation and harmonization" of scrubber discharges across all ports globally.
It targets among other things defining areas and conditions under which liquid effluents from this technology can be discharged into the sea.
The IMO sub-committee on Pollution Prevention and Response met last week.
All administrations during the plenary session of the recent sixth PPR sub-committee meeting again endorsed the use of EGCS as an approved option for complying with the 2020 0.5% global sulfur target, the EGCSA said.
Japan's Ministry of Land, Infrastructure, Transport and Tourism meanwhile told PPR6 that it believes the use of heavy fuel oils in combination with a scrubber is a better choice than burning low sulfur fuels, EGCSA said.
The Clean Shipping Alliance 2020 also presented a detailed study of the composition and quality of EGCS washwater, which reaffirmed that EGCS are effective and safe for the ocean environment, it added.
"Focusing the debate on whether one means of compliance or the other is bad, detracts from the key issue - ensuring that the shipping industry as a whole reduces sulfur emissions for the benefit of the environment and human health," Gregory said.
Aiming to influence regulations this way risks leading to a fragmented approach to compliance, with countries taking different positions on scrubber use; precisely the opposite of what the IMO is meant to achieve, he added.
The American Petroleum Institute (API) reported a surprise draw in crude oil inventory of 4.2 million barrels for the week ending February 22, coming in under analyst expectations that predicted that crude oil inventories would build by 2.842 million barrels.
Last week, the API reported a build in crude oil of 1.26 million barrels. A day later, the EIA reported a larger one of 3.7 million barrels.
Oil price movements were fairly bland on Tuesday prior to the data release, with the WTI benchmark trading essentially flat on the day at $55.48 while the Brent benchmark trading up $0.37 (+0.57%) at $65.28 at 2:25pm. Both benchmarks were trading down a couple dollars per barrel week on week.
While 2019 has been a wild ride for oil prices, inventory moves for crude have been innocuous, with a net build of 147,000 barrels for the eight reporting periods prior to this week, using API data, with only two big swings that essentially cancelled each other out.
The API this week reported a draw in gasoline inventories for week ending February 22 in the amount of 3.8 million barrels. Analysts estimated a draw in gasoline inventories of 1.686 million barrels for the week.
US crude oil production as estimated by the Energy Information Administration showed that production for the week ending February 15—the latest information available—averaged 12 million barrels per day –another high for the US, breaking yet another psychological barrier.
Distillate inventories increased this week by 400,000 barrels, compared to an expected draw of 1.951 million barrels.
Crude oil inventories at the Cushing, Oklahoma facility grew by 2.0 million barrels for the week.
Saudi Arabia's Energy Minister Khalid al-Falih stated on Wednesday that the Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers need to continue moderating the crude production in the second half of this year in order to stabilize the oil market. Speaking in an interview with CNBC, the official added that it is "difficult to predict where we will be in June when interim agreement runs out."
Al-Falih stressed that the uncertainty over the production in Libya and Venezuela creates potential risks in the oil market. He also noted that the transparency in the oil market "is not perfect yet" due to the lack of relevant data. Commenting on whether the OPEC+ will decide to prolong the output cut deal, the minister said that the major oil exporters "remain flexible" and that he is "leaning towards a likelihood of an extension."
The Saudi official highlighted that OPEC's main priority is the global economy and ensuring market stability. He also praised the cartel's efforts to rebalance the market, noting that those "actions have benefited also producers outside OPEC+," calling it "the next best thing to perfection." Al-Falih added that producers want to avoid the piling up of inventories because that will most likely lead to oil price spikes and global recession.
Because of the fourth quarter rapid oil price drop, we've drastically changed our 2019 CapEx and production growth plan. Our original plan was to grow from seven rigs at year end 2018 to nine rigs in January 2019, and then possibly jump to 10 rigs in July and grow oil production from 34,700 barrels a day to roughly 50,000 barrels a day in 2019.
Our new plan is to drop one rig, which we did in January, run six rigs flat and monitor the oil macro during the course of the year, which should generate 12% year-over-year oil volume growth per share.
That was assuming a $70 WTI world.
And clearly that plan is out the window. So that plan is just gone. So, what we're looking at now is that my macro view is that I think there's a reasonable chance that we may reach $70 WTI by year-end and then hopefully we see a stable $70 dollar WTI price for next year, which would be 2020.
Under that scenario, we can approach 65,000 barrels of oil a day by 2022. So, a two year delay in the game plan, and the cash flow neutrality would slide by a couple of years. So, there is a path to reach the cash flow neutrality and to reach 65,000 barrels of oil a day, but it would be delayed by 24 months assuming that we get to a $70 WTI world. Now again in September we had $70 WTI. So, that's not a crazy scenario.
So that's the path that I'm hoping would happen. But it's entirely a function of oil price. But in the current world where we're sit today, $55, simply put we're just not going to bang our heads against the wall and attempt to grow production in that kind of world. And so that's our logic.
So that the ultimate goal is to get to free cash flow. But I got to be honest with you, its $55 oil. That's a real stretch for any midcap to get to free cash flow, who's a pure shale producer and to have any kind of production growth concomitant with that. So that's the real trick.
Bahrain is talking to U.S. oil companies with shale oil expertise about developing a huge oil and gas field discovered last year, and hopes to have an interested company by the end of the year, the oil minister said on Tuesday.
Last April Bahrain said it had discovered its largest oil and gas find since 1932 off its west coast, estimated to contain at least 80 billion barrels of tight oil.
The first test well is being drilled now, Oil Minister Sheikh Mohammed bin Khalifa Al Khalifa told Reuters in an interview.
“We should have it flowing in a month or two months, maybe by the end of April, we think,” he said.
“And we’ve been talking to potential oil companies ... Maybe toward the end of this year we might be in a position to have an interested company, we hope.”
Tight oil is a form of light crude oil held in shale deep below the earth’s surface that is extracted with hydraulic fracturing, or fracking, using deep horizontal wells.
Al Khalifa said the recovery rate for shale deposits is around 5-15 percent of available reserves.
He said Bahrain is targeting major U.S. oil companies and independent companies which have “operating capabilities in U.S. shale, because tight oil is very much a U.S. phenomenon now”.
No deal for the tight oil areas has been signed yet, he said.
U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending February 22, 2019, which was 179,000 barrels per day more than the previous week’s average. Refineries operated at 87.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day. Distillate fuel production increased last week, averaging 4.8 million barrels per day.
U.S. crude oil imports averaged 5.9 million barrels per day last week, down by 1,605,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.7 million barrels per day, 10.9% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 473,000 barrels per day, and distillate fuel imports averaged 331,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 8.6 million barrels from the previous week. At 445.9 million barrels, U.S. crude oil inventories are about 3% above the five year average for this time of year. Total motor gasoline inventories decreased by 1.9 million barrels last week and are about 3% above the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories decreased by 0.3 million barrels last week and are about 2% below the five year average for this time of year. Propane/propylene inventories decreased by 1.2 million barrels last week and are about 11% above the five year average for this time of year. Total commercial petroleum inventories decreased last week by 17.9 million barrels last week.
Total products supplied over the last four-week period averaged 20.8 million barrels per day, up by 2.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.9 million barrels per day, down by 1.5% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels per day over the past four weeks, up by 4.5% from the same period last year. Jet fuel product supplied was up 2.5% compared with the same four-week period last year.
US production increased 100,000 bbl day to 12,100,000 bbl day
Exports 3,359,000 bbl day down 248,000 bbls day
Cushing up1.7 mln bbls
Shipowners with scrubber-equipped vessels may face challenges securing fuel unless they lock in their requirements well ahead of the new low sulphur emission limits on bunkers that apply from 2020, a senior industry executive said Tuesday.
Large volumes of high sulphur fuel oil will be available next year but not all bunker suppliers will be willing to store, move and supply it, Douglas Raitt, Regional Consultancy Manager with Lloyd's Register Asia, said at the MARE Shipping Forum in Singapore.
Lloyd's Register is one of the world's largest marine classification societies. Its fuel oil bunker analysis and advisory service, or FOBAS, is widely used across the globe.
No more than 3% of the global fleet of over 85,000 merchant ships is expected to have scrubbers installed by 2020, so marine demand for HSFO will be limited, Raitt said.
As a result, few bunker suppliers will be willing to stock it, he said.
Under International Maritime Organization regulations that take effect on January 1, 2020, it will be mandatory globally to use marine fuels with no more than 0.5% sulphur content, down from 3.5% currently.
Scrubbers collect excess sulphur while burning marine fuels, enabling the use of HSFO while still meeting low emission limits.
However, projections for the uptake of scrubbers in the run-up to the implementation of the lower limit have proven widely off the mark.
Initial forecasts of around 3,800 scrubbers being installed before 2020 are nowhere close to being met. To date around 1,600 vessels have had scrubbers installed, which may rise to 2,000-2,500 by year end, Raitt said.
Singapore and several ports in Europe and China have already banned the release of excess sulphur from open loop scrubbers in their territorial waters.
PREFERENCE FOR LOW SULPHUR FUEL
Most shipowners seem to be veering towards using low sulphur fuels, Raitt said. "Around 96% of ships will opt for low sulphur fuels next year," he added.
"Toggling or switching back and forth from storing low and high sulphur fuels in tanks is not a practical proposition for bunker suppliers," he said, adding most bunker suppliers were moving towards trading and selling mostly low sulphur fuels.
As a result, shipowners that have, or plan to install, scrubbers should lock in their requirements via term contracts well in advance as they may not be able to secure prompt spot cargoes despite abundant global supply, he said.
If a bunker supplier has only one dedicated tank for HSFO in the new low sulphur regime, it is buyers with term contracts who will have the first right of refusal, he noted.
As most suppliers will store and sell mostly low sulphur fuels, HSFO may not be easily available or cheap, Raitt said.
HSFO is currently trading at a discount of around $40/mt to LSFO in the global market, well short of the $250/mt discount that had been forecast earlier, he said.
Raitt said his company had conducted tests on low sulphur fuels and found they differed widely in viscosity, pour point and cold flow characteristics.
"Shipowners need to be cautious about other non-sulphur related parameters of their bunker requirements as our tests reveal these differ in a wide range for the various 0.5% sulphur fuels," he said.
China’s state-owned CNPC has started developing a new offshore shale oilfield near the Bohai Rim Basin, the company said via its official newspaper on Thursday.
CNPC aims to produce 50,000 tonnes of shale oil from the Bohai Rim Basin in 2019 and to achieve production capacity of 1 million tonnes by 2028.
The new drilling venture is in response to president Xi Jinping’s call to step up national energy security, CNPC said.
Shale oil production from China’s continental crust created huge technological difficulties because of the unique geological formations, according to CNPC.
At the Bohai Rim Basin, shale oil was formed and stored unevenly across sedimentary shale rock layers. About 100 kilograms of shale rocks yield about 1 kilogram of oil output from the new field, the company said.
In comparison, shale oil drilling in offshore North American basin is easier because the basin is floored by oceanic crust where shale oil is deposited often in one place.
CNPC also said it will prioritize shale oil-related exploration at the Songliao Basin, Ordos Basin, and Jungar Basin.
Russia’s Surgutneftegaz has sold April-loading ESPO crude oil cargoes at the lowest premiums in three months on a strong Dubai benchmark and lukewarm demand from China, trade sources said on Thursday.
An oil platform operated by Lukoil company is seen at the Korchagina oil field in Caspian Sea, Russia October 17, 2018. Picture taken October 17, 2018. REUTERS/Maxim Shemetov
The producer sold six cargoes at premiums of about $2.20 to $2.40 a barrel above Dubai quotes, they said, the lowest premiums seen for the grade since January-loading cargoes.
The cargoes will load on April 6-10, 9-13, 13-17, 16-20, 21-25 and 25-29. Buyers include Unipec, ChemChina, Vitol and CNOOC, the sources said.
ESPO’s premiums fell after Middle East oil benchmark Dubai rose above dated Brent and made the Russian grade more expensive than supplies from Europe and Latin America, the sources said.
“There are too many cargoes and demand is so-so,” one of the sources said.
Separately, Rosneft late on Wednesday re-issued a tender to sell an ESPO cargo loading on April 1-6, the sources said.
Rosneft is “asking people to improve their bids or put in a new bid for this particular cargo,” one of the sources said.
The new tender will close on Feb. 28 with bids valid until March 6.
Rosneft may have awarded two cargoes loading on April 11-16 and 21-26 to its term lifter ChemChina in its first tender, the sources said.
Companies do not typically comment on such commercial matters. All sources declined to be identified as they were not authorised to speak with media.
Read: Trump thinks he’s the only one who can fix North Korea
“Sometimes you have to walk” away from negotiations, the president said during an uncharacteristically subdued appearance before the media. “This was just one of those times.” (North Korean state media has been silent so far on the summit’s collapse.)
While Trump repeated his now-familiar lines about his diplomacy with Kim—how the North Korean dictator is “quite a guy,” how their “relationship is very strong,” how a denuclearized North Korea would have “tremendous” economic potential—he did so with none of the gusto that he had at the start of the summit.
It was a stunning setback not only for U.S. efforts to reduce the threat of Kim’s nuclear weapons, but also for the administration’s signature approach to nuclear talks with North Korea.
Last March, when Trump became the first American president to agree to a meeting with the leader of North Korea, an administration official explained that the gambit was designed to avoid the pitfalls of decades of ultimately unsuccessful lower-level negotiations. The innovation was to invert the process and meet with the country’s sole decision maker.
“When I was doing the negotiations … working-level stiffs like us would be out there banging our heads against the wall, trying to get them to, oh, let us into this building at Yongbyon,” the former George W. Bush administration official Victor Cha recalled shortly before the Vietnam summit. “And critics would say: ‘You’re doing this all wrong. … You need to meet at the leader level.’ That’s what we’re doing now. We’re testing that hypothesis right now. But thus far, it looks like the product is the same thing.” Thursday’s outcome has, for now at least, confirmed Cha’s suspicions that tackling the North Korean nuclear issue from the top down hasn’t proved any more fruitful than doing so from the bottom up.
Yet Trump’s decision to choose no agreement over a bad agreement, even at the risk of embarrassing his administration on the world stage at a moment of political vulnerability at home, is also a rebuke to critics who claimed that the president would get played by Kim in Vietnam—that he was interested in only superficial success rather than substantive progress. As Trump put it at his press conference, “I could have signed an agreement today, and then you people would have said, ‘Oh, what a terrible deal’ … I’d much rather do it right than do it fast.”
The president “walked away from the opportunity to reach a flashy but poorly crafted deal,” the former U.S. intelligence official Bruce Klingner told me. Based on the president’s account, “I wouldn’t have done the deal either,” the Korea expert Joel Wit said.
The “big question is what’s next on this roller-coaster ride,” Wit added.
The United States is still trying to sell North Korea on denuclearization
Encana Corporation reported significantly higher production from the Montney in 2018, but Duvernay production declined.
The Montney delivered 190,700 boe/d for the year, up from 126,700 boe/d. The Duvernay delivered 17,900 boe/d, down from 20,400 boe/d the previous year. Total Canadian operations produced 217,500 boe/d, up from 169,100 boe/d.
article continues below
In terms of capital spending, $516 million was spent in the Montney for the year, up from $346 million the previous year. Spending in the Duvernay climbed to $117 million from $78 million. Total Canadian spending was $632 million for 2018, up from $426 million the previous year. These are all in U.S. dollars.
For the fourth quarter of 2018, Encana reported net earnings of $1.03 billion, a reversal from a $229 million loss. Full-year income climbed to just over $1 billion from earnings of $827 million the previous year. Total revenues also were up to $2.38 billion in Q4 from $1.21 billion the previous year. Full-year revenues surged to nearly $6 billion from $4.44 billion.
At year-end, Encana had more than $5 billion of total liquidity including approximately $1.1 billion in cash and cash equivalents on hand and $4 billion available credit on the company’s undrawn credit facilities.
Fourth quarter production in the Montney averaged 220,000 boe/d (25 per cent liquids) and was negatively impacted by 2,000 bbls/d of liquids and 50 mmcf/d of natural gas related primarily to temporary third-party issues. For the year, liquids production grew 116 per cent to 41,700 bbls/d.
Encana’s average well cost in 2018 was $4.3 million (a nearly 30 per cent reduction in drilling and completion costs since 2015, normalized for lateral length). Thirty-nine net wells were turned to sales during the fourth quarter and have averaged more than 500 bbls/d for the first 90 days of production.
https://www.alaskahighwaynews.ca/business/encana-output-from-montney-surged-for-2018-1.23648690
Production from the recently launched Egina deepwater field would remain outside Nigeria’s commitment to stick to OPEC’s production cuts, according to state-held Nigerian National Petroleum Corporation (NNPC).
“[I]t is not part of the volumes we look at,” NNPC Group’s Managing Director Maikanti Baru told Reuters on Thursday, asked if Egina’s production would count as crude oil or condensate.
Nigeria currently produces around 1.8 million bpd of crude oil and another 400,000 bpd of condensate, NNPC’s manager said at an oil and gas conference in London.
“In terms of the OPEC quota, I think it’s not a cut in production, it’s to ensure we keep the quota. Of course the president said it and we will obey,” Reuters quoted Baru as saying, noting that the new field would be classified as condensate.
Days before OPEC’s production cuts started on January 1, France’s Total had started up oil production from Nigeria’s ultra-deepwater oil field Egina, which is expected to pump 200,000 bpd at peak output.
Total noted that the plateau production at the field of 200,000 bpd would account for some 10 percent of Nigeria’s oil production.
Nigeria, which wasn’t spared from the new OPEC/non-OPEC production cuts this time around, is expected to contribute with up to 40,000 bpd to the 800,000 bpd OPEC had pledged to cut from January, Nigerian Oil Minister Emmanuel Kachikwu told local news outlet THISDAY in December. The 40,000-bpd figure is some 2.5 percent of Nigeria’s current crude oil production of 1.7 million bpd, the minister said in the first half of December.
In the official OPEC document released weeks after the new OPEC+ deal was struck, Nigeria’s share of the cuts is 53,000 bpd from the October 2018 level of 1.738 million bpd, to 1.685 million bpd for the period January-June 2019.
According to OPEC’s secondary sources, Nigeria’s crude oil production rose by 52,000 bpd from December 2018 to 1.792 million bpd in January 2019, despite Nigeria not being exempt from the OPEC cuts this time around.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Brazilian state-led oil producer Petrobras expects domestic crude output to rise 13.0% year on year to 2.3 million b/d in 2019 as fresh wells are connected to floating production units installed over the past year, including including ongoing development of the massive Buzios subsalt field.
Petrobras has started operations on six floating production, storage and offloading vessels over the past 10 months, including two FPSOs in February. Each of the vessels has installed production capacity of at least 150,000 b/d of oil and 6 million cu m/d of gas, according to Petrobras.
Two additional FPSOs will be installed later this year, including a fourth FPSO at the Buzios field and first oil from the Berbigao field. Buzios, where first oil was pumped in April 2018, contains an estimated 3.1 billion barrels of recoverable reserves, making it the second-biggest subsalt field after the Mero field.
"This growth will be made possible by the ramp-up at recently installed platforms as well as the startup of the FPSOs P-77 and P-68," Petrobras said in financial statements filed late Wednesday.
The new production systems build on an unprecedented wave of facilities installed offshore Brazil over the past three years, many of which were ordered or under construction when Petrobras was embroiled in a corruption scandal and oil prices collapsed in 2014-2016. While the new FPSOs have pushed subsalt production higher, accelerating declines in the mature Campos Basin, a series of maintenance shutdowns and sales of stakes in several key oil fields undermined Petrobras' overall production last year.
Petrobras pumped an average of 2.035 million b/d in 2018, down from 2.154 million b/d in 2017. The company also missed its annual production target, which was set at 2.1 million b/d, for the first time in three years. Petrobras' domestic production in the fourth quarter averaged 2.055 million b/d, down 3.9% versus 2.140 million b/d in the fourth quarter of 2017, the company said.
Production, however, could still be affected by ongoing asset sales, with more than 100 fields on the sales block, the company said.
Petrobras plans to sell $26.9 billion worth of assets over the next five years, according to the company's 2019-2023 investment plan. In addition to the oil-field sales, the company's new chief executive Roberto Castello Branco wants to reduce Petrobras' dominant position in the country's refining sector to about 50% from 98% today.
REFINERY OUTPUT DECLINES
Brazil's refining segment continued to suffer from the economic malaise affecting Latin America's largest economy, which expanded 1.2% in 2018, as well as greater competition from biofuel alternatives such as hydrous ethanol and biodiesel. Consumption of diesel and gasoline typically tracks the direction of GDP in Brazil.
The outlook for this year is more positive. Brazil's National Petroleum Agency, or ANP, expects refined product sales to advance year on year in 2019 amid expectations for more robust economic growth of 2.5%.
Petrobras produced 1.764 million b/d of refined products in 2018, down 2.0% from 1.800 million b/d in 2018. In the fourth quarter, refined product output dropped 3.3% year on year to 1.736 million b/d, Petrobras said.
While Petrobras reined in domestic refineries, the company returned to a more aggressive stance in the import market. Petrobras was forced to shoulder a majority of diesel imports in mid-2018, after the government implemented a subsidy on diesel prices to settle a strike by independent truckers. Uncertainties about the subsidy and reimbursements temporarily sidelined many importers.
Petrobras imported 349,000 b/d of crude oil and refined products in 2019, up from 308,000 b/d in 2017, the company said. The year-on-year rise in fourth-quarter imports was even more robust, jumping to 424,000 b/d from 263,000 b/d in the fourth quarter of 2017, the company said.
Reduced domestic crude oil production and lower refinery runs also undercut exports, which fell to 606,000 b/d in 2018 from 669,000 b/d in 2017, Petrobras said. Exports jumped to 640,000 b/d in the fourth quarter, up from 550,000 b/d in the year-ago quarter.
Petrobras remained a net exporter, shipping an average of 257,000 b/d of crude and refined product overseas in 2018 versus 361,000 b/d in 2017, the company said. Fourth-quarter net exports also slipped to 216,000 b/d versus 287,000 b/d in Q4 2017.
Financial results in 2018 were among the strongest ever recorded by the company, including the first annual profit since 2014, Petrobras said. Petrobras registered a full-year net profit of Real 25.8 billion, up from a net loss of Real 446 million in 2017, the company said. Revenue was Real 349.8 billion, up from Real 283.7 billion in 2018, Petrobras said.
Brazilian state-run oil firm Petroleo Brasileiro SA reported its first annual profit in five years on Wednesday as it swung to a net profit in the fourth quarter, although one-time provisions and writedowns led it to miss estimates.
In a securities filing, Petrobras, as the company is known, said fourth-quarter net income rose to 2.102 billion reais ($564 million), compared with a loss of almost 5.5 billion reais in the same period a year earlier.
Chief Executive Roberto Castello Branco, who took the reins in January, called 2018 the best year in some time, while adding that there was still much more to be done across several business segments.
The U.S. Energy Department said on Thursday it is offering up to six million barrels of sweet crude oil from the national emergency reserve in a sale mandated by a previous law to raise funds to modernize the facility.
A law U.S. President Donald Trump signed last year requires the department to hold sales to fund $300 million improvements including work on shipping terminals to the Strategic Petroleum Reserve, or SPR, which is held in caverns on the coast of Texas and Louisiana. Previous laws have also mandated sales from the reserve, which currently holds more than 649 million barrels.
While global oil prices have been rising as the production group OPEC and Russia work together to cut supplies, the sale did not appear to be an explicit signal that the United States is looking to balance the current market with the SPR. U.S. Energy Secretary Rick Perry, who has said price impacts from tapping the reserve for supply balance are often temporary, did not mention the sale in a press conference earlier on Thursday.
Still, the oil supply could tighten in coming months with the Trump administration’s imposition of sanctions on crude exports from both Iran and Venezuela’s state-owned oil company, and with the producer supply cuts from OPEC and Russia.
The timing of the mandated sale may “serve as a warning to OPEC producers that a larger deployment of the SPR in the future could undermine,” efforts to boost the oil price, at least temporarily, analysts at ClearView Energy Partners said in a note.
The delivery period for the sale will be from May 1 to May 14 for oil from the reserve’s West Hackberry and Big Hill site, and from May 1 to May 31 from the Bryan Mound site. Offers for the oil must be received by March 13, the department said.
The average price for dated Brent crude, a low-sulphur, or sweet, crude benchmark, for February fell below the average prices of Middle East high-sulfur, or sour, oil benchmarks Oman and Dubai, four trade sources said on Friday, citing prices quoted by reporting agency S&P Global Platts.
Production cuts by the Organization of the Petroleum Exporting Countries and U.S. sanctions on Iran and Venezuela have tightened supplies of heavy sour crude oil globally.
Dated Brent averaged at $64.032 a barrel in February, against an average of $64.575 and $64.681 a barrel for Dubai and Oman, respectively, they said.
Canada’s main oil-producing province of Alberta on Thursday raised the amount of crude that companies can produce in April to 3.66 million barrels per day, an increase of 100,000 bpd from the limit imposed in January.
Late last year congestion on oil export pipelines backed up crude in storage tanks and sent crude prices in the province tumbling to record lows. The slump prompted the Alberta government to mandate temporary production cuts effective Jan. 1 that took 325,000 bpd out of the market.
The province is now raising the limit because the amount of oil in storage is shrinking and prices are stronger, Alberta premier Rachel Notley said in a statement. Pipeline transportation capacity could also increase because less diluent, used to help viscous heavy crude flow, is needed as the weather warms up.
“The decision to temporarily limit production was applied fairly and equitably, and our plan is working to stop allowing our resource to be sold for pennies on the dollar,” Notley said.
The discount on Canadian crude versus U.S. barrels has narrowed dramatically. On Thursday the benchmark heavy grade Western Canada Select for March delivery in Hardisty, Alberta, last traded at $12.65 a barrel below U.S. crude, according to brokers Net Energy. Last October the discount was more than $50 a barrel.
Production for February and March was set at 3.63 million bpd, adding 75,000 bpd from the January limit. The latest adjustment means producers can increase output by another 25,000 bpd in April.
The oil cuts averted disaster for many small producers that were selling crude in some cases below cost but were unpopular with some larger companies like Husky Energy and Suncor Energy that had benefited from running cheap crude through their refineries. Curtailments do not apply to small companies producing less than 10,000 bpd.
Louisiana-based Shale Support has entered into a new partnership that will allow the oilfield service company to supply frac sand and other proppants to customers in Argentina' Vaca Muerta shale play. The ... more
Louisiana-based Shale Support has entered into a new partnership that will allow the oilfield service company to supply frac sand and other proppants to customers in Argentina' Vaca Muerta shale play.
Shale Support announced on Thursday that it has entered into a partnership with the Swiss shipping company Fracht Group that will the Lafeyette-based company to export frac sand to hydraulic fracturing sites in Argentina.
"With Fracht Group's current shipping business into South America and Shale Support's geographic proximity to the Gulf Coast, we are able to provide quality proppant to Argentina without the traditional operational challenges of supply and logistics," Shale Support CEO Kevin Bowen said in a statement.
Shale Support's first shipment of frac sand left the port of New Orleans on Feb. 18 and is expected to arrive at the Port of Bahia Blanca in Argentina on March 10.
Once in Argentina, the sand will be shipped more than 400 miles inland to a facility supporting the the growing South American shale play.
"A long-term key to the development of the Vaca Muerta shale play is to help the operators bring down their consumables cost and that requires a transition to handling these products in bulk, and Shale Support has a successful track record in building and running those types of facilities," Fracht USA CEO Reiner Wiederkehr said in a statement.
Founded in 2012, Shale Support owns three frac sand mines in Mississippi and Louisiana as well as a rail yard near San Antonio that supports the Eagle Ford Shale of South Texas.
US LNG export project developer Venture Global LNG has on Thursday received a regulatory permit to site, construct and operate the Calcasieu Pass LNG export project in Louisiana.
In its order, the Federal Energy Regulatory Commission said it has given the authorization to build the LNG export facility and the East Lateral project, consisting of approximately 23.4 miles of 42-inch-diameter pipeline and related facilities extending from the Grand Chenier station in Cameron Parish.
The project is capable of providing up to 2,125,000 dekatherms per day (Dth/d) of natural gas transportation service.
The approval comes after Venture Global requested ‘urgent action’ by FERC on mid-January.
The Venture Global Calcasieu Pass project has secured binding 20-year offtake agreements for 8 metric tonnes per annum of LNG export capacity, with Shell, BP, Edison, Galp, Repsol and PGNiG.
In its January statement, Venture Global noted it is ready to commence construction of this multi-billion dollar project as soon as authorized by the commission.
The facility is based on mid-scale liquefaction technology with nine 1.2 million ton liquefaction blocks and two 200,000 cubic meter full containment LNG storage tanks. Additionally, its marine terminal will accommodate carriers up to 185,000 cubic meters in capacity. It will also include a lateral pipeline interconnecting with major interstate and intrastate natural gas pipelines.
https://www.lngworldnews.com/ferc-approves-calcasieu-pass-lng-project-construction/
Production at one of the trains at Chevron's 8.9 million mt/year Wheatstone LNG facility in Western Australia has been halted due to an electrical problem, a spokeswoman for the company confirmed Friday.
The cause of the outage at the 4.45 million mt/year train 1 is being investigated, while train 2 continues production. No timeframe was given for when it is expected to be restarted. The facility has exported eight cargoes - or 400,000 mt of LNG - in February to date, down 24% from 526,000 mt of LNG a month earlier, according to Platts Analytics.
Wheatstone's second train began production in June last year. The first train began in October 2017. The Chevron-operated Wheatstone project is a joint venture between Australian subsidiaries of Chevron (64.14%), Kuwait Foreign Petroleum Exploration Company (13.4%), Woodside Petroleum (13%), and Kyushu Electric Power Company (1.46%), together with PE Wheatstone Pte. Ltd. part owned by JERA (8%).
The French LNG regasification hit a record high this week, and sendouts are not set to weaken with a flurry of LNG vessels arrivals on the horizon and reloads to Asia uneconomical.
The cumulative sendout at France's three LNG terminals rose to 76.37 million cu m Tuesday, according to latest data from S&P Global Platts Analytics.
That compares with the February-to-date average of 42.29 million cu m/d, and to 17.02 million cu m/d last February, the data showed.
The increase was largely driven by a sharp ramp-up in regasification flows at the French Southern gas LNG terminal Fos, with nominations jumping to 38.27 million cu m/d.
The trend was set to continue with a flurry of LNG cargoes on the horizon. Eight LNG vessels, from Qatar, Russia, Algeria, Norway, Angola and Nigeria were set to arrive at French LNG terminals, with half of them set for Fos.
All of them are set to arrive by March 4 with loaded volumes trending between 44 million and 159 million cu m/d, the data forecast.
This heavy influx of LNG, coupled with healthy pipeline gas flows and very weak heating demand in an unseasonably warm February is set to continue to pressure PEG contracts.
"I think there is still plenty of room for prices to fall. But I think the high oil prices stops us from falling further at the moment. Oil supports the curve and the curve supports the spot," a German gas trader said. A bullish generating fuels complex, also driven by a firm recovery in coal prices have been providing support to the forward curve.
However, sentiment though remained largely bearish, with LNG flows not forecast to weaken anytime soon. Asian netbacks remained way out the money, meaning reloads to Asia remained largely uneconomical. The PEG prompt month was at a Eur1.351/MWh premium to the ZEE-JPN netback, data from S&P Global Platts showed. Low prices and high inventories in Asia coupled with increases in global LNG production are continuing to move LNG to Europe as a destination of last resort.
Brazil’s Energy and Mines Minister Bento Albuquerque said on Thursday that a long-awaited auction of the so-called transfer-of-rights area in which oil company Petroleo Brasileiro SA operates could happen in the last quarter of 2019.
Albuquerque also hopes to carry out a follow-on share offering for state-controlled utilities company Centrais Eletricas Brasileiras, he said, speaking at an event.
SOUTH KOREA'S KOGAS DIVERTS THREE U.S. LNG CARGOES TO BRITAIN AND FRANCE THIS WINTER - SOURCES
@FirstSquawk
A WildHorse Resource Development employee overlooks fracking operations outside Caldwell. Wildhorse, of Houston, was recently acquired by Chespaeake Energy of Oklahoma City, one of several recent deals in the oil patch.
The nation's tally of rigs drilling for oil and gas dipped by four from last week with rigs being removed from Oklahoma and the Gulf of Mexico.
The onshore and offshore rig counts declined by two apiece, partially offsetting increases in the Gulf of Mexico just one week prior, according to weekly figures compiled by the services firm Baker Hughes, a GE company.
The overall rig count is up to 1,047 active rigs, including 853 rigs primarily drilling for crude oil.
Texas is home to 508 active rigs, nearly half of the nation's total. West Texas' booming Permian Basin, which extends into New Mexico, accounts for 473 rigs all by itself. The Permian makes up 55 percent of all the oil-drilling rigs in the country.
Because of pipeline shortages in West Texas, many companies are continuing to drill Permian wells while leaving more of them uncompleted until new pipelines come online.
The total count is up from an all-time low of 404 rigs in May 2016.
With this week's dip, the oil rig count is down 47 percent from its peak of 1,609 in October 2014, before oil prices began plummeting. However, rigs today are able to drill more wells than before and to deeper depths to produce more oil and gas. That's largely why the U.S. is producing record volumes of crude oil and natural gas.
https://www.chron.com/business/energy/article/Rig-count-dips-in-Oklahoma-Gulf-of-Mexico-13637366.php
South African minister of energy Jeff Radebe, has stressed that coal jobs in South Africa are at risk, however, not as the result of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme.
Addressing members of the media on the weekend around the country's REIPPP programme, the Minister highlighted that "Eskom has as early as in the IRP 2010 reported that it will be decommissioning some of the older coal-fired power stations, which are reaching the end of their commercial and operational life. According to Eskom, by 2030, 13,000MW of coal-fired capacity is scheduled for decommissioning."
Webinar recording: Renewables vs. Coal
"As South Africans, and as stipulated and agreed in the Green Economy Accord, we have to ensure a responsible just transition to a cleaner future by finding ways to mitigate and addressing the risks to coal miners and their families, as well as the communities surrounding these coal-fired power stations.
"One of the outcomes of the Job Summit is the establishment of a presidential task team on climate change who will oversee the development and implementation of a just transition process for South Africa," Radebe noted.
He added: "As we have seen with the procured coal IPPs, commercial banks like Standard Bank and Nedbank are no more willing to support these coal-fired power projects.
"This is an international phenomenon and the OECD Countries have also taken a hard line stance against the funding of coal projects, citing climate concerns."
The minister pointed out that the World Bank and other international development finance institutions, as well as commercial banks, have also instituted a no-coal policy. "China, India, the US and others have indicated that they are also downscaling their coal-fired fleets. This, however, does not mean we shall not procure cleaner coal-fired technologies in the future," he said.
"Coal is part of the energy mix and due to the abundance thereof, South Africa would be hard-pressed should we abandon coal-fired generation. Our policy will become clearer with the imminent finalisation of the IRP update," he stressed.
Read the Minister's full speech here.
https://www.esi-africa.com/sa-energy-minister-demistyfies-the-coal-vs-renewables-debate/
Shock as new test proves new diesel engines emit almost no NOx at all
A new series of independent tests show that the modern fleet of diesel engines emits almost none of the poisonous Oxides of Nitrogen (NOx) that were at the heart of the Dieselgate scandal.
Diesel combustion has been the automotive whipping boy of Europe, with sales of new diesel cars dropping from more than half the market to less than a third since 2015 and several German cities ordering to ban older diesel engines, causing many brands to axe diesels altogether.
Yet it turns out car-makers were right when they insisted they could clean their diesel engines up, with premium manufacturers leading the way.
With exhaust gas recirculation (SCR) and urea injection, the Mercedes-Benz C 220d led the way in the independent tests, emitting no NOx at all during an on-road test.
While the C 220d emitted zero micrograms of NOx per kilometre, the BMW 520d proved the Benz figure was no fluke by emitting just 1mg/km on the same test.
The legal (Euro 6d Temp) limit for NOx emissions is 168mg/km, and it was the failure to meet this limit that lead the Volkswagen Group down the path to the Dieselgate scandal.
It also lead Daimler, Opel and PSA (Peugeot and Citroen) towards “thermal switches” to shut off their emissions cleaning at cold and hot temperatures.
Conducted by the German car club ADAC under RDE (real driving emissions) on public roads, the test involved 13 models including cars from Audi, Honda, Citroen, Kia, Opel, Peugeot, Volvo and Volkswagen.
The cleanest of the small cars was the Opel Astra, whose 1.6-litre four-cylinder turbo-diesel matched the BMW 520d by emitting just a single microgram of NOx per kilometre.
The Volkswagen Golf trailed not far behind, having come from the disgrace of Dieselgate and emitting thousands of times the legal limit to emitting just 14mg/km, or 12 times less than it’s allowed to.
Some of the cars tested emitted lower levels of NOx than equivalent petrol-powered models, which came as a shock to ADAC.
A Bosch study early last year showed that on-road NOx emissions could be slashed to well below the legal level, but that was met with skepticism, given that the world’s biggest automotive supplier was at the heart of the Dieselgate scandal.
NOx is a classified poison; with the World Health Organisation insisting it is involved in deaths from heart disease, dementia, asthma, lung disease and many others.
Even the worst of the ADAC-tested cars, the Honda Civic 1.6-DTEC, easily slid beneath the accepted legal limit, but will fail the next limit without major technical improvements.
It clocked 101mg/km, and the failure of its diesels in Europe has been cited as one of the key reasons for Honda closing its Swindon factory in England.
Even so, the Civic’s test result was almost double the next worst emitter, the Volvo XC60 D5 AWD with 56mg/km.The official RDE limit is 80mg/km for diesels (but 60mg/km for petrol-powered cars).
Honda’s Civic only passes it because, for now, the European Commission (EC) gave car-makers an allowance of 2.1 times the limit to account for “test equipment inaccuracies”. At least, that’s what the loophole says.
The issue for Honda, and others with older generation diesel engines, is that the allowance drops to 1.5 times from the start of next year, which will effectively lower the limit to 120mg/km.
Even that may not be the end of the emissions story, because the European Court of Justice ruled the EC weren’t allowed to deliver the leeway and that the 80mg/km official limit should be enforced even today.
Some of the standout figures in the ADAC test came from car-makers who were slammed for thermal switching, including Citroen, Peugeot, Opel and Mercedes-Benz.
One of the more impressive performances in the test was from Audi’s A8 50 TDI. Not only is the A8 far bigger and heavier than any other car on the test, but also it was the only car to have an engine with more than four cylinders. The biturbo V6 TDI posted just 15mg/km of NOx.
NOx emissions (mg/km)
Audi A8 50 TDI 15
BMW 520d Steptronic 5
BMW 520d Touring 1
BMW X2 xDrive 20d 23
Citroen Berlingo BlueHDI 130 7
Honda Civic 1.6-DTEC 101
Kia Ceed 1.6 CRDi 22
Mercedes-Benz A 180 d 40
Mercedes-Benz C 220 d 0
Opel Astra 1.6 D 1
Peugeot 308 SW BlueHDI 180 30
Volvo XC60 D5 AWD 56
Volkswagen Golf TDI SCR 14
https://www.motoring.com.au/new-diesels-emit-almost-no-fumes-117149/
Oil Sector May Have Finally Found a Use for Blockchain: BNEF
2019-02-26 07:00:03.369 GMT
By Hannah Davinroy
Energy companies are experimenting with boring blockchains. For
back-office tasks, ‘smart contracts’ – which are programmed and
self-executing procedures – promise to hasten settlement and
reduce transaction costs. For example, a smart contract can be
written to execute a payment on a certain date, to trigger
inventory replacement after an order, or to match tool delivery
to a project’s status.
Because these exchanges involve sensitive data, company
smart contracts will occur on private, permissioned blockchains
such as JPMorgan’s Quorum. Private blockchains promise faster
transaction speed and flexible complexity but rely on a central
source to manage development. Smart contracts scale poorly
across applications, which has slowed roll-out, but the
increased efficiency may spark niche development to reduce
tedious, routine tasks.
UK-based oil and gas company RockRose has signed a share purchase agreement to acquire 100% of Marathon Oil U.K. (MOUK) and 100% of Marathon Oil West of Shetland Limited (MOWOS) from subsidiaries of Marathon Oil Corporation.
The transaction represents a complete country exit for Marathon Oil. Reports of Marathon’s intention to exit its UK businesses to focus on the U.S. onshore have been around since last year.
RockRose said on Monday that the consideration payable by the company to Marathon Oil in connection with the acquisition is circa $140 million (subject to customary adjustments), which RockRose currently anticipates will be funded through existing resources and facilities.
MOUK holds 37%-40% operated interests in fields in the Greater Brae Area and MOWOS holds a 28% interest in the BP-operated Foinaven field unit and a 47% interest in Foinaven East, respectively. The acquisition also includes interests in the SAGE, Brae-Forties and WASPS infrastructure providing additional tariff income.
In a separate statement on Monday, Marathon said that RockRose will assume all obligations associated with MOUK and MOWOS operations in the UK, including decommissioning liability.
RockRose also said that, upon completion, this acquisition is anticipated to add circa 35 million boe of 2P reserves (21 million boe on a 1P basis). This gives the company a net 2P position on completion in excess of 70million and 2P+2C of 86 million boe. Anticipated production for the assets being acquired is circa 13,000 boepd in 2019, taking RockRose’s total net anticipated production for 2019 to circa 24,000 boepd.
The effective date of the acquisition will be January 1, 2019. The MOUK and MOWOS assets and teams in Aberdeen, Peterhead and offshore will transfer with MOUK and MOWOS to RockRose on completion of the acquisition.
It is worth noting that this is not RockRose’s first North Sea acquisition in recent years. Namely, the company in October 2018 completed the acquisition of Dyas B.V., a wholly owned subsidiary of a family-owned Dutch company SHV Holdings N.V., which owns the non-operated, Netherlands gas and condensate producing assets of the Dyas group of companies, for a total consideration of EUR €107 million.
In addition, RockRose’s portfolio includes assets obtained through acquisitions of Idemitsu Petroleum UK Limited, Egerton Energy Ventures Limited, and Sojitz Energy Project Limited, all completed in December 2017.
Reverse takeover
As the acquisition of Marathon Oil’s UK business will constitute a reverse takeover for the purposes of the UK Financial Conduct Authority’s Listing Rules, in accordance with Listing Rule 5.1 RockRose has requested that its ordinary shares be suspended from listing on the Official List pending the publication of a prospectus, which will follow completion, or until the company confirms that the acquisition is not proceeding.
https://www.offshoreenergytoday.com/rockrose-inks-agreement-to-buy-marathon-oils-uk-business/
A county in southwestern China has ordered a halt to shale gas mining amid fears it may have helped cause an earthquake in the area that killed two people, state news agency Xinhua reported.
The magnitude 4.9 quake hit Rongxian county in Sichuan province on Monday afternoon, damaging thousands of buildings, injuring 12 people and affecting more than 13,000 people, Xinhua said.
It was the third earthquake above magnitude 4 to strike the area in two days, Xinhua said late on Monday. It cited experts as saying the earthquakes might have occurred due to natural causes, “but they could not rule out industrial mining”.
“Due to safety reasons and requirements on safe production, shale gas mining companies have suspended mining work,” it quoted the county government as saying.
Rongxian county is part of the region known as the Weirong block where state oil and gas firm Sinopec Corp is drilling for shale gas.
Weirong is Sinopec’s second main shale discovery after its flagship Fuling project in the Chongqing municipality, which is located in the same geological basin of Sichuan.
Sinopec did not immediately respond to a request for comment from Reuters.
Citing experts from the Sichuan provincial earthquake bureau, local state media reported earlier on Tuesday that it could not be ascertained whether the quakes in Rongxian were related to industrial mining activity.
Meanwhile, the state-run Global Times said five quakes had hit the area since January including two on Monday above magnitude 4, prompting “some residents” to gather outside the government’s offices to call for a halt to shale gas exploitation.
The newspaper cited video footage on social media showing more than 1,000 people attempting to topple the gate of the government building with some 100 police trying to keep the gate upright. Reuters has not independently verified the footage.
“Some residents came this afternoon after the earthquake, and now they have calmed down and left. Government officials have responded to their requests,” the newspaper quoted a Rongxian county government official as saying.
China’s state-owned energy companies were set to increase spending on domestic drilling this year to the highest levels since 2016, after Chinese President Xi Jinping called last August to boost domestic energy security.
Mountainous Sichuan is a hub for China’s decade-long drive to tap shale gas, which makes up about 6 percent of the country’s total gas output.
Russian gas giant Gazprom’s share of the European gas market rose to 36.7 percent last year from 34.7 percent in 2017, a company manager told investors during a presentation in Hong Kong on Tuesday.
Oleg Aksyutin, a member of Gazprom’s management committee, also said that Gazprom’s share of China’s overall gas imports may reach 25 percent by 2035. The Russian firm is scheduled to begin supplying gas to China in December 2019.
Elena Burmistrova, head of Gazprom’s exporting arm, also said that Gazprom’s average gas price in Europe reached $245.5 per 1,000 cubic meters last year.
Alexander Medvedev, Gazprom’s long-standing deputy chief executive, who oversaw an increase in gas exports to Europe, has been relieved of his post, Gazprom said on Monday.
Medvedev was a key figure in Gazprom’s often hard negotiations with European countries over gas supplies, which became politicized after Moscow’s annexation of Crimea in 2014.
He was Gazprom’s de-facto head of exporting business, although he had been replaced as Gazprom Export chief by Elena Burmistrova in 2014.
He had a difficult task persuading European countries to buy Russian gas and approve the construction of gas pipelines, such as TurkStream and Nord Stream 2, in the face of U.S. opposition.
Gazprom whose sales account for over 5 percent of Russia’s $1.6 trillion economy, will make an appointment to replace Medvedev in due course, the company’s spokesman told Reuters.
Carrizo Oil & Gas, Inc. has announced the company’s financial results for the fourth quarter and year-end 2018 and provided an operational update.
Fourth-quarter 2018 highlights
Total production of 68,328 Boed, 9% above the fourth quarter of 2017 and 6% above the third quarter of 2018
Crude oil production of 43,040 Bpd, 7% above the fourth quarter of 2017 and 5% above the third quarter of 2018
Net income attributable to common shareholders of $255.1 million, or $2.75 per diluted share, and net cash provided by operating activities of $188.3 million
Adjusted net income attributable to common shareholders of $52.1 million, or $0.56 per diluted share, and Adjusted EBITDA of $170.7 million
Year-end 2018 highlights
Proved reserves of 329.4 MMBoe, a 26% increase over year-end 2017
Standardized measure of discounted future net cash flows of $3.6 billion, and PV-10 of $4.1 billion, a 55% increase over year-end 2017
478% reserve replacement from all sources at a finding, development, and acquisition (FD&A) cost of $10.34 per Boe
Guidance and operational highlights
As previously announced, 2019 DC&I capital expenditure plan of $525-$575 million, which is expected to deliver double-digit production growth while achieving positive free cash flow by the third quarter of the year
Achievement of cost reductions and efficiency gains that have driven materially-lower well costs across the asset portfolio
Encouraging results from initial two Wolfcamp C tests in the Delaware Basin
Scientists have managed to turn CO2 from a gas back into solid “coal”, in a breakthrough which could potentially help remove the greenhouse gas from the atmosphere.
The research team led by RMIT University in Melbourne, Australia, developed a new technique using a liquid metal electrolysis method which efficiently converts CO2 from a gas into solid particles of carbon.
Published in the journal Nature Communications, the authors say their technology offers an alternative pathway for “safely and permanently” removing CO2 from the atmosphere.
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Current carbon capture techniques involve turning the gas into a liquid and injecting it underground, but its use is not widespread due to issues around economic viability, and environmental concerns about leaks from the storage site.
The new technique results in solid flakes of carbon, similar to coal, which may be easier to store safely.
Shape Created with Sketch. Is this the world's most beautiful coal mine? Show all 9 left Created with Sketch. right Created with Sketch. Shape Created with Sketch. Is this the world's most beautiful coal mine? 1/9 The former industrial zone is now a green lung near Dusseldorf Jochen Tack/Stiftung Zollverein 2/9 Nature has begun to reclaim the land around it Jochen Tack 3/9 The land around the mine is now a kind of park Stiftung Zollverein/GNTO 4/9 There's a sparse beauty to the mine Stiftung Zollverein/GNTO 5/9 Zollverein's main shaft has become the symbol of the area Stiftung Zollverein/GNTO 6/9 The exhibition is well laid out inside Stiftung Zollverein/GNTO 7/9 The old pool in the mine Jochen Tack/Stiftung Zollverein 8/9 Guided tours of a coal mine are more interesting than you'd think Jochen Tack/Stiftung Zollverein 9/9 Zollverein's been transformed into an event space for locals Frank Vinken/Stiftung Zollverein 1/9 The former industrial zone is now a green lung near Dusseldorf Jochen Tack/Stiftung Zollverein 2/9 Nature has begun to reclaim the land around it Jochen Tack 3/9 The land around the mine is now a kind of park Stiftung Zollverein/GNTO 4/9 There's a sparse beauty to the mine Stiftung Zollverein/GNTO 5/9 Zollverein's main shaft has become the symbol of the area Stiftung Zollverein/GNTO 6/9 The exhibition is well laid out inside Stiftung Zollverein/GNTO 7/9 The old pool in the mine Jochen Tack/Stiftung Zollverein 8/9 Guided tours of a coal mine are more interesting than you'd think Jochen Tack/Stiftung Zollverein 9/9 Zollverein's been transformed into an event space for locals Frank Vinken/Stiftung Zollverein
To convert CO2, the researchers designed a liquid metal catalyst with specific surface properties that made it extremely efficient at conducting electricity while chemically activating the surface.
The carbon dioxide is dissolved in a beaker filled with an electrolyte liquid along with a small amount of the liquid metal, which is then charged with an electrical current.
The CO2 slowly converts into solid flakes, which are naturally detached from the liquid metal surface, allowing for continuous production.
RMIT researcher Dr Torben Daeneke said: “While we can't literally turn back time, turning carbon dioxide back into coal and burying it back in the ground is a bit like rewinding the emissions clock.”
“To date, CO2 has only been converted into a solid at extremely high temperatures, making it industrially unviable.
“By using liquid metals as a catalyst, we've shown it's possible to turn the gas back into carbon at room temperature, in a process that's efficient and scalable.
"While more research needs to be done, it's a crucial first step to delivering solid storage of carbon."
Lead author, Dr Dorna Esrafilzadeh said the carbon produced by the technique could also be used as an electrode.
“A side benefit of the process is that the carbon can hold electrical charge, becoming a supercapacitor, so it could potentially be used as a component in future vehicles,” she said.
“The process also produces synthetic fuel as a by-product, which could also have industrial applications.”
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Fiat Chrysler Automobiles (FCA) announced that it is investing $4.5 billion in five of its existing Michigan factories and part of that investment is going to enable plug-in electric Jeep production and possibly all-electric vehicle production in the future.
The automaker is listing many different projects as part of this large investment plan and two of them are related to electrification:
Enables electrification of new Jeep models
All three assembly sites would also produce plug-in hybrid versions of their respective Jeep models with the flexibility to build fully battery-electric models in the future
Mike Manley, Chief Executive Officer, FCA N.V., commented on the announcement:
“Three years ago, FCA set a course to grow our profitability based on the strength of the Jeep and Ram brands by realigning our U.S. manufacturing operations. Today’s announcement represents the next step in that strategy. It allows Jeep to enter two white space segments that offer significant margin opportunities and will enable new electrified Jeep products, including at least four plug-in hybrid vehicles and the flexibility to produce fully battery-electric vehicles.”
Electric Jeep?
Last year, FCA announces a bunch of new all-electric vehicles across most of its brands including Jeep.
By 2022, the company says that they will have 10 plug-in hybrid Jeep vehicles and 4 all-electric Jeep vehicles:
Electrek’s Take
While I’m always happy to see more investment in the production of electric vehicles, this investment plan looks weak to me.
It sounds like the vast majority of the $4.5 billion is going to expand the production of gas-powered vehicles.
They didn’t break down the investment in their electric vehicle efforts, but it was only a small part of the entire press release about the new investment plan.
If you are planning future production investment today and it’s not in all-electric vehicles, you’re doing it wrong.
The fact that they are only planning to have the “flexibility” to produce all-electric vehicles with this new investment plan is mind-boggling to me.
Are you planning to make them or not? Why you need flexibility?
FCA looks so far behind when it comes to all-electric vehicles right now. Even if they would have invested the entire $4.5 billion into EVs, I think they would still have a tough time catching up.
I think they need to wake up and move faster or they will end up one of the giants that will fall because of the electric vehicle revolution.
What do you think? Let us know in the comment section below.
https://electrek.co/2019/02/26/electric-jeep-fca-production-plan/
EOG Resources saw its quarterly revenues spike by more than one-third as the Houston oil and gas producer reported an $893 million profit for the fourth quarter, falling a bit shy of analysts' expectations.
EOG's net income actually fell from a $2.43 billion gain during the fourth quarter of 2017, but those returns were skewed by a roughly $2 billion, one-time tax benefit courtesy of the new federal tax law.
The Texas oil company said its quarterly revenues grew to $4.57 billion from $3.34 billion during the year prior.
Unlike many oil companies that are tightening the reins after crude prices plunged late last year, EOG plans to increase its 2019 capital spending by a bit. After doling out about $6 billion in 2018, EOG said it plans to spend in the range of $6.1 billion to $6.5 billion this year.
EOG also expects to grow its U.S. crude oil production by 12 percent to 16 percent.
The company said it will spend more on opportunistic, new drilling potential like Wyoming's Powder River Basin and a bit less on its established plays like South Texas Eagle Ford shale, although the Eagle Ford will remain its top money earner for some time.
Overall, EOG will focus on the Eagle Ford, the booming Permian Basin and other states like Colorado, Wyoming, Oklahoma and North Dakota.
In 2018, EOG said its output in the Permian's Delaware Basin spiked by 47 percent up to 126,800 barrels per day, making the region second just to its Eagle Ford production of 171,000 barrels daily.
Exxon Mobil Corp said on Tuesday its oil and gas reserves rose nearly 23 percent last year, driven mainly by increases from holdings in U.S. shale, offshore Guyana and Brazil.
The reserve update, which is required annually by U.S. regulators, comes as the largest publicly traded U.S. oil producer has been spending heavily under Chief Executive Darren Woods on new fields and projects to reverse weak oil and gas production.
Exxon said it added 4.5 billion oil-equivalent barrels of proved oil and gas reserves in 2018, bringing its total to 24.3 billion oil-equivalent barrels at the end of 2018. Proved reserves are those considered economically and geologically feasible to produce in the near future.
The 2018 additions put the company’s reserves life at 17 years based on current production rates.
“Multiple new discoveries offshore Guyana, continued growth in the Permian Basin and a strategic acquisition in Brazil greatly enhanced our already strong portfolio of high-quality, low-cost-of-supply opportunities,” Woods said in a statement.
Exxon plans to increase capital spending to $30 billion this year from $26 billion in 2018 as it expands operations in the Permian Basin of West Texas and New Mexico and develops large- scale projects in Guyana and Mozambique.
The U.S. oil major cited significant additions from shale and other unconventional sources, which added 1.2 billion oil-equivalent barrels. Higher oil prices last year contributed to proved reserves additions of about 3.6 billion boe.
Overall reserves were reduced by 800 million boe because of future production reductions at a Netherlands gas field, the company said.
Exxon’s stock gained 14 cents on Tuesday to $78.64 as oil futures inched higher and the overall stock market dipped. The company’s shares are up about 1 percent in the past 52 weeks.
Brazilian state-owned bank Caixa Economica Federal is close to selling a 9-billion-real ($2.4 billion) stake it owns in oil company Petroleo Brasileiro SA, two sources with knowledge of the matter said on Tuesday.
The share offering of the 2.3 percent stake owned by Caixa in Petrobras, as the oil company is known, depends on the publication of a new presidential decree authorizing the sale, the sources said, asking for anonymity to discuss private plans.
President Jair Bolsonaro has already signed a first decree authorizing Caixa to sell its Petrobras stake, but the decree had technical mistakes and needed to be republished, they said.
Once the new decree is signed, Caixa will hire investment banks to help manage the secondary share offering.
The sale of the Petrobras stake will be the second divestiture led by Caixa since Chief Executive Pedro Guimaraes took the helm at the state bank last month, after the sale of a 2.4 billion reais stake in reinsurer IRB Brasil Resseguros SA. The IRB share offering will be priced later on Tuesday.
These shares in IRB are owned by a government fund responsible for financing education and managed by Caixa.
Caixa owns 3.2 percent of Petrobras common stock directly and 1 percent of non-voting capital.
Both transactions will be led by Caixa’s recently created investment banking unit, with around 30 bankers recruited internally.
Guimaraes recently appointed new senior management officials at Caixa. Andre Laloni, former head of UBS AG in Brazil and the Southern Cone, is the new chief financial officer, while former Banco Santander Brasil SA executive, Luciane Ribeiro, will lead Caixa’s asset management unit.
Russia’s largest independent natural gas producer and LNG operator, Novatek is looking to revise its liquefied natural gas production plans, reaching 70 million tons per year by 2030.
In a meeting with the Russian president Putin, Leonid Mikhelson, Novatek’s head said the current plans see for production volumes of 57 million tons, but these plans could be revised upwards in a year or two.
Mikhelson informed the construction on the Yamal LNG project’s fourth liquefaction train has started, a brief released by the press office of the Russian president.
The fourth LNG train will have the capacity to produce 900 thousand tons per annum, utilizing the hydrocarbon resources of the South-Tambeyskoye field in the Russian Arctic, bringing the project’s total capacity to 17.5 mtpa.
The first LNG Train began production in the fourth quarter of 2017 and Trains 2 and 3 in July 2018 and November 2018, respectively.
Besides Novatek, Yamal LNG’s shareholders include France’s Total, China’s CNPC and Silk Road Fund.
Novatek is also developing the Arctic LNG 2 project envisaging constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms. It is based on the hydrocarbon resources of the Utrenneye field.
Novatek has already tagged a joint venture between the Italian contractor Saipem and Turkish oil and gas services company Renaissance for the onshore engineering and construction of the GBS platforms.
The company has also signed a contract on compressor equipment for the three liquefaction trains with Siemens.
https://www.lngworldnews.com/novatek-to-bump-lng-production-target-to-70-mtpa-by-2030/
With about 30 million metric tons per annum (MMtpa) of liquefaction capacity scheduled to come online in 2019, feedgas deliveries are poised to be the biggest driver of Lower-48 natural gas demand this year. The timing of this emerging export demand growth from these complex, multi-process facilities will come down to a veritable obstacle course of construction and testing timelines and regulatory approvals. Understanding these factors will be key to anticipating the gas-market impacts of the oncoming demand. Today, we begin a short series breaking down the liquefaction train commissioning process and what it tells us about the timing of incremental feedgas demand over the next several months.
As we discussed in our recent Let Me Move You blog series, demand for feedgas supply at the liquefaction/LNG export facilities will increasingly pull natural gas supplies to the Texas and Louisiana Gulf Coast, changing upstream gas flow patterns and pricing relationships. In that same series, we looked at the liquefaction projects due online this year, along with the pipeline contracts that are in place to bring supply to the facilities, including on pipeline expansions being built to connect the export terminals to growing supply basins and meet those shipper commitments. The market impacts of these projects will come down to timing — the timing of liquefaction capacity and feedgas ramp-up versus available pipeline capacity.
One part of understanding how this new demand will unfold is the liquefaction train ramp-up process, from the time the project starts commissioning to when it begins taking feedgas, its first LNG production and shipment, and ultimately full operation and commercialization. This phase involves the start-up and testing of each system, with regulatory approvals required at each step. Given the importance of LNG exports to the gas market balance this year and beyond, we thought it worth taking a deep dive into the ramp-up process and timeline as a means to extrapolate the timing of future feedgas demand as more liquefaction trains near completion. Bear in mind, we are not engineers. But fortunately, there is a good amount of information available in regulatory filings and other documentation to provide a window into the inner workings of the facilities and their start-up processes. Before we delve into those processes, though, we start with an overview of the key components of a liquefaction facility.
How liquefaction/LNG export terminals work
Unlike piped natural gas, which is compressed and pressurized to move from point A to B, shipped gas must be super-chilled to -260 degrees Fahrenheit (ºF) into liquid form (which takes up only 1/600 of the space as the gas form) in order for it to be loaded onto LNG tankers. But there’s a lot that needs to happen between natural gas intake and LNG loading. At this point, an engineer might interject that there’s more than one way to achieve liquefaction, and each method has its advantages and disadvantages in terms of economics and efficiency, depending on the scale of the facility and climate conditions, among other variables. For the sake of simplicity, we’ll leave the technical debate to the engineers and focus at a high level on the main processes that are part and parcel of a liquefaction train. The diagram in Figure 1 provides an example of one of those processes: ConocoPhillips’s Optimized Cascade Process, which happens to be the one used at Cheniere Energy’s Sabine Pass LNG (SPL) facility.
First, natural gas received at a liquefaction facility undergoes pretreatment (yellow box #1 in Figure 1) to remove any components that would freeze or damage the cryogenic sections of the plant. Pre-treatment typically involves acid gas (carbon dioxide and hydrogen sulfide) removal, dehydration and mercury removal. Heavy hydrocarbon components (C5+) are also removed (yellow box #2) before the feed gas is ready for liquefaction. The heavy hydrocarbons are typically further distilled to a point that is suitable for atmospheric storage and road transportation to end-users.
At this stage, the gas can begin to be gradually chilled and condensed in a series of cryogenic heat exchangers (transferring heat from one fluid to another for cooling) or “cold boxes” containing brazed aluminum heat exchangers (which collectively make up the core of the liquefaction “train”), using refrigerants (typically propane, ethylene and methane) that progressively cool down the gas. A propane refrigerant loop (yellow box #3) can “pre-cool” the feed gas to down to as low as -31ºF before it enters the liquefaction plant, where other refrigerants (with greater cooling properties) are used to cool the dry feed gas further, ultimately bringing it down to that magic number, -260ºF (yellow boxes #4 and #5), when the gas becomes fully liquefied. As the liquefied gas exits the last cold box and makes it way either to LNG storage tanks or to the loading dock, it is “end flashed” (depressurized), which produces vapor (“flash gas”) that is then recovered and recycled by the boil-off gas system (for use as fuel gas or for reliquefication; yellow box #6).
Figure 1. Example Liquefaction Process. Source: ConocoPhillips
That’s the basic liquefaction process, but there are all sorts of ancillary systems onsite that are supporting these primary operations. For example, each of the refrigeration systems requires its own refrigerant compressors that, in turn, are typically powered by gas turbines or large electric motors (gray ovals and dumbbell-shaped objects along the top of the diagram). There are also the various monitoring and safety systems, which include the wet gas, dry gas and marine flare systems to help manage abrupt changes in gas flows (such as during start-up, shutdown, maintenance or emergencies); the waste heat recovery systems; control systems, electrical infrastructure, utility connections, distribution systems, piping, marine berth, loading mechanisms and so on.
Without getting into the weeds of each of these systems, the point is that the various systems and sub-systems undergo extensive testing and must pass through regulatory “stage-gates” as part of the project ramp-up process. As each new liquefaction train moves through testing and approvals, its feedgas intake picks up; volumes are initially small and sporadic but build up to larger and more consistent volumes as the train achieves first LNG production, first commissioning cargo and, eventually, substantial completion and full commercial operation. It is common for LNG plants to ramp up steadily, with some intermittent shutdowns to pull commissioning strainers (used during start-up and testing to trap debris and prevent it from affecting sensitive equipment and/or instrumentation in the downstream processes) and perform critical repairs. These repairs often occur shortly after the first cargo milestone is achieved. Commissioning activities can also expect to encounter unforeseen issues that need to be rectified before full operation, which can contribute to the erratic gas supply needs at the facility. In addition to creating uncertainty on the gas inlet side of things, the intermittent operations during the testing process also result in commissioned tankers sometimes left lingering offshore awaiting the go/no-go signal while the operator works out the kinks onshore.
The patchy feedgas volumes during the testing phase are evident in the historical flows at Sabine Pass, as shown in Figure 2 below (the dashed yellow lines mark “substantial completion” for the first four trains; the fifth train is in the process of being commissioned).
Figure 2. Sabine Pass LNG Feedgas. Source: Genscape
To better understand how the testing and regulatory milestones correspond with actual feedgas demand, Figure 3 zooms into the same data in Figure 2, this time homing in on the ramp-up phase for Sabine Pass’s Train 1 (T1), from initial start-up in fall 2015 to “substantial completion” in mid-2016. The graph shows feedgas flows (blue shaded area) overlaid with key regulatory milestones (orange call-out boxes), based on filings with the Federal Energy Regulatory Commission (FERC). The green call-out boxes mark the start-up of Train 2 (T2), which began ramping up before T1 was completed, and the red dots signify cargo departures.
The first sign that T1 was ramping up was in late September 2015, when the project was cleared to introduce fuel gas to the train as well as the surrounding equipment and components that support the primary systems (referred to as “outside battery limits” or OSBL). These are typically negligible volumes of gas (less than 10 MMcf/d). About two weeks later, in early October 2015, the project was authorized to introduce a heat transfer fluid to the hot oil system used in the pre-treatment process. Next, a month and a half later in mid-November 2015, came the fuel gas to power the turbines, and at that point, the facility was also ready to introduce feedgas (gas supply used for liquefaction as opposed to fuel gas for powering onsite systems) and refrigerants (i.e. propane and ethylene for the cooling/liquefaction process). From there, it was another 20 days before gas deliveries picked up from less than 10 MMcf/d to upwards of 50 MMcf/d by mid-December. Around that time, the project introduced more fuel gas to begin testing its marine flare system, which led to volumes intermittently exceeding 100 MMcf/d in the latter half of the month before tapering again to near zero. The marine flare system is located near the loading dock and is used to safely dispose of vapors released from the LNG storage tanks or from the ships during loading.
Figure 3. SPL Train 1 Ramp-Up vs. Feedgas. Source: Genscape, FERC filings
Nearly a month-long lull in feedgas deliveries followed, particularly in the second half of January 2016, when the facility’s gas intake dropped to little more than 3 MMcf/d. It wasn’t until mid-February 2016 that FERC activity picked up again, with the authorization to introduce “process fluids” to heat up the condensate storage tanks and truck loading system (which handles the heavy hydrocarbons we noted above that are removed from the gas stream). That’s also when feedgas deliveries accelerated, jumping to as much as 580 MMcf/d in the second half of February, just before the first commissioning cargo was shipped. With the first cargo on its way, feedgas volumes again briefly subsided to less than 20 MMcf/d in early March 2016. This is also when the project began introducing fuel gas and heat transfer fluids for Train 2. But by mid-March 2016, SPL’s feedgas was consistently above 600 MMcf/d — just shy of T1’s intake capacity. Volumes remained more or less elevated through much of April, as feedgas and refrigerants were introduced to T2. But by late April 2016, the facility’s storage was nearing capacity, and, with no inbound ships approaching, the facility ramped down; feedgas intake abruptly dropped back down to the 20-MMcf/d level. During this time, SPL filed for authorization to start full operations for T1. Eight days later, on May 3, 2016, that approval was granted, and volumes bounced back to the 600-700 MMcf/d level in short order, marking the end of the commissioning phase for T1.
Based on that timeline, we know that T1 testing was a 224-day affair — including about 140 days from the time fuel gas was first introduced to when the facility was taking substantial feedgas volumes, plus another 15 days for the first cargo to ship. It also was nearly a month after the first cargo that a second one shipped (in mid-March). But after that, the pace of feedgas intake stabilized and exports quickened, with another six cargoes shipping between mid-March and the full in-service of T1 in early May (2016). SPL’s subsequent trains followed a similar pattern, but at a progressively quicker pace. Train 2 entered operation within 224 days (on October 12, 2016); Train 3 achieved full operation in 215 days (on March 21, 2017); and Train 4 in just under 200 days (on October 5, 2017).
As noted earlier, now SPL’s Train 5 is in the process of being commissioned, along with the first trains at Cheniere’s Corpus Christi LNG, Sempra Energy’s Cameron LNG and Kinder Morgan’s Elba Island, with others to follow later this year. In Part 2 of this series, we’ll look at what the timelines for previous trains can tell us about the status and timing of feedgas demand in relation to these upcoming trains.
https://rbnenergy.com/steppin-out-with-my-lng-the-liquefaction-train-rampup-process-and-timelines
Australia's gas-strapped east coast needs to urgently start importing LNG in order to mitigate a range of risk factors stretching from supply issues to regulatory uncertainties, energy consultancy EnergyQuest said Wednesday.
It said that its modeling shows gas production in the states of New South Wales, Victoria, South Australia and Tasmania will start falling short of demand by 2022, and that by 2025, annual gas production offshore Victoria will more than halve from current levels, dropping to 146 PJ from 336 PJ in 2018.
Supply from Queensland would need to increase to nearly one third of southern supply to fill the gap, and moving that volume would run into constraints along the QSN Link pipeline and the Moomba Sydney pipeline, it said, adding that more Queensland gas would also only be a short-term palliative to the problem.
"We expect Queensland gas production to start declining from 2025, due to a shortage of quality gas resources," EnergyQuest CEO Graeme Bethune said.
"Queensland also has investment risks. Maximizing production from Queensland's coal seam gas fields requires investors to be sufficiently confident of the investment climate to drill around 1,000 new wells a year at a total cost of A$1 billion-A$2 billion," Bethune said.
"The southern states need a new permanent source of gas supply, which can only be met by the proposed LNG import projects," EnergyQuest said.
There are currently five LNG import project plans on the table, and questions have been raised about how many of these would be justified. EnergyQuest said that plants in Sydney, New South Wales, and Melbourne, Victoria, should be built, and criticized state governments for slow action in addressing the issue.
"Timing is critical and it is concerning that the regulatory processes in Victoria and NSW are dragging out, delaying decisions to go ahead with these new terminals," Bethune said.
"Here, we have investors willing to spend their own money to alleviate the east coast gas shortage, but there does not appear to be any sense of urgency on expediting the approval process," he said.
EnergyQuest also noted that developing LNG import terminals sooner rather than later would reduce the risks associated with further regulatory intervention in diverting Gladstone-based LNG to the domestic east coast market.
In a preview to Wednesday's report, EnergyQuest said last week that Gladstone's three LNG export plants -- the Origin-ConocoPhillips Australia Pacific LNG, the Santos-led Gladstone LNG and Shell's Queensland Curtis LNG -- face the prospect of needing to shut two of their six trains amid political pressure to cover supply shortfalls.
Of the five LNG import project plans that have been announced, two are proposed for Victoria, two for New South Wales and one for South Australia.
The Victorian projects are AGL's Crib Point and one by ExxonMobil, which has not specified where the project would be located. The NSW-based ones are Australian Industrial Energy's Port Kembla Project and EPIK's Newcastle LNG. Meanwhile, Venice Energy has a plan for an LNG project at Port Adelaide in South Australia.
"LNG importing is the only certain supply option for the east coast after 2026," Bethune added.
Chesapeake Energy Corp reported a better-than-expected quarterly profit and said it expects to produce more crude oil in 2019 on the back of its recent acquisition of WildHorse Resource.
The company, which agreed to buy Texas oil producer WildHorse in a $4 billion deal in October, has been focusing on producing more oil over natural gas to benefit from improved prices.
Chesapeake said it expects oil production of 116,000 to 122,000 barrels per day (bpd) in 2019. Analysts were expecting 120,200 bpd, according to IBES data from Refinitiv.
“Our strategic focus on increasing our oil production is working,” Chief Executive Officer Doug Lawler said in a statement.
Chesapeake, which operates in the Eagle Ford basin in south Texas and the Anadarko basin in northwestern Oklahoma, said it produced about 464,000 barrels of oil equivalent per day (boepd) in the fourth quarter, down 22 percent from a year earlier.
The company now expects crude oil to constitute about 24 percent of its total volumes in 2019, compared to just 17 percent in 2018.
Net income available to shareholders jumped 57 percent to $486 million, or 49 cents per share, in the fourth quarter ended Dec. 31.
On an adjusted basis, the company earned 21 cents per share, beating the average analyst estimate of 19 cents, according to IBES data from Refinitiv.
Chesapeake’s shares were up at $2.89 before the opening bell. Short interest in the stock has climbed to a two-year high of about 26 percent of the company’s outstanding shares as of end-January, according to Refinitiv data. Short sellers borrow and sell shares and, when prices fall, buy and return them, pocketing the difference.
The beleaguered Constitution Pipeline is getting another chance as FERC indicated that it may rehear a challenge to the New York State Department of Environmental Conservation (DEC), which denied the water quality certification (WQC) and brought the natural gas project to a halt three years ago.
The Federal Energy Regulatory Commission wants the U.S. Court of Appeals for the District of Columbia (DC) to allow it to reconsider a decision made by the court last year. At the time, the Commission refused to waive New York’s regulatory authority, finding that the DEC did not fail to act on Constitution’s WQC within the one-year timeframe required by the Clean Water Act (CWA), as the project’s sponsors had argued. Constitution sponsors appealed FERC’s decision to the DC Circuit, but FERC wants the case remanded after the court ruled last month on an unrelated hydropower project that addressed similar issues.
At FERC’s request, Constitution’s appeal had been put on hold pending the outcome of the hydropower case, Hoopa Valley Tribe v. FERC et al, No. 14-1271. Constitution’s sponsors had been pushing FERC to reconsider last year’s decision. Earlier this month, Cabot Oil & Gas Corp. CEO Dan Dinges sent a letter to FERC Chairman Neil Chatterjee urging the Commission to act on Constitution, writing that “both policy and legal arguments now appear to favor timely action” following the Hoopa Valley ruling.
Constitution in 2014 received a FERC certificate authorizing construction and operation. But sponsors have battled the DEC since 2016, when after nearly three years of regulatory review, the WQC was denied. The project sponsors had filed for a WQC in August 2013, but the application was withdrawn and resubmitted twice, which DEC argued reset the one-year deadline it had to make a decision each time. FERC agreed last year and refused to waive the state’s regulatory authority.
In the Hoopa Valley case, the DC Circuit ruled that FERC should proceed with a review of the Klamath Hydroelectric Project, a 2004 proposal by electric utility PacifiCorp to build a series of dams along the Klamath River in California and Oregon. The court held that withdrawing and resubmitting WQC applications “does not trigger new statutory periods of review.” A three-judge panel ruled that, when an applicant and a state explicitly agree to delay a WQC, states defy the CWA’s requirement for action within a reasonable period of time.
Dinges said in his letter that given the Hoopa Valley ruling, “the gamesmanship of the state of New York has never been more legally suspect.” He also stressed during a year-end earningscall last week that Cabot has not given up on Constitution.
FERC’s request to remand the case comes after multiple defeats for Constitution, including those before the U.S. Court of Appeals for the Second Circuit and the U.S. Supreme Court. It also comes as utilities in downstate New York and New England have either imposed moratoriums on new gas customers or signaled that similar actions are ahead as parts of the region face supply shortages.
The 124-mile Constitution Pipeline would carry 650 MMcf/d of Appalachian gas from Susquehanna County, PA, to an interconnect with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY. The project is backed by Williams, Cabot, Piedmont Natural Gas and WGL Holdings Inc.
Not even China’s voracious appetite for liquefied natural gas may be enough to absorb the additional supplies hitting the market this year, with the price of the super-chilled fuel potentially a casualty.
While China’s LNG imports got off to a rollicking start in 2019, it’s unlikely that will match the 41-percent growth experienced in 2018.
Imports were 6.58 million tonnes in January, a record-high and up 27.8 percent from the same month in 2018, according to customs data released on Feb. 23.
But the sharp rise in January imports is likely to unwind in coming months as much of the LNG is being used in coal-to-natural gas switching projects that run out of steam as the northern winter ends.
Some 3 million Chinese homes were switching from coal heating to natural gas this winter, boosting demand for LNG. However, this demand drops sharply after the winter heating period ends on March 15.
China will likely increase its LNG demand by about 8 million tonnes in 2019, Nicholas Browne, director of Asia gas and LNG at consultants Wood Mackenzie, told the LNGgc Asia conference in Singapore this week.
While other analysts at the event were somewhat more optimistic about the prospect for increased demand from China, none were forecasting that the 15.7 million tonne jump seen in 2018 from 2017 would be repeated.
The problem for the LNG market is that it’s likely that more than 30 million tonnes of additional LNG supply will be available in 2019.
Poten & Partners head of business intelligence Jason Feer told the LNGgc Asia event that his company expected 33 million tonnes of new supply in 2019, but only 16 million tonnes of extra demand.
Wood Mackenzie’s Browne said a total of about 70 million tonnes of new LNG would reach the market this year and next, driven by the full ramp-up of the last of the eight new Australian plants and by the start of new U.S. projects, including Kinder Morgan’s Elba Island and Sempra’s Cameron venture.
LONG-TERM GOOD, SHORT-TERM BAD
While the demand outlook over the next few years suggests that the new LNG supply will eventually be absorbed, the problem for the industry is 2019, and possibly part of 2020.
While there is some potential for India and other emerging buyers in Asia to take more of the fuel, the outlook for traditional big buyers Japan and South Korea is more muted.
Increasing nuclear generation in Japan is likely to result in lower LNG imports, although it will keep its status as the top buyer for several years yet.
Energy policy in South Korea is now heavily tilted toward renewables, and the country has already lost second spot among LNG importers to a surging China.
Overall, it seems unlikely that Asia will be able to absorb all the new LNG capacity coming to the market this year.
It’s possible that demand could be boosted if prices weaken further, but there are also limitations to how much extra the major importers would want to buy, especially in the weak demand periods between the winter and summer peaks.
The spot price of LNG in Asia has dropped to $6.20 per million British thermal units (mmBtu), the lowest in 17 months and down 47 percent from the 2018 peak of $11.60 in June.
If low prices fail to spark a significant uptick in Asian demand, it makes it likely that cargoes will have to be diverted to Europe, especially those from major exporters Qatar and the United States.
In Europe, LNG can displace Russian pipeline gas, if the price is right, and it may just be getting low enough.
Russia’s Gazprom expects to receive the equivalent of about $6.40 per mmBtu for piped natural gas to Europe in 2019.
This means that U.S. and Qatari producers are just as likely to ship to Europe as to Asia, especially if Gazprom chooses not to compete on price and rather gives up market share, most likely taking the view that the LNG oversupply is a temporary phenomenon.
ExxonMobil Corp and Qatar Petroleum have discovered natural gas offshore Cyprus, both companies announced Thursday.
The find, described as “significant,” is on the Glaucus-1 prospect located in Block 10 in the Eastern Mediterranean. The well encountered about 133 meters of gas-bearing reservoir and was drilled to a depth of 4,200 meters in a water depth of 2,063 meters.
The discovery is believed to represent natural gas resources of 5 trillion to 8 trillion cubic feet of natural gas.
“These are encouraging results in a frontier exploration area,” Steve Greenlee, ExxonMobil Exploration Company president, said in a company statement.
Qatar Petroleum CEO Saad Sherida Al-Kaabi added that he was pleased with the Cyprus discovery, which is the second for the company’s international exploration portfolio.
Block 10 is 635,554 acres and is operated by ExxonMobil, which has a 60 percent working interest. Qatar Petroleum holds a 40 percent working interest.
Further analysis will be performed in coming months to determine resource potential in Glaucus-1.
Chesapeake Energy Wednesday reported fourth-quarter 2018 net income of $514 million or 53 cents per share, up from $334 million, or 34 cents/share one year ago, Kallanish Energy reports.
For full-year 2018, the company reported net income of $877 million, or 85 vents/share, down from $953 million, or 90 cent/share in 2017.
CEO 'pleased'
Its adjusted full-year 2018 net income was $816 million, or 90 cents/share, compared to $742 million, or 82 cents/share in 2017.
“I am very pleased with Chesapeake’s operational and financial performance in 2018,” said president and CEO Doug Lawler, in a statement.
It reported average production in Q4 2018 of 464 million barrels of oil-equivalent per day (Mmboe/d), down from 593 Mmboe/d in Q4 2017.
Average daily production dipped from 546 Mmboe/d in 2017, to 521 Mmboe/d in 2018, the Oklahoma-based company said. It said its 2018 average daily production increased by 4%, compared to 2017 levels, adjusted for asset sales.
It consisted of 90,000 barrels of oil, 2.28 trillion cubic feet of natural gas, and 52,000 Bbls of natural gas liquids.
Divesting & buying in 2018
The company undertook two major deals in 2018: divesting its Utica Shale assets in eastern Ohio; and acquiring the WildHorse assets in the Eagle Ford Shale in South Texas, he said.
Chesapeake said its capital spending in 2019 will be flat, in the range of $2.3 billion to $2.5 billion. In 2018, it spent $2.37 billion on its capital budget.
Chesapeake is also projecting a major boost in 2019 oil production. It says average daily oil production will be between 116,000 and 122,000 barrels, an increase of 32% (or 50% adjusted for asset sales).
WildHorse buy adding to production
That growth will be driven by its WildHorse asset purchase in the Eagle Ford and development of the Powder River Basin in Wyoming.
In 2018, the company average daily oil production was about 90,000 barrels, up 10% from 2017, adjusted for asset sales. December 2018 oil production equaled 21% of the company’s total production mix, Chesapeake said.
It reported it saw its highest margins in 2018, since 2014.
Chesapeake said it expects to begin production on 64 Turner wells in the Powder River Basin in 2019 (up from 32 wells in 2018).
It also plans to place in production up to 125 wells in the Eagle Ford, compared to 157 wells in 2018. Chesapeake expects to test up to 10 wells in the Upper Eagle Ford and Austin Chalk formations.
In the Brazos Valley, the name given to the WildHorse acquisition, the company will operate four rigs and place on production up to 83 wells in 2019.
Rig trio working the Marcellus
In the Marcellus Shale in Pennsylvania, the company is operating three rigs and expects to place 48 wells in production in 2019 (down from 54 wells in 2018). That includes seven wells that will target the Upper Marcellus formation in northeast Pennsylvania.
The company said it will benefit from stronger natural gas prices in the Marcellus, where it recorded record Marcellus production of 2.5 billion cubic feet per day (Bcf/d) last month.
Chesapeake expects to place on production 24 wells in the Haynesville Shale in Louisiana, down from 26 wells in 2018. In Oklahoma, the company is projecting 25 wells will be placed in production, down from 38 wells in 2018.
http://www.kallanishenergy.com/2019/02/28/chesapeake-ceo-very-pleased-with-2018s-results/
Shutterstock photo
SAO PAULO, Feb 28 (Reuters) - The Brazilian government will offer in an auction in October production sharing contracts for companies to explore areas that it says hold "significant volumes of oil and gas" off its coast, the country's energy council CNPE said on Thursday.
At a meeting in Brasilia, CNPE decided on some rules for the auction that will offer exploration licenses for reserves adjacent to the so-called Transfer of Rights area, a high-yield, pre-salt region currently being explored by state-controlled oil company Petróleo Brasileiro SA, or Petrobras.
CNPE decided that winning companies in the auction would be required to compensate Petrobras for investments it has already made in the areas. In return, they will receive ownership of some assets and part of the production. The compensation value has yet to be evaluated.
To maintain control of the company, the Brazilian government sold Petrobras the rights to explore 5 billion barrels of oil in a pre-salt area off the coast for 74.8 billion reais at the time. With that money, it bought additional Petrobras shares.
But Brazil's oil regulator now estimates there are around 17 billion barrels of recoverable oil in the area, and the government is seeking to auction rights for the exploration of the excess oil.
Petrobras has the right of first refusal over those areas. It must express interest before the auction if it wishes to hold more than 30 percent stakes in the reserves, which have been named Atapu, Buzios, Itapu and Sépia.
It is likely that the oil company will partner with other oil majors, as it has in recent oil auctions in Brazil.
($1 = 3.7508 reais)
Diamond Offshore Drilling Inc. said it’s nearly doubling rental rates for deepwater drillships as oil explorers return to sea.
The increase involves long-term rig leases beginning in 2020 and beyond, CEO Marc Edwards said Wednesday in an interview on Bloomberg TV. The proliferation of onshore shale drilling in the past decade shattered the deepwater drilling industry and prompted some rig operators to scrap vessels that cost hundreds of millions to build.
“Dayrates have collapsed down to about 25% of where they were at the last peak,” Edwards said. “We need to at least see them double and perhaps go even higher than that so that we can get back into the space whereby we are providing the correct returns to our shareholders.”’
It’s a rig-price recovery that Transocean Ltd., the world’s biggest owner of offshore rigs, pointed to last year. CEO Jeremy Thigpen has said rates for the most rugged vessels doubled in less than a year.
https://www.worldoil.com/news/2019/2/27/diamond-offshore-sees-drillship-rents-almost-doubling-next-year
The U.S. midstream sector has been on a development binge the past few years, mostly in an effort to catch up — and then keep up — with production growth in the Shale Era’s two premier plays: the Marcellus/Utica in the Northeast and the Permian Basin in West Texas and southeastern New Mexico. What’s sometimes overlooked, however, is that significant numbers of new pipelines, processing plants and other key assets are being built in smaller, lower-profile production areas. The Niobrara’s Denver-Julesburg and Powder River basins are cases in point. Exploration and production activity in the D-J in particular has been soaring, and the resulting gains in crude oil, natural gas and NGL output has been stressing the region’s hydrocarbon-related infrastructure, thus spurring the development of new processing plants and pipelines. Also, interest in the Powder has been renewed — production there has been rebounding after crude-production ups and downs and gas-production declines through the 2010s. Today, we discuss highlights from RBN’s new Drill Down Report on the Niobrara production region.
The Niobrara production area in Colorado and Wyoming has been producing hydrocarbons for more than a century. The volumes were relatively modest, however, until the late 1990s and early 2000s, when production of natural gas — especially coal-bed methane in the Powder River Basin — took off. The gains were so big that one of the U.S.’s largest gas pipelines ever — the 1,700-mile, 1.8-Bcf/d Rockies Express Pipeline (REX) from Colorado and Wyoming to eastern Ohio — was built to give all that gas an outlet. Niobrara gas production quickly leveled off, but by the mid-2010s it was again on the rise, this time driven by increasing production of crude oil and associated gas in the Denver-Julesburg Basin. That growth in the D-J accelerated in 2017-18 as exploration and production companies (E&Ps) focused on what they found to be highly productive focal points — with Weld County, CO, being the prime example. More recently, a few E&Ps have been finding similar success in parts of the Powder, and gas production there is finally on the upswing again.
Figure 1 summarizes what’s been happening. The green areas in the left and middle graphs show the rapid pace of crude oil and dry gas production growth in the D-J over the past seven-plus years. Crude production in the D-J is now approaching 570 Mb/d (nearly double where it stood in early 2017) and dry gas output is nearing 2.3 Bcf/d (more than triple its 2012 level). As for the Powder, crude production (purple area in left graph) now tops 120 Mb/d — up 140% from 2012 but still below its 2015 peak — and, as we said, Powder gas output (purple area in middle graph) appears to be reversing its long decline — it has topped 700 MMcf/d each and every month since last summer. And more growth may be on the way; indications are that production in Johnson County, WY — the recent focus of exploration efforts in the Powder — is poised to increase significantly in 2019 and 2020.
Figure 1. Niobrara Production. Sources: OPIS PointLogic and Energy Information Administration
There is no available breakdown of NGL production for the Niobrara as a whole, let alone the D-J or the Powder. But production of raw-mix NGLs in Petroleum Administration for Defense District (PADD) 4 — that is, mixed NGLs from the U.S. Rockies as a whole that are piped, railed or trucked away, not counting ethane that is “rejected” into natural gas — now averages about 450 Mb/d, up nearly 50% from early 2015 (right graph in Figure 1).
D-J production gains in particular are leading midstream companies to invest in new infrastructure to deal with it all. Consider gas processing capacity. The increasing volumes of wet, liquids-rich associated gas emerging from wells in Weld County and nearby areas in northeastern Colorado have led to the development of a number of new gas processing plants there. For example, DCP Midstream started up its 10th plant in the D-J — the 200-MMcf/d Mewbourn 3 facility in Weld County — in August 2018; the company said during its February 12 earnings call that the plant was running at full capacity within a month of its opening. DCP currently is building its 200-MMcf/d O’Connor 2 plant (also in Weld) that is slated to come online in June 2019, and has indicated it is close to a final investment decision (FID) on the first of a number of plants at its Bighorn complex — again in Weld County. Just a couple of days ago — on Tuesday, February 26 — Summit Midstream Partners, a newer and smaller player in the D-J, announced plans for a second 60-MMcf/d processing plant there; Summit’s first plant in the play is scheduled to start up in the second quarter of 2019, with the newly announced plant to follow in the third quarter of 2020.
There has also been a flurry of activity of late on the takeaway-pipeline front — and for every commodity: crude oil, natural gas and especially NGLs. We’ll begin with crude, since it’s what’s driving most of the exploration, drilling and production activity in the Niobrara. Until recently, there was more than enough crude pipeline capacity out of the region — in fact, that was an impetus for producers facing serious takeaway constraints in the Permian to shift at least some of their drilling to the Rockies. But with production in the D-J rising fast, existing crude pipes have been filling up and efforts are under way to add more capacity.
For example, in late January (2019), Tallgrass Energy and Kinder Morgan announced a plan to provide 550 Mb/d of incremental takeaway capacity out of the D-J and Powder River basins to the crude hub in Cushing, OK, as soon as the second half of 2020. Under the plan, parts of Kinder Morgan’s existing Wyoming Interstate Co. (aqua line in Figure 2) and Cheyenne Plains (purple line) gas pipelines between eastern Wyoming and south-central Kansas would be converted to crude service; also, about 200 miles of new pipeline would be built from south-central Kansas to Cushing. The plan also calls for converting Tallgrass’s Rockies-to-Cushing Pony Express Pipeline (PXP) from light-crude to heavy-crude service, with the heavy crude to come down from Western Canada. (Because heavy crude moves through pipelines more slowly, PXP’s capacity would drop from the current 400 Mb/d to 150 Mb/d.) Also, Magellan Midstream Partners indicated that the company and its partners on the 190-Mb/d Saddlehorn part of the 340-Mb/d Grand Mesa/Saddlehorn crude pipeline system (red line) are considering the possibility of adding as much as 100 Mb/d of capacity to the pipe over the next year or two.
Figure 2. Selected Niobrara Pipeline Projects. Source: RBN
A number of gas pipeline and pipeline-related projects also are under development in the Niobrara, mostly to align the region’s existing — and substantial — gas takeaway assets with the rapid run-up in production from the D-J’s Weld County. One of these is Tallgrass’s proposed Cheyenne Connector (dashed green line in northern Colorado), which would run about 70 miles from receipt connections at processing plants in the D-J to Tallgrass’s existing REX Cheyenne Hub in northern Weld County, CO, just south of the Colorado/Wyoming border. The Cheyenne Connector, with a planned start-up in the fourth quarter of 2019, would enable D-J producers to access interconnected pipelines and local distribution systems at the REX Cheyenne Hub as well as interconnected downstream systems. Affiliates of Anadarko Petroleum and DCP Midstream have signed precedent agreements for a combined 600 MMcf/d of capacity on the new pipeline.
As we noted above, a good bit of the new pipeline takeaway capacity under development in the Niobrara relates to NGLs. During the initial boom in the region’s gas production 20-odd years ago, most of the gas came in the form of coal-bed methane, which has only minimal amounts of NGLs. More recently, though, crude-focused production in the D-J generates large volumes of NGL-packed associated gas that needs processing and NGL takeaway capacity. There are a number of NGL pipeline projects now under way, including:
Plans by the co-owners of the Front Range Pipeline (pink line) to expand its capacity to 250 Mb/d (from the current 150-Mb/d) in the third quarter of 2019.
ONEOK’s plan to build the new, 240-Mb/d Elk Creek Pipeline (dashed orange line) to transport mixed NGLs from the Bakken to the Rockies and on to the Conway hub. ONEOK has indicated that it plans to complete the Rockies-to-Conway segment as soon as the third quarter of 2019, and finish the entire project by the end of 2019.
The plan by the four co-owners of the White Cliffs crude pipeline system (brown line) from the D-J to Cushing, OK — SemGroup’s Rose Rock Midstream, Plains All American, Anadarko Petroleum and Noble Energy’s Samedan Pipe Line subsidiary — to take one of the system’s two 12-inch-diameter pipes out of crude service in the next few weeks and prepare it for conversion to NGL service later in the year.
And more NGL takeaway is on the way. Just a couple of weeks ago, Williams unveiled a plan to expand Overland Pass Pipeline’s 125-mile D-J Lateral in northeastern Colorado. Overland Pass and the D-J Lateral — blue line (the lateral is the spur in north-central Colorado) — are jointly owned by Williams and ONEOK. From Overland Pass’s terminus at the Conway fractionation hub, Williams by the first quarter of 2021 plans to build a new, 168-mile, 120-Mb/d NGL pipeline called Bluestem that will connect to a planned extension of Targa Resources’ Grand Prix NGL Pipeline system, which runs to Mont Belvieu.
These plans provide further evidence not only that the Niobrara is bursting at the seams from an infrastructure perspective, but that E&Ps active in the region are anticipating continued growth that will make all the new processing and pipeline capacity a necessity. See the new Drill Down Report on the D-J and Powder for more.
https://rbnenergy.com/rocky-mountain-high-a-midstream-build-out-frenzy-in-the-d-j-and-powder-river
Shell-PetroChina subsidiary Arrow Energy has received approval for the Surat Gas project in Queensland, Australia, which is the largest resources project given the go-ahead in the state since the sanctioning of the three LNG projects at Gladstone, the Queensland government said Thursday.
"The approval of these petroleum leases is a critical milestone in Arrow delivering 5 trillion cubic feet of gas into the market," Arrow CEO Mingyang Qian said.
The A$10 billion ($7.14 billion) project, which is planned to produce gas for LNG export and domestic uses, is scheduled to be operational in 2020, according to Queensland premier Annastacia Palaszczuk.
The 5,000 Pj it is expected to bring to market is scheduled to be over 27 years, including 240 Pj/year during peak production from 2026, the state government said.
The leases cover around 2,500 sq km on blocks in the Surat Basin -- a gas-rich hotbed for the three Gladstone LNG projects. The Surat is already home to major gas projects operated by the upstream operator of Australia Pacific LNG Origin Energy and Gladstone LNG operator Santos, as well as the Shell-operated QGC venture, which exports the fuel via the Queensland Curtis LNG project.
"More gas being produced is good news for all gas customers, both domestic and export," Queensland Resources Council chief executive Ian Macfarlane said.
Queensland mines minister Anthony Lynham said Arrow proposes to use nearby existing QGC infrastructure including processing facilities and pipelines to transport gas to domestic and export facilities.
On Wednesday, energy consultancy EnergyQuest's chief executive Graeme Bethune said that Shell and PetroChina would need to be confident that the development will be profitable given losses of more than A$6 billion on the investment since 2010.
"Investors already feel over-exposed to Australia and the Queensland CSG [coalseam gas] projects, which have cost them dearly. It would hardly be surprising if they are cautious about further investment but any pullback on drilling or development could easily make the situation worse," he said at the time.
EnergyQuest also last week warned that supply shortages and diversions to the domestic market could result in two of the six trains at the Port of Gladstone needing to be shut down by the middle of the next decade. And on Wednesday, it said that Australia needs to urgently start importing LNG to mitigate the region's supply issues and reduce the risk of further regulatory intervention aimed at diverting LNG to the domestic market.
QCLNG has a nameplate capacity of 8.5 million mt/year and is neighbored by the 7.8 million mt/year GLNG and 9 million mt/year APLNG. In 2018, the three projects used 20.58 million mt of their combined 25.3 million mt/year capacity, according to data from the Gladstone Ports Corporation.
The first LNG was exported from Gladstone in January 2015 from QCLNG, and the last of the six trains came online in October 2016 at APLNG.
Spanish oil and gas firm Repsol beat forecasts with a 7.5 percent increase in fourth-quarter adjusted net profit on Thursday, boosted by higher oil and gas prices and increased production, and said its strategic plan was on track.
Repsol started new projects in Algeria, Trinidad and Tobago, Britain, Peru and Malaysia during 2018, and benefited in October-December from an annual rise in prices and lower exploration costs.
The company said it was on track to deliver its 2018-2020 strategic objectives, which include 15 billion euros ($17.1 billion) in spending, cutting debt and investing in renewables.
In the fourth quarter, recurring net profit adjusted for one-off gains and inventory effects (CCS net profit) came in at 632 million euros compared to 588 million euros last year.
The company had provided a forecast, based on analysts’ projections, of 601 million euros.
Brent crude is currently trading around $66 a barrel, off last year’s highs but well above the $50 on which Repsol’s targets are based.
The realization price for a barrel of oil was $60.4 in the fourth quarter compared with $56.6 the year before, Repsol said, while gas prices also rose.
Closing a deal to buy electricity assets in the quarter helped push net debt up to 3.44 billion euros at the end of December from 2.30 billion euros at the end of September.
Long a headache for Repsol, total net debt on its books has now fallen from 6.27 billion euros at the end of 2017.
Buying the electricity assets from fellow Spanish firm Viesgo was part of a bid among refiners across the world to lower carbon emissions and help meet U.N.-backed goals to limit global warming.
Spanish oil and gas firm Repsol expects production in Venezuela to drop to around 50,000 barrels per day (bpd) this year from 62,000 bpd in 2018, its chief executive said on Thursday.
“We are taking into account 50,000 barrels per day all in all, combining the gas and oil production. It’s a lower figure than we had in 2018 and it will be 25 or 26,000 barrels per day lower than we had two years ago,” CEO Jose Jon Imaz told analysts on a conference call.
The CEO of Encana Corp. says it cut its total workforce by 15 per cent and reduced its ranks of executives by 35 per cent in just over a week after closing its deal to buy U.S. rival Newfield Exploration Co. in mid-February.
The move has put Calgary-based Encana, which reports its results in U.S. dollars, on track to realize its vowed annual savings of $250 million from the acquisition, CEO Doug Suttles said on a conference call on Thursday.
“Eight days – once again, eight days – after closing, we completed reorganizing the combined company,” he said.
“In total, we reduced the executive and senior management roles by 35 per cent and total positions by 15. The senior team of the combined company today is smaller than Encana’s senior team was before the merger.”
The company hasn’t said how many employees were laid off, but in U.S. regulatory filings early last year, Newfield reported having 1,010 employees, almost all in the U.S., while Encana had 1,160 staff in Canada and 950 in the U.S.
A 15 per cent cut would represent a total of about 470 lost jobs. It’s unclear how many jobs were cut in Canada.
Suttles said employee cost reductions account for half of the savings – the other half will come by cutting at least $1 million from the cost of each future unconventional well drilled into the Anadarko basin of Oklahoma, formerly owned by Newfield.
When announced in November, Encana said the deal was worth about $5.5 billion in shares, but its stock has since fallen by more than 20 per cent. It also adopted $2.2 billion of Newfield debt.
Encana has adjusted its exploration priorities in the wake of the Newfield acquisition to focus on three basins – the Anadarko, the Montney of Western Canada, and the Permian of West Texas and New Mexico – because they produce more valuable petroleum liquids and less natural gas than its other prospects.
It said it will focus 75 per cent of its 2019 capital budget of $2.7 billion to $2.9 billion on those three plays.
Encana reported a fourth-quarter profit of US$1.03 billion or $1.08 per share for the quarter ended Dec. 31, compared with a loss of $229 million or 24 cents per share in the last three months of 2017.
Operating earnings for the quarter amounted to $305 million or 32 cents per share, up from an operating profit of $114 million or 12 cents per share a year earlier.
Revenue for the quarter was $2.38 billion, up from $1.21 billion.
Total production in the fourth quarter of 2018 was 403,400 barrels of oil equivalent per day, up from 335,200 a year ago.
Encana shares rose by as much as six per cent in early trading on the Toronto Stock Exchange on Thursday as analyst reports indicated its fourth-quarter results were largely in line with expectations.
https://globalnews.ca/news/5007844/calgary-based-encana-reports-us1-03b-fourth-quarter-profit/
Three Indian States Issue 1.25 Gigawatt Solar & Wind Tenders
February 26th, 2019 by Saurabh
Following the central government’s cue, a number of Indian states have stepped on the gas with regards to issuance of renewable energy tenders. Leading states in renewable energy installed capacity are dishing out tenders one after the other while some new states are issuing large tenders for the first time.
The north Indian state of Uttarakhand has issued a tender for 200 megawatts of solar power capacity. The tender represents the first major solar power tender issued by the state. Project developers would be able to bid for capacities ranging from 10 kilowatts to 5 megawatts per project, with the maximum cumulative bid allowed by a company or group of companies with a single parent of 50 megawatts. No maximum tariff bid has been set for the reverse auction.
Uttarakhand has an installed solar power capacity of around 100 megawatts. The state is rich in hydro power resources and has so far stayed away from developing large-scale solar power projects. The state issued a solar power policy in 2013 that targeted 500 megawatts of installed capacity by the end of year 2017. The latest amendment to this policy does not include any installed capacity. The Ministry of New and Renewable Energy (MNRE), however, has recommended an installed capacity target of 800 megawatts for the state by March 2022.
The state of Maharashtra has also issued a tender calling upon developers to set up 450 megawatts of solar power capacity across four small solar power parks. The capacity offered in each solar park is in the range of 60 megawatts to 170 megawatts.
These solar parks seem to have been conceptualized in the last few months as they are not included in the list of approved solar power parks issued by the Solar Energy Corporation of India (SECI). Maharashtra has an installed solar power capacity of 1.3 gigawatts and plans to add 3.2 gigawatts capacity over the next two years. The MNRE has recommended an installed capacity target of almost 12 gigawatts by March 2022 for the state.
The state had recently issued a separate 1 gigawatt solar power tender which received a huge response from project developers. Bidders in the first round offered to set up as much as 1.9 gigawatts of capacity against the offered capacity of just 1 gigawatt.
The southern Indian state of Andhra Pradesh has issued a tender inviting project developers to set up solar-wind hybrid projects with storage capability. The tender has been issued within weeks of issuance of a policy issued by the state government to promote the implementation of hybrid projects. The tender terms allow for a company to bid for total capacity between 200 megawatts and 60 megawatts.
A renewable energy policy issued by the Andhra Pradesh government last year sets an installed capacity target of 18 gigawatts by March 2022. This target accounts for more than 10% of the 175 gigawatts target set for the national level. At the end of 2018, the state had an installed capacity of 17.7 gigawatts across all technologies, including 7.4 gigawatts of renewable energy, accounting for an impressive 42% share in the state installed capacity. Andhra Pradesh did have a 10% share in the national-level installed renewable energy capacity at the end of 2018.
https://cleantechnica.com/2019/02/26/three-indian-states-issue-1-25-gigawatt-solar-wind-tenders/
Canadian Solar Inc. (NASDAQ:CSIQ) is holding above the stock’s moving averages, indicating a postitive uptrend for Technology company.
Investors paying close attention to the daily ebbs and flows of the stock market may be trying to guess which way momentum will swing into the next couple of months. Finding those stocks that are ready to ride the lightning may not be the easiest task with markets chugging along near all time highs. Investors may have to first figure out how much risk they want to take on when picking the next round of stocks. Once the risk appetite is determined, investors can start to decide whether they think it is best to go with the flow or buck the trend. Either way, paying attention to short-term and long-term price moves may help paint a clearer picture of what is happening with a particular stock. Maybe those stocks that were sure-fire winners a few months ago have lost some steam. Adjusting the portfolio may or may not be necessary, but knowing exactly what stocks are owned and how they are performing may help with additional decision making along the way. Of course nobody wants to be on the outside looking in as a stock is taking off, but there should be plenty of other opportunities in the future. Staying current with global economic conditions and keeping a finger on the pulse of the company during earnings season can help shed some light on where the stock may be headed next.
In order to tell which way a stock is trending, the stock’s share price should be compared to its moving average. The stock will be uptrending if it is being traded above its moving averages and downtrending if it is being traded below. The stock stands 29.68% away from its 50-day simple moving average and 55.34% away from the 200-day average. The price currently stands at $23.85.
Investors will be closely tracking stock market movements over the next few months. As we break into the second part of the year, many will be researching what they did right and what they did wrong in the first half. Recent market action may have investors questioning if a major pullback is on the horizon, or if momentum will turn back to the upside. Investors will have to determine if any tweaks will need to be made to the portfolio. If the economic data continues to display optimism, investors may be able to confidently make some moves to help bolster returns. Over the next few quarters, investors will be hoping that modest gains can turn into major gains.
Let’s take a look at how the stock has been performing recently. Over the past twelve months, Canadian Solar Inc. (NASDAQ:CSIQ)‘s stock was 66.32%. 44.55% over the last quarter, and 77.85% for the past six months.
Over the past 50 days, Canadian Solar Inc. stock was -4.68% off of the high and 77.19% removed from the low. Their 52-Week High and Low are noted here. -4.68% (High), 109.76%, (Low).
The RSI (Relative Strength Index), an indicator that shows price strength by comparing upward and downward close-to-close movements is 69.83 for Canadian Solar Inc. (NASDAQ:CSIQ).
The consensus analysts recommendation at this point stands at 2.80 on this stock. This is based on a 1-5 scale where 1 indicates a Strong Buy and 5 a Strong Sell. The Street has a 20.14 target price on the shares for the next 12-18 months.
The information provided on this website is for individual use only and should be considered strictly informational in nature. The article is not advice, and should not be treated as such. We are in no way responsible for any investment loss or damages. All content in our articles is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities. Neither the information presented nor any statement or expression of opinion, or any other matter herein, directly or indirectly constitutes a solicitation of the purchase or sale of any securities.
https://brookvilletimes.com/canadian-solar-inc-nasdaqcsiq-steadying-above-moving-averages/
The US will see 12% electric vehicle sales growth in 2019 by my estimates, a significant decline from 2018’s year-over-year (YOY) growth of 81%.
While 2018 was the best year ever for electric vehicle sales in the US, with an estimated volume of 361,307 sales (per InsideEVs), I’m forecasting only a modest increase to 405,000 units for 2019.
https://cleantechnica.com/files/2019/01/US-Electric-Vehicles-Sales-YOY-Growth-2011-2019-270x167.png 270w, https://cleantechnica.com/files/2019/01/US-Electric-Vehicles-Sales-YOY-Growth-2011-2019-768x475.png 768w, https://cleantechnica.com/files/2019/01/US-Electric-Vehicles-Sales-YOY-Growth-2011-2019-570x352.png 570w" sizes="(max-width: 1889px) 100vw, 1889px">
2018 was also a milestone year for EV sales, as the share of new vehicles purchased surpassed 2% for the first time. With only modest growth in 2019 and estimated sales of 16.8 million vehicles overall, I’m forecasting EV sales market share of around 2.45% for the year.
https://cleantechnica.com/files/2019/01/US-EVs-2008-2018-2019-forecast-270x179.png 270w, https://cleantechnica.com/files/2019/01/US-EVs-2008-2018-2019-forecast-768x509.png 768w, https://cleantechnica.com/files/2019/01/US-EVs-2008-2018-2019-forecast-570x378.png 570w" sizes="(max-width: 1660px) 100vw, 1660px">
There are 3 main reasons that US EV sales growth will be significantly lower in 2019 than 2018:
1. 2018 Tesla Model 3 sales: The vast majority of sales growth in 2018 came from a single EV — the Tesla Model 3. And if you combine the Model 3 with the Honda Clarity PHEV, which was launched in late 2017, and the Toyota Prius Prime, net sales in theory would’ve actually declined by 0.5% in 2018.
Now, of course, many of the consumers who purchased or leased one of those three vehicles would’ve purchased another EV model, but I’m guessing that if the Model 3 did not exist, YOY sales growth would’ve been in the 25% to 35% range — as was the case in 2014, 2016, and 2017.
https://cleantechnica.com/files/2019/01/2018-vs-2017-Sales-Growth-all-models-wo-CT-270x170.png 270w, https://cleantechnica.com/files/2019/01/2018-vs-2017-Sales-Growth-all-models-wo-CT-768x484.png 768w, https://cleantechnica.com/files/2019/01/2018-vs-2017-Sales-Growth-all-models-wo-CT-570x359.png 570w" sizes="(max-width: 1693px) 100vw, 1693px">
2. Europe/China deliveries for Model 3: With a substantial percentage of Tesla Model 3 deliveries expected to shift to Europe and China in 2019, it will be a challenge for Tesla to significantly increase both production and deliveries for the US market over 2018 levels.
3. No introduction of any new high-selling EVs: As I wrote in “New Models Drive Majority Of US Plug-In Vehicle Sales Growth, Analysis Shows,” the majority of annual EV sales growth in the US historically has come from new model introductions early in a year or late the previous year. In 2018, it was all about the Tesla Model 3, with some help from the Honda Clarity PHEV. While several new EVs will be available in the US in 2019, I expect only one model (Hyundai Kona EV) to average 1,000 units per month for the year.
https://cleantechnica.com/files/2018/07/Top-Selling-EVs-2011-2017-bar-chart-270x153.png 270w, https://cleantechnica.com/files/2018/07/Top-Selling-EVs-2011-2017-bar-chart-768x436.png 768w, https://cleantechnica.com/files/2018/07/Top-Selling-EVs-2011-2017-bar-chart-570x323.png 570w, https://cleantechnica.com/files/2018/07/Top-Selling-EVs-2011-2017-bar-chart-290x166.png 290w" sizes="(max-width: 2015px) 100vw, 2015px">
Following are my forecasts for the Tesla Model 3, the rest of the currently available EVs, and the new EVs expected to become available in the US in 2019:
Tesla Model 3: Tesla sold approximately 140,000 Model 3s in 2018 in the US and I’m forecasting 160,000 for 2019. If we assume that Tesla is able to consistently produce at least 20,000 Model 3s per month, that would equal 240,000 or more for all of 2019.
Tesla is now starting to focus on delivering a significant percentage of the Model 3s it produces for delivery to Europe and China. Some estimates are for around 50% over the next few quarters. Additionally, some percentage will also be delivered to Canada.
This means that Tesla will probably deliver anywhere from a low of about 120,000 to a high of around 180,000 Model 3s in the US in 2019. With Tesla’s announced layoffs on January 18, lack of capital to finance the leasing option, and being several months away from delivering the long-promised $35,000 version, the company has a tough road ahead. That said, I’m using 160,000 for my forecast, an increase of roughly 20,000 over 2018.
https://cleantechnica.com/files/2019/01/2018-Top-10All-Others-vs-2019-Forecast-270x193.png 270w, https://cleantechnica.com/files/2019/01/2018-Top-10All-Others-vs-2019-Forecast-768x549.png 768w, https://cleantechnica.com/files/2019/01/2018-Top-10All-Others-vs-2019-Forecast-570x407.png 570w" sizes="(max-width: 1635px) 100vw, 1635px">
2. Existing EVs: For EV models available in all/most of 2018 and likely all or most of 2019, I forecast an increase of only roughly 11,000 units. While I expect modest increases from models including the Model 3, Honda Clarity PHEV, Toyota Prius Prime, and Nissan LEAF, I also anticipate sales declines from many models, including the Chevrolet Bolt and Volt, Fiat 500e, Ford Fusion Energi, and BMW i3. In fact, I’m forecasting a sales decrease of all models outside of the top 10 of nearly 10,000 units.
Some of these models, such as the Volt, Fusion Energi, and Cadillac CT6 PHEV (a low-volume seller anyway), are being discontinued. Many others are simply not very competitive, including with new models from their own brands (e.g., Kia Niro EV and Hyundai Kona EV).
https://cleantechnica.com/files/2019/01/US-Top-10-Selling-EVs-Combined-2018-All-Others-Versus-2019-Forecast-270x173.png 270w, https://cleantechnica.com/files/2019/01/US-Top-10-Selling-EVs-Combined-2018-All-Others-Versus-2019-Forecast-768x492.png 768w, https://cleantechnica.com/files/2019/01/US-Top-10-Selling-EVs-Combined-2018-All-Others-Versus-2019-Forecast-570x365.png 570w" sizes="(max-width: 1643px) 100vw, 1643px">
3. New models coming to market: If you include the Jaguar I-PACE (introduced late in 2018), my analysis suggests 11 new BEVs and PHEVs will reach the US market at some point in 2019, but add only 33,650 units. Four factors that will limit sales volume for these new EVs include:
https://cleantechnica.com/files/2019/01/New-EVs-Available-in-US-Market-in-2019-Sales-Forecast-270x179.png 270w, https://cleantechnica.com/files/2019/01/New-EVs-Available-in-US-Market-in-2019-Sales-Forecast-768x510.png 768w, https://cleantechnica.com/files/2019/01/New-EVs-Available-in-US-Market-in-2019-Sales-Forecast-570x378.png 570w" sizes="(max-width: 1722px) 100vw, 1722px">In addition to the above vehicle sales forecasts, there are several macro trends and factors that could negatively affect EV sales in 2019, including:
Phaseout of the federal EV tax credit for Tesla and GM: Since GM is ending production of the Cadillac CT6 and Chevrolet Volt PHEVs, the tax credit will have little to no impact on sales of those models. GM promises to increase production of the Bolt, but it is also shipping many units to Canada, South Korea, and elsewhere, so it seems to have a built-in cap on sales regardless.
Secondly, the Bolt has a bigger challenge than the phaseout of the tax credit, which is the launch of both the Hyundai Kona and Kia Niro BEVs. Both CUVs are getting near-unanimous positive reviews, and with slightly more range at a similar price to the Bolt, the Bolt’s sales growth was going to be a struggle in 2019 regardless of the tax credit availability in whole or part.
I don’t expect the phaseout of the tax credit to have much of an impact on the Tesla Model S and Model X as for buyers of $80,000–100,000+ vehicles — a tax credit is not a make or break factor. It could have some impact on buyers of the Model 3 who were heavily and incorrectly factoring the federal tax credit into the purchase price. But, overall, the inability to lease and buy the short-range version will have a bigger negative impact on sales demand.
Likelihood of low gas prices: Gas prices are currently very low in the US and are expected to remain so in 2019, except for the usual summer increases. The one caveat is gas prices will likely remain high in California and other western states relative to most of the rest of the US, a factor that will continue to contribute to high demand for EVs on the left coast.
https://cleantechnica.com/files/2019/01/Gas-Buddy-USA-vs-California-12-month-270x134.png 270w, https://cleantechnica.com/files/2019/01/Gas-Buddy-USA-vs-California-12-month-570x282.png 570w" sizes="(max-width: 681px) 100vw, 681px">
Chart via GasBuddy.com
Economic slowdown: Most economists are forecasting a slowing in the US (and global) economy in 2019, but likely not turning into a recession. Rising interest rates, a rocky stock market, and job uncertainty mean that some potential new EV buyers might hold off for a year or two, opt for a used gasmobile or EV, or choose a more affordable non-EV model.
Decline in auto sales overall: Wards Auto, NADA, and other analysts are forecasting US light vehicle sales of 16.8 million in 2019, a decline from the surprising 17.3 million in 2018. An overall decline in auto sales likely means lower growth for EVs as well, though an increase in market share.
Continued shift to pickups and SUVs: While several electric SUVs are either now available or coming to market in 2019 or 2020, most are in the luxury category or come with a pretty significant price premium over sister or similar gasoline versions. (The Kona and Niro BEVs are exceptions — their sales will be limited by availability and their brand status.)
And while pickups are in the works from Rivian, Bollinger, Tesla, and Workhorse, none will reach market in 2019 (or only in a limited volume) and all are either niche or expensive trucks. As a result, the shift to SUVs and pickups will limit upside growth of EVs in the US for a few more years until affordable models reach market.
https://cleantechnica.com/files/2019/01/Trucks-vs-cars-2010-2017-270x85.png 270w" sizes="(max-width: 461px) 100vw, 461px">
Continued shift to used vehicles: In addition to American consumer’s love of SUVs and trucks, US consumers also continue to favor buying used cars over buying or leasing new vehicles. And with many unit of the Tesla Model S, Chevrolet Volt, Fiat 500e, and Nissan LEAF coming off 2016 leases in 2019, some potential new EV buyers might opt for a used EV until the Tesla Model Y or other desired EV reaches market.
https://cleantechnica.com/files/2018/10/US-vehicle-news-sals-vs-usesd-sales-2010-2017-Statistica-270x173.jpg 270w, https://cleantechnica.com/files/2018/10/US-vehicle-news-sals-vs-usesd-sales-2010-2017-Statistica-768x493.jpg 768w, https://cleantechnica.com/files/2018/10/US-vehicle-news-sals-vs-usesd-sales-2010-2017-Statistica-570x366.jpg 570w" sizes="(max-width: 1573px) 100vw, 1573px">
Chart Source: Statista
2019 will be a solid year for EV sales in the US, but until we see a few more new high-volume models become available, growth will only be modest.
Auditors to rare earths producer Lynas Corp flagged a material risk to its business on Thursday, after Lynas said it could not meet a timeline from Malaysian regulators to export a waste product before its operating license comes up in September.
In December, Malaysia’s Atomic Energy Licensing Board (AELB) told Lynas - the world’s biggest producer of rare earths outside China - that it must export stockpiles of a type of residue from its processing plant by Sept. 2, when its full operating stage license is due for renewal.
In its first half results on Thursday, Lynas said that exporting the residue, known as WLP, within the mandated timeline was “unachievable”.
The requirement follows an environmental review into Lynas’s Malaysian operations last year.
“Lynas Malaysia continues to engage in discussions with the Malaysian government seeking to agree a basis upon which Lynas will achieve a renewal of its operating license,” Lynas said in a note to its half year results.
“The Directors have reasonable confidence that an appropriate resolution will be achieved.”
Lynas added that it has appealed the condition on management of WLP.
Auditors Ernst & Young drew attention to the note in a review report, saying: “These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern.”
The Lynas Advanced Materials Plant, owned and operated by Lynas Malaysia, produces two types of solid residue, Water Leach Purification Residue (WLP) and Neutralisation Underflow Residue (NUR.)
WLP is currently stored in temporary storage facilities on site.
Chilean miner SQM said on Thursday it foresees strong long-term demand for lithium but offered a short-term prognosis clouded by the entry of new projects into the market and slowing growth of demand for the product this year.
The company’s new chief executive, Ricardo Ramos Rodriguez, said in an earnings call he expected sales volume in 2019 to rise slightly from 2018, along with modestly higher average market prices.
He said SQM would increase its production of 50,000 metric tonnes (MT) of lithium to a below-market expectation of 60,000 MT for 2019, moving any surplus production into its strategic inventory, for release when market demand merits.
“Demand rose in 2018, surprised us again by surpassing 27 percent and is expected to grow at rates above 20 percent in 2019,” he said.
“Beyond 2019, demand growth continues to look extremely healthy, making us believe that the 1 million tonnes per year lithium market may happen sooner than originally anticipated.”
SQM , the world’s No. 2 producer of lithium, saw its B share price fall by 5.38 percent to 17,250 pesos after the earnings call at midday.
In a statement overnight the company said its revenue dipped by 1.6 percent in the fourth quarter to $565.2 million from $574.8 million in the fourth quarter of 2017. Its income dropped to $108.6 million in the fourth quarter from $110.5 million in the year-earlier period.
“As was expected, new supplies coming into the market make it more difficult for us to capture the price premium that we had in 2018,” said Ramos.
“It is very difficult to predict our sales volume for 2019 and 2020, it depends on supply and demand equilibrium. The timing of the start and the ramp-up of new projects is difficult to assess. We are very optimistic about the demand for lithium in the long-term.”
Ramos confirmed heavy rain in northern Chile earlier in February that caused suspension of operations would not affect its ability to fulfill sales contracts.
The results come amid concern about softening Chinese demand for lithium, the key ingredient in electric car batteries.
Earlier this month, U.S.-based lithium miner Livent that it believed sales to key market China could weaken 2019 because of macroeconomic uncertainty and concerns around electric car subsidies.
Montana’s livestock industry is praising the recently passed legislation funding the government through the remainder of Fiscal Year 2019, because included in the new spending bill is a delay of enforcing electronic logging device rules for livestock haulers until September 30.
But those in the livestock industry say it is a short-term fix that needs a permanent solution and for good reason.
“We’re dealing with a perishable product versus a non-perishable product” said Ty Thompson, cattle sales manager for the Combined Competitive Markets of Billings. “If we don’t get this in place, and we have the same rules as a non-perishable product, then we’re going to end up having teams of drivers or drop points, and that’s going to add to the freight costs immensely. Of course, that trickles right down to the producers and that means less value for your cattle.”
Montana U.S. Senator Jon Tester agrees and says the permanent exemption can happen one of two ways: working with the Department of Transportation on new rules or through an act of Congress.
“We’ll be pushing for a congressional solution to this moving forward” said Tester. “I think it’s entirely possible. But at the very least, we should be able to get the Department of Transportation to get a rule that works for livestock haulers and keeps our roads safe.”
The livestock industry says the restrictive hours-of-service rules must be included in the final rules.
“It’s a little bit of a frustration here at the auctions but the bigger frustration for like the video cattle that deliver in the country” said Thompson. “Because as you well know, there could be five or six hours of sitting time which they call part of the work day that takes away from your drive time. So, we need to extend that work day and drive time because it’s really going to affect these cattle that are sold in the country like on video auctions and such.”
The livestock industry is encouraged to submit comments to the Department of Transportation on this issue by March 8. They can do so on the federal government’s website.
-Reported by Russell Nemetz/MTN News
BY Mohd Najib Husein
Sustaining the future for palm oil
As a plant turned edible oil to meet the needs of consumers, palm oil today joins the ranks of commodities dividing nations worldwide for its enviromental and political implications.
An undeniable fact is palm oil’s contribution to Malaysia’s economy. Having roots in our history since 1917, exports of palm oil and palm-oil based products continue to be a major pillar for our economic growth, contributing some RM16.5 billion in 2018.
Yet, countries in the West still consider palm oil a ‘dirty word’, linking it to deforestation and its detriment to the ecosystem.
The European Union (EU) has gone so far as to phase out the use of palm oil in transport fuel, as examplified by a June 2018 agreement to eliminate palm oil from its transport fuel by 2030.
France followed suit later that month with a plan to limit palm oil use by curbing its imports, proposing to do so “at a European level”.
The French National Assembly further voted to end tax incentives on December 19 for adding palm oil to diesel fuel as of 2020 and decided to treat palm oil diesel as a regular fuel and not as a green fuel.
All these moves led Prime Minister Tun Dr Mahathir Mohamad to retaliate back by saying Malaysia will consider laws to restrict imports of French products if Paris does not withdraw plans to curb the use of palm oil in biofuels.
Tun Mahathir said in a January 8 letter to French President Emmanuel Macron called on the French leader to reject the proposed ban on palm oil in biofuels, adding the trade relationship between the two countries depended on mutual respect for each other’s commodities.
“Failing in that mutual respect will force Malaysia to look at actions, including, but not limited to, suspension of EU-Malaysia free trade talks and the imposition of like-minded legislation against French exports,” the Prime Minister said in the letter.
All these political tussles brings to mind: What can we be done to remedy the situation?
Malaysia fights back
Enter Primary Industries Minister Teresa Kok in her role as she takes charge in rebuilding the image of the ‘golden crop’.
Having clocked in to her role about eight months ago – right about after the West’s palm oil ban – Kok is steadfast in building up momentum to ensure the industry remains a key economic pillar.
“As we all know, the palm oil industry plays a significant role in Malaysia’s economy,” she said in an exclusive with BizHive Weekly.
“It contributes substantial export revenue for the country, and it is the livelihood of millions of people along its supply chain.
“Despite all this, Malaysian palm oil is being targeted by international non-governmental organisations (NGOs) as well as foreign countries especially the EU,” she acknowledged.
“We are being accused as unsustainable and promoting deforestation and destruction of wildlife habitat.
“Our Malaysian consumers who are regularly exposed to such negative narratives through the internet and social media are also influenced by such negative anti-palm oil campaign on palm oil.”
Thus came about the idea of the ‘Love MY Palm Oil’ campaign as one of the promotional activities to change the negative perception on Malaysian palm oil.
“It is important that Malaysians understand and support palm oil,” she highlighted. “I hope that our own people will become our ambassadors of palm oil and defend our interests against all such anti-palm oil activities.
“We are currently undertaking systematic and strategic approaches to shape public perception through engagements and campaigns in order to address issues affecting the palm oil industry.
Glyphosate has been accused of causing cancer by a number of environmental groups, including Friends of the Earth. (AP Photo/Reed Saxon)
Friends of the Earth, Prevent Cancer Now and seven other activist groups visited Ottawa Jan. 30 in an ultimately doomed attempt to persuade Parliament to back an independent review on the herbicide glyphosate. Since then, there has been renewed debate about the use of herbicides in Canada, including on the Saanich Peninsula.
The controversy stems from the Pest Management Regulatory Agency’s original decision in 2017 to re-register glyphosate for 15 years, as the herbicide has been blamed for causing cancer and damaging the human gut microbiome by various scientists and environmental organizations around the world.
ALSO READ: Saanich to approve iron-heavy dandelion killer as an allowable pesticide
Some Roundup products, often used by Canadian farmers, contain broad-spectrum glyphosate-based herbicide as the active ingredient.
Brian Hughes of Kildara Farms, described as “one of the most knowledgeable organic farmers on the Peninsula,” does not use herbicides or pesticides and says plant immunity is pushing farmers to use multiple weed killers again.
“The more that glyphosate gets used, the weeds get immune to it and you have to use more of it, more often and use it in combination with other herbicides.”
Glyphosate is often used on plants and grains, and recent investigations found traces of it in a wide range of foods, such as Cheerios and Oreos. However, Health Canada says the amounts are too small to pose a risk to human health.
A statement from Health Canada said, “We have concluded that the concerns raised by the objectors could not be scientifically supported when considering the entire body of relevant data. The objections raised did not create doubt or concern regarding the scientific basis for the 2017 re-evaluation decision for glyphosate.”
RELATED: Health Canada upholds decision to keep glyphosate products on the market
Friends of the Earth are unhappy as they believe Health Canada and the Pest Management Regulatory Agency’s potentially based their decisions on an incomplete scientific picture, not taking into account recent science and not looking closely enough at the Monsanto Papers – a sheaf of documents that seemed to suggest Roundup’s original producer Monsanto (now Bayer) tried to influence scientific studies. They say that there is a conflict of interest as Health Canada used their own scientists to conduct the review of their decision to re-register glyphosate.
“It is unacceptable to allow any government agency to be the sole judge of its own actions. It’s like Dracula in charge of the blood bank,” said Beatrice Olivastri, CEO of Friends of the Earth. “Apparently, Monsanto has not only polluted Canada’s environment but also our regulatory process,” she added.
Health Canada denies the accusation and says its scientists, “left no stone unturned in conducting this review.”
Back on the Saanich Peninsula, Hughes said consumers increasingly care about how their food is produced.
“People want to know where their food is coming from. It’s become a trust thing,” he said.
nick.murray@peninsulanewsreview.com
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https://www.sookenewsmirror.com/news/groups-target-health-canada-approval-of-weed-killer/
Angel Commodities' report on Soybean
NCDEX Mar Soybean futures closed for the 5th consecutive week amid profit booking by the market participants on higher off-season arrivals and higher production forecasts. As per latest press release by SOPA, India’s soybean output is higher by38% at114.8 lakh tonnes this year due to increase in average yield across the country. Demand for Indian soy meal is growing from Europe and West Asia while Iranis emerging as one of the largest buyers. Soy meal exports up by 98% on year in January to 210,166 tonne, as per SEA press release. Overall, Soy meal exports are higher by 16% at 10.66 lakh tonnes for the Apr-Jan period compared to last year. Soy meal exports from India are expected to rise 25% on year to around 15 lakh tn in 2018-19 (Apr-Mar).
Outlook
Soybean futures expected to trade sideways to lower on expectation of more correction. However, reports of lower soy oil imports which may need higher crushing in coming weeks.
For all commodities report, click here
Backtracking. This is the third time Tanzania is backtracking on banning sugar exports, especially from Uganda in less than four months.
By John Namkwahe
Tanzania has again backtracked on its decision to ban sugar imports, a week after freezing issuance of permits.
Mr Japhet Hasunga, the Tanzania minister of Agriculture, told journalists last week that government was now contented with plans by manufacturers to produce more sugar.
“We are now satisfied with the companies’ strategic plans to increase sugar production. That is why we have decided to allow them to supply and import sugar for domestic consumption,” he said.
About a week ago, Mr Hasunga had accused manufacturers of importing “sugar very fast, overlooking their role of producing”.
The freeze, he said, was intended to force manufacturers to concentrate on production, claiming that the country had enough stocks to sustain demand until May.
Tanzania produces about 320,000 tonnes of sugar against a national annual demand of 670,000 tonnes.
Mr Hasunga said government would issue permits to non-sugar producing companies from June to bridge the gap, expressing optimism that sugar output would increase once Mkulazi Sugar, owned by two pension schemes in Tanzania and Bakhresa Group’s Bagamoyo factory with capacity to produce 250,000 tonnes and 100,000 tonnes, respectively are complete.
Last year, Tanzania banned Ugandan sugar traders from its market, claiming that they were importing cheap sugar from Kenya and Brazil, before it is repackaged and exported to Tanzania.
The Tanzania government, in the process, slapped a 25 per cent Excise Duty on Sugar that had been exported by Kakira Sugar Works, which was later returned to Uganda.
Negotiations to lift the 25 per cent duty on Ugandan sugar has been ongoing amid mixed policy directives.
In December last year, Trade Minister Amelia Kyambadde, said they had not been furnished with clear reasons why Tanzania, had withdrawn sugar import permits it had started issuing in December 2018.
However, the ban was later suspended in January, before it was reinstated and then lifted just in the last two weeks.
Australian rural services firm Ruralco Holdings Ltd on Wednesday backed a $337 million takeover bid by Canada’s Nutrien Ltd, the latest potential tie-up in a sector consolidating in the face of severe drought.
Fertilizer giant Nutrien, which owns Landmark, one of the largest agricultural businesses in Australia, offered A$4.40 a share in cash for rival Ruralco, representing a premium of about 44 percent to the company’s last close.
The deal is likely to face antitrust concerns as it would merge two large rural supply firms to create a sector heavyweight.
“Effectively it is about the No. 1 market player buying No. 3,” Philip Pepe, senior analyst at Blue Ocean Equities said. “It is a fair price for the Ruralco shareholders and it should attract some synergies if the regulator allows it to go through.”
Ruralco said in a statement its board unanimously recommended Nutrien’s offer in the absence of a superior proposal, sending its shares soaring 47 percent to A$4.50, its highest price in over a decade, before closing at A$4.44, still above the offered price.
“There is strong logic in bringing together the trusted businesses of Ruralco and Nutrien’s Australian subsidiary Landmark to capture synergies, efficiencies and cost savings in our highly competitive rural markets,” Ruralco Chairman, Rick Lee said in a statement.
The deal would be immediately accretive for Nutrien, formed by the union of Agrium Inc and Potash Corp of Saskatchewan last year, said President and CEO Chuck Magro.
It would represent a strategic threat to rival Elders, which according to researcher IBISWorld is Australia’s second largest livestock and agricultural supplies company.
BIDDING WAR?
Elders, which has in the past expressed interest in growing its business through acquisitions, could potentially launch a rival bid for Ruralco, but a move is far from certain, analysts said.
“Elders have had discussions in the past to buy or merge with Ruralco and agreed to walk away,” Pepe said. “I can’t see Elders paying a greater premium today, so I’m surprised the share-price has gone above the bid price.”
The offer comes at a time of heightened global interest in Australia’s agriculture sector, with Saputo Inc grabbing Murray Goulburn for $1.0 billion, while GrainCorp Ltd received a A$2.38 billion bid from a privately held asset manager.
Ruralco has been grappling with a drop in crop protection product sales as a severe drought grips Australia’s east cost, while a regulatory crackdown has hit its live export division.
Stocks rally on trade hopes
Competition watchdog, the Australian Competition and Consumer Commission, said it was aware of the deal and would commence a public review of the proposed acquisition.
Ruralco also declared an interim dividend of up to 10 cents per share, and an additional special dividend of 90 cents a share on or before implementation of the deal that would reduce the bid’s cash payment to investors to A$3.50 per share.
"Companies that didn't have any organic products in the previous year have already started adding some to their range, while many of the companies that already have plenty of experience in the production and sale of organic products are betting on the use of more sustainable packaging without the use of plastic," said Silvia Llamas, Marketing Manager of the Spanish company Haciendas Bio, in reference to the latest edition of the Fruit Logistica fair in Berlin, which reflects the current state of the organic market.
This company, which is an organic crop specialist, is launching 19 new organic leafy vegetable products grown in Cuevas, Almeria, as well as new plum varieties. With these, they hope to be able to meet different consumer tastes.
At the moment, the main objective for Haciendas Bio is to educate consumers on the values and benefits of this type of agriculture, so that the organic market can continue to grow in Spain.
"While Spain is a Mediterranean country with a consumer profile that is very similar to that of Italy, the purchase of organic products is still too low. Spanish consumers believe that the biggest difference is in the price, and although chemicals are used for the cultivation of conventional products, this doesn't stop consumption. There is just no awareness about the possible consequences on their health. This is something that is changing little by little. We have noticed that there is already a greater concern about the origin of food and how to produce it, especially among younger people, which is causing consumption to grow exponentially in recent years, coinciding with the economic recovery in Spain.
A study by Qantar World Pannel reported that in 2017, the consumption of organic products grew by more than 14%, compared to the 2% increase in conventional consumption. Consumption is recording double digit growth. "In the beginning, it could be argued that the organic would just be a passing trend, but the evidence shows that it is here to stay and that it will continue to grow," says Silvia Llamas.
"Suddenly, many companies want to do without plastic in their containers"
Haciendas Bio launched the Biovivo brand for the domestic market two and a half years ago. It is a 100% sustainable brand, even in the packaging, for which alternatives to plastic are used.
"Coinciding with the popularization of the antiplastic social movement, we became pioneers in this sense, since until then there was no company in Spain offering fruit and vegetables packed with only cardboard trays, organic cotton meshes and bags made one hundred percent from recycled paper. Today, many companies want to use this kind of packaging, although it isn't easy to do without plastic. Perishable products need some humidity and not all supermarkets have refrigeration, and in those cases, plastic ensures a longer shelf life. Moreover, plastic also makes the product more visible while in the container. For this reason, using only cardboard containers is a big challenge, and we are working every day to achieve that goal," explains Silvia Llamas.
Fraud, one of the main threats
There are increasingly more operators of conventional products that are offering the organic as conventional, or vice versa, depending on the price, making it often difficult to know what is organic and what isn't.
According to Silvia Llamas, the requirements for a farm to be considered organic are not always met, or are kept to a minimum. In this sense, it is important for all companies to be audited through fiscal and mercantile registers, thereby reducing the risk of fraud, as farm practices become open to public scrutiny. It is necessary to guarantee the authenticity of organic products under commitment and transparency standards."
Fraud is one of the main threats for this sector, as it can seriously tarnish its reputation and cause buyers to have doubts about the good work of the companies specialized in organic or biodynamic farming, such as HaciendasBio."
For more information:
Silvia Llamas
Haciendas Bio
C/ Julio Cienfuegos Linares 8,2, 2A
M: +34 686279363
sla@haciendasbio.com
www.haciendasbio.com
CM orders crackdown on spurious pesticides
LAHORE: Chief Minister Usman Buzdar on Tuesday said farmers would be fully facilitated for the promotion of agriculture sector on durable lines.
The CM said this while chairing a meeting at Chief Minister’s office in which the performance and future roadmap of agriculture, food, revenue, forest and wildlife departments were reviewed in detail.
Addressing the meeting, the CM said farmers will be fully facilitated for the promotion of agriculture sector on durable lines. Innovative programmes will be launched to increase agri-productivity and to help enhance the income of the farmers, he added. He said more than Rs 2 billion has been allocated for drip irrigation system and farmers will be provide certified cotton seeds as well to improve the cotton production. Meanwhile, subsidy will be given for certified cotton seeds and sale of unpacked seeds will be banned.
The CM directed that action be initiated against the production and sale of spurious pesticides. The farmers will be facilitated for sowing sunflower, olives and canola and special measures will also be taken for increasing the production of oil-seed crops. In this regard, the farmers will be given subsidy. He said that Punjab government has launched crops insurance, adding that its target should be achieved within the given timeframe. A comprehensive plan of wheat procurement should be devised for the current year, he added. He said that PTI government will protect the rights of the farmers and distribution of gunny bags will be made purely on merit. Similarly, the farmers will be given full reward of their hard work, he added.
The CM directed that the cabinet committee be constituted for upcoming wheat procurement campaign and this committee would prepare necessary monitoring mechanism. He said trees plantation campaign should be made a success at every cost and directed that the detail of saplings planted under the campaign should be provided to him. The CM said that he will get verify the saplings planted under the trees plantation campaign. He expressed the displeasure over planting less number of trees in DG Khan and sought a report from the Secretary Forests in this regard.
The meeting also decided to devise a comprehensive programme for promoting hatchery in the province. Meanwhile, a pilot project will also be devised for the production of shrimps. The CM said that Punjab has a tremendous potential of fish and shrimp production and added that a fish health lab will also be established. He directed that a viable project should be prepared to promote cage fish culture and added that small fish farmers will be given priority in this regard. The meeting also deliberated upon the proposal of giving soft loans to the farmers for promoting cage fish farming. He said that cage fish farming will help generate new job opportunities. He also approved the pilot project of computerisation of urban lands. Under the pilot project, the urban lands record will be computerized. He directed that provision of land records be ensured to the overseas Pakistanis through their respective embassies.
https://www.thenews.com.pk/print/437369-cm-orders-crackdown-on-spurious-pesticides
Palm oil is an ingredient found in many everyday items we buy on a regular basis – from biscuits and instant noodles, to shampoo and lipstick.
Most of the world’s palm oil is grown in two countries: Malaysia and Indonesia. The rapid growth of the industry in response to increasing demand for palm oil has caused widespread clearing of tropical forests and peatlands – habitats that are home to many Critically Endangered species including the Sumatran and Bornean orangutans. This has led to numerous campaigns to boycott palm oil and a rise in individuals and companies pledging to go palm oil-free. With a recent major UK retailer committing to removing palm oil from their own-branded products, and another online-retailer in the UK having recently introduced the first "palm oil-free" supermarket aisle, it is expected that other companies may follow suit.
© 2seven9-Shutterstock Contrasting landscapes – aerial view of palm oil plantation next to natural forest.
On the surface, the act of going palm oil-free seems to be a positive step to protecting forests and wildlife in palm oil producing countries. However, there is much more to the story.
Because palm oil is highly versatile and can be used in a wide range of products, it is in high demand. More importantly, one tonne of palm oil can be produced from as little as one eighth of the land needed for other vegetable oils – namely rapeseed, sunflower, and soybean oil. This efficiency is especially important given that global demand for vegetable oil is expected to almost double by 2050, putting forests and other natural habitats that are home to Critically Endangered wildlife at risk of conversion to agriculture.
© IUCN Palm oil can be produced on considerably less land compared to other vegetable oils.
Boycotting palm oil is therefore not an effective solution. If other vegetable oils are used instead this will require more land, and lead to greater habitat and biodiversity loss. Instead, retailers and consumer goods manufacturers should develop robust sourcing policies committing to purchasing palm oil that protects natural habitats and wildlife populations, as well at the rights of workers and local communities – including developing commitments to source palm oil certified under the Roundtable on Sustainable Palm Oil (RSPO). To improve practices on the ground, companies need to follow through with implementing their policies and engage and work with their suppliers to ensure compliance with their policies.
Transforming the sector also requires an increased demand for sustainably produced palm oil. Consumers should purchase products containing sustainably produced vegetable oils, including palm oil certified under the RSPO, and increase pressure on retailers to source sustainable palm oil. The RSPO is the world’s largest palm oil sustainability scheme, setting global standards for environmentally and socially responsible palm oil production.
In November 2018, members of the RSPO voted overwhelmingly to adopt stricter certification requirements to ensure stronger protection for forests and peatlands, and human and labour rights. Placing the RSPO at the forefront of global sustainability, the new requirements provide further assurances to companies and consumers that purchasing palm oil bearing the RSPO label meets high environmental and social standards. This includes requirements for companies to consider wider landscape impacts for new developments, including enhancing forest connectivity that is important for wildlife to move between fragmented habitats.
Look out for this logo the next time you shop. It provides assurances that the palm oil the product you are purchasing was produced sustainably.
What is sustainable palm oil?
Sustainable palm oil is produced based on social and environmental best practices such as those outlined by the RSPO.
Independent research conducted in Indonesia has shown that RSPO certification leads to a 33% reduction in deforestation compared to non-certified concessions. This reduction was especially high in primary forests – important habitats for numerous species and critical areas that store significant amounts of carbon and help slow the onset of global climate change. Additional research by the SEnSOR research group has shown that High Conservation Value areas, which RSPO-member companies are required to protect and enhance, provide important refugia for endangered species including bird species listed on the IUCN Red List of Threatened Species.
If we are truly going to make sustainable palm oil the norm, and protect wildlife and their habitats in the process, we must all work together to increase the demand and production of responsibly produced palm oil.
how you can support sustainable palm oil
By Michael Guindon
Canegrowers chairman Paul Schembri said the federal government's move was a rare and significant escalation in a dispute where India had refused to back down and find a negotiated solution.
Australian Sugar Milling Council chief executive David Pietsch said India's sugar subsidies are a clear breach of its WTO obligations.
Stood by decision
"We believe the high volumes of Indian sugar produced in recent years are embedded and structural, meaning their industry will continue to flood the global market unless the subsidies and associated support mechanisms are fundamentally reformed," he said.
Trade minister Simon Birmingham acknowledged the importance of Australia's economic and strategic partnerships with India but stood by the decision to take the ultimate step in the WTO complaints process.
Senator Birmingham said Australia had been left with no choice if it wanted to protect canegrowers and millers after "making numerous representations to India at the highest levels and in the WTO".
"Unfortunately, our representations, and those of other sugar exporting countries, have so far been unsuccessful," he said.
Senator Birmingham said Australia maintained a good relationship with India and that it was "perfectly normal" for even close friends to use WTO mechanisms to resolve trade issues.
Australia exports about 3.7 million tonnes of sugar a year and is the world's third biggest supplier behind Brazil and Thailand, which could become a party to the WTO action against India.
Indian production skyrocketed from 20.3 million tonnes in 2016-17 to about 32.2 million tonnes in 2017-18 on the back of subsidies. India is forecast to produce 31.5 million tonnes this year, about 4 million tonnes more than its domestic sugar requirements.
https://www.afr.com/business/australia-steps-up-sugar-trade-war-with-india-20190227-h1brut
Newmont Mining Corp said on Sunday that Barrick Gold Corp, owner of a tiny fraction of the U.S. mining company, intends to propose lowering the ownership threshold needed to call a meeting of Newmont shareholders.
Newmont said it received notice of intent from a unit of Barrick for two shareholder proposals for consideration at Newmont’s next annual meeting of stockholders.
The proposals would be to lower the ownership threshold necessary to call shareholder meetings to 15 percent from the current 25 percent, and to repeal all bylaw amendments implemented since Oct. 24, Newmont said in a statement.
If successful, the proposals would make it easier for shareholders to call a vote to oust Newmont’s board, and come as further sign that Barrick could be moving ahead with preparations for a hostile bid for Newmont.
Barrick, already the world’s largest gold miner, said on Friday it considered making an all-stock bid for Newmont, a deal that would create a monolith in the global gold sector.
Barrick currently holds 1,000 out of Newmont’s roughly 535 million outstanding shares, a spokesman for Newmont said in an email.
Barrick did not immediately respond to a Reuters request for comment.
Last month, Newmont said it would buy smaller rival Goldcorp Inc, for $10 billion, creating the world’s biggest gold producer in the face of dwindling easy-to-find reserves of the precious metal.
In its announcement of Barrick’s proposals, Newmont said the Goldcorp deal represents the best opportunity to create value for its shareholders.
Canada’s Barrick Gold Corp offered to buy U.S. rival Newmont Mining Corp for nearly $18 billion in stock on Monday, in a deal that would combine the world’s two largest gold producers.
Deal-making in the gold industry is growing after remaining dormant for many years. Barrick bought Randgold Resources in a $6 billion deal last month, setting off a wave of deals including Newmont’s $10 billion deal for Canada’s Goldcorp.
Barrick’s acquisition of Newmont will be contingent upon the company scrapping its agreement with Goldcorp, Barrick said, adding that its offer was a “significantly superior” option for Newmont shareholders.
“The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with the largest portfolio of Tier One gold assets,” Barrick Chief Executive Officer Mark Bristow said in a statement.
“Most important, it will enable us to consider our Nevada assets as one complex,” he said.
One of Newmont’s chief areas of operations is Nevada, the largest U.S. gold- and silver-producing state, where Newmont’s 19 mines are adjacent to Barrick’s own operations.
The deal also comes amid a rise in gold prices, which have climbed some 11 percent since October.
Under Barrick’s proposal, Newmont shareholders would receive 2.5694 common shares of Barrick for each Newmont share. That translates to a price of about $33 per Newmont share, valuing the company at $17.85 billion, according to Reuters calculations.
Newmont shareholders would hold about 44 percent of the outstanding shares of the combined company.
Neither Newmont nor Goldcorp could immediately be reached for comment outside usual business hours.
Barrick also said the new company would match Newmont’s annual dividend of 56 cents per share which, based on the offer, will represent a pro-forma annual dividend of 22 cents per Barrick share.
Barrick said last week it was considering making an all-stock bid for Newmont. Newmont had declined to comment on the matter.
Newmont Mining said on Sunday that Barrick, which already owns a tiny fraction of the U.S. mining company, intends to propose lowering the ownership threshold needed to call a meeting of Newmont shareholders.
Palladium hit a record high on Tuesday, surging above $1,550 as a threatened strike by South African mineworkers added to supply risk concerns in an already tight market, while gold prices edged up on a subdued dollar.
Spot palladium traded as high as $1,554.50 per ounce and was up 0.8 percent at $1,554 as of 0548 GMT.
The metal has risen 23 percent so far this year on a sustained supply deficit.
At least 15 mining firms in South Africa, a major producer of the autocatalyst metal, have received notices of strikes to be held later this week.
“Support comes from supply side issues, mainly from South Africa where a strike by the union has a potential to disrupt output further,” ANZ analyst Daniel Hynes said, adding that positive news on Sino-U.S. trade is also providing support.
“There’s been a feeling that demand overall would be impacted by tariffs on the either side and this potential deal will minimize the risk of that occurring, so the market is viewing this as a positive move.”
U.S. President Donald Trump said on Monday he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences, saying negotiators were “very, very close” to a deal.
“(However,) considering the rally we are seeing in prices, the risk of a correction is increasing by the day. (But) for the moment the trend is likely to continue,” Hynes said.
Meanwhile, spot gold gained 0.1 percent to $1,328.11 per ounce and U.S. gold futures were up 0.2 percent at$1,331.7 as the dollar remained subdued.
Norilsk Nickel, the world’s largest palladium producer, said on Tuesday tighter emissions regulations in all major markets and flattish primary supply would widen a palladium deficit in 2019.
Prices for palladium, chiefly used in emission-curbing auto catalysts, hit a record high in London on Tuesday as a threatened strike by South African mineworkers added to supply concerns in an already tight market.
Nornickel produces 40 percent of the world’s palladium from its Russian assets. The company estimated that gross palladium demand reached a record high of 10.7 million troy ounces in 2018, mostly driven by consumption in the automotive industry amid flat gross supply.
“(The) spot palladium market practically dried out” in 2018, Nornickel said. The company said the supply tightness was partly eased by the release of stocks from palladium ETFs (exchange-traded funds), which fell below 1 million ounces for the first time since 2009, and from Nornickel’s Global Palladium Fund.
This fund buys the metal from existing stockpiles of other holders and then sells it to industrial consumers.
Nornickel said in 2019 the global palladium market deficit is forecast at 800,000 ounces compared with 600,000 ounces in 2018, with consumption up by 500,000 ounces to 11.2 million ounces due to strong demand from autocatalyst producers.
Nornickel, which competes with Brazil’s Vale SA to be the world’s biggest nickel producer, said the battery industry would increase consumption of this metal by 20 percent in 2019. Nickel is now mainly used as an ingredient to produce stainless steel.
“We believe that EV (electric vehicle) penetration growth will remain the key driver for high-grade nickel demand in the next 5-7 years,” the company said.
Nornickel also posted 2018 results, where it reported 56 percent growth in its 2018 core earnings to $6.2 billion, the highest level since 2011, due to higher metal prices.
The company, controlled by Russian businessman Vladimir Potanin and aluminium producer Rusal, also said that its board would issue a recommendation for its final 2018 dividend in May.
Nornickel’s 2019 capital expenditure is expected to rise to between $2.2 billion and $2.3 billion from $1.6 billion in 2018 as it prepares to boost output to take advantage of an expected boom in demand from electric vehicle makers.
Nornickel said its 2018 revenue increased by 28 percent to $11.7 billion on the back of improved metal prices, higher copper output and sale of palladium from earlier accumulated stocks.
ValuEngine upgraded shares of AngloGold Ashanti (NYSE:AU) from a hold rating to a buy rating in a research note released on Tuesday, February 19th.
Several other research firms have also commented on AU. BMO Capital Markets began coverage on shares of AngloGold Ashanti in a research report on Monday, December 10th. They set a market perform rating and a $11.00 price target for the company. Citigroup lowered AngloGold Ashanti from a neutral rating to a sell rating in a research note on Tuesday, November 6th. Scotiabank restated a hold rating and issued a $14.00 target price on shares of AngloGold Ashanti in a report on Sunday, January 20th. Finally, Zacks Investment Research downgraded shares of AngloGold Ashanti from a hold rating to a sell rating in a report on Thursday, January 24th. Two investment analysts have rated the stock with a sell rating, three have given a hold rating and one has assigned a buy rating to the company. The stock has an average rating of Hold and an average price target of $11.50.
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NYSE AU traded up $0.20 during trading hours on Tuesday, hitting $14.64. 3,159,005 shares of the company’s stock were exchanged, compared to its average volume of 3,304,272. The company has a current ratio of 1.55, a quick ratio of 0.79 and a debt-to-equity ratio of 0.71. The company has a market capitalization of $6.08 billion, a PE ratio of 27.62, a price-to-earnings-growth ratio of 1.15 and a beta of -0.91. AngloGold Ashanti has a 12-month low of $7.07 and a 12-month high of $15.86.
The business also recently disclosed an annual dividend, which will be paid on Thursday, April 18th. Stockholders of record on Friday, March 22nd will be given a dividend of $0.0679 per share. This represents a dividend yield of 0.46%. The ex-dividend date of this dividend is Thursday, March 21st. AngloGold Ashanti’s dividend payout ratio is presently 9.43%.
A number of institutional investors have recently bought and sold shares of the business. BlackRock Inc. lifted its holdings in shares of AngloGold Ashanti by 74.7% in the 3rd quarter. BlackRock Inc. now owns 13,766,968 shares of the mining company’s stock worth $118,120,000 after purchasing an additional 5,888,394 shares during the last quarter. Franklin Resources Inc. lifted its position in shares of AngloGold Ashanti by 1.9% during the 3rd quarter. Franklin Resources Inc. now owns 6,327,443 shares of the mining company’s stock worth $54,289,000 after purchasing an additional 120,000 shares during the last quarter. Morgan Stanley grew its stake in shares of AngloGold Ashanti by 131.6% in the 3rd quarter. Morgan Stanley now owns 4,009,645 shares of the mining company’s stock valued at $34,402,000 after purchasing an additional 2,278,635 shares during the period. AQR Capital Management LLC boosted its holdings in shares of AngloGold Ashanti by 965.2% in the 3rd quarter. AQR Capital Management LLC now owns 3,003,860 shares of the mining company’s stock worth $25,773,000 after acquiring an additional 2,721,852 shares in the last quarter. Finally, Tocqueville Asset Management L.P. acquired a new position in shares of AngloGold Ashanti in the 4th quarter worth approximately $36,739,000. 40.88% of the stock is currently owned by institutional investors.
AngloGold Ashanti Company Profile
AngloGold Ashanti Limited operates as a gold mining company. The company also produces silver, uranium oxide, and sulphuric acid. Its portfolio includes 17 operations and 3 projects in 10 countries in South Africa, Continental Africa, the Americas, and Australasia. AngloGold Ashanti Limited was founded in 1944 and is headquartered in Johannesburg, South Africa.
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Sluggish purchases from downstream buyers and traders, as well as expanding inventories added to pricing pressure of spot copper sellers, who widened discounts on the morning of Friday February 22.
This morning, offers stood mostly at a discount of 210-90 yuan/mt, compared with a discount of 200-70 yuan/mt in the previous morning.
In early trades this morning, discounts of standard-quality copper grew to 210-200 yuan/mt, from 180 yuan/mt after opening. Trades of high-quality copper occurred at a discount of 100 yuan/mt, compared with an earlier discount offer of 80 yuan/mt.
Some traders cut offers of hydro-copper steeply to a discount of 370 yuan/mt at noon, and there is further downside room expected in the afternoon.
On the morning of February 22, the SHFE 1903 contract consolidated around 49,500 yuan/mt and closed at 49,510 yuan/mt at the end of the morning trading session, down 60 yuan/mt from that time on February 21.
At noon on February 22, high-grade copper traded at 49,360-49,410 yuan/mt and standard-quality copper traded at 49,260-49,320 yuan/mt.
https://news.metal.com/newscontent/100877623/discounts-of-spot-copper-grow-amid-sluggish-purchases/
About 20 people died on Wednesday when a truck carrying acid to Glencore’s Mutanda Mine in Democratic Republic of Congo collided with two other vehicles, Glencore said on Friday.
The accident occurred in the evening about 50 kilometres (31 miles) from the copper and cobalt mine in the southeast of the country.
The truck was owned by a logistics company contracted by the mine, Glencore said, without giving its name or any other details on whether those who died were all workers at its mine.
It said in an emailed statement to queries from Reuters that it “will continue to work with the logistics company and relevant government agencies, including the emergency services to provide support”.
ASX listed and Chilean focussed copper developer Hot Chili has executed a formal option agreement to acquire a 100% interest in the privately-owned, large Cortadera porphyry copper-gold discovery, located 14km southeast of the company’s flagship Productora project in central Chile.
The option agreement covers Chilean mining group SCM Carola’s Vallenar landholdings and incorporates the exciting Cortadera discovery, which directly adjoins Hot Chili’s El Fuego copper projects at San Antonio and Valentina.
The acquisition generates an opportunity for the company to develop the Productora, Cortadera and high-grade satellite El Fuego deposits concurrently, utilising a central processing facility and hence potentially create a large new integrated copper mining operation in this region of Chile.
Hot Chili Management said: “The company is very pleased to be formally partnered with SCM Carola toward creating a globally significant new copper development for the Vallenar region of Chile, at a time of resurgent copper price conditions”.
Earlier this month, the company secured the option to acquire the Cortadera copper-gold discovery and the smaller Purisima mining right along strike, both of which contain extraordinarily wide, consistent intersections of copper-gold mineralisation from over 23,000 metres of diamond drilling.
According to Hot Chili, the Cortadera ore system contains some of the most robust porphyry copper-gold drilling results since Canadian-listed SolGold’s amazing Cascabel discovery in Ecuador in 2012.
That deposit now holds a global mineral resource of 5.2 million tonnes of copper and 12.3 million ounces of gold.
Higher grade intersections from the Cortadera discovery include 90 metres grading 1% copper and 0.4 grams per tonne gold from just 4m down-hole and 52m @ 0.9% copper and 0.4g/t gold from 6m down-hole.
The project area also boasts an incredible 864 metre intersection going 0.4% copper and 0.1g/t gold from 62m down-hole that includes a higher-grade 348m section at 0.6% copper and 0.2g/t gold from 428m.
A further intercept of 268m @ 0.4% copper and 0.2g/t gold from 120m down-hole, included a 42m section assaying 0.8% copper and 0.4g/t gold from 206m.
The Cortadera ore system remains open and demonstrates the latent potential to host a larger global resource base than Productora, which itself holds 1.5 million tonnes of copper and about 1 million ounces of gold.
The company’s strategy here is clear, with Hot Chili aiming for a long tenancy in Chile, potentially doubling the mine life of the Productora project to at least 20 years, with the addition of Cortadera and the El Fuego satellite deposits.
The company previously stated that it expected to commence drilling at the Cortadera deposit in the coming months and prove up a JORC-compliant mineral resource at the property.
Hot Chili already has a head start with around USD$15m of drilling having already been pumped into Cortadera by the previous owners.
The acquisition of Cortadera has the potential to completely transform Hot Chili’s fortunes in South America as it aspires to become the next significant global copper producer.
A likely rebound in the amount of raw zinc produced this year could have miners "begging smelters” to refine the metal used to galvanize steel, potentially boosting their fees to the highest in two years.
Supplies of the refined metal have been tight following smelter disruptions in China. This year, though, the production of zinc concentrates – the raw material pulled from rock – could rise by 6.5%, compared with 3.7% in 2018, with a number of new mines coming online, analysts at Goldman Sachs Group wrote in a report this month.
Treatment charges were set at $147 a metric ton globally last year, down from $172 a year earlier. Industry executives gathering in Scottsdale, Arizona, Sunday through February 27 will be focusing on just how high the fees can bounce back. The meeting, organized by the International Zinc Association, has traditionally been where a consensus on the fees is determined.
Already, “people are begging smelters to take material off their hands,” said Oliver Nugent, a Citigroup Inc. analyst in London. Treatment charges “are ripping," and will probably top the 2017 levels, he said.
Higher fees, meanwhile, aren’t the only concern for industry executives. Goldman Sachs forecasts that the improved outlook for refined zinc supplies could drop prices to $2 200/t over the next 12 months. That could hurt companies such as Teck Resources, which last year produced 580 000 t of zinc in concentrates, according to a data on its website.
The metal traded at $2 724 a ton Friday at the London MetalExchange, up 10% so far this year as stockpiles shrank. Deliverable stockpiles at the London Metal Exchange are near less than a day’s worth of demand and rebuilding holdings could require a “full-blown global recession,” according to ICBC Standard Bank.
China’s zinc demand could rise more than expected this year as infrastructure fixed asset investment growth accelerates to 10% from 3.8% last year, and the metal will also benefit from a pick-up in construction, according to Bloomberg Intelligence.
Citigroup warns the world’s processing capacity, excluding China, will be “pushed to extreme” to process the increased volume while the “bigger burden is on the Chinese smelters to boost output,” the bank said in a report this month.
“The mine supply growth in the rest of the world will be there even if China underperforms,” Andrew Cosgrove, a Bloomberg Intelligence analyst, said in a telephone interview. “The bigger story is the bottlenecks, and whether smelters in China will ramp up enough. For the most part, charges are up where they should and smelters margins are presumably high enough to incentivise smelters to get going. But time will tell if that really pans out. It’s a tall order.”
Base metals miner MMG on Monday warned that it will delay some shipments from its Las Bambas copper mine, in Peru, as outbound concentrate transport from the operation has been disrupted by community blockades.
The illegal blockade occurs on a stretch of public national roads, the ASX-listed company told shareholders.
The blockade related to claims for compensation for a pre-existing easement that overlaps a public road on the Yavi Yavi farmland, which was transferred to the community of Fuerabamba as part of the 2011 resettlement agreement for Las Bambas.
The company told shareholders that it was committed to transparent and productive dialogue and supported the development of the resettled community.
The blockade has not had an impact on production as yet, but MMG noted that with low copper concentrate stocks at the Matarani Port, the company would need to delay some shipments.
Las Bambas produced 111 865 t of copper in concentrate during the December quarter on the back of higher mining and record milling rates as well as higher ore grades, a 29% increase on the September quarter.
http://www.miningweekly.com/article/mmg-warns-of-shipment-disruptions-in-peru-2019-02-25
Australia’s Queensland Rail said on Monday that it expects a railway hit by flooding this month, which disrupted zinc shipments from major producers such as Glencore, to be fixed as early as the end of April, sooner than it had expected.
The 1,000-km (620-mile) rail line is used by miners including Glencore, MMG Ltd and South 32 to carry zinc and lead concentrate from the Mt Isa region to port at Townsville, as well as by fertilizer producer Incitec Pivot Ltd.
“Our coordinated recovery crew will allow us to condense the Mount Isa Line’s repair time down to eight to twelve weeks, subject to favorable weather and construction conditions,” Queensland Rail Chief Executive Officer (CEO) Nick Easy said in a statement.
“That would have us reopening the line between late April and mid-May 2019,” he added. Queensland Rail owns the line and had previously said it expected the repairs to be finished in under six months.
It was damaged in floods that covered vast tracts of Queensland’s outback underneath muddy water earlier in February, killing hundreds of thousands of cattle and cutting off the region’s mines and industrial producers.
The port at Townsville ships about 40 percent of Australia’s zinc production, equal to about 700,000 tonnes a year or 5 percent of global supply.
Incitec Pivot said that the idling of its plants affected by the rail closure, owing to a lack of storage and ingredients arriving by rail, would cost about A$10 million ($7 million) a week in lost earnings.
Queensland Rail CEO Easy said some 400 workers were involved in the repairs and that 50 damaged sites on had already been repaired, but that 200 more remained still needed to be fixed.
“The damage ... includes track washouts and scouring, 16 damaged rail bridges, damage to track formations, and many locations where access roads, culverts and drainage have also been damaged or washed away,” he said.
Glencore, MMG, South 32 and Incitec Pivot had no immediate comment when contacted after hours on Monday.
With a full capacity of 800,000 mt, the project will initially commission 100,000 mt of capacity by the end of this year
China’s imports of bauxite stood at 7.89 million mt in January, compared to 7.24 million mt in December and 7.03 million mt in January 2018, showed data from China Customs.
January’s bauxite imports were the second highest in history, standing below 8.02 million mt recorded in January 2014.
Volumes that originated from the Republic of Guinea rose to an all-time high of 4.26 million mt last month.
Glencore has lodged a complaint with the London Metal Exchange (LME) about the company’s inability to take speedy delivery of aluminium from warehouses owned by ISTIM UK in Port Klang, Malaysia, two sources familiar with the matter said.
London-listed commodity trader and miner Glencore bought 200,000 tonnes of aluminium on the LME late in January and made preparations to take that metal from ISTIM’s warehouses.
Metal entering the LME’s global warehouse storage network is issued with a title document called a warrant. In order to take delivery of metal from the network, buyers need to cancel the warrants - earmarking it for delivery.
The metal is then shipped after being scheduled for delivery on a first come, first served basis.
To get the metal out quickly, Glencore moved to complete the formalities and create a queue of more than 50 days before the end of January, which would have activated the LME’s load-in, load-out (LILO) rules for warehousing, the sources said.
LILO rules were ushered in as part of sweeping LME reform sparked by accusations from consumers that banks and traders were hoarding metal in LME warehouses.
The rules stipulate that if a warehouse has a queue of more than 50 days, it must load out all the metal delivered in the previous three months.
But the rules were not triggered in this case because ISTIM said there was no queue at its warehouses in Port Klang at the close of business on Jan. 31, sources said.
“The load-out rules are complicated and ISTIM ... argue they didn’t have a queue in January, that the queue didn’t exist before midnight February 1,” a metal industry source said.
Glencore, the LME and ISTIM declined to comment.
LME data shows queues to take aluminium out of LME-approved warehouses owned by ISTIM in Port Klang jumped to 118 days at the end of January from zero in December.
This means the 222,713 tonnes deposited in ISTIM’s warehouses in Port Klang between November and January would have had to be delivered in February, March and April. That would be above ISTIM’s 2,500-tonne daily rate.
“The LME’s warehousing rulebook is a labyrinth and both Glencore and ISTIM are inferring different things. We think the difference comes from where they think the queue starts,” an aluminium trading source said.
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Warrants would have been canceled at ISTIM’s London office by Glencore’s brokers. The process for getting metal into the queue then includes rent payment, provision of shipping instructions and customs-clearance documents.
Once these formalities are complete, the rules require the warehouse to process requests for delivery on the basis of 48 hours’ notice and in the order in which they were received.
“Glencore is probably arguing the queue starts when the process is complete, while ISTIM will have said they had a further two days to allocate delivery slots,” the aluminium trading source said.
Cancelled aluminium in ISTIM’s Port Klang warehouses stood at 309,800 tonnes at the end of January, up from 30,000 tonnes at the end of December.
Chile’s Chuquicamata underground copper mine is due to start operations in middle of this year, the state copper miner Codelco’s chairman said on Wednesday.
“We hope that Chuquicamata’s underground mine will start up by mid-year,” said chairman Juan Benavides. “It is a fundamental step and milestone in this structural overhaul.”
Codelco announced a $5.550 billion investment to convert Chuquicamata, its second-largest resource, from an open cast mine into an underground facility last year.
The plans for Chuquicamata form part of a 10-year, $39 billion overhaul of the state miner’s key operations as it seeks to maintain production despite rapidly falling ore grades at its deposits.
WESTERN Indian state Maharashtra, is to relocate a planned Saudi Aramco refinery due to protest by farmers, says Reuters.
Saudi Aramco and a consortium of state-owned Indian oil companies signed the preliminary deal for the integrated oil refinery and petrochemicals facility last year, despite local protests. The facilities were to be built in the port town of Ratnagiri, Maharachtra, India. According to Reuters, the US$44bn build would be India’s biggest oil refinery. The refinery will have a capacity of 1.2m bbl/d, and the petrochemicals facility 18m t/y.
The news agency reports that thousands of farmers refused to surrender land, as they feared that the build would damage a region famed for its Alphonso mangoes, vast cashew plantations, and fishing hamlets. Reportedly, Chief Minister Devendra Fadnavis said that the protests stopped land acquisition at the proposed site in Nanar, a village in the Ratnagiri district, about 400 km south of Mumbai.
Reuters reports that the integrated facilities will now be built in an area where the local population will not oppose, according to Fadnavis. The news agency adds that a new location has yet to be identified.
The Ratnagiri Refinery and Petrochemicals (RRPCL) project, is promoted by Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. According to Reuters, RRPCL said the planned facilities will create up to 150,000 jobs which would supposedly pay better than agriculture and fishing. Reportedly RRPCL also said that the suggestions that the refinery would damage the environment were baseless.
The announcement follows the forging of an alliance between Fadnavis’ party, the Bharatiya Janata Party, and the regional party Shiv Sena. Reuters reports that Shiv Sena opposed the refinery and that it had been a contentious issue between the parties.
Anil Nagwekar, a spokesman for the RRPCL, told Reuters: “The company is hopeful that the state government will provide sufficient land for the project on the western coast.”
The majority of India’s population relies on farming for its livelihood, and land acquisition has always been a contentious issue, says Reuters. According to the news agency, farmer protests halted the plans of India’s Tata Motors to build a car factory in 2008.
https://www.thechemicalengineer.com/news/india-to-move-planned-refinery/
China’s exports of refined tin stood at 1,198 mt in January, soaring about 100% from a year earlier and notching the highest monthly record since 2010, the International Tin Association (ITRI) reported based on data from China Customs.
Tin prices on the London Metal Exchange surged since December 2018, from a low of $18,145/mt to a nearly one-year high of $21,800/mt. Prices in the Chinese market, however, saw much smaller gains due to relatively high inventories. This widened the price spreads and bolstered exports of tin ingots and tin products from China.
ITRI learned that margins on some tin products could reach 10,000 yuan/mt. January’s exports of tin products are expected to expand to about 1,000 mt.
The nation’s imports of tin ores and concentrates totalled 30,719 mt in January, with 29,389 mt from Myanmar, ITRI also reported.
Tin ore shipments from Myanmar in January are estimated to contain 7,100 mt of tin, up 48% month on month but down 36% year on year.
The gross weight of materials from other countries totalled 1,329 mt in January, including 565 mt from Laos and 526 mt from Australia.
January’s tin ore shipments from Myanmar increased substantially from December, as miners cleared stocks to pay workers’ salaries and fulfil debt obligations before the Chinese New Year (CNY) holiday.
Myanmar tin ore shipments, however, sharply declined on a yearly basis. Tin ore shipments from Myanmar stood at 11,900 mt in the two months before the 2019 CNY holiday (December 2018 and January 2019), down by some 50% from the same period before the 2018 CNY holiday.
With the holiday impact, February shipments are expected to remain low, which is likely to tighten supplies of tin raw materials in March. ITRI expects mining activities in Myanmar to resume normal levels around mid-March.
The accident at a mining company in northern China's Inner Mongolia on Saturday that killed 22 people is expected to shrink tin ore supplies in China, which have already been tight.
The mine is called Baiyinchagan, owned by Yinman Mining Co., Ltd, which was founded in 2005 and was acquired by Xingye Group, a listed company on the Shenzhen Stock Exchange, in 2016.
ITRI data showed that the Baiyinchagan mine produced about 7,000 mt of tin-in-concentrate in 2018, accounting for about 8% of the total in China. Market participants estimate the accident may cause Baiyinchagan mine to cease operations for about 3 months to 1 year.
Rating agency S&P Global Ratings said on Thursday that it was continuing to keep a Chinese state-owned aluminium producer on “negative” watch after the company’s delayed coupon payment on an offshore bond.
Qinghai Provincial Investment Group Ltd (QPIG), based in northwestern China, missed an interest payment due on Feb. 22 on a $300 million offshore note, prompting S&P on Feb. 26 to downgrade the company’s long-term issuer rating to CCC+ from B+ and placed it on negative watch.
While the missed payment attracted market attention as a rare offshore default by a Chinese state-owned enterprise, S&P stopped short of labelling the missed payment a default, citing an “imputed” five-business-day grace period which will end on March 1.
In a statement on its website dated Feb. 27, QPIG said the payment had been delayed due to unspecified “technical reasons” but that funds were “in the process of full payment.”
A statement on Feb. 26 similarly blamed technical issues for a delay in the payment of a maturing onshore note.
S&P said that liquidity risk for QIPG “remains high even after the company’s repayment” noting that it has not yet revealed a concrete refinancing plan for upcoming maturing debt, including $19.4 million worth of upcoming coupon payments and about 4 billion yuan ($598.68 million) of trust loans and financial leases coming due in the next six months.
“We are therefore keeping our ‘CCC+’ ratings on QPIG on CreditWatch with negative implications,” the agency said.
Slowing economic growth, a crackdown on shadow financing and a reluctance by banks to lend to private companies contributed to a spike in corporate defaults last year, with 46 issuers missing payments on 120 bonds worth 111.22 billion yuan, according to China Central Depository and Clearing Co (CCDC) data.
A total of 15 Chinese companies have defaulted on payments on 14 onshore bonds worth a total of 12.1 billion yuan so far this year, according to data compiled by Reuters.
QIPG has not been alone in delaying bond payments. State-backed China Minsheng Investment Group missed a deadline for a maturing private placement note on Jan. 29, but later said in a statement that it completed the payment on Feb. 14, before an extended deadline.
If you’re wondering why London Metal Exchange (LME) stocks of metals such as copper and zinc are so low, part of the answer lies with the current strength of Chinese imports.
LME copper stocks, excluding metal awaiting load-out, currently total a meagre 21,600 tonnes, the lowest since 2005.
There are just 52,650 tonnes of “live” LME zinc stocks, a level not seen this century.
Lead can be added to the list of disappearing visible inventory. After two consecutive days of heavy cancellation activity, “live” LME stocks have fallen to 44,150 tonnes, close to January’s multi-year low of 40,775 tonnes.
Each metal has its own narrative, particularly copper, where low LME inventory seems part of a concerted play to squeeze nearby timespreads.
But in each case refined metal has been flowing in significant quantities to China, reducing availability in the rest of the world. That trend continued into January.
COPPER
China imported a record amount of refined copper last year, 3.75 million tonnes, and the country’s appetite showed no signs of diminishing in January.
Last month’s imports totalled 336,680 tonnes, up 7 percent year-on-year, according to Refinitiv, which sources its figures from the Chinese customs department’s new website.
The country also continues to import huge amounts of copper concentrates. Last year’s tally of 19.7 million tonnes, bulk weight, was a fresh annual high and January’s imports of 1.9 million tonnes were up another 18 percent year-on-year.
This isn’t particularly surprising given last year’s strong global copper mine performance and several smelter outages which have freed up material for Chinese buyers.
The combination of strong imports of copper in both concentrates and refined form is more anomalous. Higher concentrates imports should mean higher domestic production, reducing the need for imports of metal in refined form.
Part of the answer to that conundrum comes from the decline in imports of scrap. These fell 32 percent last year and slid another 12 percent to 176,900 tonnes in January.
The drop in the headline bulk tonnage figure masks a sharp rise in purity as China shuts the door on lower-quality scrap. But the ongoing disruption to copper scrap flows, particularly from the United States, is translating into higher demand for imported refined copper.
Lower scrap imports are going to remain a feature of China’s copper dynamic this year with the government planning another tightening of the purity rules.
However, the current pace of refined copper imports looks increasingly unsustainable.
Stocks of copper registered with the Shanghai Futures Exchange have almost doubled since the start of January and now total 217,794 tonnes. Physical premiums for Chinese delivery are bombed out at $48 per tonne, also suggesting the local market is saturated.
Given the low inventory in the LME system and the resulting tightening of LME timespreads, there is rising potential for a pick-up in Chinese exports from their current subdued levels of under 30,000 tonnes per month.
ZINC
China imported just under 70,000 tonnes of refined zinc in January.
That was slightly off the pace of the preceding quarter but, as with copper, marked a continuation of a strong underlying trend, which saw refined zinc imports hit a record 713,355 tonnes in 2018.
China has turned to the international market-place to compensate for its own falling production.
The country’s national output of refined zinc slid 4.6 percent last year, according to state research house Antaike.
Chinese smelters have been caught between a tight concentrates market and an escalation of environmental regulations.
Raw materials tightness should ease this year as mine supply surges, although January’s concentrates import figure of 301,400 tonnes was still 11 percent off last year’s pace.
The key question is whether Chinese zinc smelters can actually process more concentrates, given many are scrambling to comply with new solid-waste emissions regulations.
Analysts at Citi expect domestic production to rise due to smelter restarts after the Lunar New Year holidays but the flow-through to refined metal availability will take time, meaning the bank is looking for refined imports to remain robust through the first half of 2019. (“China Commodities Trade Data”, Feb. 27, 2019)
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Everything, however, hinges on whether the environmental crackdown on zinc smelting in China intensifies further.
LEAD
China flipped from net exporter to net importer of refined lead in 2017 and last year’s imports surged 64 percent to 128,127 tonnes, the highest level since 2009.
This accelerated flow of metal into China rolled over into January with imports totalling 25,800 tonnes.
That was marginally off the pace of both November and December 2018 but imports in those two months marked 10-year highs.
Export flows, meanwhile, have almost dried up completely with just 295 tonnes of outbound shipments in January.
As with zinc the elevated call on units from outside China appears to reflect domestic supply weakness in both the primary and secondary (scrap) production streams.
Analysts at Refinitiv estimate that China’s own lead production fell by 2.2 percent last year on a combination of reduced concentrates availability and ongoing reform of the fragmented secondary sector.
January’s concentrates imports were 122,725 tonnes, the highest monthly tally since September last year.
After three consecutive years of decline, lead raw materials inflows should pick up as mine supply recovers in tandem with sister metal zinc this year.
However, after three years of thrifting, China’s lead smelters are getting more creative with their input mix, blending concentrates with recycled lead paste, according to Refinitiv.
That may place a structural cap on how much concentrate the country needs going forwards.
Right now, though, historically high imports of refined lead point to continuing supply-chain tensions within the Chinese lead market.
Chile produced 460,064 mt of copper in January, marking a drop of 4.5% from the same month of last year, according to government figures.
The figure also marked a drop of 17.5% from record monthly output of 557,780 mt in the previous month of December.
Statistics agency INE attributed the decline to lower throughput and ore grades at some of the country's largest copper mines.
Chile is the world's leading producer of the red metal, producing a record 5.831 million mt last year.
Earlier this month, the Chilean Copper Commission forecast that Chilean copper production will rise 1.9% this year to 5.941 million mt.
The government agency said that the increase in output would come principally from state copper company Codelco, the world's largest producer, and BHP's Spence mine, which suffered from a fire in its SX-EW facility in 2018.
Meanwhile, production of molybdenum at Chilean copper mines rose to 5,144 mt in January, up 8.5% from 12 months earlier. The metal, used in steel production, is a key byproduct at several of Chile's large copper mines and its second largest mineral export after copper.
Production of gold rose in January by 17.1% to 2,914 kilograms, while production of silver rose 14.6% to 97,451 kg.
The Peruvian government will likely grant Southern Copper Corp a construction license for its $1.4 billion Tia Maria project before its environmental permit expires in August, the energy and mines minister told Reuters on Thursday.
Southern Copper has spent years waiting for the construction license, a final green light for Tia Maria that consecutive governments have declined to give amid fears it would revive deadly protests that first derailed the project in 2011.
If the company does not secure the permit by August, it might have to wait at least another year while the government reviews a new environmental impact study.
Southern Copper told investors earlier this month that it that it expected to receive the permit “in a short timeframe.”
“That’s what we expect,” Energy and Mines Minister Francisco Ismodes told Reuters when asked if the license would likely be granted by August. “It’s a project that’s been prioritized by the government so that it can be implemented in 2019.”
The mine is slated to produce 120,000 tonnes of high-grade copper annually.
If Southern Copper builds Tia Maria, it would mark a rare instance of reviving one of several proposed mines that have been derailed by local opposition in Peru, the world’s No.2 copper and zinc producer.
Companies in Peru are closely watching Tia Maria as a sign of President Martin Vizcarra’s approach to the mining sector, a key driver of economic growth but also a lightning rod for conflict in far-flung provinces.
A former vice president, Vizcarra took office less than a year ago after his predecessor resigned in a graft scandal.
Southern Copper has said it has built broad-based support for the project in the region of Arequipa, where deadly protests from farmers worried about its environmental impacts forced the company to revise the project to include a desalinization plant.
Ismodes said the government wants to see greater social acceptance, and was working closely with the company to ease lingering opposition.
“We think the social issue can improve with the plan we’re carrying out,” Ismodes said. “Because the fact that it has a permit, a legal permit, is no guarantee that the project can be executed within a positive social framework.”
This year, Peru will likely produce 2.51 million tonnes of copper, up 3 percent from last year, Ismodes said.
He added that pending regulations for uranium mining - needed before Plateau Energy Metals can develop its uranium-lithium deposit in southern Peru - should be finished in a month.
Robert Winter 0 Comments AK Steel Holding Corporation, AKS
AK Steel Holding Corporation (AKS) Stock’s Price Fluctuations & Volatility:
The stock price registered volatility 4.35% in past week and volatility was at 6.33% over a last month. Historical volatility refers to the price fluctuations exhibited by the underlying asset (such as stock) over time. A security with high volatility has bigger fluctuations in price compared to a security with low volatility. The more quickly a price changes up and down, the more volatile it is. As such, volatility is often used as a measure of risk.
The stock’s Average True Range for 14 days was 0.16. ATR measures volatility, taking into account any gaps in the price movement. High ATR indicates increased volatility. A low ATR value indicates a series of periods with small ranges. Company’s beta coefficient stands at 2.86. Beta factors measures the amount of market risk associated with market trade. Presently, the stock has a RSI reading of 61.77.
AK Steel Holding Corporation (AKS) Stock’s Ratio Analysis:
The Company was able to keep Return on assets (ROA) at -0.10% in the trailing twelve month. ROA shows that how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company’s annual earnings by its total assets, ROA is displayed as a percentage. The Company generated Return on equity (ROE) -31.60% over the last twelve months. ROE is a measure of a corporation’s profitability that reveals how much profit a company generates with the money shareholders have invested. Calculated as Net Income / Shareholder’s Equity. It has kept Return on investment (ROI) at 12.70%. ROI is a financial ratio intended to measure the benefit obtained from an investment. Time is usually of the essence in this measurement because it takes time for an investment to realize a benefit.
Long Term Debt/Equity ratio was recorded at 20.96. This measures a company’s financial leverage calculated by dividing its long term debt by stockholders’ equity. It indicates what proportion of equity and debt the company is using to finance its assets. On the other side the debt to equity ratio is 0. Its current ratio is 2. Current Ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations. Quick Ratio of 0.8 is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company.
Let’s consider AK Steel Holding Corporation (AKS) stock move that changed on Tuesday Dated FEBRUARY 19, 2019. 12964284 shares changed at hands in last session versus to an average volume of 11326.18K shares. AK Steel Holding Corporation (AKS) stock ended at $3.12 by scoring 4.70%. It has 316.61M outstanding shares and 312.3M shares have been floated in market exchange. The stock institutional ownership included 64.60% while insider ownership remained 1.00%. The net percent change held by Institutional Investors has seen a change of -3.68% over last three month period. The net percent change kept by insiders has seen a change of 0.32% over last six month period.
AK Steel Holding Corporation (AKS) Stock’s Moving Average & Performance Analysis:
The stock showed weekly performance of 7.59% and it maintained for the month at 13.04%. Likewise the performance for the quarter was recorded as -15.45% and for the year it was -40.46%. The stock showed -26.42% performance during last 6-months. The YTD performance remained at 38.67%. This stock traded higher toward its 52 week low with 52.20% and -49.19% negative from its 52 week high price. The stock price is moving higher from its 20 days moving average with 7.57% and it is trading up from 50 days moving average with 15.01%. The stock price is moving along downward drift from its 200 days moving average with -21.73%.
Brazilian prosecutors are seeking the arrest of a Vale SA senior executive, authorities said on Friday, following the collapse of a dam holding mining byproducts that is believed to have killed over 300 people.
This is the first time that prosecutors are seeking to detain a senior-level executive, although several mid-level employees have been arrested in the wake of the disaster in the town of Brumadinho. Eight employees are still being held.
The executive, Director of Ferrous Metals Peter Poppinga, has not been arrested after a judge declined to issue a warrant. But prosecutors told Reuters they are still seeking his arrest in an appeal of the judge’s decision.
Vale, the top iron ore exporter in the world, told newspaper Folha de Sao Paulo, which first reported the news, that it supported the Brazilian judge’s decision not to arrest Poppinga.
The death toll from the burst dam has risen to 169 people, with 141 people still missing.
Vale has faced global condemnation and scrutiny since the dam, which held back mining byproducts, burst in January in the company’s second such disaster in four years.
Around 8 million mt of seaborne Brazilian iron ore supply may be at risk of being lost in 2019, over and above Vale's estimated 50 million mt from southern Brazil taken out of the market, as a new regulation bans upstream dams for collecting mining waste, consultancy Wood Mackenzie said Friday.
Iron ore units of Usiminas, Gerdau and smaller Brazilian miners stand to be affected the most by the ban, while CSN Mining is likely to be unaffected directly, although third-party output for processing could be cut, Wood Mac said in a report. Anglo American, which operates the Minas-Rio pellet feed mining and export chain, does not have a dam of the upstream construction method, Wood Mac said.
"The supply cutbacks will most likely come from Usiminas, Gerdau, Mineracao Morro do Ipe and junior miners that sell run-of-mine (ROM) ore to Vale and CSN," Wood Mac said.
"Pellet feed production from Usiminas is slated to account for half of the export declines, with the other half being sinter feed from the remaining impacted producers."
The February 15 regulation from Brazil's National Mining Agency established plans to ban all tailings dams built with the so-called upstream method, in a process finalizing deactivation and decommissioning taking up to four years.
"Companies holding such structures will have six months to present a technical decommissioning project and until 15th August 2021 and 15th August 2023 to fully conclude deactivation processes of inactive and active dams, respectively," Wood Mac said.
Following the January 25 burst at Corrego do Feijao's dam, Vale announced it would expedite work on an earlier program already committed to decommission all its upstream dams, taking out 40 million mt/year from supply over three years due to disruption, with partial replacement of ores from other sites.
Wood Mac reviewed a total of 226 iron ore tailings dams in Brazil and said 35 may be potentially be affected by the decree, as they are classed as upstream, or as construction method unknown.
CSN is Brazil's second-largest iron ore exporter and Wood Mac expects the company will likely see its own production chain unharmed, citing remote upstream dams employed limiting disruption to volumes.
Wood Mac estimates Vale's losses of 50 million mt this year split between 20 million mt of net losses from decommissioning dams, and 30 million mt from Brucutu's shut down.
A further 8 million mt of iron ore supply losses shifts the global mining cost curve-based incentive supply price to $90/dry mt CFR China, up from the $85/dmt after pricing in Vale's losses, Wood Mac said.
"However, this (price) assumes all else remains equal and at such high prices we could begin to see competition from scrap as a cheaper steelmaking feedstock, or demand destruction -- even a small decline in Chinese hot metal production removes a big chunk of seaborne iron ore demand," Wood Mac said.
Steel mills in northern China have defied expectations of strong iron ore restocking activity after the Lunar New Year amid continuing weak steel margins and high raw material costs, market sources said Monday.
Traded levels for Australian Pilbara Blend fines, the most heavily imported iron ore brand in China, surged above Yuan 600 /wmt at end January from around Yuan 560/wmt in mid-January on speculative activity and a strong paper market amid concerns of disrupted supply from Brazil after a dam collapse.
Although prices at the northern ports have since eased from a peak of Yuan 684/wmt on February 11, they remain well above Yuan 600/wmt, adding to strong cost pressure on mills that were already grappling with slim steel margins.
"End-users are looking to keep production levels low as Pilbara Blend fines offers are still at very high levels," a source at a mill in northern China said Monday.
"PBF prices have fallen to Yuan 630/wmt, but there is no incentive to buy given current steel margins," the source said, adding: "Steel margins are around Yuan 100-200/mt for the smaller and more profitable mills. This is similar to past months -- but that was when PBF was trading well under Yuan 600/wmt."
Traders have been reluctant over the past week to lower offers for PBF due to prevailing high prices for March-loading seaborne iron ore cargoes.
"There were traders with cargoes due to arrive at the ports in time for the expected post-Lunar New Year restocking activity. Given the relatively high prices they paid, there is a general reluctance to lower offers to offload cargoes," one trader said.
Market sources expect the current tepid level of demand at the ports to continue, with little change expected to underlying demand drivers.
"There is still a lack of clarity on steel margins and end-users are looking for April-loading cargoes," a trader in China said. "Steel margins are expected to pick up towards the end of March and port buying levels should be in line with those expectations," the trader added.
A second trader said: "Inventories for mills in the Tangshan region are at very low levels, but they have showed little interest in large-scale restocking over the past week and that should continue unless there is a large drop in prices. Northern mills are fine with holding about five days worth of inventories and are planning to only procure in limited quantities. In fact, mills closer to the ports are able to hold only about three days worth of inventories."
Australian miner Fortescue Metals Group's narrowing of discounts for March-loading PBF cargoes to Platts benchmark 62% iron ore index is expected to weaken the current buying preference for low grade iron ore.
"There has been strong demand for FMG's Super Special fines over the past month due to its low cost in keeping blast furnace operations going. However with the current sharp narrowing of price spreads with medium grade fines, there is less incentive to keep up a relatively high utilization rate for SSF," a Chinese mill source said. "With higher coke prices, the thermal rate for utilization of lower grade fines has made using certain discounted medium grade fines more economically feasible," the source added.
"Demand for Jimblebar fines [JBF] is expected to strengthen given the current situation. With mills keeping steel production levels low, the high phosphorus level of JBF is tolerable in small volumes and its sharp discount for a product with 61% Fe makes it very attractive," an international trader said.
Traders are also currently looking at supplying low grade Indian fines, which are priced at large discounts to FMG low grade cargoes, a Tangshan-based source aid.
High grade fines continued to face illiquidity at ports amid the current cost pressures on end-users. Market sources said inquiries and bids for high grade fines were limited, with cost-cutting for raw materials a top priority for end-users.
"There is some demand for Carajas fines, but this is largely limited to mills with large blast furnaces and on a need-to basis," a seller source said.
It’s been weird in the coal world in recent days, with the world’s largest shipper saying it’s capping output, biggest seaborne buyer China putting restrictions on some imports, and an Australian court saying mines must factor in climate change.
Throw in an executive at a major Indian coal-fired power generator saying his company won’t build any new plants as coal can’t compete with renewables, and it’s little surprise that environmental activists may be tempted to pop champagne corks.
The common theme at work is that coal is finding it harder to secure a long-term future in the world’s energy mix. But it’s worth unpacking the various developments and assessing the likely real impacts beyond public relations spin.
The most significant development this week was Glencore’s announcement on Feb. 20 that it will cap its annual output around its current capacity of 145 million tonnes.
Glencore is the world’s fourth-biggest coal mining company but also the largest supplier to the seaborne market, as miners that produce more – Coal India, China Shenhua Energy and Peabody Energy of the United States – are focused on their domestic markets.
Glencore said it was taking the step to help mitigate climate change, prompting commentators and activists to claim another victory in the campaign to end burning of the polluting fuel.
A PROFITABLE DEATH
While Glencore may genuinely be trying to do its part to halt global warming, it’s also likely the mining giant has calculated that restricting coal output will be good for business.
It is accepted that coal consumption is likely to drop in the coming decades, to virtually nothing in Europe and North America, and will even start to decline in Asia.
But Glencore has probably calculated that this will be a slow, profitable death, and is positioning itself to take advantage.
While overall coal consumption is important for climate considerations, Glencore’s interest lies in the seaborne market, and it’s here that business may actually be good for an extended period, even as overall coal demand drops.
The seaborne market is set to become tighter, especially in Asia, as more countries in the region build coal-fired generators that rely on imported fuel.
Countries on this list include Malaysia, Pakistan, the Philippines and others in Southeast and South Asia.
The world’s three biggest exporters of coal, however, all have various reasons as to why they may not be able to supply much more than they ship now.
Indonesia, the world’s biggest shipper of thermal coal used in power plants, has a domestic reservation policy that forecasts declining exports as more fuel is diverted to feed local generators.
Australia, the biggest exporter of coking coal used to make steel and number two in thermal coal, may find it hard to boost its shipments, given increasing domestic opposition to the industry and the difficulties in getting new mines approved, financed and insured.
South Africa, the third-biggest exporter, has capacity constraints in its rail system and is also trying to balance the needs of its home market against the desirability of earning foreign exchange through exports.
Glencore, which spent some $3.7 billion last year on coal mines in Australia, has also probably acquired all the assets it needs in the coal sector.
Its mission now is to operate these mines efficiently and to try and ensure that prices remain as high as possible.
It may be cynical, but one way to do that is to say the company will cap output, thereby helping to keep the seaborne market tight and prices elevated.
CHINA’S SPANNER
China is showing that two can play that game, with customs at the northern port of Dalian placing an indefinite ban on imports from Australia, and restricting those from other countries, according to an exclusive Reuters report on Thursday.
This isn’t the first time China has taken such measures, and the most likely outcome is that imports will decline for a period of time, but may eventually recover.
Much of the coal China imports from Australia is coking coal, and this is harder to source from other countries, with the only real alternatives being Canada and the United States.
What is clearer is that China, the world’s biggest coal importer, wants to limit its total imports, which means that over time it’s unlikely to be much of a growth market.
India, the second-biggest coal importer, looms as a great hope for the sector, but the Coaltrans India conference this week in New Delhi showed that while imports may grow this year and next, a dearth of new projects and the likely eventual improvement of domestic coal availability should result in a shrinking market.
New-build coal plants are struggling to compete against wind and solar in India, with Rajit Desai, an executive at major private generator Tata Power, telling the conference that his company wasn’t looking at developing any new plants, and will instead focus on buying existing units that are effectively distressed assets.
In another apparent victory for climate activists, an Australian court ruled on Feb. 8 that a mine development couldn’t go ahead, citing the impact from the greenhouse emissions that would be created.
While the mine in question most likely would have been rejected on other grounds, such as its close proximity to a retirement complex, the court nonetheless signalled that climate mitigation may become a part of any future approval process.
Putting the recent developments together gives a picture of a fuel battered from all sides.
But there is always a caveat. In this case, it’s simply that vast numbers of coal-fired power plants in Asia are still in the early stages of useful lives, and will likely operate for decades to come.
Coal may be down, but it’s far from out. I’m sure Glencore’s canny chief executive, Ivan Glasenberg, would agree.
https://www.hellenicshippingnews.com/strange-days-for-coal-with-glencores-cap-china-curbs/
Israeli billionaire Beny Steinmetz’s BSG Resources will walk away from Guinea’s massive Simandou iron ore project as part of a settlement ending a long-running dispute with the African country, the company said in a statement on Monday.
The agreement, if implemented, would remove a major obstacle to the development of what is believed to be the world’s biggest undeveloped iron ore deposit.
Under the deal, the two parties will drop outstanding actions related to the dispute, and Steinmetz will seek a new group of investors to develop the smaller Zogota iron ore deposit on an accelerated timetable, the statement said.
“The parties are delighted that this agreement opens a new chapter in their relationship that enables the development of a world-class mining project for the benefit of the people of Guinea,” it said.
Guinea had levelled corruption allegations at BSGR and stripped it of its rights to the Simandou blocks and Zogota concession. BSG has denied wrongdoing.
Guinea government officials were not immediately available to comment.
Japan's crude steel production fell 9.8% year on year to a ten-year low of 8.14 million mt in January 2019, reflecting a 3.8% drop from December 2018, the latest data released by the Japan Iron & Steel Federation showed.
Japan's crude steel output was last lower on July 2009 at 7.66 million mt
A JISF official said on Monday that the lower output was not due to a slowdown in demand, but rather from supply-side issues such as issues at production facilities.
"Facility problems physically lowered overall steel output," he said.
JFE Steel, Japan's second-largest integrated mill, is expected to lose a total of 1.4 million mt of crude steel output over October-February due to problems with three of its blast furnaces at the Kurashiki and the Fukuyama sections in West Japan Steel Works, as well as the Chiba section in East Japan Steel Works, S&P Global Platts had reported previously.
Within January's total production, those by converters stood at 6.13 million mt, down 11.6% year on year, and 2.5% from December, while those from electric furnaces was at 2.01 million mt, down 3.9% year on year and 8.5% month on month.
The JISF official said the drop in output produced by converters was largely reflective of JFE's facility issues, but there is no clear reason for the decline in steel output produced by electric furnaces. According to the official, the decline was due to fewer business days in January 2019 compared with January 2018.
By product, output of hot rolled coil in January fell 12.1% year on year and 0.6% from December 2018 at 3.33 million mt, while output of H-beams fell 321,900 mt, down 5% year on year, but up 0.1% on month, according to the data.
Brazil’s average daily iron ore exports in the first four weeks of this month outpaced shipments from February 2018, despite a disaster at a Vale SA facility last month that led it to halt several of its operations.
For the month to Feb. 22, Brazil exported 1.4 million tonnes of iron ore per business day on average, exceeding the average daily shipments of the mineral in February 2018 by 7.8 percent, according to data from foreign trade agency Secex.
That places Brazil’s February iron exports well on track to outstrip the 23.8 million tonnes it exported in the same month last year.
The pace of exports slowed slightly compared with January when an average of 1.5 million tonnes of iron ore per day were shipped
A tailings dam burst at a Vale iron ore mining facility last month, releasing a wave of sludge that has killed an estimated 300 people.
Vale subsequently halted all facilities using similar upstream tailings dams until those dams could be decomissioned, a move it estimated would take up to 10 percent of its output offline.
Vale did not comment on the Secex data.
South Korean steelmaker POSCO said on Tuesday that it plans to invest a total of 1.07 trillion won ($957 million) by 2021 to build environmentally friendly facilities and cut emissions.
Under the investment plan, POSCO said it will spend 350 billion won to build new facilities after closing some of its aged power facilities. A further 330 billion won will be invested in installing equipment to reduce emissions of nitrogen oxide and sulphur oxide, the company said in a statement.
The rest of the investment will be used to expand and install facilities to filter pollutants.
The chief executive of Australia’s biggest steelmaker, BlueScope, says the company has been casting its net far and wide to countries including India, Africa and Brazil to ensure it obtains the best prices and most flexible arrangements for the supply of iron ore to its Port Kembla steelworks, with a Tasmanian supplier in ASX-listed Grange Resources also high up in the mix.
The Australian Financial Review Weekend edition revealed on Saturday that BlueScope had been trialling batches of iron ore from Brazil and other local Australian players in its blast furnace at the steelworks as the end of a 17-year contract with BHP loomed.
BlueScope, which on Monday reported the highest first-half profit in its history since it split off from former parent BHP in 2002, is still a small player compared with the world’s steel giants, but Mark Vassella said it was hellbent on extracting the best possible deals.
“We worked out a while ago that we were never going to compete on scale,” he said.
When BlueScope de-merged it signed a 17-year contract for the supply of iron ore from BHP’s mining operations in Western Australia’s Pilbara region under an arrangement where more than 3.3 million tonnes of iron ore are shipped along the coast by two vessels leased by BHP which travel to Port Kembla, on the outskirts of Wollongong.
The supply contract ends on June 30 and BlueScope has been trialling various parcels of iron ore as feedstock in its Port Kembla blast furnace as it goes through the due diligence phase in preparation for its new iron ore supply agreements. Mr Vassella said BlueScope was moving to buying on the spot market, without being encumbered by a long-term “legacy” contract.
“We have a value and use model,” he said. “We have been buying little bits of iron ore from a variety of players.” Iron ore had been shipped in from Africa, India and Brazil, while the company was also in talks with Australian players including Rio Tinto, Fortescue Metals Group, BHP and ASX-listed Grange Resources.
Mr Vassella said the commodities market had shifted since 2002, “and no one buys on long-term contracts anymore”.
Test batches
Brazilian giant Vale has supplied test batches. He said the iron ore from Grange Resources’ Tasmanian mine had shown the right attributes. “We love their iron ore.”
Mr Vassella said it was likely that most of the iron ore would be sourced from Australian producers after the end of the BHP contract. “I would expect going forward that the vast majority of our requirements would come from Australian suppliers.”
But he emphasised that BlueScope needed to be globally competitive and would source from wherever the most keenly priced, reliable and highest-quality ore was available.
BlueScope was a steel products maker, and had no interest in operating any transport vessels itself. “We don’t own ships, we don’t know anything about transporting iron ore,” he said. Mr Vassella said the annual intake might be up to four million tonnes, and so BlueScope wasn’t a huge customer in global terms.
“We’re krill in the iron ore market,” he said, referring to the much larger size of competitors from China and the United States.
BlueScope had been using iron ore only from BHP’s West Australian operations. The change has already attracted the ire of the militant Maritime Union of Australia as 80 maritime workers lose their jobs, with the MUA having accused BHP of an act of “corporate bastardry”. Mr Vassella said there had been no particular frustration with BHP over the past few years, because the contract had been set in stone.
“We haven’t been frustrated with BHP at all,” he said.
https://www.hellenicshippingnews.com/bluescope-says-fortescue-grange-resources-part-of-iron-ore-mix/
China's key steel mill members of China Iron and Steel Association (CISA) reported steel products stocks jumped with the fastest increase rate since 2016 to 14.2 million tonnes in early February showed data from the CISA.
The early-February stocks registered an increase of 30.81% from 10 days ago and up 49.02% from a year ago.
This is partly because of an early 2019 spring festival, however demand from downstream enterprises ran weak alongside slow production recovery after the festival.
The U.S. Commerce Department announced Tuesday it will open a new anti-dumping probe to determine whether fabricated structural steel from Canada, China and Mexico is being sold at below fair value.
The investigation comes as some U.S. lawmakers, car companies and Canada and Mexico have strongly urged the Trump administration to drop U.S. national security tariffs on steel and aluminium imports in the wake of a deal announced last year to revise the North American Free Trade Agreement.
The fabricated structural steel under investigation is used major building projects, including commercial, office and residential buildings, arenas, convention centers, parking decks and ports.
The Commerce Department said Tuesday the new anti-dumping and countervailing duty probe is based on a petition filed earlier this month by a U.S. steel trade group. The department is investigating whether to seek duties of about 30 percent for Canada and Mexico and 222 percent for China in response to below-market price imports.
The Commerce Department said final determinations for the probe are expected by the end of September.
In 2017, imports of fabricated structural steel from Canada, China, and Mexico were valued at an estimated $658.3 million, $841.7 million, and $406.6 million, respectively. A preliminary determination on the issue is due from the International Trade Commission by March 21.
The Commerce Department alleges there are 44 subsidy programs for Canadian fabricated structural steel, including tax programs, grant programs, loan programs, export insurance programs, and equity programs. There are also 26 subsidy programs for China and 19 subsidy programs for Mexico, according to the agency.
Earlier this month, a Canadian steel industry group said it would strongly oppose a petition urging anti-dumping duty on certain steel imports from Canada.
The Canadian Institute of Steel Construction said the allegations by the U.S. group “that these products from Canada are unfairly traded and cause injury to U.S. producers of fabricated steel products are baseless.”
SWAKOPMUND – Salary delays at public enterprises have become nearly a norm as the country continues to battle adverse economic conditions.
This month alone, employees at the Roads Authority, Air Namibia and Namibia Institute of Mining and Technology (Nimt) have told their employees to expect delays in salaries.
Some of the companies have told their employees that the delay was due to ‘technical glitches’, while others were frank in stating that they simply had no cash to fulfil their salary obligations.
Pay-TV company, Multichoice Namibia, majority owned by the ruling party Swapo’s business arm Kalahari Holdings, also informed its employees this week that their salaries would be delayed. Its managing director Roger Gertze said delayed payment was due to an “unexpected error”, but promised employees refunds for any punitive charges by their banks as a result of the delayed payment.
Some of the companies have told their employees to make arrangements with their banks in terms of punitive charges related to delayed mortgage instalments on houses and on other things they pay through debit orders.
Delayed payments aside, some SOEs face salary cuts, while others are mooting retrenchments.
So far Nimt has retrenched at least six employees and placed them on contractual agreements following the closure of some workshops at the government-owned training institution.
Nimt, which has been in the news for months over non-payment of salaries, is implementing severe measures to keep itself afloat.
In January, Nimt employees were paid in two instalments dues to cashflow challenges.
Nimt’s board chairperson Dr Gaby Schneider yesterday issued a statement to staff members in which she assured that no further employee will be retrenched and that they are working tirelessly to resolve the financial crisis at the institution.
At Air Namibia, acting general manager of human capital Herold Mbuende yesterday sent out an internal memo in which he informed employees that salaries would be delayed.
He said that some employees would only receive their salaries today, despite remuneration day set at 25 of every month.
“We would like to request staff to notify their banks to honour all outstanding debit orders that were due on 26 February and the delayed payments thereof through this memo,” his statement reads.
At Roads Authority, senior human resource manager Kauna Nghisheefa also informed employees yesterday that despite them being paid on time, some of their salaries were affected during the payments, especially those that are employed on the total-cost-to-company framework.
This means those affected only received a portion of their salaries, with the company pleading for patience from the employees whilst they rectify the matter.
Some employees charge that late payments put them in a predicament as they cannot meet their financial obligations on time and are also being charged interest on late payments by financial providers, such as banks.
This, they say, affects their credit score and their chances of borrowing from financial institutions are affected as a result.
Some have expressed fear of losing their jobs.
According to Tim Parkhouse, secretary general of the Namibia Employers Federation, retrenchments, salary cuts and late salaries were a reality across many industries in the country.
“I have sympathy with the employees and the employers who are unable to pay salaries on time as we are all feeling the economic crunch - it’s not only Namibia,” he said.
Parkhouse explained that he always urged companies to look at all options before they resort to drastic measures such as retrenchments and salary cuts.
“We hear it on a daily basis that a contractor or company cannot honour its financial obligations towards its employees.”
2019-02-27 09:25:08 12 hours ago
https://neweralive.na/posts/salary-delays-at-soes-as-economic-crunch-tightens
China’s steel mills may have taken a wrong turn by adding millions of tonnes of new high-end capacity just as the country’s car sector, a key steel consumer, undergoes its first contraction in decades, cutting metal demand.
Hot-rolled coil (HRC), steel that is heat processed into metal sheets used for car bodies and household appliances, was a steady profit driver for mills but orders are now slowing down, two major steel mills and several traders told Reuters.
Sliding demand for hot-rolled coil is a further barometer of China’s lagging industrial sector which is struggling with lower profits amid a trade war with the United States. Weakening steel end-user demand will add to the government’s concerns about job layoffs as Chinese economic growth was at its slowest in 28 years in 2018.
The slowdown, occurring as overall steel profit margins have dropped 60 percent in the past three months, threatens to push China’s entire embattled steel sector further into debt, forcing mills to cut costs and leaving them unable to upgrade products and processes, said analysts and mill executives.
“We may have to lay off 10 percent of our workers this year,” said a manager at a medium-sized steel mill in Hebei, China’s biggest steelmaking province, with 10,000 staff.
HRC accounts for about half of China’s total steel output, up from roughly one-third in the early 2000s, after mills upgraded product lines to comply with Beijing’s goal of expanding the higher value products made by its heavy industry.
Profit margins for HRC shot to more than 1,100 yuan ($164.37) per tonne in 2018 as benchmark futures prices pushed beyond 4,000 yuan a tonne to record highs. That prompted mills to expand their capacity even further, and 20 million tonnes per year of new HRC lines are set to start up this year.
But that expansion now looks out of synch with China’s sputtering economic engine. Annual automobile sales in China for 2018 contracted for the first time in more than 20 years. The sector uses almost 30 percent of the country’s hot-rolled coil and products derived from it.
HRC futures fell about 25 percent after reaching a record in August 2018 to about 3,000 yuan per tonne, pushing margins into the red for the first time since 2015.
“The hot-rolled coil market will see oversupply this year. On the one hand mills are expanding their output, meanwhile demand for HRC is weakening,” said Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, a government think-tank. “Lots of manufacturing plants who actually use HRC have moved outside China.”
With the additional hot-rolled coil capacity, higher raw material costs and flat demand, profit margins for the HRC sector as a percentage of earnings before interest, taxes and depreciation (EBITDA) are set to slump to 6 percent this year, down from an EBITDA margin of 15 percent in 2018, said Kevin Bai, an analyst at CRU in Beijing.
Hot-rolled coil prices are now trading at a rare discount to steel rebar, reflecting market expectations that demand of the metal used to reinforce concrete and in construction will rise because of stimulus spending by Beijing.
The flat demand for higher value capital goods like cars and washing machines has meant HRC spot orders are falling and there are risks for long-term contracts, said a sales manager at a small-sized mill in Hebei.
“We don’t even know if the long-term contracts can be maintained in the second half of this year. There are too many uncertainties,” he said.
Beijing has promised subsidies to boost sales of some vehicles and analysts expect demand to gradually pick up from the second quarter. But even then, government and industry forecasts say that demand growth will be at most 2 percent in 2019.
“It’s particularly demand from the inland small cities that is weak. The competition between mid- and low-end models will become more intense and small-scale automakers may be wiped out,” said Yale Zhang, the head of Shanghai-based consultancy Automotive Foresight.
That is set to hurt the lower capacity steel mills that tend to supply the smaller car makers.
BLEAK OUTLOOK
Longer-term, the outlook remains bleak for HRC products for cars. Under pressure to lower emissions, car companies are expected to increasingly switch to aluminum to make lighter vehicles that consume less fuel.
Aluminum car bodies are already being used by Ford Motor Co, Jaguar Land Rover and a range of new energy vehicle brands like Tesla and Nio.
While the higher cost of aluminum will be a deterrent for many firms, Beijing is targeting a reduction in average vehicle weight of between 5 percent and 20 percent by 2020, recommending instead the greater use of high-strength steel, aluminum-magnesium alloy, and other composite materials.
“It’s hard to see another industry filling the gap left by autos,” said a senior official surnamed Zhang at a major steel trading house in the eastern province of Zhejiang.
To minimize emission of pollutants and improve air quality, Wu'an city in China's top steelmaking province of Hebei urged the enforcement of cutbacks or suspension on sintering machines, shaft furnace across local steel mills, Wu'an government said on its website on Wednesday February 27.
This came after the city escalated the smog-alert from orange to the most-severe red on Wednesday February 20.
SMM also learned that coking duration across coking plants will be extended to 48 hours. It is unclear when the restrictions will be lifted.
China’s coal consumption rose for a second year in a row in 2018, but coal’s share of total energy consumption fell below 60 percent for the first time as cleaner energy sources gained ground, official data showed on Thursday.
The world’s biggest coal consumer used 1 percent more coal in absolute terms last year than in 2017, China’s National Bureau of Statistics said in an annual communique. Coal consumption had risen for the first time in four years in 2017.
However, coal accounted for only 59 percent of China’s overall energy consumption last year, down 1.4 percentage points from 2017, while gas, nuclear power and renewable energy combined accounted for 22.1 percent, up 1.3 percentage points.
That brings the world’s biggest emitter of greenhouse gases closer to its target of reducing the proportion of coal in its energy mix to below 58 percent by 2020.
The result came as China’s total energy consumption rose by 3.3 percent year-on-year in 2018, the data showed. Electricity usage rose 8.5 percent last year, according to the National Energy Administration.
“The good news is that renewable energy continued to grow rapidly in 2018, and new aggressive air pollution policies were introduced,” Lauri Myllyvirta, an analyst at environmental group Greenpeace, said in a note.
However, a rapid rise in energy consumption, including increased residential electricity usage, still resulted in the biggest gain in CO2 emissions since at least 2013, Myllyvirta said.
“The increase in coal consumption since late 2016 has resulted from growth in electricity demand and expansion of the highly-polluting coal-to-chemical industry,” he said.
FEARS OF SLOWDOWN
Beijing’s efforts to stimulate the economy were contributing to increased energy consumption, said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit in Singapore.
“The problem is that the government tries to stimulate the economy because it fears slowdowns,” he said. “But this just leads to higher energy consumption from resource-intensive industries such as construction.”
Coal’s share in China’s energy mix has fallen from 64 percent in 2015, Kiernan noted, but this rate of reduction is currently “too slow compared to the pace required, both domestically and globally, if emissions are to start falling sharply.”
Carbon intensity, measured in carbon dioxide emissions per 10,000 yuan ($1,497) worth of GDP, fell 4 percent last year as China strives to cap its emissions by around 2030.
Liu Youbin, a spokesman for China’s Ministry of Ecology and Environment, said at a press conference on Thursday that China had bettered its carbon intensity reduction target for 2018 by 0.1 percentage points.
“Reducing carbon emissions is not only what the world wants China to do but also an inherent requirement for China’s sustainable development ... China will not ditch our promise (to lower carbon emissions) for any reason,” he added.
Energy storage company Redflow says it will be able to cut the cost of its flow battery production by a third before the end of 2019.
The Australian firm says it is on track to turn out 30MWh a year of its zinc bromine flow batteries, after having ramped up battery production at its new Thailand plant over the last six months of 2018.
The firm, which produced a total of 150 batteries during December last year, now expects to be able to rapidly expand to 250 batteries per month, the equivalent production capacity of 30MWh per annum.
It has already supplied energy storage technologies to a diverse mix of clients including a remote island in Thailand and a childcare centre.
A spokesperson for the company said: “This stable production facility equips Redflow to confidently execute on a number of key engineering projects and incremental productivity improvements that will add yield and reduce the cost of manufacturing its zinc-bromine flow batteries by 30% by the end of 2019.”
A Canadian flow battery provider has joined forces with a UK energy storage consultancy to target opportunities in the UK.
The price of dropped earlier today after China reported disappointing readings for February. China buys 40% of the global market supply, so it makes sense that traders would respond by selling off the red metal. As China’s growth shrinks, so do copper prices. However, since then the metal has rebounded, paring the 0.68% earlier decline to just 0.27%, less than half the initial slide, as of the time of writing.
So who is buying copper, despite the PMI's warning signals about the Chinese economy? Before answering, it's important to note that the known fundamental cause for the rebound is falling supply, which is offsetting the outlook for lower demand. Then, a look at the chart will help demonstrate who the current buyers are.
Copper Daily Chart
The red metal has been trading within a clearly defined ascending channel since the beginning of the year, lagging the equity rally by just a week. A channel is made up of two lines: the bottom, demand line, and the top, supply line. That means whenever the price reached the channel bottom, demand kicked in, overcoming the supply at these levels and pushing up prices toward the top of the channel. There, waiting sellers increased sell orders and batted prices back down toward buyers.
Copper is set to close 5.7% higher for February amid supply concerns and earlier optimism over U.S.-China trade talks, making it the best month since December 2017. Between the Feb. 14 low of 2.753 and the Feb. 25 high of 2.977, the price gained 22.4 cents, or 8.14% in just 11 sessions.
That’s who's buying copper now—the traders who enjoyed the recent incredible rally of Feb. 14-Feb. 25. That 8% jump prompted them to take profits, catch their breath and decide on their next move.
The fact that prices are holding these gains, especially after today’s weak Chinese data, demonstrates sufficient demand to absorb all the supply at these levels. Therefore, an upside breakout would signal that demand is willing to increase risk and seek higher prices.
That’s when the earlier bulls will jump back in for another rally. Note, the pennant developed after prices penetrated the supply-line of the channel. That would be a good place for traders to sell. It would also be a good place for a pause, as other traders build positions, getting ready to push prices higher. We also understand the necessity for a consolidation here, when looking at the bigger picture.
Copper Weekly Chart
Copper's weekly price met with the substantial resistance of the September 2017 - June 2018 lows. However, this is an appropriate time to appreciate the symmetry of the price map. Copper completed a double-bottom, starting in July, as it cut through the 50 and 100 WMA like butter, after the 200 WMA was an obvious support for the bottom. This double-bottom strengthens the case for our bullish argument, despite the panic spread by the headlines.
Back to the daily chart, the 50 DMA (black) is curving upward and set to overcome the 100 DMA (blue).
While we also see an overbought RSI—and curving down to boot—it is inevitable that after the biggest monthly jump in 14 months, the momentum factor within market dynamics would come into play. This explains the need for a consolidation, to allow for momentum, and give space to an overheating market to cool down.
Trading Strategies – Long Position Setup
Conservative traders should wait for a decisive upside breakout, including a 3% filter to avoid a bull trap. Then, they’d wait for a return move to retest the validity of the shift as part of an ongoing uptrend, with at least one long, green candle engulfing a red or small candle of either color.
Moderate traders may be content with a 2% penetration and wait for a pullback for a better entry, if not for proof of support, as explained above.
Aggressive traders should wait for more than the customary 1% upside breakout, to include a close above the 3.000 round psychological number, which would add to the resistance of the lows at the 2018 top.
Russia’s second-biggest steelmaker Evraz reported on Thursday its strongest full-year core earnings in a decade, due to higher prices of steel and vanadium, and a weaker rouble.
Evraz, co-owned by Chelsea soccer club owner Roman Abramovich, reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of $3.8 billion in 2018, up 44 percent year on year.
“The group generated (core earnings at their) highest level since 2008, which made it possible to pay dividends of $1.6 billion,” Chief executive Alexander Frolov said in a statement.
The company declared an interim dividend of $0.40 per share on Thursday.
Its 2018 net profit jumped to $2.5 billion from $759 million in 2017, while revenue rose 18.6 percent to $12.8 billion, the company said, adding its 2019 capital expenditure was expected to be $800 million, up from $527 million in 2018.
In October, Evraz said it was considering four new investment projects that would raise annual capital expenditure to between $830-990 million.
The projects, a final decision on which will be made in the next two years, could include an investment of almost half a billion dollars in a new rail mill in the United States, Evraz has said, as U.S. tariffs on steel imports boost the company’s U.S. rail business while piling on costs elsewhere.
Core earnings in the company’s North America Steel business fell 76 percent. This was due to the effect of tariffs and duties in the region, introduced last year, affecting its sales of pipes from its Canadian plant into the United States.
