By
James Grant
Though money can’t talk, people can’t stop talking about it. With the nomination of Judy Shelton to the Federal Reserve Board, the discussion has tilted to gold.
Gold is money, or a legacy form of money, Ms. Shelton contends, and the gold standard is a reputable, even superior, form of monetary organization. The economists can hardly believe their ears. The central bankers roll their eyes. How can this obviously intelligent woman be so ignorant? Let us see about that.
America was on one metallic standard or another from the Founding until President Richard Nixon announced the suspension of the Treasury’s standing offer to foreign governments to exchange dollars for gold, or vice versa, at the unvarying rate of $35 an ounce. The date was Aug. 15, 1971.
Ever since, the dollar has been undefined in law. Its value against other currencies rises or falls, as the market, sometimes with a nudge from this government or that, determines. The dollar isn’t unusual in this respect. With few exceptions, the values of the world’s currencies oscillate.
In the long sweep of monetary history, this is a new system. Not until relatively recently did any central bank attempt to promote full employment and what is called price stability (but is really a never-ending inflation) by issuing paper money and manipulating interest rates.
The advance of computer technology has made possible a world-wide monetary system based on the scientifically informed discretion of Ph.D. economists. The Fed alone employs 700 of them.
“Gold standard” means not one system but many. You can think of them as a Broadway hit, the roadshow version of the hit, and the high-school drama-club editions. The version Nixon scuttled didn’t have the starch, elegance, universality or populist inclusion of the classical gold standard. It was drama club.
The true-blue standard was sweet and simple. Participating nations defined their money as a fixed weight of gold. Citizens could exchange currency for gold, or gold for paper, as they chose. Gold moved freely across national borders. It went where interest rates and business opportunities beckoned. Gold was base money; over it rose the superstructure of credit.
Fixedness was one defining feature of the classical gold standard. Trust in the workings of supply and demand—in the “price mechanism”—was a second. Belief in individual responsibility for financial outcomes was a third.
A central bank’s single objective was to assure convertibility of the currency it managed at the fixed and statutory price. The exchange rate, not employment, growth or price stability, was the all in all.
The Bank of England was “very desirous not to exercise any power,” as a director of that institution testified before a committee of the House of Commons in 1832. The bank was content to allow the people to regulate the money supply by exercising their right to exchange bank notes for bullion.
A 20th-century scholar, reviewing the record of the gold standard from 1880-1914, was unabashedly admiring of it: “Only a trifling number of countries were forced off the gold standard, once adopted, and devaluations of gold currencies were highly exceptional. Yet all this was achieved in spite of a volume of international reserves that, for many of the countries at least, was amazingly small and in spite of a minimum of international cooperation . . . on monetary matters. This remarkable performance, essentially the product of an unusually favorable combination of historical circumstances, appears all the more striking when contrasted with the turbulence of post-1914 international financial experience and remains, even today, a source of some measure of fascination and indeed of puzzlement to students of monetary affairs.”
Arthur I. Bloomfield wrote those words, and the Federal Reserve Bank of New York published them, in 1959.
The gold standard, “the fly wheel of the Industrial Revolution,” as the historian Lewis E. Lehrman puts it, was as imperfect as any other human institution. Prices were stable over the long term but variable in the short run; sometimes—even for years on end—they fell. Sometimes governments interfered with gold movements. There were panics when the bankers overissued their IOUs. And when people ran on the banks to exchange those claims for gold—when stock prices crashed and business activity stopped cold—a central bank would respond by raising its interest rate to defend the exchange rate. It was the exchange rate, one’s standing in the international monetary community, that mattered.
Gold-standard central banking concerned itself with the present. Millennial central bankers dare to take a view of the future. The moderns forecast, or attempt to forecast, economic growth, inflation, employment.
It’s no fault of theirs that they usually miss, most memorably in 2008, when the biggest event of their professional lives took most of them unawares. The economists are dealing with human beings, not raindrops.
The National Weather Service, which does deal with raindrops, and which marshals enormous computing power and truly big data, has an ordinary forecasting horizon of seven to 10 days. The central bankers inadvisedly cast their predictions into the distant future.
The ideology of the gold standard was laissez-faire; that of the Ph.D. standard (let’s call it) is statism. Gold-standard central bankers bought few, if any, government securities. Today’s central bankers stuff their balance sheets with them.
In the gold-standard era, the stockholders of a commercial bank were responsible for the solvency of the institution in which they held a fractional interest. The Ph.D. standard brought the age of the government bailout and too big to fail.
While gold-standard central bankers set short-term interest rates, they did not seek to control longer-term rates, much less drive them to zero. In today’s monetary regime, some $13 trillion of debt securities world-wide are priced to deliver a yield of less than zero. There’s been nothing like it in 4,000 years of recorded interest-rate history.
And if gold could once be brushed aside as an anachronistic form of money, that time is no more, with private companies competing to bring digital gold to the blockchain.
In 1989, Ms. Shelton published “The Coming Soviet Crash,” a brilliant and courageous analysis of the weakness of an overrated collectivist economy. She could be just the woman to remind the Fed’s doctors of economics how monetary capitalism works.
Mr. Grant is founder and editor of Grant’s Interest Rate Observer and author of “Bagehot: The Life and Times of the Greatest Victorian,” out July 23.
Henry Ellenbogen: Increasingly, the most unpredictable thing about developed markets is elections. At a time of very low unemployment in the U.S., you would expect more political stability. Instead, our politics are increasingly divided. Many businesses are undergoing tremendous change, which has bred uncertainty. An estimated 30% of the companies in the S&P 500 are in industries going through technological change and face obsolescence risk, and even stable businesses have to become more agile, which puts more stress on employees. Economic instability has led to political instability and pressure on central bankers to be more accommodative with monetary policy to drive economic growth and some level of stability.
The global population growth rate peaked long ago. The absolute increase of the population per year has peaked in the late 1980s at over 90 million additional people each year and can be seen here.
https://ourworldindata.org/world-population-growth
With the -5.3% drop in June following the -6.0% drop in May, we repeat our message from last month: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”
May and June’s drops are significant enough to pose the question, “Will the Q2 ’19 GDP be negative?”
We acknowledge that all of these negative percentages are against extremely tough comparisons; and the Cass Shipments Index has gone negative before without being followed by a negative GDP.
The weakness in spot market pricing for many transportation services, especially trucking, is consistent with the negative Cass Shipments Index and, along with airfreight and railroad volume data, strengthens our concerns about the economy and the risk of ongoing trade policy disputes. Weakness in commodity prices and the decline in interest rates have joined the chorus of signals calling for an economic contraction.
We are concerned about the severe declines in international airfreight volumes (especially in Asia) and the ongoing swoon in railroad volumes, especially in auto and building materials.
We see the weakness in spot market pricing for transportation services, especially in trucking, as consistent with and a confirmation of the negative trend in the Cass Shipments Index.
As volumes of chemical shipments have lost momentum, our concerns of the global slowdown spreading to the U.S., and the trade dispute reaching a ‘point of no return’ from an economic perspective, grow.
European Airfreight
European airfreight volumes have been negative since March 2018, but only by a small single-digit margins (-1% to -3%), until November 2018. Unfortunately, since then, volumes have started to further deteriorate. Our European Airfreight Index was down a concerning -7.2% in April, only down -2.6% in May, before dropping -7.9% in June. Although by itself distressing, it’s the Asian data that has become the most alarming.
Asia Pacific Airfreight
Asian airfreight volumes were essentially flat from June to October 2018, but have since deteriorated at an accelerating pace (November -3.5%, December -6.1%, January -5.4%, February -13.3%, March -3.6%, -10.2% in April, -8.5% in May, and -8.6% in June).
Shanghai Airfreight
If the overall volume wasn’t distressing enough, the volumes of the three largest airports (Hong Kong, Shanghai, and Incheon) are experiencing the highest rates of contraction. Even more alarming, the inbound volumes for Shanghai have plummeted. This concerns us since it is the inbound shipment of high value/low density parts and pieces that are assembled into the high-value tech devices that are shipped to the rest of the world.
Free Markets
It is extremely refreshing to see analysis giving free trade a big plug. And in the face of Trumpian foolishnees, it is all the more refreshing.
This is what Cass had to say:
The data underlying economic history is clear: the more unrestricted and robust global trade is, the more prosperous the global population becomes. Open markets of free trade are the greatest method to efficiently allocate resources and ensure that the best quality goods made by the most efficient producers are available to everyone. Unrestricted global trade lifts hundreds of millions, even billions, of the world’s population out of poverty. ‘Protectionism,’ like so many government regulations and programs, frequently produces results that are the exact opposite of the intended outcome.
Shipment Index vs GDP
At first glance, the GDP for the 1st quarter seems very inconsistent with overall freight volumes. Using the Cass Shipments Index as a predictive proxy, we did not expect the BEA to report 3.2% as its initial estimate or 3.1% as its first revision. We won’t be surprised if the final report includes further downward revisions.
In the methodology used to calculate GDP, all increases in inventory are counted as additions to the GDP, all imports are counted as a negative to the GDP and all exports are counted as a positive to the GDP. Backing out the rising inventories, slowing imports and slightly higher exports, reduces the Q1 GDP to less than 1.5%.
Inventories
Inventories Piling Up
I agree with the Cass take on inventories.
Yet, the July 10 GDPNow Assessment of 1.4% includes a -1.01 adjustment for inventories.
Thus, the "Real Final Sales" estimate by the GDPNow model is 2.4%.
Real Final Sales is the true bottom line assessment of the economy.
Why a Negative Adjustment?
But why does GDPNow have a negative inventory build?
I have been struggling with that all quarter.
On July 3, I commented the Manufacturing Sector is Rolling Over But Inventories Keep Piling Up.
Inventory Wildcard
If inventories are somehow negative, real final sales, will be higher than the baseline report.
The reverse is also true. If the baseline GDP number is 1.3% and CIPI (Change in Private Inventories) ass 1.0%, we are talking a bottom line estimate of 0.3%, more in line with what Cass expects.
We will have a better idea tomorrow when a slew of economic reports on inventories, industrial production, and retail sales.
Bottom Line
Cass concludes with this bottom line assessment: "More and more data are indicating that this is the beginning of an economic contraction. If a contraction occurs, then the Cass Shipments Index will have been one of the first early indicators once again."
https://www.zerohedge.com/news/2019-07-16/recession-looms-cass-freight-index-negative-7th-month
Chevron Corp. is seeking approval to modify its plans for a liquefied natural gas export facility on Canada’s Pacific Coast to an all-electric design that it says will result in the lowest greenhouse-gas emissions per ton of LNG of any large project in the world.
Chevron and its partner Woodside Petroleum Ltd. earlier this year had announced they’d applied to expand the capacity of their LNG project in Kitimat, British Columbia, by as much as 80% to 18 million metric tons a year.
That triggered a new federal screening of the project that’s expected to “commence shortly,” according to a July 8 letter filed by Chevron to the provincial environmental assessment office. As part of the fresh round of approvals sought, the project is proposing to become an “all-electric plant” powered by hydroelectricity, allowing expanded capacity without the corresponding increase in emissions of a traditional LNG facility, the letter said.
LNG is created by cooling gas to minus 260 degrees Fahrenheit (minus 127 degrees Celsius) in an energy-intensive process typically powered by burning natural gas. Kitimat LNG instead proposes electric motor drives totaling 700 megawatts to run all liquefaction, utility compressors, pumps and fans with hydropower bought from the provincial utility, according to its revised project description dated July 8. It will have backup diesel power generators onsite for emergencies.
The proposed plant “will achieve the lowest emissions intensity of any large-scale LNG facility in the world,” according to the project description. Kitimat LNG will produce less than 0.1 ton of carbon dioxide equivalent for every ton of LNG compared with a global average of more than 0.3 ton of CO2 equivalent, according to the document.
Chevron and Woodside expect to make a final investment decision in 2022 to 2023 with production starting by 2029, according to the project description. The revised proposal may trigger the need for a federal environmental assessment, according to the document.
The account offers customers a way to convert funds into physical gold amounts which can then be spent using a debit card
One Tally is equal to one milligram of gold
Tally Ltd has officially launched its physical gold-backed bank account and app of the same name following a soft launch on the Google Play and Apple App stores in June.
The account offers customers a way to transfer funds that are then converted automatically into Tally gold, physical gold amounts that are owned by the account holder and kept in a secure vault in Switzerland. Customers can then spend this gold using a debit card.
One Tally is equal to one milligram of gold that can be spent like normal currency, however, its value will not decrease as a result of inflation and political uncertainty.
Tally accounts are also insured to the full value, not limited to £85K like most bank accounts, and have no interactional transaction or foreign exchange fees.
The costs for a Tally account are a single monthly charge of 0.1% of the average monthly holding, which then decreases to 0.05% for holdings of over half a million Tally, equivalent to around £18,000.
“Confidence has been eroded in government issued currency. We wanted to offer consumers a stronger form of money, protected from the risk of bank collapse, 100% insured and designed to hold its value”, said Cameron Parry, Tally’s co-founder and chief executive.
“The solution was a platform using a physical asset kept outside of the banking system while seamlessly operating with it. This is what Tally delivers.”
Hartford Courant-10 Jul 2019
Initial agreement on redeveloping Hartford trash plant reached after ... in a 15 percent increase in tipping fees for member municipalities that took effect July 1. ... tax-exempt bonds to finance redevelopment of the trash-burning ...
7NEWS-25 Jun 2019
South Australian Premier Steven Marshall has deflected the blame as local councilsjack up their rates to cope with the new 'bin tax'.
Leeds Live-8 Jul 2019
Councillor blames 'DIY tax' for rise in fly-tipping in Leeds ... to dump old tyres and other waste is leading to increased fly-tipping in the city. ... At a full council meeting in September 2018, Pudsey councillor Mark Harrison (Con) ...
The Advertiser-11 Jul 2019
Metropolitan Adelaide councils have fixed their rates — with some going up and some going down — in the wake of the surprise rubbish tax increase. ... “The sudden spike in the Solid Waste Levy is not about delivering better ...
Closure of refuse plants for maintenance has caused havoc amid record heatwave
zoom Image courtesy of Cheniere
Liquefied natural gas (LNG) exports from the United States have increased week over week.
Twelve LNG vessels with a combined LNG-carrying capacity of 44 billion cubic feet departed the United States between July 4 and July 10.
Out of the twelve vessels, seven were shipped from Sabine Pass, two from Cove Point, two from Corpus Christi, and one from Cameron LNG facility, data from the Energy Information Administration shows.
One vessel was loading at the Sabine Pass terminal on Wednesday.
Natural gas feedstock deliveries to U.S. liquefaction facilities set a new record last week, reaching 6.3 billion cubic feet per day on July 4 and July 7, 2019. They averaged 6.1 Bcf/d for the report week—the highest weekly average to date—EIA notes, citing PointLogic Energy data.
Flows to the newly commissioned Cameron Train 1 and Corpus Christi Train 2 increased, indicating that both trains have ramped up feedstock deliveries to full capacity.
Last week, the first cargo was loaded with LNG produced at the newly-commissioned Train 2 at the Corpus Christi LNG facility.
The Corpus Christi terminal in Texas consists of three trains, each with a baseload nameplate capacity of 0.6 Bcf/d. Two trains are now fully operational. The third train is under construction and is expected to come online in May 2021.
The El Niño weather pattern is likely to transition into ENSO-neutral conditions in the next month or two, a U.S. government weather forecaster said on Thursday.
ENSO-neutral refers to those periods in which neither El Niño nor La Niña is present, according to the National Weather Service’s Climate Prediction Center (CPC).
The ENSO-neutral conditions are most likely to continue through the northern hemisphere fall and winter, the CPC said in its monthly forecast.
China’s economic growth slowed to 6.2% in the second quarter, its weakest pace in at least 27 years, as demand at home and abroad faltered in the face of mounting U.S. trade pressure.
While more upbeat June factory output and retail sales offered signs of improvement, some analysts cautioned the gains may not be sustainable, and expect Beijing will continue to roll out more support measures in coming months.
China’s trading partners and financial markets are closely watching the health of the world’s second-largest economy as the Sino-U.S. trade war gets longer and costlier, fuelling worries of a global recession.
Monday’s growth data marked a loss of momentum for the economy from the first quarter’s 6.4%, amid expectations that Beijing needs to do more to boost consumption and investment and restore business confidence.
The April-June pace was in line with analysts’ expectations for the slowest since the first quarter of 1992, the earliest quarterly data on record.
“China’s growth could slow to 6% to 6.1% in the second half,” said Nie Wen, an economist at Hwabao Trust. That would test the lower end of Beijing’s 2019 target range of 6-6.5%.
Cutting banks’ reserve requirement ratios (RRR) “is still very likely as the authorities want to support the real economy in a long run,” he said, predicting the economy would continue to slow before stabilizing around mid-2020.
China has already slashed RRR six times since early 2018 to free up more funds for lending and analysts polled by Reuters forecast two more cuts this quarter and next.
Beijing has leaned largely on fiscal stimulus to underpin growth this year, announcing massive tax cuts worth nearly 2 trillion yuan ($291 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments aimed at boosting infrastructure construction.
The economy has been slow to respond, however, and business sentiment remains cautious.
Trade pressures have intensified since Washington sharply hiked tariffs on Chinese goods in May. While the two sides have since agreed to resume trade talks and hold off on further punitive action, they remain at odds over significant issues needed for an agreement.
Data on Friday showed China’s exports fell in June and its imports shrank more than expected, while an official survey showed factories were shedding jobs at the fastest pace since the global crisis..
Premier Li Keqiang said this month that China will make timely use of cuts in banks’ reserve ratios and other financing tools to support smaller firms, while repeating a vow not to use “flood-like” stimulus.
IS BETTER DATA SUSTAINABLE?
A steady string of weak economic data in recent months and the sudden escalation in the U.S.-China trade war had sparked questions over whether more forceful easing may be needed to get the Chinese economy back on steadier footing, including some form of interest rate cuts.
But June activity data on Monday showed industrial production, retail sales and fixed-asset investment all beat analysts’ forecasts, suggesting that Beijing’s earlier growth-boosting efforts may be starting to have an effect.
Analysts also say room for more aggressive monetary policy easing is being limited by fears of adding to high debt levels and structural risks.
“Cutting the benchmark deposit and lending rates — the likelihood is very low. It’s more possible (that) they twist the market-oriented rates — cutting the interest rates of all those liquidity facilities also sends an important signal to the market,” said Aidan Yao, senior Asia emerging markets economist at AXA Investment Managers in Hong Kong.
“Fiscal policy is likely to be in the driving seat and monetary policy will act in a supportive role in the coming months.”
Industrial output climbed 6.3% from a year earlier, data from the National Bureau of Statistics showed, picking up from May’s 17-year low and handily beating a forecast for 5.2% growth.
Daily output for crude steel and aluminum both rose to record levels.
Retail sales jumped 9.8% - the fastest clip since March 2018 - and confounding expectations for a slight pullback to 8.3%. Gains were led by a 17.2% surge in car sales.
Some analysts, however, questioned the apparent recovery in both output and sales.
Capital Economics said its in-house model suggested slower industrial growth, while the jump in car sales may have been partly due to a one-off factor.
Car dealers in China are offering big discounts to customers to reduce high inventories that have built up due to changing emission standards. Motor vehicle production actually fell 15.2%, the 11th monthly decline in a row, suggesting automakers don’t expect a sustained bounce in demand any time soon.
“The monthly data were better than expected... (But) we are skeptical of this apparent recovery given broader evidence of weakness in factory activity,” said Julian Evans-Pritchard, Senior China Economist at
“Looking ahead, we doubt that the data for June will mark the start of a turnaround.”
INVESTMENT ALSO SLOWLY PICKING UP
Fixed-asset investment for the first half of the year rose 5.8% from a year earlier, compared with a 5.5% forecast and 5.6% in the first five months of the year.
Real estate investment, a major growth driver for the world’s second-largest economy, quickened in June. It rose 10.1% from a year earlier, accelerating from a 9.5% gain in May but still slower than in April, Reuters calculated.
Still, the economy remains in a complex situation, with external uncertainties on the rise, the statistics bureau said, adding China will work to ensure steady growth.
China's power output rose for the second month in June with a 4.4% increase from the month prior, statistics data show.
Chairperson of the African Union (AU) Commission Moussa Faki Mahamat (C) announces the operational phase of the African Continental Free Trade Area (AfCFTA) Agreement during the launching ceremony in Niamey, capital of Niger, July 7, 2019. (Str/Xinhua)
ACCRA, July 15 (Xinhua) -- It would be prudent for Chinese manufacturing firms that export to Africa to relocate to the continent under the African Continental Free Trade Area (AfCFTA) agreement, Ekwow Spio-Garbrah, Ghana's former trade minister has said.
He told Xinhua that this was necessary for China to retain its trading ties with the continent with the expected boom in intra-African trade.
"The incoming arrangement is going to make tariffs lower and eventually non-existent to make it more affordable for African countries to import from one another's countries, than from outside the continent," the former minister said.
For that reason, he said Chinese manufacturers such as rubber processing, textile manufacturers, oil palm mills, and furniture companies that sourced their raw materials from Africa would be far better off locating themselves in Africa.
"This will make them derive benefits from the boom in intra-African trade under AfCFTA," he said.
Spio-Garbrah said there was a need for the manufacturing firms that would relocate to Africa to include metals such as steel, aluminum, and copper, as well as products that used a lot of pulp and paper, plastics and agro-based raw materials, which were abundant on the continent.
"The Chinese government can give special incentives and low-interest loans to Chinese companies which relocate to Africa, to be closer to raw materials; then process the raw materials and export to African countries as well as back to China," the former minister said.
“Citizens are just outraged and this makes it easier for people to decide to go seek opportunity outside the state,” Halbrook told the Chambana Sun. “These tax policies and all the other policies are driving people out of their homes. They just can’t afford to live here anymore and none of this stuff that was passed this spring puts us on better financial footing.”
Illinois state Rep. Brad Halbrook (R-Shelbyville) wonders how long Illinois can survive with policies like the new $85 billion state budget just signed into law by Gov. J.B. Pritzker setting the tone for the way the state operates.
With Illinois Policy Institute (IPI) reporting that the so-called Rebuild Illinois part of Pritzker’s spending plan is filled with pork-barrel projects with questionable, perhaps politically driven motives, Halbrook laments that things may get worse before they have a chance to get better. Of the $45 billion set aside for the capital spending part of Pritzker’s state budget, IPI reports that upwards of $50 million has been set aside for such projects as noise abatement at the Chicago Belt Railway Yard in House Speaker Mike Madigan’s (D-Chicago) home district, capital improvements grants to parks and recreational units and funding for the Illinois Arts Council chaired by Madigan’s wife, Shirley.
Halbrook said the abuse hardly ends there.
“It’s interesting that as a result of this capital bill, the representative from Kankakee [Sue Scherer-D] can give $3 million to her park district's water park when there is rebar showing up on the roads around the area,” he said. “We gave $3 million to a water park when highways need repair.”
Halbrook said it also baffles him how lawmakers in Springfield could be asking taxpayers for more from their pockets to cover all the added costs when so many of them are already expressing their displeasure by putting the state in their rearview mirrors.
“When the citizens of Illinois are leaving in droves, we continue to ask them for more with things like this gas-tax increase,” he said. "Unless we correct something soon, we’re going to continue to have a smaller population in the state of Illinois and I think it’s going to mean less wage earners and less employers and more taxes and fees.”
Rio Tinto on Tuesday flagged a cost blowout of up to $1.9 billion and a delay of up to 30 months at its Oyu Tolgoi underground copper mine in Mongolia, the miner’s key growth project.
Rio said the delay stemmed from the project’s challenging geology. It expected to determine the preferred mine design, along with a final estimate of cost in the second half of 2020, and was also reviewing the value of its investment.
The cost blowout was bigger than analysts had expected after the company had earlier flagged issues with the original mine design.
Rio said first production could be achieved between May 2022 and June 2023, a delay of 16 to 30 months, while the capital cost of the project was estimated at $6.5 billion to $7.2 billion, up from an original estimate of $5.3 billion.
“It is a world class orebody in terms of the size, the grade etc. What we are trying to work out now, is can it be developed and mined economically to convert what is a world class orebody into world class mine,” said Glyn Lawcock, analyst at UBS.
“Overall, it was below our expectations for the quarter.”
The news of the blowout came as Rio reported a 3.5% drop in second-quarter iron ore shipments, as disruptions caused by tropical cyclone Veronica in late March squeezed output in the April-June period.
The company shipped 85.4 million tonnes of the steelmaking ingredient in the quarter ended June 30, down from 88.5 million tonnes a year earlier. Brokerage UBS had estimated quarterly shipments of 85.2 million tonnes.
Veronica ravaged the coast of Western Australia earlier this year, damaging several iron ore export hubs and prompting Australia’s biggest listed miners to cut their 2019 forecast for iron ore output.
Rio on Tuesday maintained its annual iron ore exports forecast in the 320 million to 330 million tonnes range.
In Mongolia, the miner said it had made significant progress at Oyu Tolgoi during 2019.
“The ground conditions are more challenging than expected and we are having to review our mine plan and consider a number of options,” said Stephen McIntosh, Group executive, Growth & Innovation.
“Delays are not unusual for such a large and complex project,” he added.
Rio said it was reviewing the carrying value of its investment in Oyu Tolgoi and would announce if any changes were needed at its half-year results on Aug. 1.
India’s imports declined to their lowest level in four months in June to $40.29 billion, down 9% from a year ago, indicating weakening consumption in Asia’s third largest economy, economists said.
The Indian economy grew at 5.8% in the January-March period, a five-year low, hurt by weak consumption and tepid private investment. The latest data added to fears that the economy may have slowed further in April-June.
In the last two quarters, the Indian economy has seen a sharp fall in sales of automobiles, petroleum products and consumer goods.
India’s oil imports during June fell 13.33% to $11.03 billion, partly due to low oil prices, while gold imports surged 13% to $2.70 billion.
Imports excluding gold and oil also fell 9% to $26.57 billion in June 2019, the data showed.
“This (falling imports) is not a positive sign ... this is a serious kind of slowdown,” said Rupa Rege Nitsure, chief economist at L&T Financial Holdings.
India’s merchandise exports also fell in June, for the first time in nine months, by a year-on-year 9.71% to $25.01 billion, narrowing the trade deficit for the month by 8% to $15.28 billion.
Economists linked the weakness in exports to a trade war between the United States and China and the protectionist measures taken by countries.
“(The) de-growth in exports is a reflection of sluggish global demand and rising tariff war ... US-China trade war and developments in Iran further aggravated the problem of the world economy,” Sharad Kumar Saraf, president of the Federation of Indian Export Organisations, said in a statement.
Partial shutdowns at Reliance Industries, operator of the world’s biggest refining complex in western Gujarat state, and at Managalore Refinery and Petrochemicals Ltd dragged down India’s exports for refined products, trade secretary Anup Wadhawan said.
Exports of commodities, excluding oil and precious metals, also fell 4.86% to $19.15 billion in June from a year ago.
biofuels
Biofuels and Carbon Offsets Power Delta’s First Carbon-Neutral Flights
Delta partnered with Air BP to supply biofuels for an initial 20 delivery flights from the Airbus final assembly line in Mobile, Alabama, which are manufactured and refined via sustainable sources and processes. The first flight flew from Mobile to Kansas City where final induction work will be performed before the aircraft moves into service for Delta’s customers across its domestic route network.
“This delivery flight was a milestone on Delta’s sustainability journey as we work to cut carbon emissions in half by 2050,” said Alison Lathrop, Delta’s Managing Director – Global Environment, Sustainability and Compliance. “We are excited to partner with Air BP and Airbus to power these delivery flights with biofuels and carbon offsets, and will explore opportunities to bring this level of sustainability to all delivery flights going forward.”
Since 2005, the airline has reduced its jet fuel consumption, leading to an 11 percent decrease in emissions as it works toward its long-term goal of achieving carbon-neutral growth and reducing carbon emissions by 50 percent by 2050.
“Airbus is committed to being part of the solution for meeting aviation’s global CO 2 emissions reduction targets,” said Simone Rauer, Head of Aircraft Operations for Environmental Affairs at Airbus. “Contributing to a lasting decrease of our industry’s carbon footprint is key to ensuring a sustainable future for aviation.”
Delta is also recycling aluminum cans, plastic bottles and cups, and newspapers and magazines from aircraft, accounting for the recycling of more than 3 million pounds of aluminum from onboard waste. The airline is also removing a variety of single-use plastic items, including stir sticks, wrappers, utensils and straws from its aircraft and Sky Clubs, and has removed all plastic wrapping from international Main Cabin cutlery and its new amenity kits for all cabins. These efforts will divert over 300,000 pounds of plastic from landfills each year.
This sustainability work and more has resulted in Delta being awarded the Vision for America Award by Keep America Beautiful in 2017 and the Captain Planet Foundation’s Superhero Corporate Award in 2018, as well as being named to the FTSE4Good Index four consecutive years and the Dow Jones Sustainability North America Index for eight consecutive years.
Source: Xinhua| 2019-07-16 22:22:06|Editor: huaxia
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HEFEI, July 16 (Xinhua) -- A train goes between rocky cliffs, up into the clouds and emerges on the other side with a view of mountain peaks shrouded by white clouds. Such video clips about Mount Huangshan as above have captivated millions on Chinese social media.
Mount Huangshan in east China's Anhui Province, with its imposing scenery and vast number of works of art and literature inspired by it, has won an entry on the UNESCO World Heritage List for cultural value and natural scenery. It, however, has another lesser known role -- the place where China's modern mass tourism took off 40 years ago.
Aerial photo taken on July 11, 2019 shows a view of Mount Huangshan at sunrise, in east China's Anhui Province. (Xinhua/Tang Yang)
In July 1979, the then Chinese leader Deng Xiaoping paid a visit to the mountain at the age of 75, where he called for all-out efforts to accelerate the nation's tourism development in a number of speeches during the visit.
Today, tourism has become one of China's important economic drivers. About 5.5 billion trips were made in China in 2018, contributing nearly 10 trillion yuan (1.45 trillion U.S. dollars) to the country's GDP, or 11 percent, according to statistics given by the Ministry of Culture and Tourism.
More than 3.3 million people visited Mount Huangshan in 2018. Forty years ago, the number was around 100,000. Over the years, the government has been improving services, infrastructure, as well as protection of the site.
ECONOMIC BOOST
In the late 1970s, China was at the beginning of its reform and opening-up. Tourism was still a new sector in the country. Many locals didn't see the tourism value of this mountain. Some even took it as a kind of obstacle since it hindered agricultural activity.
Pan Meili, manager of a local four-star hotel, was born in 1969 in a small village at the foot of Mount Huangshan, where all people used to make a living on farming.
Aerial photo taken on July 11, 2019 shows a view of Mount Huangshan and villages at its foot, in east China's Anhui Province. (Xinhua/Tang Yang)
After 1979, the villagers started to realize the economic benefits of tourism as more tourists came. Pan's parents also saw the potential of tourism and opened a family hotel.
"There were only three rooms in the family hotel which could accommodate at most 10 guests," said Pan.
Tourism gradually replaced farming in the village to be the main source of income. In the 1980s, almost everyone in the village was doing something related to tourism, such as running hotels, restaurants, souvenir shops, or working as tour guides.
"We are contributors as well as beneficiaries of tourism associated with Mount Huangshan," Pan said.
IMPROVED SERVICES
Services have been improved in the mountain for facilitating visits to the site.
"It took me 10 hours to climb to the top the first time I came to Huangshan. But we rode the cable car this time. It's much easier," said Weimar Arcila, a businessman from Colombia who is on his sixth trip to Mount Huangshan over the past decades.
Cable car service at Mount Huangshan began in 1986, which could transport people to the top in just eight minutes.
Workers perform a maintenance check of a cableway at Mount Huangshan, in east China's Anhui Province, Sept. 22, 2018. (Xinhua/Tang Yang)
Today cable car service has expanded to four cableways, including a sightseeing rail track service, to connect different parts of the mountain. The sightseeing train rose to fame after a video went viral on TikTok, a short video-sharing app, showing breathtaking views of rocks and pines in the midst of clouds when the train goes from the peak to the valley.
As more people flock to Mount Huangshan, the administration has also added options for tourists to scan a QR code and buy tickets on their cellphones.
After spending a day on the mountain, Arcila and his family decided to stay at Yupinglou Hotel for the night, at about 1,700 meters above sea level. As an old patron of the hotel, he was amazed by its recent changes.
"The hotel has been renovated. We established an art gallery displaying the history and culture of Mount Huangshan," said Pan, the hotel manager. The hotel also offers cultural activities such as tea ceremony, yoga and Taichi lessons every night at the lobby.
GREEN DEVELOPMENT
With more and more tourists, the administration for Mount Huangshan has rolled out a series of policies to strike a balance between tourism promotion and conservation, such as introducing a cap on the daily tourist number at 50,000.
Aerial photo taken on July 11, 2019 shows the Bright Summit of Mount Huangshan, in east China's Anhui Province. (Xinhua/Tang Yang)
"More tourists mean more money, but we can't be greedy. We're pursuing sustainable development," said Ge Xufang with Mount Huangshan scenic area management committee.
The administration for the mountain pioneered the practice to alternately open different tourist sites to the public in 1987. The practice was later adopted by administrative authorities of other mountain scenic spots in the country.
Lotus Peak, the highest of Mount Huangshan, was reopened to tourists this March after closing for five years, while another site Tiandu Peak was subsequently closed to tourists for maintenance.
The Mount Huangshan scenic area is also home to plenty of old and rare trees, out of which 137 are under special protection. Different measures have been adopted for protection of different trees, according to Ge.
Not far from Yupinglou Hotel stands the Greeting Pine, one of China's most well-known trees. The pine tree, growing out of the rocks with a long branch extending over the mouth of a cave, got the name mainly because it appears to be greeting anyone who arrives on the scene. It is believed to be between 800 and 1,000 years old.
To protect the pine, the local government has introduced a system of designating guardians or rangers. The first guardian was appointed in 1981. The tradition has been going on ever since.
Hu Xiaochun, the 19th guardian of the Greeting Pine, examines the tree on Mount Huangshan in east China's Anhui Province, Nov. 2, 2018. (Handout via Xinhua)
"Normally I check the tree and record details of its condition every two hours. I will nonetheless check it every 30 minutes in extreme weather when strong winds blow and heavy snow hits the mountain," said Hu Xiaochun, the pine tree's 19th guardian.
"The work can be boring if you simply view the pine as a tree, but it's a different story if you see it as a senior member of your family," said Hu. "I treat it the same way I would my own family." Enditem
(Video Reporter: Liu Fangqiang, Qu Yan, Shui Jinchen, Tang Yang; Video Editor: Zheng Xin)
BHP Group Ltd (BHP.AX), the world’s biggest miner, on Tuesday reported a rebound in iron ore output in the fourth quarter after a cyclone hit production in March, and forecast modest output growth in 2019/20 amid a surge in prices.
BHP met its revised target for iron ore production, but flagged $1 billion in productivity losses for fiscal 2019 in its quarterly production report, flowing from disruptions to operations across its commodities.
The Anglo-Australian miner’s iron ore output fell to 71 million tonnes during the fourth-quarter ended June 30, compared with 72 million tonnes a year earlier. The figure was below a UBS estimate of 72.6 million tonnes, but up 12 percent on the March quarter.
Production across its suite of commodities broadly recovered from March, which is typically the weakest quarter due to Australian weather conditions.
“Generally speaking, it’s just a little bit softer than we expected, although it’s strong sequentially,” said analyst Glyn Lawcock at UBS in Sydney.
“If you look at their guidance it’s highlighting that they aren’t really growing their volumes, so that means price is key going into next year.”
Miners have benefited from iron ore prices at five-year highs, after a dam disaster in Brazil led to a global shortage of the steel-making ingredient. Analysts expect some of the windfall profits to be passed on to shareholders when Australian miners report their profits next month.
BHP forecast iron ore production at 273 million to 286 million tonnes for the 2020 fiscal year, a 1%-6% increase from 2019 production of 270 million tonnes, which was slightly down from 275 million tonnes for 2018.
The iron ore shortage was exacerbated after Cyclone Veronica tore down the coast of Western Australia in March, hitting several iron ore export hubs, in a return of more turbulent weather after several moderate years.
BHP was on track with its growth projects, Lawcock noted, after Rio Tinto flagged a cost blow out at its key growth copper project in Mongolia when it reported on Tuesday.
The $1 billion in productivity losses followed flooding in Australia’s Queensland state that hit BHP’s metallurgical coal operations, as well as changes to its Nickel West mine plan and higher costs in thermal coal, it said.
That added to disruptions mostly at its Australian operations in the first half that included an acid plant outage Olympic Dam, a fire at its Kalgoorlie nickel smelter, and a train derailment.
The figure did not include disruptions from Cyclone Veronica BHP said.
In other metals BHP forecast around a 9-4 percent decline in petroleum production and growth of 1-8 percent in copper over the next financial year. It forecast a decline in energy coal output.
The German ZEW headline numbers for July showed that the economic sentiment index came in at -24.5 versus -22.3 expectations and -21.1 last. While the sub-index current conditions figure unexpectedly dropped to -1.1 in July versus 5.0 expected and 7.8 booked previously.
ZEW President Professor Achim Wambach noted: “In particular the continued negative trend in incoming orders in the German industry is likely to have reinforced the financial market experts’ pessimistic sentiment. A lasting containment of the factors that are causing uncertainty in the export-oriented sectors of the German economy is currently not in sight. The Iran conflict seems to be intensifying and the ongoing trade dispute between the USA and China is a burden not only to Chinese economic development. Furthermore, no discernible progress has been made in the negotiations as to what Brexit will look like.”
Meanwhile, the Eurozone ZEW economic sentiment for July arrived at -20.3 vs. -20.9 expected and -20.2 last.
Shares of Rio Tinto PLC (NYSE:RIO) closed 1.76% lower at $60.43 on Tuesday after the company released production results for the second quarter.
Due to Cyclone Veronica’s impact on operations in Western Australia in March, bad weather conditions in Quebec in the first quarter and lower copper ore grades processed in Utah and Chile, Rio Tinto generated less iron ore shipments and copper production volumes.
The production of mined copper decreased 13% to 137,000 tons and shipments of iron ore produced from the asset located in the Pilbara region of Western Australia also fell 3% year over year to 85.4 million tons. Copper equivalent production for the first part of the year saw a 2% decline.
The company was also forced to lower 2019 guidance for Pilbara iron ore shipments and for the Canadian production of iron ore pellets and concentrate.
Rio Tinto guided for Pilbara iron ore shipments of 320 million to 330 million tons at a higher unit cost of $14 to $15 per tonne versus, down from the previous forecast of 333 million to 343 million tonnes at a unit cost of $13 to $14 per tonne. The miner forecasted Canadian iron ore production of 10.7 million to 11.3 million tonnes compared to the previous range of 11.3 million to 12.3 million tonnes.
In contrast, as a result of several operating improvements, titanium dioxide slag production grew 31% to 303,000 tons and bauxite production increased 1% to 13.4 million tonnes. Production of aluminium, at 0.8 million tonnes, was flat compared to the prior-year quarter.
Additionally, Rio Tinto said it will allocate approximately $509 million to the development of mineral projects located in South Africa and Arizona.
The stock had a market capitalization of about $102.77 billion at close on Tuesday, a price-book ratio of 2.38 versus the industry median of 1.46 and an enterprise value-Ebitda ratio of 5.90 compared to the industry median of 8.36.
Following a 10% rise for the 52 weeks through July 16, the share price is now slightly off the 100- and 50-day simple moving average lines and far above the 200-day line.
The 52-week range is $44.62 to $64.02.
Wall Street issued a hold recommendation rating for shares of Rio Tinto with an average target price of $80.01, reflecting 31.6% upside from Tuesday’s closing price.
Disclosure: I have no positions in any securities mentioned.
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CSX Corp (CSX.O) on Tuesday posted quarterly profit that missed Wall Street’s target and cut its full-year revenue forecast after weakness in its trade-related intermodal business weighed on results.
CSX now expects 2019 revenue to fall 1%-2%. The Jacksonville, Florida-based company previously anticipated growth of 1%-2%.
Results from the third-largest U.S. railroad landed amid worries that a “freight recession” is under way in the U.S. transportation industry, which is broadly viewed as an economic bellwether.
U.S. truck and rail freight volumes were down in the first half of 2019 and appear to be deteriorating further as President Donald Trump’s ongoing trade war with China takes a toll on Main Street shopkeepers, Midwestern farmers and other domestic businesses.
“Analysis of U.S. rail traffic trends shows that most commodity groups have seen declines worsening in recent weeks,” CFRA Research analyst Jim Corridore said in a client note.
CSX Chief Executive James Foote told Reuters the economy is flashing “confusing” signs as U.S. companies grapple with uncertainty created by U.S. trade policies and other issues.
“There’s been a lot of angst and noise in the marketplace,” Foote said.
An 11% drop in intermodal - the segment that includes freight that moves from cargo ships or trucks to railroads - dragged CSX’s total revenue down 1% to $3.06 billion during the second quarter. CSX executives attributed a portion of the intermodal declines to the revamping of intermodal routes to boost profits.
U.S. importers, including retailers and automakers, late last year stockpiled goods made in China to avoid the Trump administration’s new tariffs.
Cargo container volumes at U.S. seaports are easing off 2018’s record levels as importers work through those inventories.
CSX serves most of the eastern third of the United States, including seaports in New York/New Jersey, Virginia and South Carolina.
Revenue from coal and metals shipments also were down during the quarter. Separately, a massive fire closed Philadelphia Energy Solutions Inc’s large East Coast oil refinery, affecting 1% of volume at CSX.
Net income slipped 0.8 percent to $870 million, or $1.08 per share, for the second quarter. Analysts had expected a profit of $1.11 per share, according to Refinitiv IBES data.
CSX’s pricing held up during the second quarter, but investors are bracing for a potential downturn as competing long-distance truck rates fall.
AAR reported that the overall rail traffic volumes for 
rail carriers fell 5.6% YoY in week 28.
The index contracted 24 out of the last 25 weeks.
Link: https://bit.ly/2LqUIO2
Swedish engineering group Sandvik reported quarterly operating earnings below market expectations on Wednesday and said it would cut around 2 000 jobs to buttress profitability in the face of early signs of slowing market demand.
Sandvik said it had seen weaker demand in its parts of its business, primarily from customers in the automotive and general engineering sectors, towards the end of the second quarter.
"We will take further action in all business areas to deliver strong margins long-term," Sandvik CEO Bjorn Rosengren said in a statement. "These activities will be promptly implemented and include a personnel reduction of approximately 2 000."
Operating earnings at the maker of metal-cutting tools and mining gear maker edged up to 5.08-billion Swedish crowns ($542-million) from 5.04 billion in the year-ago quarter, but came in below the 5.18-billion mean forecast in a poll of analysts based on Refinitiv data.
Sandvik said the results had also been boosted to the tune of 110-million crowns due to an adjustment of the purchase price of a previously announced sale of one of its smaller businesses.
The company's order bookings fell 5% on a like-for-like basis, compared with the 6% growth reported for the first quarter of the year.
China will take targeted measures to implement production halts on high energy-consuming industrial companies in a bid to encourage more environmentally friendly production, the Economic Information Daily reported Thursday.
Authorities are mulling a rating scheme for firms in 15 key industries including steel, coal and cement, and those with the highest pollutant emissions will be subject to the strictest production limits, the Xinhua-run newspaper said.
Those with an A-rating, the highest, will be required to suspend production only in extreme weather, while the C-rated companies will be subject to additional bans during the winter heating season, when pollution is the most severe.
Such measures will incentivize some high energy-consuming companies to upgrade their pollution-control facilities, analysts said.
China has launched a series of campaigns to fight pollution and environmental degradation, with thousands of officials punished for environmental damage following inspections by central authorities.
While implementing strict policies, authorities have reiterated that no "one-size-fits-all" approach should be adopted to address environmental issues, and blanket shutdowns of industrial activities are not acceptable.
According to Liu Bingjiang, an official with the Ministry of Ecology and Environment, the rating scheme would address the "bad money drives out good" problem, as some high-emission steel firms currently invest far less in environmental protection than their low-emission counterparts.
"There is no way to implement the same control policies with these companies," Liu said.
China will continue to implement strict production control policies during this coming winter as the country is expected to meet many environmental targets next year, said Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute.
As the basis for their challenge, Environmental Petitioners contended that payment by generators of hazardous secondary materials to a reclaimer to accept such materials meant that in all cases the hazardous secondary materials were “discarded." Under RCRA and the long line of RCRA regulatory definition of solid waste cases, materials can only be “solid” and “hazardous wastes” and subject to full RCRA Subtitle C regulation, if they are “discarded.” Environmental Petitioners argued that any ambiguity about the meaning of “discard” does not extend to materials generators pay to get rid of which “fall so easily into the ordinary meaning of discarded.” The D.C. Circuit rejected Environmental Petitioners’ claims under a traditional Chevron step one and step two analysis and an Administrative Procedure Act (APA) arbitrary and capricious analysis.
On January 23, when US-backed opposition leader Juan Guaido declared himself interim president of Venezuela, he thought deposing President Nicolas Maduro from power would be easy.
He had a simple, three-thronged plan: declare Maduro's presidency illegitimate by exposing the irregularities in the election that brought him to power, establish a transition government, and hold new elections that would bring the opposition to power.
However, almost six months on, Guaido is not any closer to loosening Maduro's grasp on power. The main reason behind the 35-year-old opposition leader's failure to bring Maduro down is the support that some prominent international powers, most significantly China, have given to the Venezuelan government.
China, a global power with significant financial and military ties to Venezuela, refused to recognise Guaido's presidency on the grounds that doing so would amount to intervening in the internal affairs of a sovereign state.
Guaido's foreign backers, the US chief among them, interpreted China's stance on the issue as support for Maduro and his government and even implied that China is responsible for the ongoing crisis in Venezuela. On April 13, for example, during a visit to Chile, US Secretary of State Mike Pompeo said that he believes "China's bankrolling of the Maduro regime helped precipitate and prolong the crisis in that country." More recently, US Southern Command Chief Admiral Craig Faller claimed that Chinese support to Venezuela in the form of surveillance technology has been “used to monitor and repress the Venezuelan people".
Meanwhile, acknowledging the important role China has been playing in the ongoing crisis, Guaido started a campaign to convince Beijing to end its support for the Chavista government.
Only a day after Pompeo's criticism of China, the self-declared interim president published an op-ed in Bloomberg titled, Why China Should Switch Sides in Venezuela. In the article, Guaido argued that the opposition government would protect China's interests and investments better than the Chavistas and pledged to give China new financial incentives in Venezuela if it agrees to seize its support to the current government.
Guaido's article and Pompeo's statements only confirm a fact many Venezuela watchers have been aware of for a very long time: China's political stance is the key factor that will determine the future of Venezuela.
Why is Venezuela important to China?
While Beijing is an indispensable economic and political partner to Caracas, the Latin American nation is also very important to China.
China views the oil-rich socialist country as a significant trading partner and a geopolitical ally in its main political and economic rival US's backyard. Moreover, the investments Beijing made in the country in the last couple of decades made Venezuela an important component in China's future economic prosperity and energy security.
Cooperation between China and Venezuela began to grow significantly following Hugo Chavez' ascent to power in 1999. Following Chavez' death in 2013, the good relations between the two nations continued under Maduro's presidency. From 2000 to 2018, the trade between the two countries increased more than 20-fold and the value of Chinese direct investment to the country reached $6bn. Meanwhile, the total value of Chinese loans to Venezuela surpassed the $60bn mark.
The majority of China's loans to and investments in Venezuela have been related to the oil sector. In 2007, Beijing created the China-Venezuelan Joint Fund (FCCV), which allowed Venezuela to receive loans from China in tranches of up to five billion dollars, and pay them with shipments of crude oil. The FCCV allowed the Chinese government to get involved in oil production in the Orinoco Oil Belt, which is considered to be the world's largest oil reservoir.
Why is China still standing by Maduro?
Having accumulated a significant amount of debt over the past two decades, Venezuela is struggling to repay Chinese loans, as its oil production continues to decline due to the ongoing crisis casts. This puts China's economy and energy security at risk. Meanwhile, the majority of Chinese direct investments in Venezuela have either been put on hold or completely abandoned due to the unfavourable conditions for business in the country.
Acknowledging the risk it is currently facing in Venezuela, China reevaluated its objectives and limited the issuing of new infrastructure loans in the country. It focused on financing mixed enterprises that it has created in partnership with Venezuela's state-owned energy firm Petroleos de Venezuela SA. It has also increased the mechanisms of control over the final use of the credit issued to Caracas.
Despite these challenges and the risk of suffering potential economic losses, Beijing continues to stand by the Maduro government, at least for now. The official reason behind this position is that the Chinese government is not willing to intervene in a sovereign nation's internal affairs. However, this cannot explain its motivation to continue supporting the embattled Venezuelan president at a great cost to its economy.
Unofficially, there are a number of other reasons. Beijing is still siding with the Venezuelan government because it believes having a like-minded socialist ally in the US' backyard is more important than any costs it may incur as a result of the ongoing Venezuelan crisis.
Additionally, "south-south cooperation" is currently one of the mainstays of China's foreign policy and Beijing does not want to risk its reputation as a leading trading partner and trustworthy investor in the global south by siding with a US-backed opposition group and supporting its attempt to unlawfully topple the legitimate government of a sovereign country.
Moreover, despite Guaido's best efforts, China has no reason to trust the Venezuelan opposition. For years, the position of the opposition regarding Venezuelan debt commitments to China has been ambiguous. Today, Beijing has no reason to believe that after taking power the opposition would agree to pay back the debts accumulated under Chavista governments.
The Venezuelan opposition's close relations with the Trump administration is another reason why China continues to support Maduro. The Chinese government does not believe Venezuelan elites who appear to be under the tutelage of the Trump White House would protect its interests in Venezuela or in the wider region.
China's position, however, is not set in stone. Guaido and his supporters can still convince the Chinese to change their mind by distancing themselves from the Trump administration and providing some form of reassurances that they would honour Venezuela's financial commitments to China.
If the opposition indeed finds a way to win the trust of Beijing, it would have a much better chance at challenging the Chavistas and eventually taking power in Venezuela.
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial stance.
‘Crude’ front is heating up. Events are beginning to happen, and, in quick succession. Ominous clouds could be seen hovering all around.
Amid, escalating UK-Iran tensions, the UK is deploying a second warship in the Persian Gulf, where reportedly, three Iranian boats had attempted last Thursday to “impede the passage” of a British oil tanker, forcing the UK warship HMS Montrose to intervene. However, Iran’s Revolutionary Guards denied the incident. “There has been no confrontation in the last 24 hours with any foreign vessels, including British ones”.
This happened in the backdrop of reports that the British Royal Marines had seized an Iranian crude supertanker off the coast of Gibraltar, carrying oil to Syria, in contravention of the ‘EU sanctions’ against Bashar Al-Assad.
The Government of Gibraltar later confirmed that the Iranian supertanker was laden with 2 million barrels of crude oil. Iran however, insisted the tanker was in international waters, not headed to Syria, and the seizure was done at the behest of the United States.
Iranian Foreign Ministry spokesman in a tweet said, that the British Ambassador Rob Macaire was summoned over the “illegal interception”. Tehran also vowed to retaliate. “It will be reciprocated, at a suitable time and in a suitable place,” Mohammad Bagheri, the chief of staff for Iran’s armed forces warned.
In a precautionary move, BP Plc was reportedly keeping an oil carrier empty inside the Persian Gulf, close to Saudi Arabia, rather than risk its seizure by Iran.
In the meantime, the London based Al-Araby Al-Jadeed reported that the Egyptian authorities have also detained a Ukrainian tanker carrying Iranian crude, as it was passing through the Suez Canal. News of the seizure came a day after Egypt’s Supreme State Security Criminal Court sentenced six people to jail on charges of spying for Iran.
Since early May, six oil tankers have been attacked, near the strategically important Straits of Hormuz. The U.S. and its allies blamed Iran for the incidents, a charge that Tehran denies. The temperature gauge is beginning to turn red.
Consequent to all this, tankers are shunning the port of Fujairah in the UAE, the main refuelling hub of the Middle East, Bloomberg quoted traders as saying.
Tanker owners were worried about the situation and were opting to refuel elsewhere. Insurance premiums are going up. The port of Fujairah, Matt Stanley from Dubai-based Star Fuels told Bloomberg, is experiencing “a significant drop in demand owing to war-risk premiums”. Insurers were quick to raise premiums after the tanker attacks. Between the end of May and the middle of June, tanker insurance premiums jumped by between 5 and 15 percent, Oilprice reported.
In another related development, late in June, Iran shot down a US drone, allegedly launched from the UAE territory, claiming it was violating the Iranian airspace. This made the temperature only rise. President Trump opted out of the retaliatory strikes, literally minutes before they were to take place.
On the other hand, while the US continues to insist on its maximum pressure campaign, Iran has so far managed to keep its oil exports from collapsing to zero. The Iranian Oil Minister Bijan Zanganeh is hopeful of improvement in its crude exports. “I am very hopeful that our oil exports will improve,” Zanganeh told the Iranian state TV.
Battling what he called “the most severe organised sanctions in history,” Zanganeh last week vowed to keep selling oil via “unconventional means”. As the New York Times reported, some oil tankers have recently resorted to switching off their transponders as they enter the Persian Gulf, likely loading up with Iranian oil and then heading out towards markets in Asia.
Despite Washington’s ‘zero tolerance policy’, China and Turkey appear to be the most obvious destinations for the Iranian crude. The Islamic Republic state TV recently aired a programme showing an Iranian-flagged tanker, delivering one million barrels of crude oil to China, despite the sanctions.
Kpler, a firm that tracks the movement of oil tankers, told media that Iran exported 186,000 barrels per day of oil to China in June. It said the oil tanker Salina delivered 1.05 barrels of oil to China and another Iranian tanker, The Horse, 2.13m barrels of crude to Chinese ports. Turkey in the meantime, has also received 1.03m barrel shipment from Iran, the report added.
Interestingly, power politics continue to rule the world while the hawks in Washington appear least bothered. And as a battle of ‘crude’ wits is on, disastrous and unintended consequences remain very much a possibility.
Published in Dawn, July 14th, 2019
Delivered 380 CST bunker fuel premium in Singapore has jumped to the highest level in more than 16 years, as it continued to trend up steadily since end-June, S&P Global Platts data showed Friday.
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Sign Up The Singapore delivered 380 CST bunker premium over MOPS 380 CST HSFO rose to $33.57/mt at Thursday's close, and was last higher at $34.13/mt on March 20, 2003, Platts data showed.
A stronger fuel oil market helped bunker premiums to rise steadily in July so far, buoyed by tight availability for prompt delivery dates, market sources said.
"Cargo premiums are already at crazy highs and backwardation was never this steep before," a bunker trader said.
The Singapore 380 CST HSFO August/September timespread was assessed at $35.75/mt at Thursday's close, a record-high 380 CST timespread to date.
Singapore is expected to receive only 2.5 million-3 million mt of fuel oil cargoes from Europe and the US in July, down from around 4 million mt/month earlier in the year, according to estimates from traders.
The inflow of arbitraged cargoes in August will also remain low as the arbitrage window had been shut amid supply tightness at Rotterdam, traders added.
While some traders said they did not wish to bring in high sulfur fuel oil cargoes owing to current steep backwardation, others were increasingly looking to switch to low sulfur fuel oil storage.
"I guess [IMO] 2020 is also a game-changer...most of the VLCCs outside are now storing LSFO," another bunker trader said.
Fuel oil traders in Singapore use VLCCs and other tankers to store fuel oil, while about 20 VLCCs were floating around Singapore as fuel oil storages, according to sources.
China’s crude oil imports on a daily basis in June rose 15.2% from a year earlier, customs data showed on Friday, as the start up of new large-scale refiners spurred demand for feedstocks.
A new plant owned by Hengli Petrochemical, capable of processing 400,000 barrels per day (bpd) of crude, reached full operations in late May, while a similar sized plant owned by Zhejiang Petrochemical has started trial runs.
June imports by the world’s largest crude oil importer came in at 39.58 million tonnes, according to data from the General Administration of Customs.
That works out to 9.63 million bpd, up 1.7% from 9.47 million bpd level in May and up from 8.36 million bpd a year ago.
For the first six months of 2019, crude imports grew 8.8% from a year earlier to 244.6 million tonnes, or about 9.87 million bpd.
June imports rose despite poor margins limiting runs at some plants and amid shut downs for maintenance.
Last month, Sinopec’s 200,000-bpd Luoyang refinery, PetroChina’s 140,000-bpd Jinzhou refinery and a 200,000-bpd Liaoyang Petrochemical plant were shut for planned repairs.
Two coastal refineries under top state refiner Sinopec Corp suffered losses in June for the first time this year, plant sources have said, as they processed higher-priced crude while domestic fuel prices trended lower.
China’s crude oil purchases are expected to be subdued in July as fuel supply from mammoth new refineries stokes an already-sizeable glut.
Customs data also showed China exported 5.43 million tonnes of oil products in June, up 13.5% from a year earlier and rising from 4.49 million tonnes in May, reflecting the growing surplus.
Exports for the first half of 2019 totalled 32.52 million tonnes, up 7.3% from a year ago.
Natural gas imports, including liquefied natural gas (LNG) and pipeline imports, were 7.52 million tonnes last month, the customs data showed, easing from 7.56 million tonnes in May.
Imports of the cleaner fuel have slowed since March from peaks in the winter months when heating demand surges.
Norwegian oil firm Aker BP has made an oil discovery off Norway which could strengthen its hand in negotiations with sometimes partner Equinor on how to develop fields.
Aker BP, formed from a merger of BP’s Norwegian oil assets and the Det norske oil firm controlled by billionaire Kjell-Inge Roekke, said on Thursday it had made an oil discovery with its Polish partner LOTOS.
The find is estimated to hold between 80 million and 200 million barrels of recoverable oil equivalent (boe), in an area with several oil and gas discoveries, nicknamed NOAKA.
Up to 700 million boe are in place overall at the discovery, called Liataarnet, but Aker BP needs to do more work to find out how much it can extract, the company said.
Aker BP and its partner in some of the NOAKA fields, state-controlled Equinor, are at odds about how to develop them.
“This is a clear message to partner Equinor in terms of development solutions for NOAKA. We believe the Liataarnet discovery will improve Aker BP’s negotiation position vs. Equinor,” Sparebank 1 Markets said in a note to clients.
Aker BP shares were up 1% at 0818 GMT, outperforming the STOXX European oil and gas index, which was up 0.3%.
JOHAN SVERDRUP
Aker BP and Equinor are also partners in the Johan Sverdrup oilfield off Norway, which is scheduled to start production in November.
The biggest oil find made off Norway in more than three decades, Sverdrup could start earlier than planned, Aker BP CEO Karl Johnny Hersvik said during an earnings presentation.
“I am really happy about the progress on Johan Sverdrup,” he said. “The start-up is going according to plan and we could even start earlier than planned ... We have a couple of deadlines coming up (and will know more then).”
Sverdrup, which is likely to account for 25% of the Nordic country’s total petroleum output at its peak in 2022, is co-owned by Lundin Petroleum and Total.
Aker BP also said it would slightly increase its capital and exploration spending this year.
Spending on exploring new oil and gas fields will rise to $550 million this year, from its previous guidance for $500 million. Capital expenditure is now seen in a range of $1.6-$1.7 billion compared with previous guidance for $1.6 billion.
Overall, Aker’s net income fell to $62 million in the second quarter from $128 million a year earlier.
MANILA, Philippines — In separate advisories, oil firms announced gasoline prices would be raised by P1.05 per liter, diesel prices by P0.70 and kerosene by P0.70 per liter.
Caltex Philippines said it implemented its price adjustments across fuel products at 12:01 a.m. today.
Eastern Petroleum, Petro Gazz, Phoenix Petroleum Philippines, Pilipinas Shell Petroleum Corp., PTT Philippines and Total Philippines raised pump prices at 6 a.m.
Other oil companies have yet to announce their respective price increases.
During last week’s trading, global oil prices jumped to near six-week highs as US oil producers in the Gulf of Mexico reduced their output by over half, amid a tropical storm, Reuters reported.
Continuing Middle East tensions also propped up prices last week. These pushed Brent Crude over $66 per barrel.
This is the fourth consecutive week gasoline prices were increased.
Last week, oil companies raised gasoline prices P0.25 per liter, while diesel prices were reduced by P0.40 per liter and kerosene by P0.35 per liter.
Based on Department of Energy data, year-to-date adjustments stand at a net increase of P5.15 per liter for gasoline, P3.30 per liter for diesel and P1.75 per liter for kerosene.
Crude-oil production from seven major U.S. shale plays is forecast to climb by 49,000 barrels a day in August to 8.546 million barrels a day, according to a report from the Energy Information Administration released Monday.
Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to see an increase of 34,000 barrels a day in August from July. Shale oil output from the Anadarko and Eagle Ford regions, however, are expected to see slight monthly declines, the report showed.
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
TOTAL S.A. (TOT) is a stock many investors are watching right now. TOT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 9.55, while its industry has an average P/E of 12.94. TOT's Forward P/E has been as high as 11.29 and as low as 8.70, with a median of 9.88, all within the past year.
TOT is also sporting a PEG ratio of 1.08. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TOT's PEG compares to its industry's average PEG of 1.68. TOT's PEG has been as high as 1.61 and as low as 0.71, with a median of 0.98, all within the past year.
Another notable valuation metric for TOT is its P/B ratio of 1.17. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.24. TOT's P/B has been as high as 1.35 and as low as 1.04, with a median of 1.17, over the past year.
Finally, investors should note that TOT has a P/CF ratio of 5.44. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.90. Over the past year, TOT's P/CF has been as high as 6.72 and as low as 4.93, with a median of 5.59.
Value investors will likely look at more than just these metrics, but the above data helps show that TOTAL S.A. Is likely undervalued currently. And when considering the strength of its earnings outlook, TOT sticks out at as one of the market's strongest value stocks.
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Equinor drills dry well west of Johan Sverdrup
7/16/2019
STAVANGER -- Equinor Energy AS, operator of production licence 502, has completed the drilling of wildcat well 16/5-7.
The well was drilled about 1 km west of Johan Sverdrup oil field in the central part of the North Sea and 200 km west of Stavanger.
The objective of the well was to prove petroleum, as well as to investigate potential reservoir rocks in several levels: Upper Jurassic (intra Draupne formation sandstones), Upper Triassic (Skagerrak formation), Upper Permian (the Zechstein group) and weathered/fractured basement rock.
The well was drilled about 110 m into basement rock, of which 77 m of weathered and fractured basement rock with poor to moderate reservoir properties. In the upper part of the basement, the well encountered traces of oil in a zone of about 19 m.
At this time, it is impossible to determine whether the oil is producible or simply residual. No sedimentary rocks were encountered in other levels. Pending new information and interpretation of collected data, the preliminary classification is that the well is dry.
The well was not formation-tested, but extensive volumes of data have been acquired and samples have been taken.
The well has yielded important information about the potential for reservoir properties in the basement rock, as well as pressure communication in the area.
This is the second exploration well in production licence 502. The licence was awarded in APA 2008.
The well was drilled to a vertical depth of 1988 m below the sea surface, and was terminated in the basement rock.
Water depth at the site is 105 m. The well will now be permanently plugged and abandoned.
The well was drilled by the Transocean Spitsbergen drilling facility, which will now proceed to the shipyard before well operations start up on Snorre field in the northern part of the North Sea.
Related News ///
FROM THE ARCHIVE ///
While Canadian oil producers are scrambling to sell their oil at a fair price due to a pipeline shortage to take away the crude to foreign markets, Canada’s own domestic oil supply could be threatened due to court decisions and heightened tension in the Middle East.
Canada, the world’s fourth largest oil producer, may not be as energy secure as its producer status would otherwise suggest, Peter Tertzakian, Executive Director of the ARC Energy Research Institute in Calgary, Alberta, writes in Financial Post.
That’s because Canada lacks a west-east oil pipeline to carry crude from the oil-rich Western Canada to the eastern provinces. Therefore, the eastern parts of Canada rely on imported crude oil, including via oil tankers. In addition, Central Canada’s fuel demand is largely met by the Sarnia refinery complex, whose vital source of crude supply is Enbridge’s Line 5.
According to Tertzakian, the unrest in the Middle East and the intense oppositions to the vital Enbridge Line 5 in Michigan increase the probability of Canada having to scramble to ensure it will have enough oil and fuel supplies, despite being the world’s fourth biggest oil and liquids producer behind the United States, Saudi Arabia, and Russia.
Increased tension in the Middle East and its most vital oil flow route, the Strait of Hormuz, could affect the global oil tanker traffic and consequently, Canada’s east coast seaborne imports of crude oil.
More than half of the oil used in Quebec and Atlantic Canada is imported from foreign sources, according to the Canadian Association of Petroleum Producers (CAPP). Related: An Unexpected Boon For Alberta’s Oil Producers
Canada imports around one barrel of crude oil for every seven and a half barrels it produces, the National Energy Board (NEB) estimates. Last year, Canada reduced its total oil imports by 12 percent over 2017, to 593,000 kbpd. Imports from the U.S. via pipeline accounted for more than 60 percent of those imports, and they increased by 6 percent compared to 2017. Canada also increased its imports from Saudi Arabia last year, to 109,200 bpd from 102,100 bpd in 2017, while it reduced imports from Azerbaijan, the UK, Algeria, and Nigeria, according to the NEB.
In New Brunswick and Newfoundland, most of the imported crude oil for refineries is shipped by oil tankers.
According to CAPP estimates, despite having the third largest oil reserves in the world behind Venezuela and Saudi Arabia, Canada imported US$14.9 billion (C$19.4 billion) worth of foreign oil in 2018, and nearly all of this oil went to Ontario, Quebec, and the Atlantic provinces.
If some kind of disruption in global oil tanker traffic were to occur, eastern Canada would be left scrambling for oil and fuel supplies, because there are simply no pipelines to carry crude oil from Alberta to the east. The latest such proposal to remedy this constraint was the Energy East project, which was ditched in 2017.
Then there is the Michigan Attorney General Dana Nessel suing Enbridge Line 5, the dual oil pipelines running under the Straits of Mackinac because, she said, the 66-year-old pipelines “present an unacceptable risk to the Great Lakes.”
Line 5 is a vital crude supply source for the Sarnia oil refinery complex which supplies fuel in Central Canada. So if the U.S. were to cut off Line 5, they would cut Sarnia, Tertzakian says. Related: IEA: Huge Oil Glut Coming In 2020
Theoretically, Line 9 could have come to the rescue in case Line 5 were cut off and bring imported foreign oil via tankers from Montreal to Sarnia. However, since 2015, for economic reasons, Line 9 now flows in the reverse way—from Sarnia to Montreal, in a decision where costs had trumped energy security, Tertzakian argues.
Canada also had not insulated itself from supply disruptions with a strategic petroleum reserve (SPR) as it had opted out of creating an SPR when western nations agreed to keep reserves to use in cases of emergency after the Arab Oil embargo in the 1970s.
Back then, Tertzakian recalls, Canada argued that it was energy secure in its supplies--and unfortunately, it hasn’t tested that argument since.
With increased probability of disruption in the Middle East and in Michigan, Canada could soon find out just how energy secure it is.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Longhorn Midstream Holdings, LLC (“Longhorn”) today announced that one of its subsidiaries, LM Touchdown Crude II, LLC (“LM Touchdown”), has launched a binding open season to obtain commitments to support the development of its Touchdown Crude Oil Gathering System in the Northern Delaware Basin. The greenfield pipeline system will initially gather crude oil from origination points in Eddy County, New Mexico and deliver to destination points in Eddy County, New Mexico. The binding open season for the initial phase of the gathering system commenced today, July 15, 2019 at 8 a.m. Central time and is scheduled to conclude at 5 p.m. Central time on August 14, 2019.
Business Update
The Touchdown Crude Oil System, which will support multiple customers willing to make long-term commitments, will initially consist of approximately 50 miles of gathering and transportation pipelines. Construction has begun and the gathering system is expected to enter partial service in September 2019 and to be fully commissioned in the first quarter of 2020.
In addition to the Touchdown Crude Oil System, Longhorn also announced it is constructing a gas gathering system in the Northern Delaware Basin. The Touchdown Gas Gathering System will initially provide low pressure gathering, dehydration, compression, and high-pressure gathering services for liquids-rich natural gas produced by customers in the area.
Management Perspective
“The Northern Delaware Basin is one of the most economic areas in the country for oil and gas development,” said Elliot Gerson, Managing Partner at Longhorn. “The combination of prolific well results and insufficient existing infrastructure creates a compelling opportunity to offer our customers midstream solutions that will help unlock the underlying resource potential.”
https://www.oilandgas360.com/longhorn-launches-open-season-for-its-touchdown-crude-gathering-system/
The American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 1.4 million barrels for the week ended July 12, according to sources. The API also reportedly showed a stockpile decline of 476,000 barrels for gasoline, but distillate inventories jumped by 6.2 million barrels.
Inventory data from the Energy Information Administration will be released Wednesday. The EIA data are expected to show crude inventories down by 4.2 million barrels last week, according to analysts polled by S&P Global Platts. They also forecast a fall of 1.5 million barrels for gasoline and an increase of 300,000 barrels for distillate supplies.
Oil prices turned lower on Tuesday, falling more than 3% after U.S. President Donald Trump said progress has been made with Iran, signaling tensions could ease in the Mideast.
Brent crude futures LCOc1 fell $2.13 a barrel, or 3.2%, to settle at $64.35. The international benchmark hit a session high of $67.09 earlier in the day.
West Texas Intermediate crude futures CLc1 settled at $57.62 a barrel, down $1.96, or 3.3%. The U.S. benchmark hit a session high of $60.06 early in the trading day.
“What were tailwinds have become headwinds,” said Bob Yawger, director of energy futures at Mizuho in New York. He said the same U.S.-Iran tensions that had driven prices higher earlier in the session put a damper on the market after Trump’s comments.
Trump on Tuesday said a lot of progress had been made with Iran and that he was not looking for regime change in the country.
Trump, who made the remarks at a Cabinet meeting in the White House, did not give details about the progress, but U.S. Secretary of State Mike Pompeo said at the meeting Iran had said it was prepared to negotiate about its missile program.
Tensions between the United States and Iran over Tehran’s nuclear program have previously lent support to oil futures, given the potential for a price spike should the situation deteriorate.
Uncertainty about China’s economic prospects also pressured prices lower after data on Monday showed growth in the country had slowed to 6.2% from a year earlier, the weakest pace in at least 27 years.
Additionally, U.S. oil companies on Monday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry.
Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume.
The storm will probably result in a noticeable decline in U.S. crude oil stocks this week, analysts at Commerzbank said.
Inventory data will be published by the American Petroleum Institute on Tuesday evening, and by the U.S. Department of Energy on Wednesday.
Some say bullish inventory data is structural, and not attributable only to the storm.
“Beyond the storm we feel we’re in a tightening inventory mode through August,” said Phil Flynn, an analyst with Price Futures Group in Chicago.
https://www.reuters.com/article/us-global-oil/oil-falls-as-iran-tensions-seen-easing-idUSKCN1UB01V
Stratford Avenue marks the end of Colombo. It separates Sri Lanka’s capital city from it’s suburbs to the southeast—up and down, the short stretch of road is dotted with small shops and hole-in-the-wall restaurants, and hums with faint chantings of a nearby Buddhist temple. Here is where Kopi Kade calls home.
Opened in 2016, the cafe stood out at the gate. A product of Nimeshan Namasivayam, Kopi Kade directly translates to “coffee shop” in both Sinhala and Tamil. It’s also the name of a long running and extremely famous soap opera. The show centered around the idea of a kopi kade as a community hub.
The unassuming facade of Namasivayam’s Kopi Kade gives way to a clean, former warehouse—designed by local architect Manju Wijeratne, the space is decorated with clean-cut teak tables and chairs, bronze light fixtures, and the work of artist Shaneea Mendis.
Before founding Kopi Kade, Namasivayam worked as a barista, coffee roaster, and a coffee taster for more 15 years in Australia, where he lived for most of his life.
“It’s more about ensuring consistency,” says Namasivayam of running a successful cafe. “We use very good water filtration systems and always fresh milk.” He’s also using Kopi Kade to build Colombo’s barista community, offering workshops to local restaurant staff and home baristas alike.
The menu here sees a constant change, with rotating single-origin coffees from Costa Rica to Ethiopia to Indonesia. “We change the coffee every three to four weeks, not just from different countries, but from different roasters,” Namasivayam says.
Kopi Kade also has its own 1kg Giesen abutting the back wall, on which Namasivayam trial roasts small lots of Sri Lankan coffee.
“We want to see if we can improve farming and processing techniques, which would result in a better cup of quality coffee,” Namasivayam says of his relationships with a few local smallholder coffee farmers. “There’s a lot of potential to produce good Sri Lankan coffee, as the terroir is perfect for coffee growing in the hill country.”
For espresso beverages, the cafe uses a two-group Victoria Arduino VA388 Black Eagle along with two Mythos One grinders. Brewed coffee is offered either on AeroPress or Hario V60 and ground with a Comandante hand grinder. There’s also a “Sri Lankan Style” cold brew made sweet to match Colombo’s palate—it’s a darker-roasted African coffee mixed with 40-percent milk.
Kopi Kade’s food menu is filled with modern takes on traditional Sri Lankan dishes, like spiced lamb and prawn sliders and the Coconut French Toast—fluffy, eggy, pani pol bread covered in caramelized coconut flakes and coffee-infused coconut sugar syrup, gently spiced with cardamom, cloves, and cinnamon.
At Kopi Kade, Namasivayam has built a community of regulars with whom he shares not just new coffees, but sizable doses of information about production, taste, brewing, and coffee culture. In doing so, he hopes his coffee shop can be more than just that. “It’s an experiential learning experience,” Nimeshan says, and one with the name recognition that just may draw the masses.
Zinara Rathnayake is a freelance journalist based in Colombo, Sri Lanka. This is Zinara Rathnayake’s first feature for Sprudge.
Photos by Nathan Mahendra
U.S. crude oil refinery inputs averaged 17.3 million barrels per day during the week ending July 12, 2019, which was 172,000 barrels per day less than the previous week’s average. Refineries operated at 94.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production increased last week, averaging 5.4 million barrels per day.
U.S. crude oil imports averaged 6.8 million barrels per day last week, down by 470,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.1 million barrels per day, 16.3% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 852,000 barrels per day, and distillate fuel imports averaged 132,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.1 million barrels from the previous week. At 455.9 million barrels, U.S. crude oil inventories are about 4% above the five year average for this time of year. Total motor gasoline inventories increased by 3.6 million barrels last week and are about 2% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 5.7 million barrels last week and are about 2% below the five year average for this time of year. Propane/propylene inventories increased by 0.5 million barrels last week and are about 5% above the five year average for this time of year. Total commercial petroleum inventories increased last week by 11.7 million barrels last week.
Total products supplied over the last four-week period averaged 20.8 million barrels per day, up by 0.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.5 million barrels per day, down by 1.7% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the past four weeks, down by 4.9% from the same period last year. Jet fuel product supplied was up 2.1% compared with the same four-week period last year.
Lower 48 production fell 400,000 bbls day to 11.5 mln bbls day
Exports fell 514.000 bbls day to 2,524,000 bbls day
Cushing down 1.4 mlb bbls
Crude oil on its way from Africa to the United States, destined for an ill-fated refinery that plans to close its doors permanently in Pennsylvania, is being diverted to other places, according to Reuters sources.
The 335,000-barrel-per-day Philadelphia Energy Solutions (PES) refinery, which will close permanently on Monday, used 43.1 million barrels of African oil last year. Only the Phillips 66 refinery in New Jersey imported more oil from Africa.
The oil currently being diverted is a one-million-barrel shipment of Nigerian crude oil, which is now headed into storage in Canada, Reuters said, citing Kpler, which also shows a million barrels of crude idling in nearby waters.
But even more crude has been diverted away from the refinery and to new buyers, according to Refinitiv Eikon data, and at a “heavy” discount, Reuters added.
The United States purchased 4.1 million barrels of Nigerian crude oil in April, the last month for which the Energy Information Administration published data.
Pennsylvania decided not to pour money into saving the largest refinery on the Eastern seaboard after a couple of explosions in June took it offline. Pennsylvania’s decision to let the refinery wither on the vine was multifaceted, citing not just safety concerns but “competitive challenges against more modern refineries that would be extremely costly and difficult to overcome,” a spokesman for Pennsylvania’s governor said at the time.
The 1300-acre, 145-year-old refinery is a near dinosaur, went through bankruptcy proceedings in 2018, citing its financial failings due to the federal Renewable Fuels Standard Policy and a lack of access to cheap domestic crude oil, among other factors.
The closure of the Pennsylvania refinery will cut US refining capacity by 2% to 18.46 million bpd, according to Reuters calculations of government data.
By Julianne Geiger for Oilprice.com
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After refusing last month to take an oil cargo over suspicions that its origin could have been at least partially Iranian, Italy’s oil major Eni has now filed a fraud complaint against its ex head of oil trading for having misled all parties in the spot cargo deal.
Eni fired the head of oil trading Alessandro Des Dorides at the end of May over a different, unrelated deal with small Italian oil trading company, Napag, in 2018, the Italian major said, as carried by Reuters.
In the fraud complaint filed with the prosecutor’s office in Milan, Eni accuses Des Dorides of misleading the parties to the deal and of having concealed the role of Napag in it, according to the filing seen by Reuters.
Eni told Reuters that the reason for Des Dorides’ termination was a petrochemical deal with Napag from last year that is unrelated to last month’s curious case when Eni refused to receive a cargo intended for the Milazzo refinery in Sicily because there were red flags that the tanker loaded with 1 million barrels of crude oil may have carried, at least partially, oil originating from Iran.
Eni, like all major western oil firms, stopped trading Iranian oil when the U.S. slapped sanctions on Iran’s oil exports in early November, in order to not run afoul of a U.S. Administration determined to drive Iranian crude exports to zero and to sanction entities dealing with Iran.
Eni rejected last month the cargo on the White Moon oil tanker, saying that the specifications of the crude were different from those of Iraq’s grade Basra Light, which it had contracted to buy.
According to two sources at Eni who spoke to Reuters, the cargo created panic at Eni that the whole shipment may have all the hallmarks of Iran ghosting its oil, and that the tanker could be loaded, at least partially, with Iranian crude.
After the tanker fiasco, Eni has moved to revamp the top management in its oil trading division, Reuters reports.
By Tsvetana Paraskova for Oilprice.com
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As Ohio is close to rescuing FirstEnergy’s two nuclear reactors in the state from early retirement by providing financial subsidies, opponents of the nuclear and coal industries and proponents of green energy say that the move may very well be the “death blow” to renewables in the state.
On Wednesday, the Ohio Senate passed a bill to set up subsidies of US$150 million annually for the nuclear power plants Davis-Besse and Perry, owned by FirstEnergy Solutions. The bill is expected to be sent to Ohio Governor Mike DeWine this week, Josh Price, a senior analyst at Height Capital Markets, told Reuters on Wednesday.
Last year, FirstEnergy Solutions filed for Chapter 11 bankruptcy protection and sought legislative and regulatory relief at the state and federal level to keep certain nuclear and coal plants in the region operational. FirstEnergy Solutions has said that it would retire early, in 2020 and 2021, its two reactors unless it receives financial help to keep them operational.
The Ohio state legislature and governor are poised to grant those requests with the new bill, which drew a lot of criticism from opponents of the nuclear and coal industries.
“Renewable energy is our future; energy efficiency is our future - if we’re going to have a future. And that is all being sacrificed at the altar of nuclear power in Ohio if this thing passes,” Kevin Kamps, a Radioactive Waste Watchdog at the organization Beyond Nuclear and a longtime opponent of FirstEnergy Solutions, told Radio Sputnik in an interview.
Related: Colombia’s Push To Triple Proven Oil & Gas Reserves
“The nuclear and coal industry in Ohio have sabotaged the renewable energy industry. This bailout may be the death blow. In fact, there are very specific provisions in this legislation that would really gut any renewable support in Ohio whatsoever,” Kamps said.
Taxpayer watchdog Citizens Against Government Waste described the planned subsidies for the Ohio nuclear power plants as “outrageous” and added:
“This taxpayer funded bailout will raise monthly bills ranging from around $1 for residential customers all the way up to $2,400 for the largest companies in the area. This huge additional charge could cause some of these larger employers to leave the Buckeye State. This bailout could cost Ohio valuable jobs.”
By Tsvetana Paraskova for Oilprice.com
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Heavy Canadian crude prices narrowed to the smallest discount against U.S. benchmark futures since April as crude-by-rail shipments were forecast to increase.
Western Canadian Select, an oil sands benchmark, shrank $1.30 to $9.20/bbl below West Texas Intermediate crude Tuesday, data compiled by Bloomberg show. Prices surged after Canadian Pacific Railway said crude-by-rail volumes were expected to rise 20% in the third quarter from about 160,000 bpd in the second quarter.
With pipelines full, crude shipped by rail has become the only real alternative left for producers to send excess oil out of the province. The region’s largest producers have been under mandatory production limits since January after rising production drove WCS prices as low as $50/bbl below WTI.
The heads of Canadian oil companies including Cenovus Energy and Suncor Energy are offering to boost crude-by-rail shipments in exchange for higher production limits.
https://www.worldoil.com/news/2019/7/17/canadian-heavy-crude-surges-as-rail-shipments-increase
Packers Plus Energy Services, a company built on the North American shale oil boom, is turning to the Middle East to weather a new round of spending cuts by producers amid warnings of a looming oil glut.
Oil production has outpaced demand by 900,000 barrels per day (bpd) this year, according to the International Energy Agency, which expects increases to add a net 136 million barrels to the global surplus by March. Spending cuts by producers also have sharply cut service providers’ margins, a June survey of 60 providers by the Dallas Federal Reserve Bank revealed.
The last time supplies overwhelmed demand, oilfield service suppliers cut 100s of thousands of jobs and top firms gushed red ink. Memories of that sharp downturn in late 2014 have executives such as Ian Bryant, chief executive officer of privately-held, Calgary-based Packers Plus, again cutting jobs, seeking safe harbors, mergers, or putting business units on the market.
These defensive strategies comes as oil and gas drillers are producing vastly more oil with less investment.
U.S. shale output is estimated to have hit 8.5 million bpd, even as the number of rigs in operation fell by almost 100 in the last year. On average, analysts expect the top 50 U.S. independent oil producers will cut spending by 20% this year, with some by as much as 60%, according to review by researcher DrillingInfo.
That drop has Bryant’s Packers Plus, which historically catered to North American onshore producers, looking beyond shale and toward markets in the Middle East for future business.
“There are obviously geopolitical risks, but the cycles are not as vicious as they are in North American land,” said Bryant in an interview. He cut 10% of Packers’ staff in North America earlier this year and is planning to open a manufacturing center at an undisclosed location in the Middle East. The bet: there will be more growth there and better margins than in North America.
“For some exploration and production companies, the downturn is over and behind them. For most service companies, it still feels like we’re in the downturn,” said Bryant. “Service pricing is unsustainable at present levels.”
‘TOO MANY PLAYERS’
Weatherford International, once a top four oilfield service provider, filed for protection from creditors this month and has been cutting staff, citing “market headwinds” and lack of access to financing.
In the last 18 months, other top service firms, including the world’s top oilfield services company Schlumberger (SLB.N), added or acquired new hydraulic fracturing fleets in a bet that a backlog of uncompleted shale wells would grow their businesses.
But across the U.S. the number of yet-to-be-fracked wells hit 8,289 in May, up 22% in a year, according to the U.S. Energy Information Administration.
Oil and gas employment in the United States has grown since the last downturn, but last month remained 20% below the same month in 2014, according to U.S. government data.
Some investors and executives believe a wave of mergers and restructurings will be required to prop up declining margins.
“There’s just frankly too many players,” Roe Patterson, CEO of Fort Worth, Texas-based Basic Energy Services Inc (BAS.N), said of the oilfield services industry in May.
“Everyone understands that trying to reduce our cost structure is not going to be how we improve and fix the OFS (oilfield service) space. We’ve got to see a shrinking number of bidders and competitors out there.”
CAN MERGERS FIX MARGIN PRESSURE?
Profits for service companies that added people and equipment following the 2015-2016 oil price collapse also have suffered. Oilfield equipment utilization fell nearly 13 points and profitability tumbled 26 points versus the previous quarter, according a June survey by the Dallas Federal Reserve bank. Its survey polled 60 oilfield service companies in Texas, New Mexico and Louisiana.
Investors have so soured on the sector that there were no public equity offerings by oilfield service firms last quarter, said Drillinginfo, for the first time in more than three years.
C&J Energy Services Inc (CJ.N) and Keane Group Inc (FRAC.N) struck an all-stock deal in June to merge, a move that investors hoped would spark more.
However, that combination still leaves about 14 larger pressure pumping firms in business, estimates Brad Handler, an oilfield services analyst at investment firm Jefferies. He estimates five are candidates to sell their pressuring pumping businesses.
“If a much-needed transaction doesn’t happen, service companies will have to look at refinancing or entering into out of court agreements with debt-holders, or filing bankruptcy,” said Kelli Norfleet, a restructuring partner at law firm Haynes & Boone.
But even as companies look to consolidate, too many are in such poor shape to attract a buyer.
Patterson’s Basic Energy Services ratio of debt to pre-tax earnings is 5.57, according to Moody’s Investors Service. By comparison, Keane’s debt to EBITDA ratio was 1.05 before it merged with C&J Energy Services.
“There are not very many buyers,” said Sajjad Alam, an analyst for debt rating firm Moody’s Investors Service. “The market is still very weak and looks more uncertain today than it did earlier in the year.”
Enbridge delays open season for bids on Mainline oil pipeline system -sources
Enbridge Inc has delayed the start of an open season to solicit bids for contracted space on its Mainline oil pipeline system, North America’s largest oil-shipping network, three market sources told Reuters on Wednesday.
The reason for the delay was not immediately clear.
Canadian pipeline company Enbridge plans to turn the Mainline system from a common carrier system in which shippers submit monthly bids for capacity, to one that is mostly contracted for up to two decades.
The open season, a period in which shippers can submit bids for contracted space, was meant to start in mid-July and last for two months, Enbridge said previously.
Three sources said the start of the open season was scheduled for Monday, July 15, but had been pushed back. Two of the sources said the delay was expected to last about a week.
“We have been in discussions with interested shippers and are working to accommodate to their needs. We anticipate on holding the open season soon,” Enbridge spokeswoman Tracie Kenyon said in an emailed statement when asked about the delay.
The Mainline system is vital to transport barrels out of Canada, the world’s fourth-largest oil producer, which has grappled with delays in pipeline projects because of environmental and legal opposition.
Locking shippers into long-term contracts offers Enbridge a chance to capitalize on delays to competitors’ plans to build pipelines, and secure future cash flow at a time when anxiety about market access is dominating headlines.
The Mainline currently operates under a system in which customers nominate the barrels they want to move each month, generating criticism that some larger shippers inflate their nominations to game the system.
Space on the Mainline is often rationed, contributing to price volatility in marketing hubs in Alberta, Canada’s main crude-producing province.
Changes to the Mainline system will need to be approved by Canada’s National Energy Board regulator and would take effect in 2021.
Currently, the open season pertains solely to the Canadian Mainline, Kenyon said, adding that Enbridge will evaluate interconnecting pipelines after the Canadian Mainline open season. Enbridge also operates major U.S. oil pipelines including Spearhead and Flanagan South.
Smaller Canadian producers have raised concerns they will not be able to meet Enbridge’s minimum-term and volume commitments and be shut out of the Mainline by larger competitors and U.S. refiners snapping up all the available capacity.
Last week, Enbridge confirmed it had lowered the minimum oil volumes required to 2,200 barrels per day from 6,000 barrels per day.
The next wave of Permian crude oil pipeline infrastructure is getting completed as we speak. In West Texas, several new pipeline projects are either finalizing their commercial terms and agreements, wrapping up the permitting process, or actually putting steel in the ground. In the Permian alone, there is a potential for 4.3 MMb/d of new pipeline takeaway capacity to get built in the next two and a half years. Along with those major long-haul pipelines, there are also crude gathering systems being developed to help move production from the wellhead to an intermediary point along one of the big new takeaway pipes. While we often like to give pipeline projects concrete timelines with hard-and-fast online dates, the actual logistics of how producers, traders and midstream companies all bring a pipeline from linefill to full commercial service are never clean and simple. There can be a lot of headaches, learning curves, and expensive — not to mention time-consuming — problem-solving exercises that come with the start-up process. In today’s blog, we discuss why new pipelines often experience growing pains, and how market participants navigate the early days of new systems.
Over the past few months, we’ve written extensively about the number of new pipeline projects in the Permian that are either under development or have passed the final investment decision (FID) threshold and are currently under construction. On the long-haul side of things, those new pipelines are creating much-needed space for producers and marketers to access refining and export markets all along the Gulf Coast, from Corpus Christi to Nederland in Texas and farther east in Louisiana. There are six new Permian-related projects in various stages of completion that have the potential to add over 4.3 MMb/d of new takeaway capacity by the end of 2021. Almost every major midstream player in the country is developing — or has co-signed onto — a massive new pipeline project. In the next few months, we’ll see the first of the greenfield projects materialize, as Plains All American brings online its 670-Mb/d Cactus II system (dashed-red line in Figure 1). We understand that linefill is currently under way on the new pipe and that commercial operations are expected to begin shortly. Big projects like Cactus II, EPIC and the others shown in Figure 1 have been marketed to producers and traders as the best option for reaching expanding export markets, with the ability to also batch different types of crude qualities and enhance the value for a possible sale to a downstream refiner.
Figure 1. Permian Crude Long-Haul Pipeline Projects. Source: RBN
Upstream of those big, long-haul pipelines are smaller gathering systems. We’ve been detailing a number of these in our ongoing Have It All blog series. There are new gathering systems popping up on a seemingly monthly basis, designed to efficiently gather production from well sites and deliver the volumes to long-haul takeaway pipelines as economically as possible. Systems like Concho Resources and Frontier Energy Services’ Beta Crude Connector (see Figure 2) provide access for connected producers to get into a number of different takeaway systems. Midstream companies sell their gathering services to producers as a way to improve flow assurance, reduce the reliance on over-the-road trucking and provide optionality to multiple end-markets.
Figure 2. Example of a Gathering System — Concho and Frontier’s Planned Beta Crude Connector — and Nearby Takeaway Pipelines. Sources: Frontier Energy Services and RBN
All of the aforementioned offerings, from long-haul pipes to local gathering systems, are extremely attractive to a would-be shipper. Once you’re signed up for a system, you’re eagerly anticipating that in-service date like a six-year-old waiting for Christmas on the first day of December. Committed producers and traders are in constant contact with their rep at the midstream company, getting frequent updates on when the pipe is expected to need linefill (i.e., small initial volumes that each shipper contributes to the pipe that must stay in the system to facilitate operations) and when full commercial service will begin (typically one or two months after linefill has started). Once those shippers feel good about the start-up date given to them, they’ll start making sales downstream to one or several of the connected markets available on the pipeline. Well before commercial operations start, shippers are having conversations with sales markets and adjusting and lining up deals based on the expected in-service date.
But pipelines don’t turn on like light switches. First of all, they can face setbacks during the permitting process or during construction, if there are labor or material shortages. Or with bad weather — nothing like a week of persistent, heavy rain to undo a schedule. Eventually, though, every project moves toward completion. As it does, a pipeline’s developer will shoot for an initial in-service date in the early days of a particular month. That gives traders a few weeks in advance to lock in sales and get their shipping nominations in place. Crude oil scheduling requires you to nominate pipeline space the month prior. So, sales and nominations for October business are taking place sometime between the 15thand 25th of September, for example, depending on when pipelines set their nomination date. (In Canada, it can be two months prior, but that’s a blog for another day.) And if a new pipeline isn’t expected to be able to run at full capacity on the first month of service, which happens frequently, the shipper will be notified of how much volume they’ve been approved to move. Seems simple — what could possibly go wrong?
A lot, apparently. Let’s take a gathering system, for example. A producer will begin planning its drilling program around the project’s expected in-service date, knowing that it has a specified amount of volume that can move on the gathering system on a daily basis. But suddenly, it turns out a new well tied to the system has an initial production (IP) rate of one and half times or double the expectation, and the nascent pipeline can’t handle it. There’s generally less flexibility with a system that is just up and running, for several reasons, but that producer still needs to move volume from the wellhead or risk choking back the well –– or worse, shutting it in. So, the producer calls in the trucking company that previously had been hauling oil from wells in the area, and contracts with it to truck those barrels to the desired long-haul pipeline (at a much more expensive emergency rate!). The producer is hoping that there is space at the truck injection point to get the barrel to market (truck injection points have capacity limits, too). A gathering system in its infancy may also run into plumbing problems. The pressure may be uneven, pumps and connectivity may not be working quite the way they’re designed to, and the whole system (or parts of it) may need to be taken out of operation for a few hours or days. Crude oil production never sleeps, and if the gathering system is down and there isn’t enough storage at the well site, those barrels still need to flow. So once again, we’re calling in trucks to the rescue. (Trucking companies hate these emergency jobs, but if there’s money in it, they’ll lend a hand.)
On the long-haul side of things, problems are just as complex, and sometimes even more costly. Let’s say you’ve committed to a new pipeline to the Gulf Coast, and you’ve been told that commercial service will begin October 1. You made your nomination in September, locked in your sales, worked out the economics based on what your trucking cost will be to get it to the new injection point outside Midland. But then, your pipeline rep calls to tell you there is an issue with that truck injection point, or there is a problem with plumbing on the pipe, and the start-up date has been delayed by a few days. Now you have a problem. You’ve already purchased the barrels in the field, which as we said above, have to flow. If your new pipeline is delayed five days, you’d need to find capacity on another system for that period of time. Maybe you’ll get lucky and you’ll find someone who is short barrels and is in desperate need of volumes. More likely, you’ll find someone who knows you’re in trouble because they also know that pipeline is delayed, and they’ll buy your barrels at a big discount and ship it on their space on a different pipeline. Or, you have a friend who you can sell it to at a small loss (and maybe the cost of an expensive lunch the next time you see them). Regardless of how it shakes out, it’s just another headache. Producers and traders like to hedge their bets on these start-up dates, and not overcommit, but small disturbances like these can take a lot of man-hours to solve.
And these issues aren’t always just at the initial startup; there’s often intricacies that only come to light once the pipe is up and running. Crude oil quality, for example, is a relatively new but now-prevalent concern. West Texas Intermediate (WTI), the U.S. crude benchmark and often the price quoted on your CNBC ticker, was historically representative of a generic barrel that came out of the ground, with a specification of 38-44 degrees API gravity. But shale wells, especially in certain parts of the Permian, are getting lighter. West Texas Light (WTL) covers crude oil from 44 API gravity up to 49.9 API gravity. Most importantly, WTL trades at $1-$2/bbl less than WTI — a significant discount. With the proliferation of WTL production growth in the past six months, producers are more and more concerned about the system design and how batching is conducted. If you’re connected to a gathering system and producing clean, 43-API gravity crude oil, you sure as heck don’t want your crude commingled with a 45-API gravity barrel that your neighbor is drilling. Most new-build gathering and long-haul systems are accounting for these differences through the use of expensive tracking units at the injection point on a pipeline. Midstream companies work hand-in-hand with their committed shippers to address these issues beforehand, but you don’t want to connect to a system and find out a month later that you’re losing value on your barrel because the scheduling kinks haven’t been worked out yet.
Long story short, introducing a new long-haul pipeline or gathering system into the mix, while necessary, is a challenging affair, and these are just the very basic, high-level examples of the variety of issues that can crop up. And for every instance we’ve given where you can point the finger at the pipeline company, there are four pointing right back at the producer or shipper. Is the producer bringing its volumes online in a timely fashion, producing good-quality crude and maintaining clear communication with the pipeline? Is the shipper being clear about where it’s sourcing its volumes, or is it playing games in the nomination system? Everyone involved with these new pipelines is integral to its success, both initially and over the long term. But especially at the outset, just how well all of the participants get along really does determine if the first few months are smooth sailing. That’s also a good reason to keep a close watch on the status and timing of the projects. We’ll check back in a few months to see if all of these new pipelines really did hold fast to concrete dates, or if those initial start-up timelines were indeed a bit fluid.
https://rbnenergy.com/easy-to-be-hard-the-challenges-of-new-crude-pipeline-operations
Chinese oil refiners want changes to tax laws on the consumption and sale of fuel oil in order to start producing low-sulphur marine fuel when new global clean fuel rules start in 2020, four executives at Chinese oil companies said this week.
China’s central government must waive a 1,218 yuan ($177.11) per ton consumption tax and offer rebates of the 13% value-added tax currently levied on fuel oil to allow the country’s refiners to economically produce the very low-sulphur fuel oil (VLSFO) needed to meet the rules, officials at China Chemical and Petroleum Corp, PetroChina and China National Offshore Oil Co said.
The companies have lobbied Beijing for the tax changes to supply VLSFO for the so-called bonded marine fuel market. New rules from the International Maritime Organization will ban ships from using fuels with a sulfur content above 0.5% from 2020, compared with 3.5% now, unless they are equipped with exhaust scrubbers.
The head of Sinopec’s Jinling Petrochemical refinery asked the Chinese central government in March for the value-added tax rebates and the consumption tax waiver during the National People’s Congress meetings.
“Tax is a key hurdle to release domestic production and expand China’s bonded bunker fuel market,” said Harry Liu, executive director of downstream consulting with IHS Markit.
China Petroleum and Chemical, known as Sinopec, and PetroChina have announced they will together be capable of producing 14 million tonnes annually of VLSFO in 2020.
That would equal about 6% of the high-sulphur marine fuel oil consumed globally in 2018 and exceeds the current Chinese bunker market of 12 million tonnes annually.
But the officials said it would be uneconomic to produce the VLSFO without the tax changes.
“We’re waiting for the announcement. This is the first priority,” said one of the four sources, a Sinopec marine fuel executive who declined to be named as he is not authorized to speak to the press.
Under the current tax regime, Chinese supplies would be $150 per ton more costly than supplies from Singapore, an executive with a shipping fuel company based in Zhoushan, on China’s east coast, estimated.
China’s Ministry of Finance, State Taxation Administration and the National Development and Reform Commission, decision markers in the policy, did not respond to requests for comment.
Sinopec and PetroChina did not respond to requests for comment.
The Sinopec executive said 10 of its coastal plants, such as Jinling Petrochemical, Hainan refinery and Zhenhai Refining and Chemical Corp, are ready to produce VLSFO.
Most of these plants have more than one atmospheric residue desulphurization unit that cuts the sulfur content in residues produced from crude distillation units, allowing the company to produce the VLSFO.
PetroChina will likely use the northeast China-based refineries of Jinzhou, Jinxi, Dalian, and the Guangxi refinery in southern China to produce VLSFO, said two PetroChina refinery sources.
zoom Image courtesy of GasLog
The Hague-based LNG giant Shell is currently loading the second cargo of the chilled fuel from its Prelude FLNG facility located 475 km North East of Broome in Western Australia.
In a brief statement through its social media, Monaco-based LNG shipper GasLog showed its tanker Methane Julia Louise docked by the side of the Prelude FLNG.
According to the shipping data provided by VesselsValue, the vessel capable of transporting up to 170,000 cubic meters of the chilled fuel docked at the facility on June 5 and is already in the Banda Sea off Indonesia.
Shell shipped the first cargo from its Prelude FLNG last month.
The Prelude FLNG facility is operated by Shell in joint venture with Inpex (17.5 percent), Kogas (10 percent) and OPIC (5 percent).
The company opened the wells in the fourth quarter last year, supplying gas to the Prelude FLNG, the largest of its kind.
The FLNG facility is expected to stay moored at the Prelude gas field offshore Western Australia for 25 years. It is designed to produce 3.6 mtpa of LNG, 1.3 mtpa of condensate and 0.4 mtpa of LPG for export.
LNG World News Staff
Construction Hyundai E&C secures $2.7bn order from Saudi Aramco to build gas and crude-oil processing facilities in the Kingdom By
Scope of works includes the development of two major packages for an oilfield incremental development project in Marjan
Hyundai Engineering and Construction (E&C) has secured a $2.7 billion order from Saudi Arabia’s state oil giant, Saudi Aramco, to build gas and crude-oil processing facilities in the Kingdom.
In a report by The Korea Times, it was said that the scope of works includes the development of two major packages for an oilfield incremental development project in Marjan, northeast Saudi Arabia.
According to the company, the 1.72 trillion won Package 6 requires it to expand an existing gas-oil separation facility.
Under the terms of the Package 12 deal which is worth $1.23 billion, Hyundai E&C will build facilities for an onshore plant.
The company added in a statement that it expects each construction project to take 41 months.
Earlier this month, Saudi Aramco announced the opening of a ‘game-changing’ Baker Hughes GE (BHGE) research facility at Dhahran Techno Valley.
The firm says the move reflects its commitment to cutting edge technology and developing global partnerships.
The new facility will feature what’s billed as ground-breaking technologies and will include the first industry 3D printer for metal in Saudi Arabia, as well as a data visualisation and automation platform to help simulate and optimise well activity and construction.
Persistent natural gas takeaway constraints out of the associated gas-rich Permian have pushed Waha Hub prices to between $1 and $9/MMBtu below the Henry Hub benchmark for most of 2019. Concerns about gas flaring have flared. Tanker trucks transporting diesel fuel to drilling and completion operations in West Texas and southeastern New Mexico are clogging the region’s roads. And diesel’s not cheap, especially if you’re using thousands of gallons of it a day. With Permian wells producing far more natural gas than takeaway pipelines can handle, and with gas essentially free for the taking, is this the year when electric fracs — hydraulic fracturing powered by very locally sourced gas — gain a foothold in the U.S.’s hottest shale play? Today, we look at the economic and other forces at play in the e-frac debate.
Last week, Waha basis averaged $2.25/MMBtu and the Henry Hub daily prices averaged $2.24/MMBtu — in other words, folks selling gas at the Waha Hub had to pay someone a penny per MMBtu to take the gas off their hands. This seemingly crazy situation has become all too common in the Permian in recent months, as we’ve chronicled in a number of blogs, most recently in Sitting, Waiting, Wishing. The issue is pipeline takeaway capacity — there’s simply not enough of it. And with Permian gas production now rising past the 10-Bcf/d mark, the only near-to-mid-term hopes are (1) that new pipeline capacity and gas demand will become available in Mexico (allowing more gas to flow south across the border); (2) that the next big gas pipeline from the Permian to the Texas Coast (Kinder Morgan’s Gulf Coast Express, or GCX) starts up a few weeks earlier than its promised October 2019 online date; or (3) that regulators continue to allow more gas flaring. (See RBN’s weekly NATGAS Permian report for the latest on Permian gas production, takeaway capacity and prices.)
While the Permian produces extraordinary volumes of hydrocarbons — all that natural gas, plus more than 4 MMb/d of crude oil and lots of NGLs — it consumes a lot of energy too, mostly in the form of diesel fuel to power the trucks, drilling rigs, hydraulic fracturing pumps, compressors and other equipment needed to keep the oil patch humming. Refineries within or near the Permian meet a portion of the region’s diesel needs, but rising demand for the fuel has been spurring the development of new infrastructure — and the repurposing of existing assets — to bring additional fuel into the Permian from refineries along the Gulf Coast. (See our Fuel blog for more on that.)
All of which raises a logical question: Isn’t there a way to put at least some of that “surplus” gas to good use at or near the lease, and maybe reduce wellsite demand for diesel in the process? It turns out there is a way — switching from diesel-powered frac fleets to electric fleets (with the electricity coming from gas-fired generators), or to dual-fuel fleets that can run on some combination of diesel and natural gas. The catch, of course, is that for any such switch to occur, the pros need to outweigh the cons — and any hesitance on the part of the folks doing the pressure pumping must be overcome.
A typical hydraulic fracturing job involves the use of about 20 diesel-powered pumps, all parked side by side like tractor trailers at a five-star truck stop. These fuel-hungry pumps force a mix of water, frac sand and some chemicals into the well. According to Baker Hughes — the drilling-rig counter, and a supplier of small-ish gas generators (about 6 to 35 megawatts, or MW) — there are currently more than 500 diesel pressure-pumping fleets across the U.S. (a substantial portion of them in the Permian) with a combined capacity of about 20 million hydraulic horsepower (HHP), or about 40,000 HHP per fleet. A fleet of 20 or so pumps can consume as much as 7 million gallons of diesel a year (imagine the credit card points!), the equivalent of about 700 big tanker-truck deliveries to the wellsite. The annual fuel cost? North of $16 million per fleet, at current diesel prices (if 7 million gallons is used).
There’s been talk for a few years now about the potential for transitioning the U.S. pressure-pumping fleet from diesel to electric — not just in the Permian, but in other major plays. There are a number of benefits to switching, proponents say. These include:
A smaller footprint at the lease. A diesel-powered pump requires an engine for each pump; in an all-electric fleet, all of the pumps are powered by a single generator. Also, some e-frac trailers have two pumps, not one (as is typical in diesel set-ups).
Fewer workers required to install, operate and maintain the equipment.
Higher reliability, less maintenance and less downtime.
No need for “hot fueling” (refueling with diesel while hydraulic fracturing is under way); hot fueling can start fires.
Reduced need for diesel deliveries to the lease, and for gas flaring.
Perhaps the biggest selling point, though, would be a reduction in pressure pumping-related fuel costs. As we noted above, a diesel-powered frac fleet can consume as much as 7 million gallons of diesel a year — a company with a half-dozen fleets could easily spend $100 million annually on diesel fuel for them. Natural gas produced in the Permian, in particular, is currently available at essentially no cost, and even in other plays such as the Marcellus/Utica, Bakken, Niobrara and Eagle Ford, the cost of onsite natural gas is only a small fraction of the cost of delivered diesel.
AFGlobal’s DuraStim® E-Frac. Source: AFGlobal
As you might expect, the main downside to switching to an all-electric frac fleet is the up-front cost. The numbers surely vary, depending on the supplier and the size of the fleet, but recent cost info — discussed during (5-P alliteration alert!) Permian pressure pumper ProPetro’s May 2019 earnings call — is instructive. In a shift away from diesel, the Midland, TX-based company is buying three all-electric DuraStim® frac fleets from AFGlobal (with options for three more in 2020) and two 30-MW TM2500 gas turbines from Baker Hughes to power the first two e-frac fleets, which will be deployed at XTO Energy (an ExxonMobil subsidiary) and Diamondback Energy well sites in the Permian in late 2019 or early 2020. (The power source for the third e-frac fleet hasn’t been announced yet.) According to ProPetro, the cost of a 36,000-HHP fleet (each with six trailer-mounted, 6-HHP pump sets) and ancillary equipment (not counting the generator) is about $36 million — very much in the same ballpark as the cost of a conventional diesel-powered frac fleet with the same HHP. The power-generation side adds another $20 million to $22 million, putting the total cost per fleet at just south of $60 million. Given ProPetro’s expectations regarding fuel, operating and maintenance costs, the company estimates that the payback period for an e-frac fleet will be at least as quick — and possibly faster than — what it’s seen on its diesel frac fleets. (ProPetro has indicated that it successfully tested a DuraStim® pump set alongside a conventional fleet in the fourth quarter of 2018.)
Another pressure pumper, U.S. Well Services (active in the Permian, Eagle Ford and Marcellus/Utica), which introduced what it claims was the industry’s first commercially successful all-electric frac fleet in 2014, added three more electric fleets this year (for a total of five out of the company’s 13 fleets overall) and plans to add another in early 2020 — the newest e-frac fleet is under contract to Shell for up to four years.
Dual-fuel Frac Pump. Source: FTS International
Another option for using more onsite gas — and less delivered diesel — is to switch to a dual-fuel frac fleet (see photo above), which as its name suggests runs on a highly variable combination of natural gas and diesel, with gas’s contribution in some set-ups running as high as 90%. The key benefits of dual-fuel fleets, pressure pumper Liberty Oilfield Services (active in the Permian, Eagle Ford, Niobrara and Bakken) said during its May 2019 earnings call, are that they provide for at least some fuel-cost savings and can continue operating if there’s a problem with gas supply. (Depending on their size and hours of operation, e-frac fleets can require several million cubic feet of gas per day.)
We don’t pick ponies in technology races, but it’s safe to say that, with serious, big-time producers like XTO Energy, Diamondback and Shell signing up for e-frac fleets, the all-electric approach will be put through its paces in the next year or so. If pressure pumpers and producers continue to have good experiences with it — and the pros/cons balance leans toward the pros — we’d expect to see a lot more of them. At best, broad use of e-fracs would have only a secondary effect on gas pipeline takeaway needs, but when producers are literally giving gas away — or even paying to have gas taken off their hands — the economics of going all-electric certainly improve.
South Korean state-owned Korea Gas reported the largest drop in LNG sales since October 2017 in its latest monthly update.
The company’s LNG sales reached 1.91 million tons in June, 14 percent below the 2.22 million tons reported in the corresponding month last year.
Compared to the previous month when Kogas sold 2.15 million tons, the sales dropped 11 percent, the report shows.
Of the total sales in June, LNG sales to the power generation sector reached 0.93 million tons, dropping 8.9 percent from the previous month and 24.7 percent compared to the 1.23 million tons sold in June 2018.
City gas sales reached 0.98 million tons in the month under review, 0.8 percent below the corresponding month in 2018 and 12.9 percent down from the previous month.
Kogas operates in total 72 LNG storage tanks in South Korea. It imports about 96 percent of Korea’s LNG demand via its four terminals, namely Incheon, Pyeongtaek, Tongyeong and Samcheok.
https://www.lngworldnews.com/south-koreas-kogas-reports-steep-lng-sales-drop-in-june/
Baker Hughes BHGE, -0.91% on Friday reported that the number of active U.S. rigs drilling for oil fell by 4 to 784 this week. That followed a decline of 5 oil rigs a week earlier. The total active U.S. rig count, meanwhile, also fell by 5 to 958, according to Baker Hughes.
Permian Leads US in Rig Count Decline
The U.S. dropped a net total of five rigs this week, according to Baker Hughes, a GE Company.
The U.S. dropped a net total of five rigs this week, according to weekly data from Baker Hughes, a GE Company.
This brings the nation’s overall rig count to 958 active rigs, which is 96 fewer than the number of rigs one year ago.
Texas led all states with a loss of seven rigs while Alaska and California shed one rig apiece.
Colorado upped its rig count by two while Louisiana and Oklahoma added one rig each.
And despite the bustling shale drilling activity in the Permian, it led all major basins in losses this week, dropping six rigs. This brings the Permian’s active number of rigs to 437. However, the Permian still accounts for almost half of the U.S.’ total number of active rigs.
The Eagle Ford also saw a decline, with a reduction of five rigs.
The Cana Woodford, DJ-Niobrara and Haynesville all added one rig each this week.
https://www.rigzone.com/news/permian_leads_us_in_rig_count_decline-12-jul-2019-159297-article/
London — Weakness in the Platts JKM market this year and its decorrelation with Brent has prompted LNG sellers to start using the Dutch gas hub TTF price as a floor for the market, an S&P Global Platts analysis found.
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The JKM has traditionally followed LNG long-term contracts, the majority of which are linked to crude oil prices.
But Asian LNG prices have been falling since last winter due to strong supply and muted demand, leading the Platts JKM spot price to fall close to the TTF price. Meanwhile, Dated Brent prices have remained robust, creating a significant disparity with JKM.
The JKM spot price fell almost 40% in the first half of the year to stand at $5.509/MMBtu on June 30, according to S&P Global Platts data, while the equivalent Asia weighted average contract declined 14.7% to $9.375/MMBtu.
"It is interesting to see that LNG sellers now have to adjust their JKM spot and forward offers to the Dutch TTF gas hub level," a London-based LNG broker said, pointing to TTFas the current technical support for the JKM.
European natural gas prices rose last week, supported by coal and carbon prices and lower flows from Norway and Russia. Both JKM spot and derivatives have also gained value in the last days mirroring the TTF bullish movements.
On Friday, JKM for August was assessed 21.3 cents/MMBtu higher day on day at $4.588/MMBtu, the biggest single-day price rise since April 12, according to Platts data. The JKM derivative for October delivery was assessed at $5.60/MMBtu on Friday, up 25 cents/MMBtu on the day.
TTF month-ahead was assessed at $4.588/MMBtu on Friday at the close, leaving the JKM premium at just 17.5 cents/MMBtu, having traded at a discount of 20 cents/MMBtu at one stage during the day.
The tight spread between TTF and JKM suggested Europe remained the preferred option for LNG supply, as netbacks favored Europe. For instance the August netback for Northwest Europe from the US Gulf Coast was $3.713/MMBtu on Friday, compared with $3.118/MMBtu for Japan/Korea.
Related story: JKM LNG derivatives June volume shrinks 7.7% to 142 cargoes
U-Turn in Q1 2020?
"The question is, what will happen with European prices if storage will be close to full? This could depress TTF, widening the gap [to JKM]. Then TTF would have less influence on JKM, partly because Europe would not be able to compete with Asia as it cannot physically take more gas," said Gergely Molnar, gas analyst at the International Energy Agency.
Stock levels in Northwest Europe plus Italy are 80% full, compared with 59% a year ago, according to Gas Infrastructure Europe.
"There are increasing concerns that European gas storage could hit 'tank tops' by the end of summer, opening up further downside to prices," HSBC oil and gas analyst Kim Fustier said.
Forward prices assessed by Platts at Friday's close showed the spread opening again in Q1 2020, with the US Gulf Coast and Nigerian netbacks for Asia being higher than those for Northwest Europe.
Once the spread opens, and the JKM returns to a larger premium, TTF will have less influence.
"In periods of oversupply, TTF will provide a key benchmark for global LNG pricing, but this dynamic will be short-lived if winter demand materializes at seasonal norms in Asia," S&P Global Platts Analytics senior LNG analyst Samer Mosis said.
-- Lucie Roux, lucie.roux@spglobal.com
-- Edited by Joe Fisher, newsdesk@spglobal.com
Seabed Geosolutions, a joint venture between Fugro and CGG, has been awarded a 4D ocean bottom node (OBN) monitor survey in West Africa from an unnamed major oil company.
The project, for which the data is expected to be acquired over a two-month period during the third quarter of 2019, will cover 151 square kilometers in water depths up to 600 meters, Fugro said on Monday.
The ocean bottom nodes will be deployed by remotely operated vehicles.
Stephan Midenet, CEO of Seabed Geosolutions, commented, “We are excited to secure another survey for this repeat customer, creating a better understanding of the development of their reservoir. It will secure backlog continuity for our CASE Abyss crew and the Hugin Explorer vessel.”
Seabed Geosolutions collects geophysical data on the seabed through an array of imaging technologies for oil and gas companies, focused on the development and production phases of their fields.
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LNG, CNG may be transported through road and rail as being done in many countries
ISLAMABAD: Oil whether crude or finished products has been transported with ease in normal bowsers and trucks. This has not been the case with natural gas as it is too light.
Gas pipelines have been used for transporting gas. Often there are far-off areas with lesser demand to which expansion of gas network may not be economical. Also, there are small gas resources in far-off areas including biogas which are not transportable through the gas network.
There are non-pipeline methods of gas transportation, now being widely used in many countries. There is a potential to introduce the same in Pakistan, which is the subject of discussion in this space. Liquefied natural gas (LNG) and compressed natural gas (CNG) have high energy densities, which are 600 and 200 times respectively of the ordinary natural gas at normal temperature and pressure, and thus are good candidates for road and rail transportation through trucks and wagons.
OGRA recommends 47% hike in gas tariff
LNG trailers
LNG is a chilled gas (at minus 160 degree Celsius) and requires heavily insulated tanks/tubes that are mounted on trailers. Fortunately, highly efficient and effective material and methods are now available, which make this possible without causing energy loss or creating insurmountable safety issues.
LNG can be transferred directly in liquid form without regasification to LNG bowsers and transported to points of consumption. Regasification facilities, however, have to be installed at the user end. This requires space and capital, which is not normally excessive.
CNG stations in many countries have installed such facilities and have become independent of the gas utility or CNG stations have been set up in far-off places where the gas network is not available. There are heavy-duty trailers, which run directly on LNG, for which LNG-CNG stations have built underground insulated LNG tanks and have installed LNG dispensers for the LNG-fuelled trailers.
There are proposals in Pakistan by private parties to introduce this system for CNG and industrial users. Expensive LPG currently being used in LPG-air mix plants can also be substituted by LNG.
Conversely, some gas resources and fields are too small and thus remained stranded. In oil fields, there is associated gas which is flared into the atmosphere, causing environmental damage and resource loss. Such gas resources are liquefied through mobile skid-mounted or even stationary liquefaction plants and the chilled gas is transported to end-users directly or supplied to the gas utility.
CNG transportation
CNG transportation through trucks has been in vogue for a longer period than LNG transportation. CNG cylinders of the same size as are installed in CNG stations or even large ones are interconnected and a booster is installed as well. There are even longer tubes of truck length that are utilised.
The limitation is on diameter and not on length. CNG is filled in cylinders at some suitable station (called mother stations) and transported to CNG stations (called daughter stations), which do not have gas supply. Such CNG trucks themselves are used as mobile CNG stations in which dispensers are also installed.
CNG can also be transported to areas where gas supply is not available. Local grids are connected directly to these CNG trailers and gas is released as per requirement.
CNG has been under controversy as CNG station owners have been perceived to be big stealers of gas. It may or may not be true. Gas stealing by CNG stations and other large commercial consumers can be controlled through mother-daughter concept, although there are other ways to control the same. In Pakistan, such mother-daughter system has not been installed yet. This system can bring in a wholesale CNG supply business. Commercial land cost in busy areas is high. Daughter stations not requiring compression facilities need much less space. Mother stations can be set up in cheaper land areas and possibly connected with high pressure pipelines, thus providing a cheaper solution.
However, transportation cost is an addition, which will determine the suitability of this system. In India, this system is very popular.
Direct filling stations
Public transport or large fleet operators can benefit from this system. High pressure stations called SMS in our terminology have high pressure gas at 1,000-1,500 psi. CNG is at 3,000 psi. A compressor with a doubling or tripling ratio can be installed at such stations and CNG can be filled with very economical electricity consumption and thus lower cost.
Normal CNG compression requires 20 times compression and this only 2 or 3 times compression. It should result in proportionally lesser electricity consumption. Large urban areas in the country like Karachi, Lahore, Rawalpindi, Multan, Peshawar, etc can benefit from such a system; needless to say that a high political dividend can be reaped through the installation of such systems.
Biogas and bio-CNG
Pakistan is an agricultural country producing abundant bio-waste. Also, it is the fifth largest milk producer with proportional ranking in the population of milk animals, which produce dung – an ideal ready material for bio-gas.
In Pakistan, programmes for small family-size biogas plants have been promoted, which should continue. However, much waste material still goes unutilised or under-utilised. Commercial-scale biogas can be produced in far-off agricultural areas. Local grids can be installed where feasible.
Local bio-CNG stations can be installed. Also bio-CNG stations can be set up in mother-daughter mode, should the production scale justifies it.
Commercial biogas production is common in many countries of Europe and is even pumped into the standard gas grid after necessary processing. There is a target in Europe to supply 20% of gas requirements through biogas. In India, bio-CNG has become popular and is cheaper than normal CNG.
Biogas and bio-CNG have become generally competitive in the wake of high LNG prices. Landhi Cattle Colony in Karachi appears to be an ideal location for installing mother CNG supply stations.
No oil, gas reserves found off Pakistan shore
Flared gas use
Oil fields produce associated gas which sometimes is not in industrial quantities and is normally flared. There may be opportunities to utilise this waste. There is a flared gas utilisation policy issued lately in 2016. In certain situations, where no commercial use or user is found, the flared gas can be diverted and put at the disposal of the government free of cost.
Flared gas can be used in direct burning, possibly without much processing, if it is not required to be pumped into the gas grid. Industrial boilers and possibly home cookers can use this gas. Above virtual pipeline methods can be used in this case.
CNG can be made more competitive through methods discussed above. With the new gas tariff and rupee depreciation, economics has become topsy-turvy. One has to wait until things stabilise to make final judgment in this respect.
The writer is the former member energy of the Planning Commission
Published in The Express Tribune, July 15th, 2019.
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Australian oil and gas company Karoon is set to get hold of Petrobras’ Bauna offshore field in Brazil, almost three years after the initial agreement had been suspended.
In a statement on Friday, responding to a report by Upstream, Karoon said: “Karoon confirms it has been notified that it has presented the high bid in the process to acquire a 100% operating interest in Santos Basin off-shore Brazil concession BM-S-40, which contains the producing Bauna light oil project.”
Just a little over a year ago, Petrobras started a non-binding phase for the sale of its entire stake in the Bauna field, located in shallow waters in the Santos Basin.
Petrobras had been in exclusive talks Australia’s Karoon over the sale of an interest in Bauna and Tartaruga Verde fields back in 2016, however, shortly after the start of negotiations, court proceedings were initiated against the potential sale of the assets, alleging that Petrobras did not follow the correct sale process. An injunction was granted on November 19, 2016, suspending the potential sale at the time.
Commenting further on Monday, Karoon said that the transaction for the Bauna field remained subject to approval by Petrobras’ Board and governance bodies. The field has been in production since February 2013.
“This bid is in line with Karoon’s stated strategy to create value for shareholders by acquiring a high quality, transformational production asset,” Karoon said Monday.
Karoon has previously said it is looking to complete the acquisition of “a foundation production asset that will underpin long-term sustainable growth and shareholder value.”
Offshore Energy Today Staff
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Natural gas and oil discoveries around the world have continued to show promising growth this year, with new finds totaling 6.7 billion boe through June, according to an assessment by Rystad Energy.
The 1,123 million boe average monthly of discovered volumes year-to-date reflect a 35% uplift compared with the 827 million boe seen in 2018. This year has been “a year of gas discoveries, which hold a majority (63%) share compared to liquids, a phenomenon not seen since 2016,” the researchers said.
Discoveries offshore have been led by Russia, followed by Guyana, Cyprus, South Africa and Malaysia. The new reserves have propelled what already has been a successful year for international exploration companies, said senior analyst Rohit Patel.
“With deepwater finds contributing half of the discovered volumes, it can be inferred that high-risk frontier plays in the deepwater are back on the map for explorers.”
Majors and the integrated operators, which share a “high-risk appetite and successes in frontier regions,” to date have dominated conventional exploration and accounted for more than 80% of the discovered volumes.
By far the offshore finds have dominated, with 30 of the 56 global conventional discoveries between January and June, Rystad noted.
Russia’s Gazprom has had two big natural gas discoveries in the Kara Sea off the northwestern part of West Siberia's Yamal Peninsula -- Dinkov and Nyarmeyskoye.
“Together, these discoveries hold nearly 1.5 billion boe of recoverable gas resources,” according to Rystad. “Dinkov, the larger of the two fields, holds 1.1 billion boe of resources, making it the largest discovery so far this year.”
In Guyana, ExxonMobil Corp.’s spate of oil discoveries has continued in the Stabroek block, with three major discoveries so far in 2019, Tilapia, Yellowtail (oil) and Haimara (natural gas condensate). The three fields collectively may hold almost 800 million boe of recoverable reserves.
“ExxonMobil’s success rate in the 15 wells drilled so far on the Stabroek block stands at an impressive 86%. First oil from the block is expected in mid-2020,” analysts said.
ExxonMobil also has made headlines in the Mediterranean Sea, with giant Glaucus gas discovery off Cyprus, a discovery estimated to hold 700 million boe in recoverable resources. It was the second major find in Cypriot waters after Eni SpA’s Calypso gas discovery of a similar resource size.
In South Africa’s deepwater, Total SA’s Brulpadda wildcat completed in February made a large gas condensate discovery in the Lower Cretaceous Post-rift Paddavissie Fairway that could hold 1 billion boe or more.
Four additional prospects in South Africa -- Luiperd, Platanna, Woudboom and Blassop -- have been de-risked within the fairway and a multi-well drilling campaign targeting oil in the eastern side of the fairway is expected to commence on the block in early 2020. The campaign might be carried out in stages as the operational window in the area is limited to December to March. The Luiperd prospect, with a pre-drill resource estimate of more than 500 million boe, might be spud next.
Meanwhile, Thailand’s national energy company PTT Exploration and Production Public Co. Ltd. (PTTEP) unveiled a major offshore discovery in Malaysian waters with the Lang Lebah-1RDR2 exploration well, which may hold 2-2.5 Tcf of gas. The discovery is believed to be the largest discovery ever made by PTTEP as operator.
Norwegian vessel provider DOF Subsea has been awarded several contracts, securing utilization for vessels in the Subsea/IMR Projects segment.
DOF Subsea said on Monday that, in the Atlantic region, the 2011-built Skandi Skansen vessel had been awarded a contract for mooring installation on the Njord Future project by Equinor.
“The Atlantic region further announces successful contract awards on the UKCS for two operators to undertake 60 days of work using the Geosund, one of which is called off under a long-term frame agreement,” the company added.
The works include pipeline inspection and environmental sampling.
In the North America region, DOF Subsea has secured a three-year renewal of a frame agreement with an unnamed major operator in the U.S. Gulf of Mexico.
Under the frame agreement, DOF Subsea will be responsible for the final assembly, transportation and installation of well production jumpers and control flying leads to support new tie-ins to existing brownfields.
The primary installation vessel will be the Jones Act compliant vessel Harvey Deep Sea built in 2013.
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More than 70 percent of the U.S. Gulf of Mexico oil production remained shut on Sunday after the oil operators had shut facilities and evacuated offshore workers ahead of the Hurricane Barry.
Hurricane Barry made landfall in Louisiana on Saturday and has since weakened into a tropical storm. According to a CBS report on Saturday, Barry left 70,000 people without power: 67,000 in Louisiana and 3,000 in Mississippi.
As for the effects on the offshore oil and gas industry, as reported last week, the operators such as Shell, Anadarko, BP, Byron, and others had evacuated platforms and rigs in the path of the storm and had shut production across their offshore facilities.
According to the latest update by the U.S. Bureau of Safety and Environmental Enforcement released on Sunday, 72.82 percent of the oil production in the Gulf of Mexico had been shut-in, equating to 1,376,265 barrels of oil per day.
BSEE said on Sunday that approximately 61.68 percent of the natural gas production or 2,780 million cubic feet per day in the Gulf of Mexico had been shut-in.
Offshore workers have been evacuated from a total of 283 production platforms, 42.3 percent of the 669 manned platforms in the Gulf of Mexico. Also, workers have been evacuated from 10 rigs, of the 21 rigs operating in the U.S. Gulf of Mexico. Furthermore, none of the 20 DP rigs operating in the Gulf of Mexico are off location. They have all returned to pre-storm positioning, BSEE said.
Shell platforms shut
In an update on Sunday, Shell said: “Shell continues to monitor and respond to Tropical Storm Barry in the Gulf of Mexico and we are taking actions to keep our people and assets safe.
“Our offshore crews and assets have weathered the storm well; however, we have shut in the Auger, Salsa and the Enchilada assets in the Gulf of Mexico and curtailed production in the Mars Corridor as a result of the effects of this storm.
“Downstream third-party facilities have experienced weather-related issues, including power loss, that are limiting, restricting or halting some or all of their operating capabilities. We continue to monitor and work with those third-party providers in order to resume normal production as soon as is safely possible.
“Despite the shutdowns and curtailments, approximately 65% of the average daily production of oil and gas flowing across our Shell-operated assets in the Gulf of Mexico is continuing.
“Worker re-deployment, restarting and normal production resumption are all contingent on weather conditions and repair times (if needed). Planning for all of those activities have begun and we will enact those plans when it is safe to do so,” Shell said.
Anadarko Petroleum last issued an update on Friday, July 12. The company at the time said it had removed all personnel and shut in production at its operated Constitution, Heidelberg, Holstein, and Marco Polo platforms, and had also shut in production at Lucius and Marlin platforms due to downstream infrastructure closures.
“These platforms will remain shut in until the weather has cleared, it is safe to return staff, and/or downstream infrastructure re-opens,” Anadarko said on Friday.
BSEE said on Sunday: “After the storm has passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back on line immediately.”
NASA astronaut Christina Koch last Thursday shared the photo of the Tropical Storm Barry as seen from the International Space Station.
Tropical Storm Barry pic.twitter.com/GNh8qUhQdN — Christina H Koch (@Astro_Christina) July 11, 2019
Offshore Energy Today Staff
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Washington — The port of New Orleans opened to some traffic Sunday and was expected to resume normal cargo operations Monday as Tropical Storm Barry headed further inland.
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The storm was expected to weaken to a tropical depression later Sunday, the National Hurricane Center said.
Water levels along the southern coast of Louisiana are gradually receding, but minor coastal flooding is possible.
Related story: Slow-moving Barry dropping rain as 150,000 electricity customers without power
"Barry is expected to produce rain accumulations of 6 to 12 inches over south-central Louisiana, with isolated maximum amounts of 15 inches," the NHC said Sunday.
More oil and gas production in the Gulf of Mexico was reported offline Sunday, but operators are expected to start the process of evaluating the status of their offshore platforms with an eye toward resuming production.
Approximately 73% of oil production, or 1,376,265 b/d, has been halted in the Gulf as of Sunday, according to the US Bureau of Safety and Environmental Enforcement.
About 62%, or 2,780 Bcf/d, of natural gas output has been shut in, BSEE said.
ExxonMobil said it has begun the process of determining if any of its offshore or onshore facilities have been damaged by the storm.
BSEE said all offshore facilities will be inspected once the storm has passed.
"Once all standard checks have been completed, production from undamaged facilities will be brought back online immediately," BSEE said.
The US Coast Guard opened the lower Mississippi River to all traffic, with some restrictions.
"The Inner Harbor Navigational Canal Lock remains closed and is expected to be opened this evening. All flood gates along the Mississippi River should be opened by this afternoon," the port said in an update on its website.
The port said it expects "normal weekday" cargo operations to resume Monday.
REFINERIES
ExxonMobil said Sunday that its 502,500 b/d Baton Rouge refinery, chemical plant and Sorrento terminal are "operating as normal."
Phillips 66 said it is preparing for start-up activities at its 294,700 b/d Alliance refinery to start Monday.
"There have been no significant impacts to the Alliance Refinery after Hurricane Barry made landfall yesterday," the company said Sunday. "While ordinary operations were shut down for the storm, utilities at the facility remained active to allow for these activities to begin as soon as it is safe to do so."
-- Gary Gentile, gary.gentile@spglobal.com
-- Edited by Jason Lindquist, newsdesk@spglobal.com
Following last week’s results from the first two targets, which proved to be dry, Australian energy giant Santos has failed to find hydrocarbons at the other two Roc South-1 targets as well. The rig will move on to the next well location soon.
Roc South-1 is located in WA-437-P where Santos is the operator and Carnarvon Petroleum is its partner. It is an exploration well with primary objectives in the Caley, Baxter, Crespin and Milne Members of the Lower Keraudren Formation.
Santos spudded the Roc South-1 well in mid-June, using the Noble Tom Prosser jack-up rig, with hopes to discover and add tie-in resources to the nearby Dorado oil field, one of the largest ever oil discoveries in Australia’s North Western Shelf.
Last week, Carnarvon said that no producible hydrocarbons had been found across the Caley and Baxter sands.
On Monday, July 15 Carnarvon provided an update related to the Roc South-1 well. The company said that the 7” liner was set in place as planned and the well was drilled down to total depth of approximately 4,910 meters Measured Depth (MD) in 6” hole.
The well was not drilled as deep as earlier planned due to lack of hydrocarbon indicators. The interpretation from logs indicates no producible hydrocarbons across the Crespin and Milne sands.
According to Carnarvon, the rig will complete operations to secure the well before moving to the Dorado-3 well appraisal location.
The Caley, Baxter, Crespin and Milne reservoir sands were of similar quality reservoir in the Roc South-1 well as compared to the nearby Dorado field.
Carnarvon Managing Director, Adrian Cook, said: “Of the eight wells that we have drilled in this new basin, this is the first well to not discover producible hydrocarbons. We will need to analyse the reason for this result, however a strong positive take away is the quality of the reservoir sands found at depths of almost 5,000 meters. As we continue to build our understanding of the area, we will incorporate all of our well results, together with the new Keraudren 3D seismic survey, to refine our prospectivity for future exploration drilling. We remain firmly of the view that we are working in a highly promising new basin with very high-quality prospects to be pursed in the future.
“The rig will soon move to the Dorado-3 appraisal well location where it is planned to extract several cores and conduct flow tests from the Dorado reservoirs that have proved successful in both the Dorado-1 and 2 wells. Given our understanding of the Dorado-1 and 2 reservoirs, and the successful flow test at Roc-2, we are looking forward to the Dorado-3 results providing us with strong support for our development plans.”
The objective of the Roc South well was to determine if additional hydrocarbons existed that were capable of being tied-in and produced with the Dorado liquids (oil and condensate) and gas production facilities. Carnarvon said that the development plans for Dorado will not be impacted by the Roc South results.
In relation to the other exploration prospects in the area, the final Roc South-1 result is expected to assist in their refinement. However, the new 3D seismic data that has essentially completed acquisition over the core area, is expected to provide more relevant information over both the Dorado development area and a number of key prospects nearby, Carnarvon concluded.
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While U.S. shale production is booming and the Permian continues to set new production records, the pace of growth is slowing as many companies have recently scaled back production growth targets while investors and bankers continue to be skeptical about the shale industry’s returns.
After oil prices crashed in the fourth quarter of 2018, many independent producers trimmed their spending budgets for this year, but investors continue to be unconvinced that they will see steady healthy returns, as evidenced in the market value of many smaller producers, Bloomberg estimates show.
For example, small producers Legacy Reserves and Approach Resources saw their market value plunge by 99 percent and 87 percent, respectively, in the past year. Bigger players, including Parsley Energy, Centennial Resource Development, and QEP Resources, lost 42 to 59 percent of their market value in one year, according to Bloomberg calculations.
Legacy Reserves of Midland, Texas, even filed for Chapter 11 bankruptcy protection last month to facilitate negotiated financial restructuring. And this isn’t the first small producer to have done so over the past year.
While the largest players, including supermajors Exxon and Chevron, are expanding their Permian presence and aim to grow production volumes significantly over the next few years, small, third-tier exploration and production companies have been struggling even when WTI Crude prices were above $60 a barrel.
Some small players who have been relying on borrowings to finance drilling are now finding themselves in a position to look for options to restructure debt, including by seeking Chapter 11 bankruptcy protection.
According to executives at 161 energy firms responding to the Dallas Fed Energy Survey for Q2 2019, activity in the oil and gas sector was flat in second quarter this year after three years of growth. Oil and gas production rose for the 11th quarter in a row, but the oil production index showed a slightly slower rate of growth, the survey found.
More worrisome was the plunge in the company outlook index, which, after returning to positive territory in Q1, was once again negative for Q2, falling 28 points to -4.5, “pointing to more pessimism about future conditions,” the Dallas Fed said.
“The dimming outlooks coincided with a surge in uncertainty, as the aggregate uncertainty index jumped 31 points to 50, the highest level since the index was introduced in 2017,” according to the Dallas Fed.
https://oilprice.com/Energy/Crude-Oil/Signs-Of-Slower-Permian-Oil-Growth-Continue-To-Emerge.html
Callon Petroleum Co said on Monday it would buy Carrizo Oil & Gas Inc in a $3.2 billion deal, the latest in a string of acquisitions as energy companies scale up to boost cash flow in the face of investor criticism.
Energy companies have been under pressure to cut costs and increase buybacks and dividends to shareholders, who are no longer willing to back drilling programs in the absence of strong cash flow.
Lion Point Capital, Carrizo’s fourth-largest shareholder with a 5.05% stake, in May urged the company to look at a potential merger or to sell its units.
The deal will bolster Callon’s presence in the oil-rich Permian shale basin, the country’s most prolific, and the Eagle Ford shale field.
The combined company, which will have about 200,000 net acres in the two basins, produced more than 100,000 barrels of oil equivalent per day in the first quarter, with oil constituting nearly three quarters of the total output.
Low natural gas prices, down nearly 18% this year, have also forced companies to invest more in oil-rich assets.
The deal is also expected to generate positive free cash flow of more than $100 million at current pricing and save $100 million to $125 million in costs annually.
Carrizo shareholders will receive 2.05 Callon shares for each share held, or about $13.12 per Carrizo share based on Callon’s closing share price on July 12, representing a 25% premium.
Shares of Callon Petroleum fell 12% at $5.63 before the opening bell, while Carrizo was up 9% at $11.46 - well below the offer.
The equity value of the deal is $1.21 billion, based on Carrizo’s outstanding shares, according to Reuters calculations. As of March 31, Carrizo had long-term debt of $1.71 billion.
Callon shareholders will own about 54% of the combined entity, with Carrizo shareholders owning the rest.
The combined company, which will remain headquartered in Houston, will have an 11-member board with eight from Callon’s board and three from Carrizo’s.
The deal, expected to close in the fourth quarter, will immediately add to earnings and net asset value per share, the companies said.
JPMorgan Chase Bank and BofA Merrill Lynch will provide financing to Callon for the deal. J.P. Morgan was the financial adviser to Callon, while RBC Capital Markets and Lazard advised Carrizo.
Papua New Guinea’s new prime minister used Oil Search Ltd’s (OSH.AX) 90th birthday to press the country’s biggest company and its oil major partners to pay more tax to the impoverished Pacific island nation.
Prime Minister James Marape’s comments come as Oil Search and partners Exxon Mobil Corp (XOM.N) and Total SA (TOTF.PA) face delays on a $13 billion plan to double liquefied natural gas (LNG) exports from the country, with the new government seeking to win more from resource projects.
Oil Search has long prided itself on work it does in PNG communities, including funding health care and literacy programs, but Marape said that was not the company’s job.
“So going into the future we will not be asking much of you in terms of community service obligation, but we will be asking you to pay your fair share of tax,” Marape said in a speech at Oil Search’s 90th birthday celebration in Port Moresby last Friday. Excerpts were released on Tuesday.
“We will be asking of you and others in the industry for a greater participation in ... downstream processing. We’ll be asking of you for a clearer, better definition of what local content is,” he said.
Oil Search had no immediate comment on the speech.
The company on Tuesday pared its full-year capital spending guidance by $45 million to between $500 million and $610 million due to a delayed start to front-end engineering and design work for the expansion of the Exxon-operated PNG LNG plant.
The expansion is due to be fed by gas from Total’s Papua LNG project, the P’nyang gas field and existing fields.
Oil Search said early work has been delayed because talks with the government on developing P’nyang have been put on hold while the new government reviews the Papua LNG agreement, signed in April.
Oil Search shares fell 2.6% in a flat broader market after it reported the delay and second-quarter revenue that missed estimates by a wide margin.
Revenue for the quarter ended June 30 rose to $378.9 million from $262.8 million a year earlier, when a deadly earthquake forced a shutdown of PNG LNG. Citi had expected quarterly revenue of $421 million.
Compared with the first quarter, production was hit by 13 days of slower output in late May to early June amid planned maintenance at PNG LNG. Sales were flat but revenue fell due to weaker LNG pricing, tied to lower oil prices, Oil Search said.
After tropical storm Barry passed through the U.S. Gulf of Mexico and made landfall in Louisiana early on Saturday, oil and gas producers began on Monday to slowly restore oil production that had shut in as much as 73 percent of the oil production in the Gulf.
Exxon, Chevron, Anadarko, BHP, and Shell began to return workers to the platforms they had evacuated ahead of the storm.
Last week, those companies evacuated staff from many platforms in the U.S. Gulf of Mexico. Chevron was evacuating all the staff from five platforms and shutting them down ahead of the storm, and also evacuating some non-essential personnel from a sixth platform. Shell was evacuating four platforms--Appomattox, Mars, Olympus and Ursa—and had reduced production from the Mars and Olympus platforms by more than 2,500 bpd. BP evacuated staff from four platforms that collectively produce over 300,000 bpd of oil and gas. BHP, for its part, was reducing production at two platforms, with the evacuation of staff from Neptune and Shenzi expected to wrap up by this afternoon.
On Sunday, 72.82 percent—or to 1,376,265 bpd—of the current oil production in the U.S. Gulf of Mexico was shut-in in response to the tropical storm Barry.
On Monday as of 11:30 CDT, 69.08 percent of the oil production was shut-in, equal to 1,305,558 bpd, according to operator reports submitted to the U.S. Bureau of Safety and Environmental Enforcement (BSEE).
“Redeployment and crew-change flights to some of our assets have begun now that weather conditions in the Gulf and onshore have improved,” Shell spokeswoman Cynthia Babski told Reuters on Monday, noting that one Shell platform had limited production on Monday, while three others were still shut.
Phillips 66, which had temporarily closed down its 253,600-bpd Alliance, Louisiana, refinery ahead of the storm, was getting ready on Sunday to restart the refinery on Monday. Most of the Louisiana refineries of major operators were operating normally on Sunday, refinery officials or sources told Reuters.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
European gas hub prices have risen above the price of liquefied natural gas (LNG) on the Asian spot market in a rare occurrence that largely rules out arbitrage of LNG cargoes from the Atlantic to the Pacific basins.
Dutch and British month-ahead gas prices exceeded Asian spot LNG in April for the first time in four years. Asian LNG prices tend to be higher due to the huge demand there with few alternative supplies.
The switch in the price values is another twist in a unique year for the fast-expanding commodity as soaring production from new plants, much of it in the U.S. Gulf Coast, coincides with tepid demand from Asia, normally consumer of 75% of global LNG.
Month-ahead Dutch gas was $4.56 per million British thermal units (mmBtu) and the British equivalent was $4.48 per mmBtu by 1315 GMT on Monday, while Asian spot LNG for August was heard at $4.40 per mmBtu [LNG/].
The arbitrage, whereby Atlantic Basin LNG - including from the U.S., Russia and West Africa - headed for Europe instead travels the longer distance to Asia to fetch a higher price, has been largely closed for most of the year. That is because the spread has rarely exceeded the extra cost of shipping - broadly defined as a dollar per mmBtu.
Forward price curves moreover indicate the situation is unlikely to change until at least October.
When the Japan/Korea Marker (JKM) for the months of August, September and October is compared to the Dutch Title Transfer Facility (TTF) forward prices, the spread is below $1 per mmBtu. For October, it is 46 cents and was as low as 28 cents.
The JKM is a benchmark published by commodity pricing agency S&P Global Platts and Asia’s main LNG pricing benchmark for the spot market.
Dutch and British month-ahead gas prices soared this month in part due to a string of planned outages in Norway, although their 38% to 44% gains in the past two weeks have not fully reversed the prolonged 66% percent fall since last October.
The rise has, nevertheless, given a breather to European suppliers that had contracted to buy U.S. LNG by widening the spread with the U.S. Henry Hub gas price.
At one point last month the spread did not cover shipping costs.
With U.S. production the largest source of increased supply in the past year, Europe’s ability to absorb excess LNG is being tested. Europe has long been seen as the industry’s “destination of last resort” due to its flexible continent-wide markets.
The backlog of DUCs in major U.S. shale plays fell for a fourth straight month, the longest stretch of declines since 2016, as producers came under intense pressure from shareholders to rein in costs while boosting output.
The number of drilled but uncompleted wells, or DUCs, fell by 41 to 8,248 in June, according to the Energy Information Administration’s Drilling Productivity Report. That’s down from a record high of 8,315 in February. Demands for fiscal discipline are spurring more producers to finish existing wells.
“They have already sunk their cash into the drilling portion,” said Elisabeth Murphy, an analyst at ESAI Energy. “Now it’s just a matter of completing rather than drilling new wells.”
While the number of DUCs fell in most regions, the Permian saw an increase of 42. The West Texas basin has experienced pipeline bottlenecks that are expected to ease as soon as next month as new conduits start opening.
Production from the top seven shale regions is expected to increase by 49,000 bpd in August to 8.55 MMbpd, according to the EIA. Gains will be led by the Permian, where output is seen rising by 34,000 bpd.
Although production continues to scale new heights, the pace of increases is slowing. July’s forecast output was revised lower in this report.
Brazil’s state-controlled oil company Petroleo Brasileiro SA announced on Monday the start of a sale process for refining and logistics assets, according to a securities filing.
Petrobras, as the company is known, said the nonbinding phase involves refineries Abreu e Lima (Rnest), Landulpho Alves (Rlam), Presidente Getúlio Vargas (Repar) and Alberto Pasqualini (Refap). “Potential buyers qualified for this phase will receive a descriptive memorandum containing more detailed information on the assets,” the company said in the filing.
North Dakota's Bakken oil production could top easily 2 million b/d, but gas capture constraints continue to plague producers and limit growth, Lieutenant Governor Brent Sanford said Tuesday.
"We are now at 1.39 million b/d, just below the record of 1.4 million b/d set in January, and that is with a lower rig count than we had one year ago, due to technological gains," Sanford said at the Bakken Oil and Gas Conference Expo in Bismarck. "The only thing keeping us from setting a new oil production record is our gas production. It is outpacing our oil production and makes it difficult to meet our gas capture goals. The gas-to-oil ratio continues to rise as producers better understand the shale."
About 19%, or about 536 MMcf/d, of the estimated 2.82 Bcf/d of natural gas produced in North Dakota was flared in May, according to North Dakota Pipeline Authority data released Tuesday. About 423 MMcf/d was flared due to challenges or constraints on existing gathering systems. The remainder was flared from wells with zero sales.
In May, the number of new wells producing gas outpaced the number of new wells selling gas, according to Justin Kringstad, the authority's director.
"How do we overcome this obstacle?" Sanford asked. "That's the 2 million b/d question. The gas capture challenge is limiting further growth. We believe the solution is through investment and innovation, not regulation or more red tape."
The North Dakota Industrial Commission's current gas capture goals currently set a limit of 12% of statewide production to be flared. That goal is scheduled to fall to 9% beginning in November 2020.
Lynn Helms, director of the North Dakota Department of Mineral Resources, said the state should be back in compliance with flaring goals late this year as new gas capture infrastructures comes online.
"There's no silver bullet," Sanford said. "In my home county there are $1.5 billion currently invested in gas plants under construction. Hopefully, a lot of that will come online in the next six to 12 months. This will give us additional processing capacity of 1.65 Bcf/d. Even with that, it will take more investment to keep growing production."
Helms said gas production is forecast to outpace the growth of that infrastructure by mid-2022 when the state could fall out of compliance again.
"That's not a lot of breathing room," Helms told reporters Tuesday.
North Dakota oil production averaged 1.39 million b/d in May, up 800 b/d from April. But producers "self-restricted" about 25,000 b/d of oil production in order to stay within gas capture limits, Helms said.
Sanford also said the state needs to increase its percentage of gas-fired power generation, which could help alleviate the gas capture issue.
Another challenge facing the industry is a lack of workers in North Dakota. He estimated there are as many as 30,000 job openings. This includes positions ranging from gas plant operators to refinery positions to truck drivers.
"We have more jobs available than people who need a job," Sanford said. "We have to find a way to attract people from other states and other countries to move here."
Shares in blue-chip miner ( ) ticked up on Wednesday after better than expected petroleum production just about outweighed declines in its copper and iron ore output last year.
For the year ended 30 June, the FTSE 100 firm reported that petroleum output had risen 1% to 121mln barrels of oil equivalent (mmboe), mainly due to increased natural gas production and increased tax barrels in Trinidad and Tobago.
Copper production, meanwhile, fell 4% to 1,689 kilotonnes as a result of production outages at the Olympic Dam project in Australia as well as lower grades from the Escondida mine in Chile.
Iron ore production during the year was flat at 238mln tonnes despite record production at BHP’s Jimlebar mine as the benefits were offset by the impact on inventory from a fire at the Mount Whaleback mine in the previous year.
The declines continued across the group’s metallurgical coal, energy coal and nickel production, which fell 1%, 6% and 6% respectively over the course of the year.
However, the figures were better for the group’s performance in June, which saw month-on-month iron ore output rebound 12% to 63mln tonnes as its Western Australia Iron Ore project returned to full capacity following Tropical Cyclone Veronica in March.
Month-on-month petroleum output was up 3% while copper, metallurgical coal, energy coal and nickel were up 3%, 6%, 20%, 10% and 49% respectively.
Looking ahead, the company said it expected copper production for the 2020 financial year to be “slightly higher” that the year just ended, with chief executive Andrew Mackenzie saying a “strong underlying performance” during the year had put the company in a position to deliver “higher volumes” in 2020.
BHP added that all of its major projects were currently “tracking to plan”.
The positive outlook and higher petroleum output helped lift the shares by 0.4% to 2,037.5p in early deals.
No fast exit from Permian oil for private equity, RS Energy says
By Rachel Adams-Heard on 7/16/2019
HOUSTON (Bloomberg) -- Private equity has been ramping up its investment in Permian basin oil and natural gas production, but the old strategy of selling out after a few years is no more, according to RS Energy Group.
Simply tapping a team of oil executives to find a good spot in the Permian of West Texas and New Mexico is no longer enough to attract buyers, the Calgary-based researcher said. Investors want proof that companies can generate reliable cash flow.
“It will be increasingly rare for companies to flip in the traditional three- to five-year period, even though many portfolio companies put together great asset packages,” RS said in a blog post. “The management teams chosen to build will now be required to operate, which can be an intimidating change to their sponsor.”
Earlier this year, private equity executives themselves warned of the challenges they face trying to find buyers for their oilfield investments. Publicly traded oil and gas producers used to be the natural acquirers, but a drop in crude prices, combined with investor demands for them to conserve cash, has diminished their appetite for deals.
“There’s an inability to exit” private equity oil and gas holdings as a whole, George McCormick, co-founder of Outfitter Energy Capital LP, said in January at the Private Capital Conference in Houston. “The engine on the train is really public companies buying assets from privately backed companies. But public companies aren’t buying today.”
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FROM THE ARCHIVE ///
Oil and gas major Santos has reported record interim results for the six months to June, with production growing to 37-million barrels of oil equivalent, up 32% on the previous corresponding period.
“Our disciplined operating model and approach to capital allocation has delivered a strong first-half result and the successful integration of our Western Australian business has exceeded expectations,” said Santos MD and CEO Kevin Gallagher.
Sales volumes for the first half of the year were up 19% on the previous corresponding period, to 45.2-million barrels of oil equivalent, while sales revenues were up by 18%, to A$2-billion.
Santos generated A$300-million in free cash flow during the second quarter ended June, bringing the total free cash flow for the interim period to A$600-million.
“Santos has now delivered free cash flow for 13 consecutive quarters. These cash flows underpin our brownfield growth strategy where we hit a number of significant milestones during the quarter, including farming-in P’nyang and awarding the subsea contract for Barossa.”
Gallagher noted that Santos was also hitting record drilling rates in the onshore business, and completed two appraisal wells for its carbon capture, utilization and storage project in the Cooper basin.
Looking ahead, Santos has narrowed its production guidance for the full year to between 73-million and 77-million barrels of oil equivalent, while sales volumes are expected to reach between 90-million and 97-million barrels of oil equivalent.
Gallagher said that with maintenance activity at the Cooper basin and the Papua New Guinea liquefied natural gas project now completed, stronger production was expected in the second half of the full year.
https://www.miningweekly.com/article/santos-reports-a-stellar-first-half-2019-07-18
Australia’s Woodside Petroleum Ltd (WPL.AX) reported a 32% drop in second-quarter revenue on Thursday, the first decline in six quarters, as it was hit by an extension of planned maintenance at its Pluto liquefied natural gas facility and weaker prices.
The country's largest listed oil and gas explorer said production for the quarter ended June 30 fell to 17.3 million barrels of oil equivalent (mmboe), from 22.1 mmboe a year earlier. The latest quarter production figure was above Citi estimates of 16.33 mmboe.
Sales fell to $738 million from $1.08 billion, below Citi estimates of $793 million.
Last month, the company said it expected annual production to be at the lower end of its forecast range of 88 mmboe to 94 mmboe on maintenance extension at its Pluto plant.
The company said it started commissioning activities at the $1.9 billion Greater Enfield oil project off Western Australia. Woodside operates the Greater Enfield project and has a 60% stake, while Mitsui E&P Australia Pty Ltd, a unit of Japanese trading house Mitsui & Co (8031.T), owns the remaining 40%.
In March, Woodside Chief Executive Officer Peter Coleman said the company was slowing down marketing for the Scarborough development in Western Australia, despite a lot of interest for the gas, due to weak prices of Asian LNG.
Coleman had also said he was worried about companies approving new LNG projects without lining up long-term contracts, potentially weighing on prices when they start producing in the mid-2020s.
Xinhua File Photo
HOUSTON, July 17 (Xinhua) -- A pragmatic and cooperative approach would best serve the mutual interests of the United States and China, a U.S. expert said here Wednesday.
At the U.S.-China Sister Cities Mayors' Summit, Charles Foster, chairman of the U.S.-China Partnerships, said that "while there are important issues that must be addressed, it must be done in the context of mutual respect and appreciation that both of our countries have fundamentally different histories and institutions."
Stressing that the U.S.-China relationship is "too big to fail," he said any effort by the United States to stop China or impede its growth is doomed -- "not only will not be successful, but in the long run, could be mutually destructive."
In regard to the trade tensions, he said while the U.S. additional tariffs can hurt China, they will neither prevent the Chinese economy from continuously expanding, nor prevent China from playing a growing role in world affairs.
He added that China's continued engagement in the international system is essential to world stability.
The Houston-based lawyer expressed his hope that the trade issues can be resolved in a win-win manner, adding that "when that happens, Houston, as one of the largest U.S. exporters, will be a major beneficiary."
The summit, which gathered some 200 representatives, was co-sponsored by the Chinese People's Association for Friendship with Foreign Countries and Sister Cities International, a U.S. organization dedicated to promoting friendship with foreign cities.
Themed "40 Years Ahead: Stronger Friendship, Closer Cooperation," the one-day event featured panel discussions, keynote addresses, case studies as well as a multimedia exhibit of more than 300 historic photos to commemorate the 40th anniversary of the China-U.S. diplomatic ties.
Natural gas storage activity this spring suggested extremely bearish fundamentals. The market injected gas into storage at a record pace, well above year-ago and 5-year-average levels. The high injection rate was in part a result of demand loss as weather abruptly moderated in April and May. However, a look at injections on a weather-adjusted basis suggests there’s another dynamic at play — namely, that increased baseload demand for gas in the power sector amplified the effects of the mild weather this spring, lowering demand even more than temperatures alone would indicate. Moreover, that same dynamic could have an opposite, equally extreme effect during the hotter months when power generation is the primary driver of gas demand. Today, we look at the latest gas storage and demand trends, and what they can tell us about the balance of injection season.
Back in April, in our Living in the Wild, Wild West blog, we said the winter of 2018-19 was one of records and extremes for the gas market, including record production and demand, and both the highest and lowest spot gas prices ever recorded in the U.S. physical gas market. It’s safe to say that theme extended into spring. Lower-48 gas production continued setting record highs, as did demand, particularly from LNG exports. And we can add one more extreme to that list — some of the highest storage injections seen this decade for the April-May time frame.
Figure 1 plots the monthly total injection/withdrawal volumes for 2019 to date (black line) versus last year (blue line) and the 5-year average (green line). Injections in April and May of 2019 totaled 332 Bcf and 524 Bcf, respectively, exceeding both year-ago and 5-year-average levels (dashed red oval). In April, injections came just 24 Bcf shy of the highest total injection for that month seen this decade (356 Bcf in 2010). By contrast, the net storage change was a net withdrawal of 11 Bcf in the comparable weeks last year, and the next-highest injection level in the past 5 years was 250 Bcf 4 years ago in 2015.
Figure 1. U.S. Natural Gas Storage Injections/Withdrawals. Source: Energy Information Administration
The higher-than-normal injections continued through May, but not to the extent they had in April. May’s total injection of 524 Bcf was the highest of the decade and 142 Bcf above last year, though it was only 2 Bcf higher than the 5-year high of 522 Bcf seen in 2015. June injections also were above average, at 404 Bcf, but not as high as the 429 Bcf seen in June 2014. When compared to 5-year average, the deviations in storage injections have swung from being as much as 180 Bcf higher than the historical average in April, to less than 80 Bcf higher in May and then to about 90 Bcf higher in June. What gives? Next, we begin to break down the fundamentals underlying the volatile storage behavior.
Figure 2 shows the underlying supply-demand balance changes behind the deviations in storage injections versus the 5-year average. To recap, the supply-demand balance equals the total supply — including domestic production and imports from Canada by pipeline and elsewhere via LNG — minus total demand — including domestic consumption from the power, industrial and residential/commercial (res/comm) sectors, plus exports to Mexico and via LNG. (Note that the res/comm bucket in our model includes lease and plant fuel, pipe loss and any miscellaneous gas flows that can’t be otherwise categorized due to insufficient transparency into flows on intrastate pipeline systems and behind local distribution companies. These miscellaneous volumes combined are a relatively stable piece of the overall supply-demand balance.) Getting back to Figure 2, the graph plots the difference between the 2019 supply-demand balance and the 5-year average balance for the first half of the year, using data from our NATGAS Billboard daily price outlook report. As is evident from the changes, there was a huge swing in April, with the balance going from being more bullish (shorter supply) versus the 5-year average in February and March (red bars; negative volumes), to over 6 Bcf/d more bearish (longer supply) versus the 5-year average in April (blue bars; positive volumes). In May and June, the 2019 balance remained longer supply compared with the 5-year average, as indicated by the blue bars, but the deviation was much less bearish than what we saw in April.
Figure 2. Lower-48 Gas Supply-Demand Balance – 2019 vs. 5-year Average. Source: RBN NATGAS Billboard
The storage anomalies in part can be explained away by weather, which along with record production contributed to a particularly weak supply-demand profile in April. To put the temperature piece into context, absolute temperatures typically rise between March and April and, with that comes lower demand for res/comm heating, which normally leads to an overall net decline in domestic gas consumption (since res/comm heating is a disproportionately bigger driver of overall gas demand than any other consuming sector). As temperatures continue to rise and air conditioners are flipped on later in spring, higher gas demand for power generation begins to partially offset the demand loss from the res/comm sector. However, weather aberrations can shift the demand curve off its normal course — lower-than-average temperatures in the shoulder months can prolong the heating demand well into spring (as late as May), while above-average temperatures too early in the spring — before it’s hot enough for electricity demand for cooling to kick in — can reduce heating (and overall) demand even further.
This year, after a colder-than-normal March, the weather in April warmed faster and earlier than it normally does (green oval in Figure 3), with national average temperatures (yellow line) coming in above the 10-year rolling average (black line) for most days of the month (including as much as 10 degrees above average on April 8). The result was a sharp, 17-Bcf/d month-on-month drop in res/comm demand (the 5-year-average change between March and April is about 12 Bcf/d), with res/comm demand in April averaging 26 Bcf/d, compared with 43.3 Bcf/d in March. Power and industrial demand also fell, by 1.4 Bcf/d and 1.6 Bcf/d, respectively, for a net drop in domestic demand of about 20 Bcf/d. Overall total demand (U.S. consumption, plus exports) in April still came in 8.5 Bcf/d above the 5-year average (led by power burn and LNG exports), but that was not enough to offset the nearly 15-Bcf/d net increase in supply compared with the 5-year average — all of that from U.S. production.
In May, temperatures rose overall on an absolute basis but came in cooler than the 10-year average (blue oval), sustaining some heating demand. So, while res/comm demand (and, with it, total demand) continued to slip month-on-month, the monthly decline was modest compared with previous years, given that res/comm and power burn (gas demand for power) averaged higher than the 5-year average. The cooler-than-normal weather pattern continued into June, but with absolute temperatures well above 70 degrees by then, res/comm demand fell to near historical average levels and industrial demand also declined a bit while power burn gained traction. In fact, power burn posted a record high in June and the monthly increase more than offset the loss from the res/comm and industrial sectors, which allowed total demand to rise month-on-month despite the mild weather. The overall June balance tightened relative to May as a result. But because of the milder-than-normal weather, the June balance remained bearish relative to the 5-year average, as shown in Figure 2 above.
Figure 3. National Average Temperatures. Source: RBN NATGAS Billboard
So, weather clearly played a sizable role in driving the strong injections this past spring, but as we alluded to above, there’s more to it than that because storage deviations through the spring months were not only happening on an absolute basis but also on a temperature-adjusted basis, meaning they were stronger than the historical model would suggest even at the same temperatures. We suspect this has to do with the increased market share of natural gas in the power sector and how that’s affecting its sensitivity to temperature anomalies. We’ll delve into our thesis on that in Part 2 of this series.
Halliburton has introduced 3D reservoir mapping, a new logging-while-drilling (LWD) capability that provides a detailed representation of subsurface structures to improve well placement in complex reservoirs.
Three-dimensional inversion, an advanced reservoir mapping process, reveals overlooked features such as faults, water zones, or local structural variations that can considerably alter the optimal landing trajectory of a well. In geosteering applications, the technology maximizes contact with oil and gas zones while mapping the surrounding formation to identify bypassed oil, avoid drilling hazards and plan for future development.
“This unique technology moves beyond layered reservoir models to full 3D characterization of the reservoir, enabling accurate well placement,” said Lamar Duhon, V.P. of Sperry Drilling. “In complex formations, visualizing data in a 3D environment helps operators significantly enhance reservoir understanding to drive better drilling decisions and maximize asset value.”
The 3D capability originates from downhole measurements taken by the EarthStar ultra-deep resistivity service, an LWD sensor that identifies reservoir and fluid boundaries up to 225 ft (68 m) from the wellbore. This range more than doubles the depth of detection of other industry offerings.
An operator in the North Sea recently deployed the 3D capability in a field with a long history of production and water injection. The data allowed the operator to better assess the movement of reservoir fluids and visualize fault boundaries, which supported more accurate well placement and increased production.
The U.S. Department of Interior (DOI) has said that the Bureau of Ocean Energy Management (BOEM) will offer 77.8 million acres for a region-wide lease sale in the Gulf of Mexico scheduled for August 21, 2019.
The sale will include all available unleased areas in federal waters of the Gulf of Mexico, the DOI said in a statement on Thursday.
The U.S. Secretary of the Interior, David Bernhardt, said: “The expansion of America’s energy sector has been a major economic driver for the American people in keeping energy prices low. Our work in the Gulf of Mexico to ensure America leads the world in energy production is paramount.”
Lease Sale 253, scheduled to be live-streamed from New Orleans, will be the fifth offshore sale under the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program. Under this program, a total of ten region-wide lease sales are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established. Two Gulf-wide lease sales are scheduled to be held each year and include all available blocks in the combined Western, Central, and Eastern Gulf of Mexico Planning Areas.
Lease Sale 253 will include approximately 14,585 unleased blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).
Excluded from the lease sale are: blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary.
The Gulf of Mexico OCS, covering about 160 million acres, is estimated to contain about 48 billion barrels of undiscovered technically recoverable oil and 141 trillion cubic feet of undiscovered technically recoverable gas.
Revenues received from OCS leases (including high bids, rental payments and royalty payments) are directed to the U.S. Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi, Alabama), the Land and Water Conservation Fund and the Historic Preservation Fund.
“This lease sale is a critical part of BOEM’s multi-faceted effort to secure our nation’s energy future,” said BOEM Gulf of Mexico Regional Director Mike Celata.
BOEM has included fiscal terms that take into account market conditions and ensure taxpayers receive a fair return for use of the OCS. These terms include a 12.5 percent royalty rate for leases in less than 200 meters of water depth, and a royalty rate of 18.75 percent for all other leases issued pursuant to the sale, in recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow water resources.
Activist investor Carl Icahn formally launched on Thursday a proxy fight against Occidental Petroleum (OXY.N) to win control of four board seats, a regulatory filing showed, after talks with the oil company’s CEO failed to reach an agreement.
Icahn, who owns 4.4% of Occidental shares, said last month he planned to launch a proxy fight to oust and replace four Occidental directors. Icahn has blasted the Houston-based oil and gas producer for failing to give owners a say on its proposed $38 billion acquisition of Anadarko Petroleum (APC.N), which he has called “misguided and hugely overpriced”.
“Occidental refused to craft a compromise and so we’ll happily take our case to stockholders which the company should have done with this bet-the-company transaction,” Icahn told Reuters on Thursday.
“We prefer to have peace and have a great record in reaching settlements,” Icahn added.
Icahn’s use of a consent solicitation to elect directors would require a majority of shares outstanding to be voted in favor, a greater hurdle than a special meeting of shareholders, according to an Occidental spokesman. Occidental has urged shareholders to reject the activist’s proxy, calling the request “not in the best interests of Occidental or its shareholders”.
If Icahn’s solicitation is successful, the record date for a vote on the Icahn candidates could be scheduled as soon as September or October.
In the filing with the Securities and Exchange Commission, Icahn identified his four candidates for the board: John Hofmeister, the former president of Shell Oil Company; Alan LeFevre, the former finance chief of consumer goods firm Jarden Corp; and Nicholas Graziano and Andrew Langham, two executives with Icahn’s own investment company.
Icahn spoke with Occidental CEO Vicki Hollub on July 10 in an 11th-hour effort to reach a compromise and avert a proxy fight. His associates also spoke with Occidental executives twice earlier this month, according to the filing.
The investor expects to schedule meetings with Occidental shareholders in the next four weeks to press the case for board seats. The proxy fight is unlikely to stop the Anadarko deal, but would influence the pace and direction of billions of dollars of asset sales that will result after the acquisition closes.
Occidental has proposed selling Anadarko’s Africa assets, including a proposed Mozambique liquefied natural gas project estimated to cost $20 billion. Anadarko also owns significant offshore wells and production platforms in the U.S. Gulf of Mexico.
Freeport-McMoRan (FCX.N), which in 2016 sold some of those same offshore assets to Anadarko, did so while under pressure from Icahn’s investment fund, which held seats on the mining firm’s board.
Anadarko shareholders are expected vote in favor of the Occidental deal on Aug. 8.
China is set to become the single biggest energy storage market in the Asia Pacific region by 2024, according to new reporting by British data analysis and consultancy group Wood Mackenzie. The company’s July 9th report states in no uncertain terms that the country is poised to take over the energy storage market, as its “cumulative energy storage capacity is projected to skyrocket from 489 megawatts (MW) or 843 megawatt-hours (MWh) in 2017 to 12.5 gigawatts (GW) or 32.1GWh in 2024,” an impressive increase ”in the installed base of 25 times.”
Wood Mackenzie credits the Chinese government’s assertive policy incentives in the energy storage arena as the primary reason for the sector’s rapid growth. Thanks to the country’s major push for storage deployments in the last year, deploying 580MW (1.14GWh) to reach a cumulative market size of 1.07GW (1.98GWh) in 2018, China has already secured its position as the second biggest energy storage market in the Asia Pacific region in terms of deployment, with South Korea coming in first place. “Front-of-the-meter (FTM) storage led growth,” Wood Mackenzie said of China’s 2018 growth, “up five-fold in terms of installed power capacity compared to 2017.”
The vast majority of FTM market growth in China came from one company last year, the State Grid Corporation of China. The state-owned utility “deployed 452MWh of grid-connected FTM pilot projects, which accounted for 83% of FTM market growth nationwide last year. These pilot projects were supported by government research grants,” according to Wood Mackenzie.
(Click to enlarge)
China is not the only country, however, vying for a larger slice of the global energy storage market. Grid-connected energy storage deployments have increased significantly around the world in the past five years, with an impressive compound annual growth rate of “74% worldwide in the years 2013 to 2018, with a ‘boom’ in deployment figures expected over the next five years,” according to Energy Storage News reporting based on Wood Mackenzie analysis in April. Related: Here’s Putin’s Answer To The U.S. Shale Boom
While Asia currently dominates the global energy storage market, the United States is also set to significantly increase its own capacity in the coming years, with China and the U.S. “set to dominate with over 54% of the market by 2024 shared between them.” Wood Mackenzie projects that the whopping 74 percent compound annual growth rate that the energy storage sector has enjoyed over the past 5 years will significantly slow in the future, down to 38 percent by 2024, global deployments will still manage to reach the very impressive level of 63GW / 158GWh by that year.
In the meantime, China’s investment in FTM storage will only continue to grow. At the moment, in the words of Wood Mackenzie senior analyst Dr. Le Xu, “Based on current project economics and without policy support, utilities have limited incentive to scale-up investment in FTM storage as part of grid infrastructure,” but that’s all about to change. Next year, according to the Chinese National Energy Administration as paraphrased by WoodMac’s reporting, “the ancillary services market will be transitioning from a basic compensation mechanism to a market integrated with spot energy prices by 2020. That, along with maturity in technology and subsequent cost reduction, are key factors that will contribute to the exponential growth in the nation’s energy storage market through to 2024.”
Not only is the geopolitical landscape of energy storage set to change dramatically in the next 5 years, with the U.S. and China both angling for a larger market share, the storage industry itself is in for a major transformation as the market moves away from fossil fuel grid back-up services and toward long-term duration storage more geared toward renewable energies. According to reporting from PV Magazine, “the next five years will see such storage evolve from short duration grid services such as frequency regulation into the long-duration segment that could render fossil fuel backup generation obsolete.”
By Haley Zaremba for Oilprice.com
More Top Reads From Oilprice.com:
State-owned mining company China Northern Rare Earth (Group) held the July listed prices for all its light rare earth products unchanged from the previous month, after it hiked quotes on ore supply concerns in June, the company said on its website on Friday July 12.
SMM expects the move to rally market confidence and underpin prices of light rare earth oxides such as praseodymium-neodymium oxide, after offers slid amid sluggish trades from late-June.
Spot prices of praseodymium-neodymium oxide stood at 320,000-325,000 yuan/mt as of Friday July 12, down 15,000 yuan/mt from a week ago and down 55,000 yuan/mt from a high on June 19, SMM assessed.
Separately, China Southern Rare Earth Group also set the listed prices for medium and heavy rare earth oxides, except for gadolinium oxide, unchanged on the week as of Wednesday July 10.
Most market participants remained bullish about prices of medium and heavy rare earth oxides, and this kept producers from offloading cargoes.
China Northern Rare Earth and China Southern Rare Earth are two of the six state-owned mining groups that dominate China’s rare earth industry.
HOUSTON, July 16, 2019 /PRNewswire/ -- Surge Energy US Holdings Company ("Surge Energy") today announced that its wholly owned subsidiary, Moss Creek Resources Holdings, Inc., has successfully completed the longest known lateral in the Permian Basin.
The Medusa Unit C 28-09 3AH was safely and successfully completed and drilled out to total depth. As previously announced, this well is the longest known lateral in the Permian Basin with a total horizontal displacement of 17,935 feet (or 3.4 miles). The completion consisted of 52 frac stages utilizing TTS SlicFrac™ diverter technology to place 2,200 lbs of proppant per lateral foot.
This technological accomplishment was executed with service providers Universal Pressure Pumping for pumping services and GR Energy Services for wireline.
Initial production from this well is expected by the end of the third quarter.
"The successful drilling and completion of the longest known lateral in the Permian Basin demonstrates the strong culture of innovation at Surge Energy," stated CEO Linhua Guan. "We are extremely proud of our technical and operations teams in this record setting achievement."
About Surge Energy
Surge Energy is an independent oil and natural gas company focused on the development, exploitation, production and acquisition of oil and natural gas reserves in the Midland Basin of West Texas, one of three primary sub-basins of the Permian Basin. Surge Energy is headquartered in Houston, Texas and currently holds approximately 85,000 net acres in the Permian Basin. For more information, visit our website at www.surgeenergya.com.
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SOURCE Surge Energy
Source: Xinhua| 2019-07-17 20:31:16|Editor: xuxin
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BERLIN, July 17 (Xinhua) -- Uber, the world's leading mobility online platform, is re-launching its services which can be booked via the app UberX in the German city of Hamburg, the U.S. company announced on Wednesday.
Addressing legal concerns in Germany over brokering rides with private drivers, customers in Hamburg could now book a trip with a professional driver. At the end of the journey, payment could be made cashless by credit card or Paypal.
According to Uber, "the fare is displayed before booking and does not change even if the journey takes longer or there is a traffic jam." Also, customers could see the profile of the driver including a picture, number plate and service evaluation before departure.
Hamburg is the sixth city in Germany where Uber is offering its services, alongside Berlin, Munich, Dusseldorf, Frankfurt am Main and Cologne. Uber stated that last year alone, more than 240,000 people in Hamburg had tried to book car trips via the Uber app.
Uber would also continue its co-operation with German taxi companies in Hamburg where customers could book a regular taxi trip via UberTaxi, the company stated.
With the "Green option", Hamburg would be joining the list of European cities such as Munich, Lisbon and Kiev "where people can order all-electric cars at the touch of a button".
In Germany, Uber is working exclusively with licensed rental car and taxi companies, whose drivers all hold a passenger transport permit and are fully insured for commercial passenger transport. According to Uber, "the drivers meet all the requirements for commercial passenger transport, which includes a regular specialist health check and the control of the police clearance certificate".
Hamburg is one of the first German cities which is testing autonomous and networked vehicles, intelligent parking sensors, traffic light phase assistants, and many other digital trends in the transport sector.
According to the traffic index 2018 released in June this year, no other city in Germany is suffering from as many traffic congestions as Hamburg. The city has set itself the goal of becoming one of the most innovative mobility cities in Germany, reducing individual traffic and offering safe and diverse mobility opportunities.
"In order to solve traffic problems, individual traffic must be intelligently reduced," said Christoph Weigler, general manager at Uber Deutschland. This could only work if alternative mobility offers "would convince people that their own car is not always the most effective and environmentally-friendly means of transport".
Germany, a poster child for responsible energy, is renouncing nuclear and coal. The problem is, say many power producers and grid operators, it may struggle to keep the lights on.
The country, the biggest electricity market in the European Union, is abandoning nuclear power by 2022 due to safety concerns compounded by the Fukushima disaster and phasing out coal plants over the next 19 years to combat climate change.
In the next three years alone conventional energy capacity is expected to fall by a fifth, leaving it short of the country’s peak power demand. There is disagreement over whether there will be sufficient reliable capacity to preclude the possibility of outages, which could hammer the operations of industrial companies.
The Berlin government, in a report issued this month, said the situation was secure, and shortfalls could be offset by better energy efficiency, a steadily rising supply of solar and wind power as well as electricity imports.
Others are not as confident, including many utilities, network operators, manufacturing companies and analysts.
Katharina Reiche, chief executive of the VKU association of local utilities, many of which face falling profitability as plants close, said the government’s strategy was risky because it had not stress-tested all scenarios. She characterized the plan as “walking a tightrope without a safety net”.
Utilities and grid firms say if the weather is unfavorable for lengthy periods, green power supply can be negligible, while storage is still largely non-existent. Capacity aside, the network to transport renewable power from north to south is also years and thousands of kilometers behind schedule, they add.
Stefan Kapferer, head of Germany’s energy industry group BDEW, said it would be risky to rely on imports. “Conventional power capacity is falling nearly everywhere in Europe and more volatile capacity is being built up,” he told Reuters.
The government rejected such concerns, saying the likelihood of plant crashes or identical weather conditions across Europe was remote.
Regardless of reliability, however, Germany becoming a net power importer would have major consequences for the whole continent, whose power markets are interlinked under EU single market rules - and are dominated by exports from Germany.
The shift comes at a time when nuclear plants in France, another major exporter to the rest of Europe, are ageing fast - meaning it is also increasingly likely to rely on imports.
Searing summer temperatures rising to record levels in parts of Europe highlight a quandary facing the continent: how to phase out the fossil fuels driving global warming, while avoiding power shortfalls in an era when there could be increasing spikes in demand from cooling systems and expanding data centers.
COMPANIES ON EDGE
Germany, Europe’s economic powerhouse, should lose 12.5 gigawatts (GW) of coal capacity by 2022 and its final 10 GW of nuclear power, leaving below 80 GW of conventional capacity, according to recommendations from a government-commissioned panel in January.
There will still be nearly enough reliable capacity to meet the country’s peak demand of around 82 GW, with rising green capacity and the option of imports providing a comfortable cushion, economy minister Peter Altmaier said this month.
He was speaking upon the release of a separate government safety monitoring report which said a one-for-one match of supply and demand is unnecessary because overcapacities of 80 to 90 GW in the wider European region provided some leeway for imports into Germany.
However Germany’s four transmission system operators (TSO) estimate there could be a shortfall of 5.5 gigawatts between peak power demand and reliable capacity in 2021, which equates to the supply of electricity to 13-14 million people, and that’s before factoring in the bulk of coal plant closures.
Altmaier’s position is supported by environmental campaigners who say some energy producers were playing up the threat of blackouts to protect their own interests.
“Their motive is obvious,” said Green lawmaker and energy expert Oliver Krischer. “They want to build up pressure to receive payments for capacities which otherwise would have no chance to come to play in the market.”
Some utilities have asked for compensation for the coal exit plan, with RWE, Germany’s largest electricity producer, wanting up to 1.5 billion euros ($1.7 billion) per GW to soften the financial hit of plant closures.
Regardless of who may be right or wrong, German manufacturers say they are worried about the prospect of black-outs or even short outages. They say they can’t afford to lose secure flows of electricity, nor can they survive higher network handling costs that could accompany more unreliable renewables.
“The early exit from coal-to-power generation fills us with great concern,” Philipp Schlueter, chairman of Trimet, operator of three aluminium plants in North Rhine-Westphalia state, told Reuters.
“Our aluminium plants need non-stop supply of power at competitive prices and a stable power grid at all times.”
Aluminium maker Hydro Aluminium Rolled Products in Grevenbroich, in the same western German state, said that plants should only be closed once alternatives were in place.
“As an energy-intensive industry, we can only go without conventional energy once renewables are in a position to offer reliable supply,” managing director Volker Backs told Reuters.
North Rhine-Westphalia, also home to other big corporates like E.ON, RWE, Thyssenkrupp and Bayer, accounts for a third of German gross domestic product.
Grid operator Amprion, which operates high voltage lines mainly in that state, says the region will have to rely on power imports from the early 2020s at the latest.
“Secure capacity goes down continuously until 2020 and there could be a deficit even before all nuclear reactors leave the grid,” CEO Klaus Kleinekorte told Reuters.
Steelmaker and chemicals industry lobbies also voiced concerns. Wacker Chemie’s CEO has signalled the company could shift some operations overseas, saying he saw more favorable conditions in the United States.
BIG QUESTION FOR EUROPE
The problem takes on a European dimension as much of the bloc is following a trend of reducing reliance on thermal plants and switching to renewables.
Over the next 10 years, coal-fired and nuclear power plants with a total capacity of around 100 GW will be shut down in Europe, equivalent to Germany’s thermal power capacity alone, according to grid operator data.
To counter this, hundreds of gigawatts of offshore wind are planned to line European coastlines by the end of next decade, according to the EU’s green expansion plans.
Most industry experts agree the transition is needed to combat climate change, and that within 10 or 15 years there will be substantial renewable generation to provide reliable cover for the continent, on the road to carbon neutrality by 2050.
However, they say, a big question remains: how will Europe struggle through until this happens, keeping the lights on and its businesses competitive? Countries in similar positions can’t all import from each other.
Germany’s rapid and radical shift makes the scenario more precarious.
German output accounts for around 20% of the European Union’s electricity, with France another 17%, according to figures from Eurostat, the EU statistics office.
Germany is a net exporter to Austria, Switzerland and Poland and also the Netherlands, which sends some of the power onwards to Britain and Belgium. Thus, if Germany alone was to stop reliably producing surpluses, several parts of the continent could see power shortfalls - and outages - as a consequence.
There have already been warning signs this year as Germany’s net exports in the first half of 2019 fell by 14%. The situation has been exacerbated by a European heatwave that drove demand in France to near record levels in June, curbing its export availability.
Fabian Joas, energy expert at Berlin think-tank Agora, said it would be a difficult road for most of Europe to meet its goal of abandoning conventional energy in coming decades.
“But we will be able in the long run to operate a power system based nearly fully on renewables,” he added. “Everyone who understands the matter agrees on that.”
America’s biggest solar power developers are stockpiling panels to lock in a 30% federal tax credit set to start phasing out next year, a strategy that could backfire if projects do not materialize or panel prices slide substantially.
Duke Energy, 8minute Solar Energy and Shell-backed Silicon Ranch are among those working to claim the full subsidy, which is available to firms that either start construction or spend 5% of a project’s capital cost by the end of 2019. Consumers who purchase residential solar this year are eligible for the full tax credit, but the rules that allow the subsidy to be locked in now for systems installed much later apply only to companies.
North Carolina-based Duke, for example, plans to claim the maximum credit on as much as 2 gigawatts worth of panels. That is enough to power 380,000 homes, even though some of those projects might not go online for years.
Clean-energy mandates in many states and a push by companies to go green have given Duke confidence it can recoup its investment, said Chris Fallon, vice president of the company’s renewable energy arm.
“We know there will be customers out there, we just don’t know who those customers are yet,” Fallon said.
China’s Trina Solar estimated about 20% of current U.S. demand for solar panels is being fueled by tax considerations. That heavy up-front spending has been good news for global panel manufacturers, including Trina, which is sold out through the first quarter of next year.
Consultancy Wood Mackenzie projects developers will “safe harbor” roughly 31.2 gigawatts of U.S. solar installations, representing nearly $30 billion of investment in coming years to maximize their tax credits.
The strategy carries risks.
Installers could get stuck with inventory if U.S. solar demand weakens or if current technologies rapidly become outdated.
They are also paying a premium for panels amid the rush to beat the year-end tax-credit deadline. Modules prices are up by more than 10% from earlier in the year, according to Wood Mackenzie.
It is a major departure for an industry that has seen steady declines in panel prices, thanks to improvements in efficiency and low-cost Asian imports.
“There is a definite risk” but it is “still worth doing,” said Tom Buttgenbach, chief executive of Los Angeles-based 8minute Solar, which builds large solar power plants in the southwestern United Sates.
‘ACT NOW’
The phase-out of the Investment Tax Credit is a major change for an industry that has relied on it to fuel growth. Since the tax credit was implemented in 2006, U.S. solar installations have expanded by more than 50% a year, according to the Solar Energy Industries Association.
Falling costs have enabled solar to compete with fossil fuel-generated power. The solar industry trade group this week kicked off a lobbying push to preserve the ITC with a letter to Congress. Democratic lawmakers in both the House and Senate support extending the subsidy.
But an extension is opposed by Chuck Grassley, the Republican chairman of the Senate Finance Committee, which oversees tax issues. A longtime supporter of credits for both wind and solar, Grassley promised subsidy critics in 2015 - the last time it was extended - that there would be no repeat. The extension would need Republican support to pass.
If allowed to sunset, the tax credit would drop to 26% in 2020, with an annual step-down until 2022. It would then settle at a permanent 10% for utility and commercial projects and be eliminated for residential systems.
“The message really is ‘act now,’” said TJ Kanczuzewski, CEO of Inovateus Solar. Based in South Bend, Indiana, the solar developer expects to safe harbor 15 projects this year.
8minute Solar plans to build 6 gigawatts of projects in the United States over the next five years, all while maximizing tax benefits. Its 200 MW Eland solar and battery project in Southern California, for instance, is not slated to begin operating until 2023. But the company began building a substation for the project this year for an undisclosed price, allowing it to claim the 30% tax credit.
CEO Buttgenbach said even a modest decline in the ITC to 26% next year makes a huge difference.
“In terms of project economics it’s equivalent to the entire profit margin,” he said.
Silicon Ranch, a Nashville, Tennessee-based developer, is taking a cautious approach, accumulating panels only for projects for which it has signed contracts. As a result, “we perceive the risk to be extremely low,” CEO Reagan Farr said.
Residential solar company SunPower Corp has said it will hoard at least 200 MW of panels this year, enough for more than 25,000 homes.
The safe-harbor practice does not apply to the federal tax credit for residential projects, which also begins to step down next year and expires completely in 2022. But homeowners who decide to lease a solar system, rather than own it themselves, could benefit indirectly if the owner of the panels has locked in a higher tax credit than they might qualify for by owning the project outright.
SOLD OUT
The stockpiling has been a boon for panel makers.
Trina, one of the world’s largest manufacturers, is sold out through the first quarter of 2020, according to Steven Zhu, head of the company’s operations in the Americas.
Rival First Solar Inc said on a conference call with analysts in May that its supplies were completely committed through the end of 2020, prompting the U.S. panel maker to consider extending production of a panel technology it had been planning to phase out.
Some industry veterans expect panel demand to cool in 2020 following this year’s tax-driven buying frenzy, while planned expansions by several manufacturers should help boost supply.
For now, panel makers are enjoying their seller’s market, a rare occurrence in an industry accustomed to sliding prices and razor-thin margins.
First Solar CEO Mark Widmar expressed optimism on the May call, along with a reminder that the unique conditions now benefiting the industry are temporary.
“As we look across the horizon, we feel very comfortable,” Widmar said. “But we know this will continue to be a very challenging and demanding market.”
Borr Drilling, an offshore drilling company that operates 27 rigs, has filed a registration statement with the SEC in an attempt to raise up to $50 million in an initial public offering.
Borr Drilling said on Wednesday that it filed a registration statement with the U.S. Securities and Exchange Commission (SEC) relating to a proposed initial public offering of its common shares on the New York Stock Exchange (NYSE).
According to the company, it intends to raise from $10 million to $50 million in the offering. The company has not yet determined the number of common shares to be offered.
Borr added that the proceeds of the offering were intended for general corporate purposes.
It intends to have its common shares listed on the NYSE under the symbol ‘BORR’, but following the registration statement filing and the application for listing on NYSE, Borr will continue to be listed under the ticker ‘BDRILL’ on the Oslo Stock Exchange where it has been listed since 2017.
It is worth noting that Goldman Sachs and DNB Markets are the joint bookrunners on the deal. Pricing terms were left undisclosed.
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To better harvest rain water, the villagers build two-foot high embankments around the village
In the middle of the arid and dry Rajasthan landscape the village of Laporiya, located 90 kilometres from Jaipur, stands out because even at the end of a long summer its lakes hold enough water for the community's needs. In fact, Laporiya's wells never run dry and fields have moisture, even in summer, to boast grass to sustain animals.
"We never run out of water. In fact, during summer we supply water to neighbouring villages," 63-year-old Laxman Singh who, for 35 years, has spearheaded water conservation in the village, and has now started the Gramin Vikas Navyuvak Mandal, to carry forward his work.
Over the past three decades Laporiya has demonstrated conservation is possible despite increasing desertification. This is a lesson Rajasthan must learn because it has the least amount of surface water of any state in the country; it has only three per cent of India's surface water.
Even slightly below-average rainfall can send the state into a spiral of drought and water scarcity. Last year 19 of 33 districts were drought-affected.
To combat dependency on fickle monsoons, the village's "water warriors" built two-foot high "chaukas (small embankments)" all around the village, in both fields and pasture lands. These small mud walls work as water-harvesting structures by slowing down the flow of rain water and giving it enough time to seep into the ground and recharge underground water tables.
"The mud has been dug up and it creates a small catchment area. Water is collected in small quantities and then it overflows from one 'chauka' to the next, increasing ground-level moisture with repeated recharges with every spell of rain," Laxman Singh explains.
There is a rule in the village that two of three lakes are for drinking; the third is for irrigation
After recharging excess water feeds three lakes, each of which is desilted in the summer. Two of these lakes are for drinking and the third is for irrigation.
"We have made a rule in this village," Laxman Singh continues, adding that Anasagar (the third lake) irrigates nearly 1,400 bighas (approximately 875 acres) of agricultural land.
"This system in our village is unique, our animals never go hungry. We don't need to rush to the city for jobs, we make a living from rearing cows buffalos and even goats," Goparam, a village resident, says as his buffalos graze peacefully.
"Our job is farming and we keep animals for dairy. We easily earn more than Rs 12,000 per month and this is because we have water and rich pastures," Laxman Gujjar, a farmer, says.
The conservation movement that started in Laporiya has now spread to 58 villages and is run by the villagers themselves. No government body is involved. The people organise themselves, build the 'chaukas', carry out maintenance and desilt channels.
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Reuters
By Rajendra Jadhav
MUMBAI, July 15 (Reuters) - India will keep its sugar export subsidies despite complaints to the World Trade Organization (WTO) from rival producers Brazil and Australia, though it will tweak how it provides them, four sources directly involved in the matter said.
The export subsidies are designed to increase shipments from the world's second-biggest sugar producer and reduce their brimming inventories. But that could pressure global prices , that have only eked out a 2.1% gain this year after plunging more than 20% in 2018.
Government and industry officials did not say what kind of changes they are planning to make, though they said they are seeking guidance from WTO experts.
Years of bumper cane harvests and record sugar production have hammered Indian sugar prices, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
To reduce that debt and pare rising inventories, New Delhi said in September it would provide incentives to mills for overseas sugar sales and set an export target of 5 million tonnes for the 2018/19 marketing year ending on Sept. 30.
India's exports surged to 3.3 million tonnes from 620,000 tonnes a year earlier. That prompted rivals to complain at the WTO, alleging the incentives violate trade rules.
The Brazilian government said on Thursday it had asked the WTO to establish a panel aimed at resolving its dispute over Indian sugar subsidies. Australia and Guatemala also lodged complaints on Thursday.
India has been providing transport subsidies of between 1,000 rupees($14.59) a tonne to 3,000 rupees a tonne to sugar mills, depending on the distance to ports. The government has also raised the amount it directly pays to cane growers to 138 rupees a tonne in assistance from 55 rupees a year ago.
On Wednesday, Indian industry and government officials discussed how an incentive can be provided in the next marketing year starting from Oct. 1 without violating WTO rules.
"The export policy for the next season could be finalised early next month," said an industry official, who participated in Wednesday's discussion.
Sugar mills are requesting that the government provide incentives to export 7 million to 8 million tonnes of sugar in the next season, up from this season's target of 5 million tonnes, said Abinash Verma, director general of the Indian Sugar Mills Association (ISMA).
Announcing the export policy will help mills in deciding whether to produce raw or white sugar for export at the beginning of the season, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd (NFCSF).
Indian mills traditionally produce white sugar for local consumption, but they produce raw sugar during years of surplus to help exports. Selling raw sugar is easier in the world market than white.
In the next marketing year, India's sugar production is expected to drop by 18% from a year ago after drought last year forced farmers to curb their cane planting and as weaker monsoon rains this year limit crop growth.
India could start the new season with inventory of more than 14.7 million tonnes and could produce another 28.2 million tonnes in the season, against local demand of around 26 million tonnes, the ISMA estimates.
($1=68.52 rupees)
In the weeks since my appointment as commissioner of the Utah Department of Agriculture and Food, I’ve been inspired. I am amazed at the depth and breadth of UDAF staff, programs and services. I dare say there isn’t a person in Utah whose life is not sustained and blessed by the work of UDAF.
This important state agency oversees the safeguarding and protection of our food supply, promotes the prosperity agriculture and food producers, and generates equity and fairness for all. I wish everyone reading this could see and learn what I have in this sort time.
So let’s do it. In the coming months and years, my office will be in fields, fairgrounds, and food facilities across Utah. You will hear me share messages of hope, optimism and the good works of UDAF and our ag producers, but I will also continue to listen and learn. I want to know what matters most to you. What are your successes? What are your fears? What can we do at UDAF to make your life better?
In the agriculture and food industry, it seems we are either fanning the flames of success or dousing the fires of fear. Here at UDAF, we have a long history of that and will continue to do both. We’ll work to sensitize and simplify our regulatory demands; we’ll maintain the highest level of safety and quality Utahn’s expect; and we’ll also develop new and better ways to promote growth and prosperity, to give all producers the tools they need to succeed locally and abroad.
Let me share some areas I plan to help fan the flames of success.
We all need food to live, but I believe our reliance on imported commodities is out of balance. Utah is rich in both variety and abundance, and we continue innovate and create better methods of production and distribution. We simply don’t need to rely on producers outside the state as much as we once did. To that end, we will amplify our branded Utah’s Own buy local campaign, so that citizens get more of the freshness and quality products they demand.
Utahn’s also need to know their food is safe. The UDAF regulatory inspection team has a track record of success, spotting foodborne illness outbreaks and issues early. I’m excited about the development and launch of the Utah Rapid Response Team — a committee of federal and statewide partners that will soon convene regularly to level up these efforts. This, too, increases our capacity to make a critical impact on the lives of citizens.
Speaking of federal and state agency engagement, I am proud of the improved communications and land management work UDAF facilitates between the Forest Service, Bureau of Land Management, state agencies and our ranchers. Open dialogue, coordination and collaboration preserves rangeland and watershed productivity and sustainability. But it also helps foster an economic balance and quality of life for rural Utah.
UDAF has also enjoyed great success in managing invasive species. They are small and tend to go unnoticed by most, but foreign insects such as Bark Beetle and Emerald Bore Ash can create millions of dollars in damage to our trees. Our team of insect experts collaborate with other agencies in cooperative efforts such as the Don’t Move Firewood campaign to ensure that doesn’t happen.
Another success story is the completion of our legislative mandate to develop the rule-making and oversight of industrial hemp manufacturing and distribution earlier this year. I am also happy to report that the same process for the cannabis program (medical marijuana) is moving ahead transparently and on schedule. Growers will be licensed in the fall and we expect a final product available by the beginning of 2020.
Finally, I want douse the flames of fear by addressing a sensitive topic that has touched me personally. As a fifth-generation dairyman from Weber County, I know something of the pressures that farmers and ranchers are under. It’s a risky business and sometimes, despite our best efforts, prosperity is elusive.
Suicide is not my favorite topic — I wish I didn’t feel there was a need to even bring it up. There are many factors behind it and the subject is nuanced, but studies clearly indicate that farmers take their lives at a higher rate than other professions. Let me be clear that suicide at any rate, in any profession, is not acceptable and we can all do more to help shoulder the burdens of those who are hurting.
One of my most important messages and efforts as commissioner will be to ensure we are doing more to love and care for one another as communities. We must do more to extend resources and programs out to the farmers and ranchers experiencing pressures that lead to hopelessness, depression and thoughts of suicide.
Thank you for this unique opportunity to serve you. I invite you to join me in keeping an eye on optimism. Let’s all do our part to fan the flames of success and quickly douse fears and uncertainty. May the silos of our lives be filled to capacity with hope, optimism and an abundance of good works.
KUALA LUMPUR (July 16): Both Malaysia and Indonesia are committed to challenge the European Union (EU) Delegated Act that curbs palm oil use in biofuels through the World Trade Organisation Dispute Settlement Body, as well as other possible avenues.
They are also currently reviewing their relationship with the EU and its member states, the Ministry of Primary Industries (MPI) said in a statement today, following the 7th Ministerial Meeting of the Council of Palm Oil Producing Countries (CPOPC) held here.
“The ministers expressed regret that the EU Delegated Regulation entered into force on June 10, 2019. This was despite the various efforts undertaken by producing countries to provide information on the sustainability initiatives,” MPI said.
The meeting also proposed to set up a CPOPC-EU Joint Working Group (JWG) on Palm Oil as a new platform to respond to the EU Delegated Act. This was after taking note that the CPOPC delegation and the European Commission had agreed to have regular dialogues.
“The JWG shall engage CPOPC member countries and other palm oil producing countries, such as African palm oil producers, and will raise the issue of the smallholders and poverty alleviation to counter the Delegated Act,” MPI said.
The meeting, co-chaired by Malaysia's MPI minister Teresa Kok Suh Sim and Indonesia's Coordinating Minister for Economic Affairs Darmin Nasution, discussed various issues related to the palm oil industry, including international trade policies and market access, business and smallholder engagements, and the United Nations 2030 Agenda for Sustainable Development Goals (UN SDGs).
Ambassador of Colombia to Malaysia, Mauricio Gonzalez Lopez, attended the meeting in the country's capacity as an observer state.
MPI said the ministers welcomed the findings of study on “Masterplan for the Strategic Implementation of SDGs in the Palm Oil Sector by 2030” commissioned by CPOPC, which indicated that palm oil meets most of the 17 objectives of UN SDGs. This was based on case studies conducted in Indonesia, Malaysia, Thailand, Colombia and Nigeria.
On the issue of the contaminant level of the 3-Monochloropropanediol (3-MCPDE) proposed by the European Commission, she said the ministers agreed that one maximum level at 2.5 ppm for all vegetable oils should be adopted as the acceptable safety limit for consumption.
The ministers also agreed that CPOPC should continue working on the current issues related to palm oil industry, such as supply-demand, productivity, price stabilisation, smallholders’ welfare, and the positive image of palm oil along its value chain, MPI said.
MPI said all palm oil producing countries were invited to attend the Second Ministerial Meeting of Palm Oil Producing Countries in Kuala Lumpur on Nov 18. — Bernama
Networks representing more than 7,000 higher and further education institutions from around the globe have declared a climate emergency.
A joint letter, organised by The Alliance for Sustainability Leadership in Education, US-based higher education climate action organisation Second Nature and UN Environment’s Youth and Education Alliance, marks the first time further and higher education establishments have come together to make a collective commitment on tackling climate change.
The institutions have agreed to undertake a three-point plan that includes committing to go carbon neutral by 2030 or 2050 at the very latest, mobilising more resources for action-oriented climate change research and skills creation and increasing the delivery of environmental and sustainability education across campuses and community outreach programmes.
The letter has been signed by universities including Strathmore University (Kenya), Tongji University (China), KEDGE Business School (France), University of Glasgow (UK), California State University (US), Zayed University (UAE) and the University of Guadalajara (Mexico).
The call is also backed by major global education networks such as the Global Alliance and the Globally Responsible Leadership Initiative, which have made commitments to meeting the suggested carbon neutrality targets.
The letter remains open for online signatures from leaders of institutions and networks representing them.
Inger Andersen, Executive Director of UN Environment said: “What we teach shapes the future. We welcome this commitment from universities to go climate neutral by 2030 and to scale-up their efforts on campus.
“Young people are increasingly at the forefront of calls for more action on climate and environmental challenges. Initiatives which directly involve the youth in this critical work are a valuable contribution to achieving environmental sustainability.”
The UK recently became the first major economy in the world to pass a law for net zero emissions by 2050.
https://www.energylivenews.com/2019/07/16/networks-of-7000-universities-declare-climate-emergency/
India will keep its sugar export subsidies despite complaints to the World Trade Organization (WTO) from rival producers Brazil and Australia, though it will tweak how it provides them, four sources directly involved in the matter said.
The export subsidies are designed to increase shipments from the world's second-biggest sugar producer and reduce their brimming inventories. But that could pressure global prices that have only eked out a 2.1% gain this year after plunging more than 20% in 2018.
"The industry needs government support for exports. It will be provided without violating the WTO framework," said a senior government official involved in the policy making. "We may need to make some changes in the way we provide incentives."
Government and industry officials did not say what kind of changes they are planning to make, though they said they are seeking guidance from WTO experts.
Years of bumper cane harvests and record sugar production have hammered Indian sugar prices, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
To reduce that debt and pare rising inventories, New Delhi said in September it would provide incentives to mills for overseas sugar sales and set an export target of 5 million tonnes for the 2018/19 marketing year ending on Sept. 30.
India's exports surged to 3.3 million tonnes from 620,000 tonnes a year earlier. That prompted rivals to complain at the WTO, alleging the incentives violate trade rules.
The Brazilian government said on Thursday it had asked the WTO to establish a panel aimed at resolving its dispute over Indian sugar subsidies. Australia and Guatemala also lodged complaints on Thursday.
India has been providing transport subsidies of between 1,000 rupees ($14.59) a tonne to 3,000 rupees a tonne to sugar mills, depending on the distance to ports. The government has also raised the amount it directly pays to cane growers to 138 rupees a tonne in assistance from 55 rupees a year ago.
On Wednesday, Indian industry and government officials discussed how an incentive can be provided in the next marketing year starting from Oct. 1 without violating WTO rules.
"The export policy for the next season could be finalised early next month," said an industry official, who participated in Wednesday's discussion.
Sugar mills are requesting that the government provide incentives to export 7 million to 8 million tonnes of sugar in the next season, up from this season's target of 5 million tonnes, said Abinash Verma, director general of the Indian Sugar Mills Association (ISMA).
Announcing the export policy will help mills in deciding whether to produce raw or white sugar for export at the beginning of the season, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd (NFCSF).
Indian mills traditionally produce white sugar for local consumption, but they produce raw sugar during years of surplus to help exports. Selling raw sugar is easier in the world market than white.
In the next marketing year, India's sugar production is expected to drop by 18% from a year ago after drought last year forced farmers to curb their cane planting and as weaker monsoon rains this year limit crop growth.
India could start the new season with inventory of more than 14.7 million tonnes and could produce another 28.2 million tonnes in the season, against local demand of around 26 million tonnes, the ISMA estimates.
($1=68.52 rupees)
( ) (OTCQB:XXMMF) told investors Monday it has increased its ground in the historic Camp McKinney area in southern British Columbia via acquisition and now holds 1,718 hectares there.
The company said it had now consolidated a "sizable" land position surrounding the former Cariboo-Amelia gold mine, British Columbia's first dividend-paying lode gold mine.
The McKinney camp lies southeast of Mount Baldy, northeast of Osoyoos and comprises several mines, the main one being Cariboo-Amelia, which produced 81,602 ounces of gold, 32,439 ounces of silver, 113,302 pounds of lead and 198,140 pounds of zinc during intermittent operations between 1894 and 1962.
Al McKinney and Fred Rice staked a claim in 1888 which eventually became the Caribou mine, noted Ximen in the statement.
Today's new acquisition includes nine claims acquired from private firm Turnagain Resources Inc for C$33,000 in cash, plus one new mineral claim staked by Ximen.
The area covered by these new claims is 1,522 hectares.
At Cariboo, the main quartz vein has a surface trace of 2.4 km along strike, which has been mined over 754 metres and to a depth of between 107 and 171 metres.
The width of the vein varies from 0.25 to 3.5 metres. Visible native gold is locally prominent and higher gold grades are reported to occur where the vein hosts bands of sulphides.
Ximen said priority targets for exploration on its new ground include potential extension of gold mineralization at depth below the historic mine workings, strike extensions in fault offset segments along strike, parallel veins, and possible porphyry related molybdenum-copper mineralization.
A busy spell
It's been a busy spell for Ximen. On Thursday last week, it said its option partner GGX Gold Corp ( ) (OTCMKTS:GGXXF) would start drilling again at the Gold Drop property in British Columbia next week after a field break.
Crews will arrive at the base in Greenwood and initially start drilling at the COD north vein, where samples late last year ranged up to 21.7 grams per tonne (g/t) gold over 0.4 metres.
Then it will be the turn to drill a new geophysical target, which was identified by the new technology — Stargate II — a deep-penetrating ultra-sonic AMT (Audio-Magnetotellurics) geophysical survey conducted by Earth Science Services Corp.
Ximen shares in Toronto added 1.35% to stand at C$0.75.
Contact the author at [email protected]
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SOFIA (Bulgaria), July 15 (SeeNews) - Canadian mineral exploration and development company Velocity Minerals said on Monday that it has received drill results from the Obichnik gold project, in southeastern Bulgaria, which confirm the presence of both high-grade epithermal gold and potential bulk tonnage intrusion related gold mineralization.
One drill hole returned two significant, high-grade intersects - an upper, near-surface drill intersection returned 43.4m grading 3.89g/t gold, while a lower drill intersection returned 27.5m grading 1.24g/t gold, Velocity Minerals said in a statement.
True widths for the upper and lower intersections are estimated at 35.6m and 22.5m, respectively, the company said.
Velocity also carried out a verification drill hole perpendicular to strike of a historical drill intersection to determine true thickness, which returned 90.0m grading 3.09g/t gold.
"Results of verification drilling are very positive, demonstrating that grade has historically been slightly under-estimated and indicating an impressive 35.6m estimated true width for the upper zone," Velocity announced.
Last month, Velocity said that ground magnetic and surface geochemical surveys highlight a large area of structurally controlled alteration with anomalous gold mineralization. The surveys defined four priority drill targets.
Also last month, Velocity said that it has entered into an option agreement with Bulgaria's Gorubso Kardzhali to acquire a 70% interest in the 388-hectare Momchil property in southeast Bulgaria, which includes the Obichnik gold project. Under the terms of the option agreement, Velocity can earn a 70% interest in the property by delivering a mineral resource estimate.
Velocity also operates the more advanced Rozino Project, not far from the Obichnik gold project.
VANCOUVER, British Columbia, July 15, 2019 (GLOBE NEWSWIRE) -- Western Copper and Gold Corporation ("Western" or the "Company") (TSX: WRN; NYSE American:WRN) is pleased to announce an update on the exploration program underway at the Company's 100%-owned Casino project in Yukon, Canada.
Proposed 2019 drilling plan showing progress as of July 14, 2019. Open pit outline from Feasibility Study - 22 year pit.
Since the beginning of June, when Western commenced the exploration at its Casino site with 2 rigs from Yukon based Kluane Drilling Ltd., over 6,000 meters of drilling have been completed in 34 holes (see Figure 1). This represents over 50% of the planned meters of the $3.3 million drill campaign.
The goal of the drilling campaign is to convert inferred mineralization to indicated mineralization, which would have a number of positive effects on the Casino project, including:
Increasing the overall tonnage of indicated mineralization, which in turn increases the amount of material that potentially becomes reserves in future economic studies, thus increasing projected mine life.
Potentially lowering the overall strip ratio, as in the January 25, 2013 Casino Project Feasibility Study (the "Feasibility Study"), inferred mineralization located in the Casino pit was considered to be waste.
Providing more accurate quantities of ore and waste, which will allow for more detailed engineering of the tailings and mine waste facility outlined in the Best Available Tailings Technology Study (see news release dated November 5, 2018).
Once the drilling is complete and all the assays received, the drill results will be incorporated in an updated resource estimate.
Paul West-Sells, President and CEO, stated, "The program has been a success so far, with drilling on schedule and spending within budget. I look forward to releasing the drill results and the updated resource later this year."
Technical information in this news release has been reviewed and approved by Jack McClintock, P.Eng, and a ‘Qualified Person' as defined under Canadian National Instrument 43.101.
ABOUT WESTERN COPPER AND GOLD CORPORATION
Western Copper and Gold Corporation is developing the Casino Project, Canada's premier copper-gold mine in the Yukon Territory and one of the most economic greenfield copper-gold mining projects in the world. For more information, visit www.westerncopperandgold.com.
Figure 1: Proposed 2019 drilling plan showing progress as of July 14, 2019. Open pit outline from Feasibility Study - 22 year pit.
https://www.globenewswire.com/NewsRoom/AttachmentNg/b0b1c2f4-7fb7-401f-ba72-c5c425dc9af9
On behalf of the board,
"Paul West-Sells"
Dr. Paul West-Sells
President and CEO
Western Copper and Gold Corporation
For more information, please contact:
Chris Donaldson
Director, Corporate Development
604.638.2520 or cdonaldson@westerncopperandgold.com
Cautionary Disclaimer Regarding Forward-Looking Statements and Information
This news release contains certain forward-looking statements concerning anticipated developments in Western's operations in future periods. Statements that are not historical fact are "forward-looking statements" as that term is defined in the United States Private Securities Litigation Reform Act of 1995 and "forward looking information" as that term is defined in National Instrument 51-102 ("NI 51-102") of the Canadian Securities Administrators (collectively, "forward-looking statements"). Certain forward looking information should also be considered future-oriented financial information ("FOFI") as that term is defined in NI 51-102. The purpose of disclosing FOFI is to provide a general overview of management's expectations regarding the anticipated results of operations and capital expenditures and readers are cautioned that FOFI may not be appropriate for other purposes. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible" and similar expressions, or statements that events, conditions or results "will", "may", "could" or "should" occur or be achieved. These forward-looking statements may include, but are not limited to, statements regarding perceived merit of properties; mineral reserve and resource estimates; capital expenditures; feasibility study results (including projected economic returns, operating costs, and capital costs in connection with the Casino Project); exploration results at the Company's property; budgets; permitting or other timelines; economic benefits from the mine and/or the access road; strategic plans; market price of precious and base metals; or other statements that are not statement of fact. The material factors or assumptions used to develop forward-looking statements include prevailing and projected market prices and foreign exchange rates, exploration estimates and results, continued availability of capital and financing, construction and operations, the Company not experiencing unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays, and general economic, market or business conditions and as more specifically disclosed throughout this document, and in the AIF and Form 40-F.
Forward-looking statements are statements about the future and are inherently uncertain, and actual results, performance or achievements of Western and its subsidiaries may differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements due to a variety of risks, uncertainties and other factors. Such risks and other factors include, among others, risks involved in fluctuations in gold, copper and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; risks related to joint venture operations; risks related to cooperation of government agencies and First Nations in the development of the property and the issuance of required permits; risks related to the need to obtain additional financing to develop the property and uncertainty as to the availability and terms of future financing; the possibility of delay in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in Western's AIF and Form 40-F, and other information released by Western and filed with the applicable regulatory agencies.
Western's forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and Western does not assume, and expressly disclaims, any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by applicable securities legislation. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
Source: Western Copper and Gold Corp
On June 28, 2019, in Barrow-Shaver Resources Co. v. Carrizo Oil & Gas, Inc.[1], the Texas Supreme Court confirmed that industry customs cannot qualify an unrestricted consent-to-assign provision contained in a farmout agreement, nor is such a provision subject to any implied duty of good faith or fair dealing. The ruling was hotly contested, evidenced by both the 5-4 decision and the multitude of letters received by the court from industry players.
The case stems from a farmout agreement between Carrizo Oil & Gas, Inc. (“Carrizo”) and Barrow-Shaver Resources Co. (“Barrow-Shaver”), in which Barrow-Shaver would earn a partial assignment of Carrizo’s interest in a 22,000 acre lease upon successful well completion. The following language regarding future assignments by Barrow-Shaver was contained in the memorialized agreement:
The rights provided to [Barrow-Shaver] under this Letter Agreement may not be assigned, subleased or otherwise transferred in whole or in part, without the express written consent of Carrizo.
Later, Raptor Petroleum II, LLC approached Barrow-Shaver about a potential assignment of the farmout, but to affect the assignment, Barrow-Shaver would have to obtain the consent of the interest holders, including Carrizo. All of the parties consented to the proposition, except Carrizo, and instead, Carrizo proposed selling its interest to Barrow-Shaver for $5.0 million. Barrow-Shaver ignored that offer, and ultimately, Carrizo refused to consent to the proposed assignment.
After the deal lapsed, Barrow-Shaver sued Carrizo for breach of contract, fraud, and tortious interference with contract. Barrow-Shaver admitted that the consent-to-assign provision was unambiguous, but the company argued that the agreement was silent as to the basis on which Carrizo could withhold consent. Barrow-Shaver asserted that the jury should hear evidence of industry custom and usage to determine whether the contract was breached. The trial court agreed and submitted the breach of contract question to the impaneled jury, and the court allowed the jurors to consider evidence of industry custom. A unanimous verdict in favor of Barrow-Shaver awarded over $27.0 million in total damages.
( ) ( ) has revealed positive drilling results from an area within the proposed starter pit that encompasses the first two to three years of production at its flagship Namdini Gold Project in Ghana.
Cross Section showing downhole mineralised intersections of infill holes
Notably, the infill drill results highlight the robustness of Cardinal’s current resource and further supports the company’s project finance plans.
Highlight results from infill drilling down to the base of the proposed starter pit to a vertical depth of 140 metres include:
• 89 metres at 2.3 g/t gold from surface;
• 83 metres at 3.5 g/t gold from surface; and
• 78 metres at 4.1 g/t gold from surface.
Cardinal chief executive officer and managing director Archie Koimtsidis said: “This close spaced infill drill program, along with the previous grade control programme within our proposed starter pit, confirms the robustness of our mineral resource, thereby providing higher confidence in predicting operational outcomes.
“The infill results are also key to underpinning the delivery of a high‐quality engineering study which will provide more informed economic data during the critical project finance payback period.
“An added benefit of these infill drill results is enhancing confidence in the first two to three years production from the proposed starter pit.
“This will assist Cardinal with project financing options for the Namdini Project with a declared open pit ore reserve of 5.1 million ounces of gold.”
PLC ( ) has received an order from the Tanzanian government to stop using the tailings dam at its North Mara gold mine.
The Tanzanian authorities say that a failure to control seepage from the tailings facility is why the notice has been issued.
An Environmental Protection Order and fine was handed to North Mara in May but the miner says it has never received any supporting reports, findings or technical data in relation to these allegations.
Acacia was ordered to build a new tailings facility at the start of the year.
At present, Acacia is banned from exporting gold and concentrates from its mines in Tanzania due to an ongoing row over taxes.
The issues is further complicated by an approach for Acacia from its parent company Gold.
owns already owns 64% of the shares but its indicated offer for the rest has been rejected by Acacia's board.
The Canadian group is negotiating with the Tanzanian government to find a settlement but Acacia has been excluded from these talks.
Today, Acacia said it was willing to suspend its own international arbitration plans to provide time for Barrick to complete its discussions.
“Acacia will continue to support those discussions and remains ready and willing to engage directly with the GoT {Government of Tanzania],” it said.
عقدت المؤسسة الوطنية للنفط اجتماعا طارئا بمقر شركة الزاوية لتكرير النفط، وذلك عقب انفجار جسم مشبوه بالمكاتب المخصصة للفريق المكلف بالإشراف على المرحلة الثانية من مشروع تطوير المصفاة يوم الاثنين 15 يوليو 2019.
وقد تم فتح تحقيق رسمي في حادث الانفجار، بعد الاجتماع الذي ضمّ كلاّ من إدارة الأمن الصناعي بالمؤسسة الوطنية للنفط وإدارتي شركة الزاوية لتكرير النفط وشركة أكاكوس للعمليات النفطية. كما حضر الاجتماع مسؤولون من جهاز حرس المنشآت النفطية وجهاز الأمن والمجلس البلدي.
واتفق الحضور على وضع تدابير لتحسين الإجراءات الأمنية، بما في ذلك إنشاء غرفة عمليات أمنية مشتركة، وتحديث البروتوكولات الخاصّة بالمراقبة والتكنولوجيا والاتصالات.
وإذ تعرب المؤسسة الوطنية للنفط عن ارتياحها لعدم إصابة أي من موظفيها خلال الانفجار، فإنّها تدين بشدة جميع المحاولات الرامية إلى ترهيب عمال قطاع النفط وتعريض حياتهم للخطر. كما تعلن المؤسسة أنها ستلجأ لكافّة الوسائل القانونية المتاحة لمقاضاة كلّ من يقف وراء هذا الهجوم المشين.
Barrick Gold Corp (ABX.TO) has agreed to buy out fellow shareholders in Acacia Mining (ACAA.L) in a deal that values the firm at 951 million pounds, ending a two-month standoff between the world’s second biggest gold miner and its Africa unit.
Barrick had spun off Acacia into a separate company in 2010, but owns about 64% of the company.
The deal will offer Acacia shareholders, as well as special dividends on Acacia exploration properties and deferred cash consideration dividends, 0.168 Barrick shares per Acacia share, implying a value of about 232 pence per share, the miner said.
Acacia had said until earlier this month that it is worth more than what Barrick’s earlier offer of 193 pence per share valued the company at.
Barrick’s final offer represents a 24.3% premium to Acacia’s closing price on Thursday. Barrick first made an offer for Acacia shares it did not already own in May.
Acacia has said Barrick’s earlier proposal undervalued its mine plans and appears to have ignored the value of its exploration and development assets.
Barrick’s buyout proposal for Acacia followed two years of wrangling over a $190 billion tax bill in Tanzania, which was reduced to $300 million under a 2017 framework agreement.
Barrick’s earlier proposal to take full control of its African unit to resolve a long-standing tax dispute with Tanzania has drawn the ire of Acacia’s minority shareholders, who may have the ultimate vote on a deal.
Gold prices rose to their highest in more than six years on Friday, supported by fresh tensions in the Middle East and comments from a top Federal Reserve official that cemented expectations of an interest rate cut.
FUNDAMENTALS
* Spot gold hit $1,452.60 an ounce in early trade, its highest since May 2013, before easing to be down 0.2% at $1,442.71 as of 0117 GMT.
* The metal has gained 1.8% so far this week, on track for a second consecutive weekly gain.
* U.S. gold futures jumped 1% to $1,441.90 an ounce.
* New York Fed President John Williams said on Thursday that policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold.
* The comments from Williams made it a virtual certainty the Fed would opt to cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also fuelled expectations of an even deeper 50 bp reduction.
* The dollar index was relatively unchanged against a basket of major currencies on Friday after falling to a near two-week low in the previous session as Williams’ remarks increased bets the central bank would lower interest rates at month-end.
* Meanwhile, the United States said on Thursday that a U.S. Navy ship had “destroyed” an Iranian drone in the Strait of Hormuz after the aircraft threatened the vessel, but Iran said it had no information about losing a drone.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.42 percent to 814.62 tonnes on Thursday from 803.18 tonnes on Wednesday.
The company said it had invested more than $220 million by the time Pakistan's government.
ISLAMABAD (Dunya News) – The International Centre for Settle¬ment of Investment Disp¬utes (ICSID), one of the five organisations of the World Bank Group, has ordered the Pakistani government pay damages of $5.8 billion, including $1.7 billion in interest, to Tethyan Copper – a joint venture between Chile’s Antofagasta Plc and Canada’s Barrick Gold – in the Reko Diq case.
The international tribunal, which provides facilities for conciliation and arbitration of international investment disputes, rendered its judgement on Friday — a 700-page ruling against Pak¬istan in the case.
Tethyan Copper discovered vast mineral wealth more than a decade ago in Reko Diq, at the foot of an extinct volcano near Pakistan’s frontier with Iran and Afghanistan. The deposit was set to rank among the world’s biggest untapped copper and gold mines.
The company said it had invested more than $220 million by the time Pakistan’s government, in 2011, unexpectedly refused to grant them the mining lease needed to keep operating.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) ruled against Pakistan in 2017, but until now had yet to determine the damages owed to Tethyan.
Tethyan board chair William Hayes said in a statement the company was still “willing to strike a deal with Pakistan,” but added that “it would continue protecting its commercial and legal interests until the dispute was over.”
The Reko Diq mine has become a test case for Prime Minister Imran Khan’s ability to attract serious foreign investment to Pakistan as it struggles to stave off an economic crisis that has forced it to seek an International Monetary Fund bailout.
Pakistan considers Reko Diq as a strategic national asset and had taken a key role in its development amid the dispute with Antofagasta and Barrick.
Meanwhile, Pakistan has decided to challenge the award “very soon” by filing a review application.
Earlier, Tethyan Copper Company’s (TCC) management, the complainant whose contract was terminated, had claimed $11.41 billion in damages. In 2012, TCC filed claims for international arbitration before the ICSID of the World Bank after the Balochistan government turned down a leasing request from the company. The litigation has continued for seven years.
Reko Diq mine is famous because of its vast gold and copper reserves and is believed to have the world’s fifth largest gold deposit. Reko Diq, which means sandy peak in the Balochi language, is a small town in Chagai district in Balochistan.
The Reko Diq area is part of the Tethyan Magmatic Arc, extending through central and southeast Europe ( Hungary, Romania, Bulgaria, Greece) Turkey, Iran and Pakistan through the Himalayan region into Myanmar, Malaysia, Indonesia and Papua New Guinea. It contains wealth of large copper-gold ore deposits of varying grades.
Reko Diq represents one of the largest copper reserve in Pakistan and in the world having estimated reserves of 5.9 billion tonnes of ore grading 0.41% copper. The mine also has gold reserves amounting to 41.5 million oz.
The deposit at Reko Diq is a large low grade copper porphyry, with total mineral resources of 5.9 billion tons of ore with an average copper grade of 0.41% and gold grade of 0.22 g/ton. From this, the economically mineable portion of the deposit has been calculated at 2.2 billion tons, with an average copper grade of 0.53% and gold grade of 0.30 g/ton, with an annual production estimated at 200,000 tons of copper and 250,000 ounces of gold contained in 600,000 tons of concentrate.
With input from Reuters
Rio is bullish on the outlook for copper but Arnaud Soirate says growth through M&A is not on the miner's radar. "It’s unusual for me to come to an exploration site at such an early phase but it is a very interesting project," Mr Soirat said. Mr Soirat said the company was still looking for the limits of the Winu deposit but would know by the end of the year whether it warranted development. "We are still looking for the limits of the deposit east, north and south," he said. "When we do the next disclosure, we will have significantly more drilling completed and therefore we will see how rich the deposit is and how big it is as well.
"To make it a Rio Tinto site of course size is important but to make it a mine site in general it’s not just the size but also the quality of the ore body itself. "At this stage it is too early to say whether the metallurgy is going to be such that we will have a business there one day. I think we'll be able to tell the market by the end of this year whether it’s not a Rio Tinto site. "I think we'll be able to tell the market by the end of this year whether it’s not a Rio Tinto site." Rio Tinto's copper operations delivered earnings before interest, tax, depreciation and amortisation of $US2.8 billion last year and it has signalled it plans to maintain annual capital expenditure at roughly current levels at about $US6 billion a year.
Mr Soirat said if the company did pursue the deposit it had the potential to come online between the trouble plagued Oyu Tolgoi underground expansion in Mongolia and its Resolution joint venture with BHP in Arizona. Loading "I think if the deposit is right and the metallurgy is right potentially it could become before Resolution," he said. "The reason I’m saying this is because it will be an open cut mine, it’s reasonably shallow and it’s sand and sandstone [with] 50 to 100-metres of burden. It’s not that difficult to mine from what we’ve seen so far." The area surrounding Winu has come into focus since activity began and it prompted a ‘nearology’ share price bump for adjacent junior miners also in the Paterson province.
Rio Tinto is interested in the wider area too. Mr Soirat confirmed the company was looking at other potential sites in their mining licence area, but it was still early days. "Frankly at this stage it’s a hope more than anything else, because we haven’t done any exploration yet however we’ve done some surveys and there are some signs where our exploration team are [drilling]," he said. "It would be worth going and having a look prospecting there, then we’ll see." The global copper price hit a low of US$4382 in 2016 and has hovered around the US$6000 mark since 2017.
Mexico’s Federal Attorney for Environmental Protection or Profepa launched an investigation against Grupo Mexico following the failure of a pressure valve of a tank that receives purges from the shipping lines at the Maritime Terminal of Guaymas in the northwestern Sonora state.
The accident, which took place on July 9, 2019, caused the spill of 3,000 litres of sulfuric acid into the waters of the Sea of Cortez.
Grupo Mexico submitted relevant information to Profepa a day after the spill and from that moment on, the miner has five days to file any additional details. The investigation is ongoing and there is no deadline for its conclusion.
In a statement, Grupo Mexico said that it is in constant communication with the environmental authority and that management will continue to do so until all actions to respond to the breach are completed.
As soon as the rupture was discovered, Grupo Mexico’s personnel started transferring the spilled acid into a pipe. The incident, however, wasn’t deemed serious enough by the authorities to activate an emergency plan.
Yet, this weekend, people bathing in the San Francisco beach in Guaymas found a dead turtle. In a video that went viral on social media and that was shared by local media and by conservative MP Carlos Navarrete, they blamed the toxic discharge for the death of the animal.
https://www.mining.com/mexicos-environmental-authority-investigates-grupo-mexicos-spill/
China’s unwrought copper imports in June fell 27.2% from a year earlier, official data showed on Friday, as a slowdown in the world’s second-biggest economy continues to weigh on demand for the metal.
Arrivals of unwrought copper, including anode, refined and semi-finished copper products, were 326,000 tonnes last month, the General Administration of Customs said, down 9.7% from 361,000 tonnes in May and the lowest since February.
For the first half of 2019, unwrought imports were 2.27 million tonnes, down 12.5% from a year earlier, the data showed.
Factory activity in China, which is embroiled in a trade war with the United States, shrank more than expected in June in a bearish sign for the manufacturing sector that is a key source of copper demand.
Even a crackdown on imports of copper scrap that is expected to increase demand for other forms of the metal failed to keep unwrought imports buoyant.
“The demand is still weakening ... for most of the sectors, especially for air conditioning,” said He Tianyu, a copper analyst with CRU in Shanghai.
“The trade war could be one of the factors but actually the bigger problem is China’s domestic demand. This summer is weaker than last year,” he added.
Imports of copper concentrate CNC-COPORE-IMP, or partially processed copper ore, were 1.47 million tonnes in June, the lowest since December. That was down 20.1% from 1.84 million tonnes in May and down 16.5% from a year earlier.
However, for the first half of 2019 imports rose 10.5% from a year earlier to 10.55 million tonnes, reflecting growing smelter capacity in China.
The drop in concentrate imports came as smelters, including Tongling Nonferrous Metals Group (000630.SZ), carried out maintenance in June, reducing demand for feedstock.
The copper concentrate market remains in deficit and has pushed down treatment and refining charges (TC/RCs), He said.
The charges AM-CN-CUCONC, paid by miners to smelters to process concentrate into refined metal, are currently near 7-year lows.
Meanwhile, China’s June aluminium exports fell 5.6% from May and were down 0.8% from a year earlier.
The world’s top producer and consumer of the metal used in everything from cars to cans, last month exported 506,000 tonnes of unwrought aluminium, including primary metal, alloy and semi-finished products.
However, first-half 2019 exports rose 10% from a year earlier to 2.98 million tonnes.
Steel jacket and topsides from Spirit Energy’s ST-1 platform have arrived at the Dales Voe facility in Shetland for decommissioning by Veolia and Peterson.
Peterson said on Monday that the structures from the ST-1 arrived in the port facility on July 15.
The company added that a recycling target for the project is 97 percent, which means that around 2,500 tonnes of materials would be recovered and recycled.
The ST-1 platform comprises of a 45-meter-high 1,300-tonne steel jacket and a 1,200-tonne topsides structure. It was originally installed in 1994 in the Greater Markham Area some 160 kilometers off the coast in the Southern North Sea.
Production on this gas platform ceased in April 2016 and was placed in warm suspension mode in September 2017.
The final part of the decommissioning program, covering the removal of the topsides and jackets, was carried out through two single lifts by Seaway 7 using the Seaway Strashnov heavy lifting vessel.
Martin O’Donnell, decommissioning director of Veolia, said: “This work follows the successful recovery operations carried out at the facility […]. We have already recycled over 80,000 tonnes of materials and created new job opportunities to meet the growing demand for decommissioning.”
James Johnson, decommissioning manager at Peterson, added: “This project is a great showcase of how our collaboration with Veolia is enabling us to provide a full decommissioning service which provides a better customer experience. We are pleased to be involved in the ongoing development of Dales Voe as a center of excellence for decommissioning for the North Sea.”
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TEHRAN- Two remaining platforms of Iran’s South Pars gas field’s phase 14 of development will be put into operation by the end of autumn, according to Mohammad-Mehdi Tavasolipour, the operator of phase 14.
Making the remarks in a press conference after installing platform 14B of this phase on Saturday, Tavasolipour also said that $150 million has been saved in the projects for building and installing the four platforms of phase 14, and put the total cost of the projects at $550 million, Shana reported.
Platform 14B, which was installed on its designated offshore spot on Saturday, will add 14.2 million cubic meters of gas per day to the total output of the giant gas field, when it starts operation within 30-45 days, according to Tavasolipour.
The 2,450-ton structure, which is the third platform of phase 14 of South Pars development, had been shipped in Bandar Abbas, the capital city of southern province of Hormozgan, on June 11 to be installed on its designated offshore spot.
The platform was built in a 115-month period, Public Relations Department of Pars Oil and Gas Company, which is in charge of developing the gas field, announced.
This project is 100 percent implemented by Iranian engineers and experts and more than 60 percent of its equipment is also domestic.
The first platform of phase 14 started operation in summer 2018 and the second platform namely 14C was shipped in September 2018 and the installation operation of this platform were completed in October 2018.
Construction of platform 14D, the last platform of phase 14, has a 92-percent progress for the moment and it is scheduled to be installed on its designated offshore spot by the end of the seventh Iranian calendar month of Mehr (October 22), according to Tavasolipour.
South Pars gas field, which Iran shares with Qatar, is estimated to contain a significant amount of natural gas, accounting for about eight percent of the world’s reserves, and approximately 18 billion barrels of condensate. The field is divided into 24 standard phases.
In early June, Iranian Oil Minister Bijan Namdar Zanganeh, in separate decrees, outlined the current Iranian calendar year (March 21, 2019-March 19, 2020) priorities of the ministry’s four major subsidiaries.
In the decree addressed to Masoud Karbasian, the head of National Iranian Oil Company (NIOC), completion and inauguration of the phases 13, 14, 22 and 24 of South Pars gas field was one of the main priorities for NIOC.
tehrantimes
PM orders probe into Reko Diq ‘predicament’
ISLAMABAD: Prime Minister Imran Khan has ordered the formation of a commission to investigate the role of individuals in the Reko Diq “predicament” that led to the imposition of $6 billion in penalties by the International Center for Settlement of Investment Disputes (ICSID), the Attorney General for Pakistan (AGP) office has said.
“The Prime Minister has directed the formation of a commission to investigate into the reasons as to how Pakistan ended up in this predicament; who was responsible for making the country suffer such a loss and what are the lessons learnt, so that mistakes made are not repeated in the future,” said a notification.
The Attorney General’s office said: “The international tribunals are urged to consider the implications of their decisions and the impact on development and poverty alleviation in Balochistan.”
The government said in the response of the statement by William Hayes, the Chairman of the Board of Directors of TCC, in which he expressed a willingness to work towards a negotiated settlement, it (the government) welcomes this approach to work towards a mutually beneficial solution that works for both sides.
The move comes a day after Pakistan was ordered to pay almost $6 billion in damages to the foreign gold mining firm whose dig was shut down in 2011. The consortium TCC — of which Canadian gold firm Barrick and Chile’s Antofagasta Minerals control 37.5 per cent each — is the largest foreign direct investment mining project in the country.
More than a decade ago the group found vast gold and copper deposits at Reko Diq in Balochistan, and had planned a hugely lucrative open-pit mine. But the project came to a standstill in 2011 after the local government refused to renew the consortium’s lease, and in 2013 the Supreme Court declared it invalid.
Over the weekend, the World Bank’s international arbitration tribunal committee awarded $5.9 billion in damages to Tethyan, according to a statement from the company, because of the government’s decision to shut down the mine.
Attorney General for Pakistan Anwar Mansoor Khan said in a statement the decision was noted “with disappointment”. Legal experts were “studying the Award and reflecting upon its financial and legal implications,” the statement continued.
Consortium Chairman William Hayes said: “We remain willing to discuss the potential for a negotiated settlement with Pakistan and will continue to protect our commercial interests and legal rights until the conclusion of this dispute.”
It comes weeks after the government secured a $6 billion bailout from the International Monetary Fund (IMF), amid devaluations of the rupee and soaring inflation.Barrick and Antofagasta say the proposed plant could produce 600,000 tonnes of copper and 250,000 ounces of gold a year. The provincial government is also a sleeping partner in the Reko Diq project with a 25 per cent stake.
Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts say, which waste up to 80 per cent of potential because of poor extraction techniques. Experts have called for more transparent policies to allow mining to flourish.
Concern Worldwide is expanding its health and nutrition services in Turkana, northern Kenya, in a bid to curb the damaging impact which the continuing drought in the region is having on children.
The latest statistics for parts of Turkana show that over 30% of under-fives are acutely malnourished and up to 7.8% are severely malnourished – to the point where they are at risk of dying. Populations with acute malnutrition rates of 15% and over are internationally recognised as being in a state of emergency.
“I was shocked by what I saw last week during a visit to a local village, both by the level of malnutrition and the numbers of children who were malnourished,” Concern’s regional director for the Horn of Africa Carol Morgan said. “Many of the children in the villages were in a terrible state. I have not seen children so malnourished in years.”
Turkana, in north-western Kenya, has experienced drought conditions since 2017. The Food and Agriculture Organisation (FAO) estimates that up to two million people in Kenya currently need food as a result of the lack of rain. The latest rainy season has just ended with below average rainfall and no further rain is due until October.
“The people in Turkana are pastoralist and depend on their livestock for food and milk,” Carol said. “Yet during our visit we saw very few cattle or goats. We were told they were away in the hills and therefore the children did not have access to milk.”
Concern is currently providing health and nutrition clinics in neighbouring Marsabit county and Tana River in Kenya where drought conditions are also being experienced. It is currently operating nine mobile clinics in Turkana to reach and assist malnourished children. As part of its expanded operations in the province it will support an additional 35 mobile clinics.
For more information on Concern’s work visit www.concern.net.
China’s daily aluminium output hit record levels in June, according to Reuters calculations, even as total production for the whole of the month fell slightly according to data released by the National Bureau of Statistics on Monday.
The world’s top aluminium producing country churned out 2.97 million tonnes of the metal last month, the bureau said. That was down from 2.98 million tonnes in May, but up 1.3% year-on-year.
On a daily basis, output averaged 99,000 tonnes in June, according to Reuters calculations. That was up from around 96,000 tonnes in May, and surpassed the previous record of around 98,400 tonnes, sent last December.
The daily record high followed a jump in Shanghai aluminium prices SAFcv1 to as much as 14,380 yuan ($2,091.18) a tonne in May, turning margins positive again for some smelters and incentivizing ramp-ups.
But prices fell by 2% in June, and currently sit below the 14,000 yuan ($2,035.92) mark that is considered a break-even threshold for many Chinese smelters.
Jackie Wang, an aluminium analyst at CRU in Beijing, said the high June number was likely explained by ramp-ups at projects in Yunnan and Guizhou, both in southwest China.
The price of alumina, a substance used to make aluminium metal, has also been on the decline since the second half of June, Wang said, easing the pressure on smelter margins. “If their costs decrease they can continue to operate,” she added.
Local employment rate considerations may prevent closures being made at smelters if aluminium prices remain low, “but we may see the ramp-ups slow down,” Wang said.
Meanwhile, June production of 10 nonferrous metals - including copper, aluminium, lead, zinc and nickel – rose 3.4% from May to 4.9 million tonnes. That was also up 5.7% year-on-year and the second-highest monthly total on record.
Nonferrous output for the first half of 2019 was up 4.3% year-on-year at 28.34 million tonnes. The other non-ferrous metals are tin, antimony, mercury, magnesium and titanium.
Lower prices of alumina since mid-June improved margins at primary aluminium smelters and narrowed the proportion of aluminium capacity operating under losses to 20.1% in the month to July 15, an SMM survey found.
SMM assessed the average price of alumina across five major consumption areas in China has dipped to 2,582 yuan/mt as of July 15, with a low under the 2,500 yuan/mt level in northern markets.
Falling prices of the feedstock reduced costs at primary aluminium smelters, which averaged 13,105 yuan/mt in the first half of July, down 717 yuan/mt from that in June.
Based on the average price of spot aluminium ingot of 13,739 yuan/mt for the first half of July, SMM assessed that some 29.23 million mt of aluminium capacity was operating with profits, accounting for 79.9% of the total domestic capacity under operation.
The readings compared with profitable capacity of 15.26 million mt, and 41.8%, respectively in June, based on the average prices of spot aluminium ingot at 13,974 yuan/mt.
In the first half of July, aluminium capacity with operating costs of 13,000-13,500 yuan/mt made up a major share of the total capacity, at 26.91%.
SMM expects further downside room in prices of alumina on production resumptions.
Protesters blocked a portion of Peru’s main coastal highway on Monday in the start of a new challenge to a billion-dollar copper mining project that has been a lightning rod for conflict.
Protesters from the area bordering Southern Copper Corp’s $1.4 billion Tia Maria copper mine project in the south of Peru carried signs and flags as they occupied a section of the highway, snarling traffic for cargo vehicles and others.
The project has long been lamented by residents in the southern region of Arequipa where farmers say the mine will pollute their fields and affect water supplies.
“We are not going to talk. We want the presence of President (Martin) Vizcarra with the cancellation of the project,” Luis Cornejo, mayor of Cocachacra, told Reuters, referencing the construction permit granted by the government on July 9.
Southern Copper spent years awaiting the final green light that former governments had declined to give because of fears it would revive deadly protests that previously derailed the project. At least six protesters were killed in clashes with police in 2011 and 2015. The company said it would not begin construction until it gains more support from people who live in the area.
Southern Copper declined to comment on Monday’s demonstrations.
Peruvian Prime Minister Salvador del Solar said on Monday that the government is open to discussions with provincial government officials, but had not yet received a response.
LIMA, July 16 (Reuters) - Peruvian President Martin Vizcarra rejected the demand of a regional governor on Tuesday to cancel within 72 hours the construction permit for a copper mining project that has led to protests.
Residents from the area bordering Southern Copper Corp's $1.4 billion Tia Maria copper mine project in the south of Peru, which is the second largest copper producer in the world, began protesting on Monday with a blockade of a portion of Peru's main coastal highway.
Officials from the southern region of Arequipa said the government had not taken into account the community's concern that the mining operation would contaminate its water sources and land when it granted a construction permit on July 9.
Arequipa Governor Elmer Caceres called on Vizcarra to cancel the construction permit within three days.
"You cannot cancel [a construction permit]. We have to talk," Vizcarra said in a public appearance in Lima, responding to a reporter's question about Caceres' request.
Vizcarra said the government approved the project when legal requirements were met and that Southern Copper said it would not begin construction until it gains more support from people who live in the area.
Caceres said the community plans to continue its protest while perusing a legal plan to challenge the permit, but did not offer details.
Demonstrations have previously derailed the project when at least six protesters were killed in clashes with police in 2011 and 2015. (Reporting by Marco Aquino; writing by Cassandra Garrison; editing by Grant McCool)
Our Standards: The Thomson Reuters Trust Principles.
The FOB Singapore 95/92 RON gasoline spread rebounded Monday from multi-year lows seen in June to a 14-month high, fueled by a surge in octane boosters demand, industry sources told S&P Global Platts.
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The 95/92 RON gasoline spread -- the difference between the prices of Platts FOB Singapore 92 RON gasoline and 95 RON gasoline assessments -- slid to its lowest since 2011 at $1.21/b on June 27, but steadily widened from the start of July to $2.80/b at the Asian close Monday, Platts data showed.
The 95/92 RON gasoline spread was last higher on May 17, 2018 at $2.83/b.
Market participants attributed the widening inter-octane spread to a surge in demand for octane boosters from the West, a result of an explosion and subsequent closure of the 335,000 b/d Philadelphia Energy Solutions refinery in late June.
The increased demand lifted the cost of blendstocks used for blending lower-octane grade gasoline to higher-grade one, buoying prices of higher RON gasoline, sources said.
At the close of Asian trade Monday, the price of FOB Singapore 95 RON gasoline stood at $77.50/b, an increase of 5.17% since the start of July. While, the price of FOB Singapore 92 RON gasoline was up 3.84% at $74.45/b.
SURGE IN WESTERN DEMAND BUOYS BLENDSTOCK
Surging demand from the West sent premiums for high-octane gasoline blendstocks soaring, several traders also noted.
Taiwan's CPC in particular, was heard to have recently concluded a spot tender for 9,000 mt of 100 RON reformate for August loading at a premium of around $15-$16/b to the August average of MOPS 97 RON gasoline assessments.
Previous tenders from CPC of the same grade in July and June were concluded at around the $8-$10/b and around $10-$11/b range respectively, Platts previously reported.
"Asian sellers are trying to fill prompt orders for reformates and alkylates. We have noticed a lot of these cargoes moving West," one source from an Asian refinery said.
According to US customs data, BP and US Oil and Refining were recently seen bringing in 258,230 barrels of alkylate from Asia to the US West Coast in the second half of June, Platts reported earlier.
In addition to reformates and alkylates, prices of Asian toluene and MTBE -- which saw lackluster fundamentals in June -- have also been supported.
The FOB Korea toluene marker was assessed at $646/mt at the Asian close Monday, up $6/mt on the week, despite weak toluene disproportionation unit (TDP) margins.
"Due to the PES outages, toluene cargoes are continuously seen moving to the US from Asia," said a trader based in South Korea, adding that nowadays, toluene demand is mainly driven by the gasoline market rather than the mixed xylenes and benzene productions.
According to Platts data, the TDP production margin for benzene was estimated at around minus $19.67/mt, down $1/mt on the day as of Monday, while the margin for MX was at around minus $6/mt, both on an FOB Korea basis. The FOB Singapore MTBE price was similarly assessed up $28.50/mt on the week at $670.50/mt Monday.
Unlike alkylate, toluene and reformates however, MTBE is mainly used by Asian blenders. US gasoline does not contain MTBE.
--Mark Tan, mark.tan@spglobal.com
--Michelle Kim, michelle.kim@spglobal.com
--Edited by Nurul Darni, nurul.indriani.darni@spglobal.com
Zinc’s premium to lead has collapsed from over $1,000 per tonne in April to just $460 per tonne as of Monday.
The ever-popular relative value trade between the “sister” metals is now as tight as it’s been since the first days of January.
This marks a collective rethink about each metal’s short-term outlook in the context of both markets’ broader shift from supply shortfall to supply surplus.
London Metal Exchange (LME) zinc last week touched a fresh year-to-date low of $2,355 per tonne amid a dramatic dissipation of time-spread tightness.
LME lead, by contrast, hit a three-month high of $1,987 per tonne with spreads re-tightening as the market digests a continuing outage at the Port Pirie smelter in Australia.
It’s an unexpected turn in the sisterly dance and there may yet be more surprises in store.
ZINC TIGHTNESS EVAPORATES
The London zinc market has seen a rapid collapse in nearby time-spreads over the last couple of weeks.
Cash zinc was commanding a premium of $161 per tonne over three-month metal in late May. As of Friday’s close the premium CMZN0-3 had shrunk to just $10 per tonne.
That in turn has sapped the outright three-month price, with bears once again building short positions to the tune of 3.6% of open interest, according to LME broker Marex Spectron.
The combination of outright price weakness and easier spreads suggests the market is now pricing in an imminent turnaround in supply-demand dynamics.
Not for the first time.
Timing the zinc market’s shift to supply surplus has been tricky work with premature bears getting burnt on both time-spreads and outright price in the first half of the year.
While mine supply has surged, the flow-through to better availability in the refined metal segment of the supply chain has taken much longer than expected.
SURPLUS COMING?
So what’s changed to persuade zinc bears to try the downside again?
Firstly, Chinese refined zinc production appears to be recovering from its contraction in 2017 and 2018.
Much improved availability of mined concentrates and much improved margins for treating that raw material appear finally to be making an impact, with national output in May up 7.4% year-on-year at 480,000 tonnes, according to the National Bureau of Statistics.
It’s the strongest reading for over two years and has fuelled expectations that the global smelter bottleneck is starting to clear.
Secondly, visible inventory has rebuilt from depleted levels over the last few months.
LME stocks have recovered from a cycle low of 50,425 tonnes in early April to a current 78,550 tonnes, while inventory registered with the Shanghai Futures Exchange (ShFE) has bounced back from 20,103 tonnes at the start of the year to 74,065 tonnes.
These, however, are still low numbers by any historical yardstick and the uptrends are by no means established, witness Monday’s cancellation of 9,600 tonnes of LME zinc stocks in possible preparation for physical load-out.
LME spreads are signalling a significant amount of metal is on its way, but it’s still unclear how much or when.
LEAD BUOYED BY PORT PIRIE OUTAGE
Lead was supposed to be heading towards supply surplus quicker than zinc but physical tightness has also proved surprisingly sticky.
LME lead stocks are still low at a current 64,550 tonnes, while ShFE stocks have edged up only slightly this year to 34,123 tonnes.
Moreover, physical availability is being stretched by the outage at Nyrstar’s Port Pirie smelter in Australia.
The plant was originally expected to be back on line at the end of June but the company’s latest assessment is that it will return to production at the end of July.
Based on Port Pirie’s output over the last two years, the downtime will cost the market around 30,000 tonnes of lost production.
That doesn’t sound a lot and at other times it probably wouldn’t make much market impact. But with visible stocks cover so low and no sign of any imminent turnaround, Nyrstar’s latest restart timetable has caused renewed time-spread turbulence on the LME.
The benchmark cash-to-three-months spread CMPB0-3 flared out to a backwardation of $42 per tonne in the days following the company’s original June 10 announcement of force majeure on Port Pirie shipments.
By the beginning of this month the period had flipped back to a more “normal” contango of $15 per tonne but it tightened again last week to close Friday valued at a small $2 contango.
The LME outright lead price has a new spring in its step, challenging last week’s high of $1,987 again on Monday.
TIMING THE TURN
In terms of fundamental supply-demand balance, zinc and lead should be on the same trajectory with mine concentrate availability improving and refined metal production rising.
They are, after all, called “sister” metals because they tend to be found in the same deposits and mined together.
However, both markets are having trouble trading the timing of this process. Zinc has had several false starts, while lead is also defying bear expectations.
That should instil some caution into the latest change in the pair’s relative value dance.
The bull story in zinc looks to be over once and for all, but there are questions as to whether the physical market can match the paper market’s expectations.
Zinc is undoubtedly near an inflection point but as analysts at Morgan Stanley note, the supply-demand balance remains finely poised. The bank flags “the potential for a last rally before price falls into 2020, driven by a smelter bottleneck that eases more slowly than forecast”. (“Zinc’s short-term support,” July 1, 2019).
Lead should be through the inflection point but, thanks in part to the Port Pirie outage, there is as yet no sign that a deluge of new metal is on its way.
These differing dynamics are generating a lot of volatility in the relative value trade between the two metals.
Expect more of the same until the two markets show clear and accumulating evidence that they are on the road towards long-awaited supply surplus.
Nickel prices surged to their highest in 11 months on Tuesday, propelled by buying from speculators and industrial consumers worried about potential future shortages.
A key ingredient in batteries for electric vehicles (EVs), nickel could be subject to increasingly heavy demand with an expected shift from diesel and petrol cars in the coming years.
“We’ve been hearing about consistent strong Western consumer buying as the main driver of the price, probably related to EV nickel hedging requirements,” said Nicholas Snowdon, metals analyst at Deutsche Bank in London.
Current estimates peg the future supply situation as less critical than forecasts from a year ago, but industrial buyers remain nervous about availability, Snowden said.
“The balance has softened from a sizeable deficit to close to balance,” he said. “But it’s not a sudden swing back to significant surplus and ample availability, so I think there’s still a concern over making sure that you have enough raw materials.”
As nickel prices ramped up, buying from speculators extended the rally, one broker said. “It’s CTA (commodity trading advisers) momentum buying ... that is pushing things (nickel) higher.”
CTA funds often base trading decisions on chart patterns and technical levels, including momentum.
Benchmark three-month nickel on the London Metal Exchange (LME) climbed as much as 2.7% to $14,025 a tonne, its highest since last August, and traded 2.3% higher at $13,980 in official open outcry activity.
Prices of nickel, mainly used in the stainless steel industry, have also been boosted by worries of restricted ore supplies from major producer Indonesia because of a planned 2022 export ban.
LME nickel has been the best-performing base metal this year with gains of 31% while most other base metals have fallen.
Peruvian President Martin Vizcarra rejected the demand of a regional governor on Tuesday to cancel within 72 hours the construction permit for a copper mining project that has led to protests.
Residents from the area bordering Southern Copper Corp’s $1.4 billion Tia Maria copper mine project in the south of Peru, which is the second largest copper producer in the world, began protesting on Monday with a blockade of a portion of Peru’s main coastal highway.
Officials from the southern region of Arequipa said the government had not taken into account the community’s concern that the mining operation would contaminate its water sources and land when it granted a construction permit on July 9.
Arequipa Governor Elmer Caceres called on Vizcarra to cancel the construction permit within three days.
“You cannot cancel [a construction permit]. We have to talk,” Vizcarra said in a public appearance in Lima, responding to a reporter’s question about Caceres’ request.
Vizcarra said the government approved the project when legal requirements were met and that Southern Copper said it would not begin construction until it gains more support from people who live in the area.
Caceres said the community plans to continue its protest while perusing a legal plan to challenge the permit, but did not offer details.
Demonstrations have previously derailed the project when at least six protesters were killed in clashes with police in 2011 and 2015.
Nickel is enlivening an otherwise torpid summer for the base metals complex.
The market is on a bull charge in both London and Shanghai.
London Metal Exchange three-month nickel has jumped 23% since the start of June and at a current $14,250 per tonne is trading at its highest level in a year.
Chinese speculators are surging into the Shanghai Futures Exchange contract, which is also nudging one-year highs.
The trigger for this collective exuberance is news that Indonesia will stop allowing the export of unprocessed nickel ore in 2022.
Since this is a key raw material pipeline for China’s giant nickel pig iron (NPI) sector, the price reaction might seem rational.
Except that the “news” is not new. The 2022 deadline was set in 2017, when the Indonesian government allowed a five-year grace period for ore exporters in return for investment in processing capacity.
How much nickel ore the country will be exporting come 2022 is also a highly moot point.
But such niceties have done nothing to damp speculative buying interest, proof perhaps that Goldman Sachs was right when it described nickel as behaving like a biotech stock.
A BRIEF HISTORY OF THE BAN
Indonesia introduced a ban on the export of unprocessed minerals in January 2014 with the explicit aim of forcing miners to build domestic processing capacity.
The nickel market was caught unawares, even though the law had been pending for five years. The price surged to a mid-2014 peak of $21,625.
Indonesia’s exports of nickel ore ground to a halt over the course of 2014-2016, although the expected hit on China’s NPI sector never materialised because of the rise of the Philippines as an alternative supplier.
January 2017 was supposed to see the ban reaffirmed and exemptions such as that for copper concentrate ended.
However, the Indonesian government did an about-turn, perhaps accepting that getting smelters built in such a short period of time was unrealistic.
It pushed back the deadline to 2022 and introduced a system of annual export permits for those operators who could prove they were building processing plants.
Progress is regularly reviewed. Four miners, three nickel and one bauxite, had their export licences suspended in August 2018. Two, both nickel, were subsequently reinstated after demonstrating they had met the conditions.
Nickel ore exports to China kicked back in over the course of 2017 and have picked up momentum ever since. However, they have not displaced Philippine material. China imported 1.7 million tonnes of nickel ore from Indonesia in May. Imports from the Philippines were higher at 3.3 million tonnes.
China’s nickel ore buyers have successfully diversified their sourcing to reduce their reliance on Indonesia, cushioning them against another complete export ban.
PROCESSING BUILD-OUT
It’s also highly uncertain how much nickel ore Indonesia will be exporting in 2022 anyway.
The comments that triggered the recent market excitement were made by Indonesian Energy and Minerals Resources minister, Bambang Gatot Ariyono, in a July 8 parliamentary hearing.
He reaffirmed the 2022 cut-off point for all unprocessed mineral exports but with the important caveat that the ministry forecasts there will be 41 smelters, including 22 nickel smelters, operating in the country by that stage.
That may be on the optimistic side but Indonesia’s policy of pushing miners towards downstream processing is undoubtedly working.
China’s Tsingshan Group has gone all the way down the processing chain, offshoring some of its mainland stainless steel capacity with a three million tonne-per-year plant in Indonesia fed by local nickel ore.
It and others are now looking at building capacity to produce battery-grade nickel to meet rising demand from electric vehicles (EV).
Some operators are just converting ore to nickel pig iron and shipping the intermediate product to China.
All this evolving processing capacity will naturally reduce the amount of ore available for export by the time the ban comes into full force in 2022.
Assuming, of course, the Indonesian government doesn’t change its mind again at that stage.
Shanghai nickel prices rose more than 4% in early trade on Thursday to a one-year high,
extending a rally for the metal into a ninth day as speculators continue to pile into the Shanghai Futures Exchange.
Nickel, used to make stainless steel and batteries for electric vehicles, is now up more than 30% since the start of this year in Shanghai and is almost 37% higher in London.
* SHANGHAI NICKEL: The most traded August nickel contract on
the ShFE rose as much as 4.1% to 114,770 yuan ($16,692.85) a tonne, the highest since July 4, 2018, and stood at 114,090 yuan as of 0155 GMT.
* OPEN INTEREST: Market open interest in Shanghai nickel, a measure of liquidity, rose to 604,806 lots on Wednesday, its highest since April, and was up more than 50% since July 5. The
trading volume was approaching 800,000 lots, already well above the 30-day average for a full day's trade.
* LME NICKEL: Three-month nickel on the London Metal Exchange shrugged off an early dip to move higher for a seventh session. It gained as much as 1.5% to $14,665 a tonne,
its highest since July 3, 2018.
Aluminum producer Alcoa reported better than expected second quarter earnings on Wednesday with a narrower-than-expected loss but raised concerns about demand, and the implications for the global economy with the Trade War affect and tariffs.
Alcoa Corp NYSE: AA Reported Earnings After Close Wednesday
($0.01) Beat ($0.19) EPS AND $2.7 Billion Matched $2.7 Billion Forecast in Revenue
Earnings
Alcoa said it lost $402 million, or $2.17 a share, in the second quarter, versus earnings of $10 million, or 5 cents a share, in the year-ago period. Adjusted for one-time items, the company lost $2 million, or a penny a share, versus earnings of $1.17 a share a year ago.
Revenue fell to $2.7 billion from $3.6 billion a year ago. Analysts polled by FactSet had expected an adjusted loss of 19 cents a share on sales of $2.7 billion. ;
Outlook
Alcoa said it estimates global aluminum demand growth for 2019 between 1.25% and 2.25% this year, down from a previous estimate of growth between 2% and 3%. This is a result of “lower demand in both China and the world ex-China due to trade tensions and macroeconomic headwinds,” AA said in a statement. This is also against a backdrop of Aluminum inventories as measured by days of consumption continue to decline and are expected “to reach levels not seen in more than a decade, since before the global financial crisis in 2008” this year, the company said. Alcoa continues to expect an aluminium deficit and an alumina surplus for 2019. For bauxite, it upped its expectations of a global surplus, to between 13 million and 17 million metric tons, an increase from the previous quarter’s full-year estimate of 8 million to 12 million metric tons. That increase is due to higher production in Guinea and Southeast Asia, only partially offset by higher demand in China, Alcoa said.
Alcoa Corporation $AA is a global leader in bauxite, alumina, and aluminum products. The stock had been rising on protectionist hopes as the Trump administration mulls curbs of imports on national security grounds. The tariff war has changed the dynmaics of such a hope. These were just the second year of results since AA split off it's aerospace division. Alcoa is a harbinger for many in the commodities and global growth sectors.
China’s alumina output rose by 5.4% year-on-year to 6.41 million tonnes in June, its highest in more than two years, according to data released by the National Bureau of Statistics.
Figure is highest monthly total since May 2017, according to records on the bureau’s website, and comes as prices for the aluminium raw material in China have slumped to their lowest since August 2017 on oversupply.
China June refined copper output rises 11.8% year-on-year to 804,000 tonnes, highest since December 2018 – stats bureau.
China June zinc output rises 10.3% year-on-year to 513,000 tonnes, highest since November 2018 – stats bureau.
China June lead output rises 18.2% year-on-year to 475,000 tonnes – stats bureau.
China June iron ore output 12.1% year-on-year to 73.13 mln tonnes – stats bureau.
Anglo American said it remained 'broadly' on track to meet its full-year production target despite lowering its diamond production guidance and reporting a fall in iron ore production at its Kumba mine. The miner reported that total production rose just 2% in the second quarter. De Beers' diamond production decreased by 14% to 7.7m carats in the quarter, amid a softer demand backdrop and as its Venetia mine transitioned from open pit to underground. The company revised down its diamond production guidance to about 31 million carats, in response to weaker trading conditions. Kumba's iron ore production decreased by 9% to 10.5m tonnes due to plant maintenance, the miner said. While Minas-Rio's iron ore production rose to 5.9m tonnes for the quarter, up from 0.1MT as the strong ramp-up of the miner continued ahead of schedule. Copper production increased 1% to 159,100 tonnes, reflecting strong performance at both Los Bronces and Collahuasi. Production guidance was unchanged at 630,000-660,000 tonnes. Metallurgical coal production increased by 11% to 5.8m tonnes due to 'generally stronger performance and the completion of Q1 longwall moves,' Anglo said. While thermal coal production decreased by 8% to 6.6m tonnes which the company blamed on local drought conditions at Cerrejón. 'Production is up 2%(1) for the quarter, due to the successful ramp-up at Minas-Rio and strong performance at Metallurgical Coal following the longwall moves and plant upgrade work in Q1,' said Mark Cutifani, Chief Executive of Anglo American. 'Kumba Iron Ore continues to improve following Q1 production challenges. De Beers, in view of prevailing market conditions, will continue to produce to demand for the year. We remain broadly on track overall to deliver this full year's production targets, with an increase to Minas-Rio guidance offsetting two reductions at De Beers and Kumba Iron Ore.' At 8:10am: (LON:AAL) Anglo American PLC share price was -18p at 2185p
The copper market may be stuck in a well-worn trading range but there is plenty of action unfolding in the mine concentrates segment of the copper supply chain.
China’s copper smelters have just slashed their minimum charges for converting concentrates into refined metal.
The 10-member China Smelters Purchase Team (CSPT) has set treatment and refining charges at $55.00 per tonne and 5.5 cents per lb respectively for third-quarter deliveries.
That’s down from $73 and 7.3 cents in the second quarter and from $92 and 9.2 cents in the first quarter.
It is now sufficiently low to cause margin distress for higher-cost smelters.
Tumbling treatment charges reflect a tightening market for copper raw material.
They are also putting further stress on an already creaking benchmark system of pricing copper concentrates.
MINE SUPPLY STALLS
This was always going to be a year of low or no copper mine production growth.
The International Copper Study Group (ICSG) forecast minimal growth of 0.2% this year at its spring meeting in May.
Even that low-ball figure is looking optimistic with global production of concentrate falling 1% in the first quarter of this year, according to the group’s latest monthly statistical update.
The two main drags on supply so far this year have been Chile and Indonesia.
Chilean output slid 5% in the first quarter “mainly due to lower copper head grades”, according to the ICSG.
Indonesian production slumped 52% year-on-year, largely reflecting lower output at Freeport McMoRan’s giant Grasberg mine, which is transitioning from an open pit to an underground operation.
Last year’s stellar performance by Zambia and the Democratic Republic of Congo, which saw combined output surge by 11%, is fading in 2019 with first-quarter growth of just 1.7%, the ICSG said.
CHINESE APPETITE GROWING
While mine supply growth is on pause, China’s collective appetite for concentrates is still growing at a healthy clip thanks to continued expansion of the country’s smelting capacity.
China’s imports of copper concentrates rose by 14% to 19.7 million tonnes, gross weight, last year and there has been no drop-off so far this year with first half imports up 10% year-on-year.
Quite evidently, this has not done much to stop the slide in treatment charges.
Indeed, with smelter production growth slowing in China, the tightness in the raw materials market looks anomalous.
Colin Hamilton, analyst at BMO Capital Markets, suggests that there may be other factors at work.
“Lower scrap consumption at smelters may be playing a part, increasing concentrate consumption per tonne of refined copper,” he says. (“Copper Concentrate: China can’t get enough”, July 17, 2019)
The steady decline in outright tonnages of scrap being imported by China is down to the steady tightening of import purity rules. Scrap imports fell by 32% last year and by another 27% in the first five months of 2019, albeit with some mitigation from higher average grades.
However, Hamilton suggests that another reason for a tight concentrates market in China may be a faster-than-expected decline in domestic mine production.
This is a notoriously opaque part of the copper supply picture but there is no reason to assume that local copper miners haven’t been facing the same environmental clampdown as other industrial metal producers.
What is not in doubt is that Chinese smelters are willing to accept ever lower treatment charges despite higher concentrate imports and relatively subdued refined production growth.
BREAKING THE BENCHMARK?
The tensions in the copper raw materials market are such that they appear in danger of fracturing both the CSPT and the traditional annual benchmark system of pricing concentrates.
Two of the smelter team’s largest members, Jiangxi Copper and Tongling Nonferrous Metals Group, have broken ranks by signing early deals for first-half 2020 deliveries with Chilean miner Antofagasta.
This is a highly unusual development.
Normally the CSPT negotiates annual terms around the time of the Asia Copper Week conference in Shanghai in November.
These terms then become the “benchmark” for the year with other smelters falling into line around the CSPT negotiated price.
The rush by the two smelters to negotiate early deals is a sign of the pressures on processors to secure supplies but may also be “a play to run others into the ground, break up the CSPT and consolidate the sector cheaply,” BMO’s Hamilton says.
Antofagasta for its part may be keen to secure a bespoke deal to reflect the relatively high purity of its concentrates.
The terms for treatment and refining charges for the first-half 2020 deal are believed to be around $64 per tonne and 6.4 cents per lb, which would mark a significant drop from this year’s benchmark terms of $80.80 and 8.08.
It remains to be seen how this will impact negotiations for the 2020 benchmark or even whether the benchmark will survive.
This is the just the most recent crack in a system that has been crumbling for some time.
BHP, which used to take the lead role in the annual negotiations with smelters, walked away from the benchmark system about five years ago, preferring to sell its concentrates on shorter-dated or even spot deals.
Since then Antofagasta and Freeport McMoRan have taken it in turns to lead the miners in the annual talks.
But with Antofagasta locking in its own supply deal with the two CSPT breakaway members and Freeport McMoRan with less to sell from its Grasberg mine, it is highly uncertain how the annual benchmark negotiations will play out over the coming year.
CONSOLIDATION AHEAD?
So far this turbulence in the copper concentrates segment of the market hasn’t affected the availability of refined metal.
While China has been importing more concentrates, it has been importing less refined metal with net imports sliding 12% over the January-May period to 1.23 million tonnes.
That may be about to change, though, with suggestions that several Chinese smelters will take downtime for maintenance as a way of reducing exposure to margin-negative treatment charges.
Given the expansion of smelting capacity in China, however, that may amount to no more than kicking the can down the road.
The country’s copper smelter sector may need more fundamental consolidation. It’s starting to look as if some members of the CSPT agree.
Copper output began at the Chinese-owned Mirador mining project in southern Ecuador on Thursday, a milestone in market-friendly President Lenin Moreno’s effort to boost the mining sector and wean the OPEC nation’s economy off its dependence on oil.
Ecuador, an Andean country neighboring No. 2 copper producer Peru, has large mineral reserves but is only beginning to develop industrial-scale mining projects. Mirador has an estimated 3.2 million tonnes of copper reserves, along with 3.4 million ounces of gold and 27.1 million ounces of silver
Ecuacorriente, a subsidiary of the Chinese consortium CRCC-Tongguan which has a 30-year concession to mine Mirador, says it expects to produce 94,000 tonnes of copper concentrate per year. The company has invested some $1.4 billion in the project and paid $85 million in government royalties, official data show.
“For the first time, with the Mirador project, Ecuador will produce copper and become an industrial-scale exporter of minerals,” Carlos Perez, Ecuador’s minister of energy and non-renewable natural resources, said at a ceremony marking the mine’s inauguration.
The CRCC-Tongguan consortium bought the company with the concession for the open-pit mine under former leftist President Rafael Correa, who deepened Ecuador’s economic ties with China. During Correa’s 10-year tenure, the world’s No. 2 economy invested in major electricity projects and lent billions in loans-for-oil deals with state-owned Petroecuador.
Moreno, who was elected with Correa’s endorsement in 2017 but has since earned his former mentor’s ire by shifting economic policy to the right, has focused on improving Ecuador’s investment environment to attract Western companies.
Other major mining projects in Ecuador include the Fruta del Norte gold mine, - operated by Canada’s Lundin Gold; the Cascabel copper, gold and silver mine, operated by Australia’s Solgold; and the Llurimagua copper mine, to be operated by Ecuador’s Enami and Chile’s Codelco.
Some of those projects have run into opposition from nearby communities, which are concerned about environmental damage.
AI Runs Smart Steel Plant
2019-07-15 09:30:00.744 GMT
By John Murawski
An ultramodern steel plant in Arkansas is using artificial intelligence to
help it become more competitive, as the U.S. steel industry looks for ways to
lower costs in a global market facing slowing demand.
Big River Steel LLC's mill, which began operating in January 2017, melts
scrap metal and produces steel for more than 200 customers, including four auto
makers. Investors in the $1.6 billion facility in Osceola, along the
Mississippi River, include Koch Minerals LLC; TPG Growth, part of
private-equity firm TPG Capital; the Arkansas Teacher Retirement System and the
plant's management.
The plant's AI system, designed by San Francisco technology firm Noodle
Analytics Inc., uses deep learning and neural networks. It was designed to
continually train algorithms on data captured by thousands of sensors.
The data can be useful in a number of ways, from spotting problems with
production and quality to helping sequence the production of various grades and
sizes of steel in the most efficient manner. The system can also help conserve
energy consumption beyond what the plant gets per its utility contract,
maximizing the amount of surplus power it can sell.
Big River Chief Executive David Stickler, 58 years old, is a veteran of
the steel, mining and recycling industries who attended a White House AI summit
last year. He is also director at Global Principal Partners LLC, which invested
in the plant.
Mr. Stickler said the "self-learning" mill is comparable to an autonomous
vehicle in the technological advances it is ushering into the steel industry.
"We're using the best available technology and pressing that technology
farther, we think, than anyone in the steel industry," he said. "Any future
steel facilities that are built will try to capitalize on what we've done and
replicate it."
The plant, which employs more than 500 people and produced 1.6 million
tons of steel last year, is the company's only steel mill, though it is
exploring building another facility.
In recent months, falling steel prices have put pressure on many domestic
producers. United States Steel Corp. said last month that it would cut
production by idling two blast furnaces, adjusting for a decline in demand from
the manufacturing sector.
That environment is creating opportunity for newer plants with lower
operating costs. Mr. Stickler told WSJ Pro that he believes Big River is
millions of dollars a year less expensive to run than traditional mills, thanks
to the AI system and its potential to sell unused power. When demand for
electricity is high, Big River can sell power at up to four times the amount it
pays per its contract, Mr. Stickler said.
Some experts say Big River is at the cutting edge of steel mill
technology.
It is the world's first steel plant designed to manage its operations with
the aid of "artificial intelligence from the drawing board," said Ron Ashburn,
executive director of the Association for Iron & Steel Technology.
Christopher Plummer, CEO of Metal Strategies Inc. in West Chester, Pa.,
advised the banks and investors backing Big River Steel. He said it is "the
newest and highest-tech steel plant in the U.S."
The AI system collects data on equipment conditions such as pressure and
temperature. It also tracks scrap-metal conditions, customer delivery schedules
and electricity costs. The technology helps the mill produce different grades
of steel with lower operating costs, a competitive boost.
Big River Steel spent much of 2017, its first year of operation,
collecting and analyzing data, Mr. Stickler said. It took time to train the
algorithms that are used to predict maintenance problems, because the machinery
was new.
Mr. Stickler said that a typical mill might shut down for four hours once
a week for maintenance, without knowing whether it is needed. But Big River's
algorithms assess actual wear and tear, helping the plant avoid unnecessary
downtime.
"Pretty soon you get an extra three weeks of operation a year," Mr.
Stickler said.
Write to John Murawski at john.murawski@wsj.com
(END) Dow Jones Newswires
July 15, 2019 05:30 ET (09:30 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.- - 05 30 AM EDT 07-15-19
BHP on Friday said it had released the world’s first tender for LNG-fueled transport to carry up to 27 million tonnes, or about 10 percent, of its iron ore as it seeks to position itself at the forefront of responsible mining.
Apart from the quest to cut carbon emissions to curb global warming, the United Nations shipping agency is introducing tougher anti-pollution standards in the industry’s biggest shake-up for decades.
BHP said ships fueled by LNG (liquefied natural gas) would eliminate NOx (nitrogen oxide) and SOx (sulfur oxide) emissions and, though not a zero-carbon solution, would bring a significant reduction in CO2 emissions until other options are available.
BHP, the world’s biggest diversified miner, stands apart from others in the sector with its target of net zero emissions by the second half of the century, in line with U.N. carbon-cutting goals.
That is a huge challenge, especially if it includes emissions related to the group’s vast amounts of coking coal and iron ore for steelmaking, as well as shipping of the material.
“We recognize we have a stewardship role, working with our customers, suppliers and others to influence emissions reductions across the full life cycle of our products,” said Rashpal Bhatti, BHP’s vice president for maritime and supply chain excellence.
BHP was “fully supportive” of the International Maritime Organization’s decision to impose lower limits on sulfur levels in marine fuels, Bhatti added.
China imported 254,000 mt of high-carbon ferrochrome in June, down 21.12%, or 68,000 mt from a month ago, after the imports shrank 19.37% on the month in May, the latest customs data showed.
Last month, some 89,100 mt of high-carbon ferrochrome imports originated from South Africa, 52,300 mt from Mozambique, 26,500 mt from India, and 10,600 mt from Kazakhstan.
https://news.metal.com/newscontent/100949759/chinas-ferrochrome-imports-dip-21-in-jun/
China’s iron ore imports in June fell from a year ago, touching their lowest since February 2016, customs data showed on Friday, as supply declined from top miners in Brazil and Australia.
Arrivals of the steelmaking raw material were 75.18 million tonnes last month, below both the 83.24 million tonnes imported in June 2018 and May’s 83.75 million tonnes, according to data from the General Administration of Customs on Friday.
For the first-half of the year, the world’s biggest iron ore consumer brought in 499.09 million tonnes of ore, down 5.9% from the same period a year ago, the customs data showed.
Supply from Brazil has fallen following the deadly rupture of a tailings dam in January. Elsewhere, Rio Tinto, the world’s largest iron ore miner, has cut its forecast for 2019 shipments from the Australian region of Pilbara due to operational problems.
The two countries are China’s largest iron ore suppliers.
Inventories of imported iron ore at Chinese ports fell to a 2-1/2-month low of 115.25 million tonnes by the end of June, according to data compiled by SteelHome consultancy. It rebounded slightly to 115.6 million tonnes last week.
“Iron ore supply may not see much improvement as some miners have scheduled maintenance in the coming months, while output from Vale is not likely to pick up largely in the near term,” said Richard Lu, analyst at CRU in Beijing.
Chinese demand for iron ore could ease as top steelmaking cities in China heighten anti-pollution measures, including trimming production at mills, as local officials face mounting pressure to meet air quality targets.
Utilization rates at steel mills across China fell to 66.02% as of Friday, the lowest since late March, data compiled by consultants Mysteel showed.
“With the top steel hub cutting output, mills in other regions may take the chance to ramp up production. In that sense, total iron ore demand in China may not fall too much,” said Lu.
China’s coal output rose in June from the previous month to a record high, official data showed on Monday, as miners ramped up production to ensure supply ahead of peak summer demand for electricity.
The world’s top coal producer churned out 333.35 million tonnes of coal in June, up 6.7% from May and up 10.4% year-on-year, data from the National Bureau of Statistics showed.
Output over the first half of 2019 reached 1.76 billion tonnes, up 2.6% from the same period last year.
Summer is typically a high season for electricity demand in China due to increasing use of air conditioners in hot weather.
China’s state planner and energy administration have asked miners, especially big producers in Shanxi, Shaanxi and Inner Mongolia, to step up production of high-quality coal to meet increasing demand.
China generated 583.4 billion kilowatt-hours (kWh) of power in June, up 2.8% year-on-year, the data showed, with coal-fired power generation rising 0.1% from a year ago after two months of year-on-year declines.
Meanwhile, Beijing has been approving new coal mining capacity in recent months despite a push to promote clean energy and reduce its carbon footprint.
With new capacity coming on line, coal prices on the Zhengzhou Commodity Exchange CZCcv1 are currently around 583 yuan ($84.81) a tonne, down almost 5% from a two-month high of 612.60 yuan in mid-June.
Meanwhile, China’s production of coke, used in steelmaking, rose 10.7% year-on-year in June to 41.69 million tonnes, with year-to-date output reaching 233.87 million tonnes, up 6.7%, the data showed.
China will continue to enforce production restrictions in heavy industry in winter this year and will tighten its emission assessment on steel mills when granting exemptions from curbs already in place, an environment ministry official said on Saturday.
With increasing discontent over large-scale industrial shutdowns, Beijing has vowed to adopt more effective and targeted measures during its war against air pollution by imposing different levels of output cuts on companies based on their emission situation.
“The steel industry remains a major contributor of pollutants despite improvement in emission levels and production restrictions...This year, there will not be many first-class firms that will be exempt from curbs,” Liu Bingjiang, the head of the atmospheric environment department at Ministry of Ecology and Environment (MEE), told an industrial conference.
Liu said MEE will bring in industrial associations to carry out emission assessments on mills to avoid fraud in the emission upgrading process.
“We will hand out severe punishment to mills who play tricks and will enforce the highest level of production restrictions on them,” said Liu, adding that he had noticed that investment and operational costs of emission upgrade at mills varied from less than 20 yuan ($2.91) a tonne to as high as 270 yuan a tonne in steel-making.
China, the world’s biggest steel producer, has ordered mills in key regions, including Beijing-Tianjin-Hebei, the Fenwei Plain and the Yangtze River Delta, to meet ultra-low emission standards by 2020.
That would include more than 60% of steel capacity in the country.
Companies who attain “ultra-low” emission standards are entitled to be exempt from or are allowed to implement a minimum level of production cuts during smog days.
However, an executive at the China Iron and Steel Association (CISA) at the same conference warned of insufficient “clean capacity” in the steel industry despite the record high output.
“I hope the government can adopt fair measures in its anti-smog campaign by protecting and supporting clean and advanced steel producers,” said CISA Chairman He Wenbo.
In the first five months of this year, China’s crude steel output increased 10.2% from a year earlier to reach 404.88 million tonnes. Of the incremental output, 54% comes from small steel firms whose emission level is typically lower compared with their mid- and big-sized rivals, He said.
“Mills are investing huge amounts of money to improve their emission levels...they are the real heroes in the war against pollution.”
China’s daily crude steel output rose to record levels in June, according to Reuters calculations, even as anti-pollution production curbs pushed whole-month production slightly lower, official data showed on Monday.
The world’s biggest steel producer churned out 87.53 million tonnes of crude steel last month, data from the National Bureau of Statistics (NBS) showed. That was down from a record 89.09 million tonnes in May - the first monthly drop this year - as the government stepped up its drive to cut smog, but still well above 80.2 million tonnes in June 2018 as daily output grew.
Average daily output of steel was around 2.92 million tonnes, calculations showed, compared with 2.87 million tonnes in May.
The monthly drop for June came as the smog-prone northern province of Hebei, which accounts for a quarter of China’s total steel output, ordered local governments to bring forward capacity cuts and anti-pollution measures to meet annual air quality targets.
The Hebei cities of Handan and Tangshan extended production curbs until August.
Analysts expect the restrictions, if fully implemented, will have a bigger impact than curbs usually imposed in winter to restrict smog, and will trim blast furnace operations by around 40% in the region.
Utilization rates at Chinese steel mills fell to 66.02% as of July 12, the lowest level since late March, data compiled by consultancy Mysteel showed.
At blast furnaces in Tangshan, China’s top steelmaking city, those rates are expected to hover at around 61% in July and August, analysts estimate. That compares to an average of 75.6% in the city in the first half this year.
On Saturday, an environmental official said at a conference that China will continue to enforce production restrictions in heavy industry in winter this year, and will tighten its emissions assessment on steel mills when granting exemptions from curbs already in place.
Meanwhile, the chairman of the China Iron and Steel Association (CISA) told the same conference demand was being driven by sustained government investment in the construction sector.
“Nearly 98% of the increase in steel production in the first five months flew into the domestic market,” He Wenbo said. “Steel output is not determined by producers, but downstream users in the market,” he added.
India's Tata Steel group, which produces steel mainly in India and Northwest Europe, said steel-to-raw material price spreads during the April-June quarter had been squeezed by a combination of weaker steel prices and higher raw materials prices.
Besides regional factors, steel prices across many regions declined last quarter due to global trade related concerns hitting investment and demand, Tata Steel said.
"A sharp rise in iron ore prices due to supply disruptions and elevated coking coal costs," hit margins, the company said in an update on Sunday.
"Global business confidence has dipped sharply in recent months amidst broader economic weakness and the uncertainty around the ongoing US-China trade conflict, which has had an adverse effect on investment decisions, capex spend and trade flows," Tata Steel said.
NW Europe indicative HRC steel to raw materials margins fell to average Eur229/mt ($258/mt) in Q2, from around Eur271/mt in Q1, after benchmark iron ore prices surged to average at over $100/dry mt CFR China during Q2, according to S&P Global Platts analysis.
Atlantic Basin iron ore blast furnace pellet contract prices rose over April-June, as higher iron ore fines reference pricing in China boosted invoices for FOB buyers in Europe, the Americas and northeast Asia.
Higher 65% Fe fines and continued strong lump premium pricing have pushed up overall steel making costs in Q2 for Europe, according to a Platts analysis.
Coking coal prices remain strong for benchmark grades, as China boosted demand during the period for higher quality and low impurity imports.
Tata Steel's fiscal Q1 steel production for Europe fell 5.3% to 2.66 million mt from the year earlier period, while steel sales fell 7.3% to 2.27 million mt.
Tata Steel said the decrease was a result of planned shutdowns and unplanned outages during the quarter.
"In Europe, the steel industry is facing significant headwinds in terms of lower economic growth and trade flow uncertainty that is impacting steel consuming products," Tata Steel said.
U.S. President Donald Trump will sign an order on Monday seeking to increase the domestic content threshold for American-made iron and steel in federal procurements, White House trade adviser Peter Navarro said in an opinion piece on Fox News.
Navarro said Trump will strengthen his “Buy American” platform by further moving toward increasing “domestic content threshold for American-made iron and steel from 50 percent to 95 percent.”
Caofeidian port in northern China has halted custom declarations for all coal imports effective July 16, which is being interpreted by the market as a signal of a further tightening of import curbs, market sources said Tuesday.
Sources at three major Chinese steelmakers confirmed with S&P Global Platts that they had received verbal notice from Caofeidian port-related authorities that restrictions were being imposed.
The sources said a meeting was held at midday Monday about the restrictions and that verbal notice was also circulated in the market Monday evening.
A Caofeidian port agent also confirmed this with Platts, without providing further comment.
"It looks like the Caofeidian port restrictions are targeting both thermal and metallurgical coals from all origins," a Chinese trader said.
Market sources said the measure was imposed after the total volume of coal imported over the first half of 2019 was deemed by authorities to be greater than desired. China imported 27.1 million mt of coal over January-June, including thermal and metallurgical coals, up 5.8% year on year, latest customs data showed.
Caofeidian port is primarily a domestic coal hub located in northern Hebei province.
Although no official announcement has been made, market players said the restriction was targeted at trading companies, while end-users were still allowed to process custom declarations.
"Caofeidian mainly handles domestic coal, but as there have been port restrictions elsewhere, some seaborne traders have been diverting to this port for unloading and custom clearance in recent months," a trader in east China said.
Other market sources in China said the impact of the decision on seaborne coal was expected to be limited as the volume likely to be impacted is small.
"More importantly, traders are worried this is a signal to the market," another market source in east China said.
In addition to the port restrictions reportedly imposed at Caofeidian, market sources said clearance times at Qingdao and Fangcheng ports were increasing.
"I think this is a bearish factor to consider for the seaborne market, while the port stocks and domestic coal market will be supported," a trader in Tangshan said.
Platts assessed Premium Low Vol coal at $184/mt FOB Australia Monday, while the CFR China price was assessed at $191.50/mt CFR China.
Prices of 4,200 kcal/kg NAR thermal coal, one of the most liquid grades in Asia, was assessed Monday at $35.50/mt FOB Australia and $44.95/mt CFR China.
Shockwaves from Tsingshan’s new stainless steel hub in Indonesia are reverberating across South East Asia and beyond, according to Wood Mackenzie.
“Competitively priced exports of Indonesian stainless product have provoked varying reactions from stainless steelmakers in the destination countries. China has warned off Tsingshan with anti-dumping duties, Taiwan has willingly taken Indonesian stainless instead of melting its own, South Korea is changing its mix of stainless grades and fighting a proposal for a new Tsingshan cold rolling (CR) mill, India is partnering with Tsingshan in a new CR venture that is about to enter production and Europe is worried that more Indonesian stainless might come its way,” said Sean Mulshaw, Wood Mackenzie Principal Analyst.
Tsingshan upsets the apple cart
Tsingshan’s stainless complex in Morowali, Indonesia, entered production in mid-2017 with a capacity of 2Mtpa. In 2018, this was increased to 3Mtpa. A third line was commissioned but has yet to start commercial operations.
“Normally, the start up of a new 3Mtpa stainless melt shop would be good for nickel demand and generally positive for prices. In this case, however, the ramp up in production has been partly offset by cuts in output elsewhere, with more likely to follow.
“The Morowali mill is regarded as the lowest cost stainless operation in the world, primarily due to its integration with, and hot metal transfer of, nickel pig iron (NPI). Its stainless semi-finished products of slab and hot-rolled coil (HRC) are both very competitively priced. As a result, global producers are likely asking: why continue to melt stainless when I can purchase these lower priced semis and roll them instead?” added Mr. Mulshaw.
China closes the door
When Tsingshan started up the Morowali stainless complex in July 2017, output was principally shipped to China. By the end of March 2018, almost 1Mt of stainless steel slab and HRC had been exported to the country, however the market was not strong enough to absorb it.
“Inventories increased to record levels, the Chinese market weakened and Tisco, one of Tsingshan’s main competitors, lobbied the government to take action. Threats of anti-dumping measures were made and Tsingshan duly backed off, cutting production at its own mills in China and expanding its customer base in other South East Asian countries.
“The Chinese government followed through on its threat of anti-dumping duties. On 23rd March 2019, it introduced preliminary tariffs against Indonesia, South Korea and Europe. This triggered a repeat of the early-2018 oversupply situation, as Tsingshan increased its stainless exports to China in the period immediately leading up to the duty instigation date. This, combined with strong domestic production in March and into Q2, drove inventories back up to record highs,” said Mr. Mulshaw.
Taiwan embraces the change
Since Tsingshan’s Indonesian stainless became available, Taiwan has been cutting domestic melt production.
Between November 2017 and March 2019, Taiwan imported 560kt of Indonesian stainless slab and HRC. As a result, from July 2018, Taiwan’s own melt shop – of which Yusco is the largest – decided to reduce production by an average of 40kt per month. This is the equivalent of almost 500ktpa.
“The melt shop is the most expensive element of stainless steelmaking operations, therefore this strategy is reducing costs for Taiwanese mills. At the same time, iron-nickel inventories have doubled. In addition, since the beginning of 2019, Taiwan’s mills have increased stainless steel scrap imports considerably, further lowering their primary nickel requirements. These changes equate to a cut in primary nickel consumption in stainless of about one third, from 46kt in 2017 to an estimated 31kt in 2019.
“Stainless imports from Indonesia have also replaced imports from other countries, most noticeably China and South Korea. These two countries accounted for almost 90% of stainless HRC imports in 2017, however this share approached 60% in 2018 and will sit at approximately 50% in 2019,” added Mr. Mulshaw.
South Korea resists
When looking at South Korea, imports from China, Taiwan and Japan are being replaced by imports from Indonesia.
“While domestic output of the country’s main producer, Posco, has not been greatly affected in terms of quantity, it has instigated a change in product mix. In January 2019, the company stated that its efforts to combat the Tsingshan threat would be two-fold: to produce more ferritic and high chrome grades of stainless that Tsingshan does not make in Indonesia; and to produce a low-cost stainless product that would directly compete with Tsingshan’s 304 grade.
“There is now an added threat from Tsingshan’s stainless cold-rolled coil (CRC). Tsingshan has reportedly submitted a letter of intent to the Busan city government for a new 600ktpa stainless CR mill. The Korean Iron and Steel Association (KoSA) opposed the motion. Korea’s cold rollers may be happy taking cheaper HRC from Indonesia in preference to the semis previously obtained from Posco, however a new CR mill fed by that same low-priced HRC would undoubtedly take market share from them too,” said Mr. Mulshaw.
India partners up
Tsingshan has intensified its stainless HRC shipments to India in preparation for the July start up of its new 600ktpa CR mill at Mundra, Gujarat.
“This could spell trouble for Jindal Stainless. The company owns India’s two largest flat rolling mills, both of which had disappointing sales of stainless products in 2018-2019. During the first week of July, India’s Ministry of Commerce and Industry announced that it would launch an anti-dumping investigation of stainless flat products from 15 countries, including Indonesia, China, South Korea, Taiwan and Japan. The investigation was triggered by appeals from the Indian Stainless Steel Development Association (ISSDA) and three subsidiaries of Jindal Steel and Power, including Jindal Stainless (Hisar),” said Mr. Mulshaw.
European mills expected to struggle
In 2015 to 2017, EU27 imports of stainless steel from Indonesia amounted to an average of approximately 3kt per quarter, though this increased to more than 20kt per quarter in 2018 and 30kt in Q1 2019. The Indonesian share of imports has increased from less than 1% in 2015 to 2017 to 4.4% in 2018 and 10% in Q1 2019.
“In 2018, the U.S. 232 tariffs redirected considerable quantities of stainless away from the U.S. to Europe. Preliminary safeguarding measures brought in by the European Commission failed to mitigate effectively against this. As such, 2018 was a boom year for imports leading to stainless oversupply and high European stocks. The safeguards only began to have a noticeable impact from Q4, as illustrated by substantially reduced imports during that quarter. Definitive safeguards came in in January 2019 and these are functioning more effectively, as country by country quotas have provided import restraint. Indonesia is not limited by its own quota because it was not shipping any stainless to Europe between 2015-2017. This is why Indonesia is seen as a particular threat.
“European mills cannot afford to face a renewed challenge from Indonesian imports, especially with production levels sharply down on last year,” said Mr. Mulshaw.
What will Tsingshan do now?
In 2018, Tsingshan shipped 950kt stainless slab and HRC to China. This now has to be shipped elsewhere, yet only 800kt of product was exported to alternative destinations.
“Agreeing new offtakes for such a large quantity of stainless will not be a quick process. Shortly before the anti-dumping instigation date, around 200kt went to China. If Tsingshan’s new CR mill in India comes online in July, perhaps a further 300kt can go there. That leaves 450kt of other stainless that needs to be exported somewhere.
“If customers are not found then Tsingshan may have to cut production in Indonesia. This is counter to market expectations, with the start up of the third 1Mtpa line expected in H2 2019. However, producing more stainless will only add to the offtake challenge. For that reason, we expect the start up of the third line to be deferred until, at the very earliest, 2020,” concluded Mr. Mulshaw.
Reuters
BEIJING, July 16 (Reuters) - China's government promised it will keep "order" on the iron ore market at a meeting last week with the country's steel producers who complained about record-high prices, according to a source who attended the meeting.
More than a dozen representatives from government departments, leading steel mills, including China Baowu Group, Ansteel Group and Jiangsu Shagang Group , domestic trading houses, industrial associations, consultancies and Dalian Commodity Exchange gathered at the Ministry of Industry and Information Technology (MIIT) last Thursday, the source said.
"Government officials said they support industrial participants' assertion of their own rights and will resolutely sustain market order," said the attendee, who is a senior official at the China Iron and Steel Association (CISA). He declined to be named as he is not authorised to talk to the media.
They will also examine whether companies are using affiliated entities to place trades on the DCE in violation of the market rules. However, the current DCE trading rules will not be changed, he said.
Iron ore futures on the DCE have doubled since the beginning of 2019. On Tuesday, the most actively traded contract, for September delivery, rose to a record 924.5 yuan($134.47) a tonne.
The spike follows production cutbacks at major miners in Brazil and Australia after a fatal tailings dam accident and a cyclone in the state of Western Australia.
Last Thursday's meeting followed the creation of a group, led by eight steel firms representing 30% of China's steel output, that asked the government to investigate "non-market factors" causing the iron ore price rally.
Officials from the National Development and Reform Commission (NDRC), the MIIT and State Administration of Market Regulation also attended the meeting on Thursday.
The mills, the CISA, the DCE and the government agencies did not respond to enquiries by Reuters seeking official comment.
In their plea to the government, the eight mills also called for investigations into the methodologies used to assess physical cargoes of imported iron ore by S&P Global Platts, which is considered the spot trade benchmark and a reference for long-term contracts.
However, no formal approach has been taken by the Chinese government in response to the enquiry, according to the CISA source and Platts.
"We are always open to suggestions to change to improve on our methodology," said Julien Hall, Asia Metals Pricing Director at Platts.
A Platts spokesman also said it has approached CISA to discuss the price assessments.
The benchmark Platts iron ore index with 62% iron content was at $118.55 a tonne on Friday from $72.35 at the beginning of this year.
($1 = 6.8750 Chinese yuan renminbi)
This article appears in: Stocks , Commodities
Iron ore shipments to China from Australia’s Port Hedland terminal rose more than 11% in June from a month earlier, port data released on Wednesday showed.
Iron ore shipments to China from the world’s biggest iron ore port totalled 42 million tonnes in June, compared with May’s 37.8 million tonnes, the Pilbara Ports Authority said.
Port Hedland is used by three of Australia’s top four iron ore miners, BHP Billiton, Fortescue Metals Group and Gina Rinehart’s Hancock Prospecting.
Brazilian mining company Vale SA said on Monday it would pay 400 million reais ($106.52 million) to compensate workers affected by the deadly rupture of a tailings dam in January that killed at least 240 people.
In a statement, Vale said the deal also involves individual compensation for moral and material damages, including job stability and other benefits for a certain period of time.
In May, the company said it was taking $2.42 billion in writedowns for payments to victims’ families and estimated out-of-court settlements for various damages related to the dam collapse, including $247 million for a “framework agreement” with labor prosecutors.
FRANCE – European Commission presidential nominee Ursula von der Leyen yesterday pledged to propose a 'green deal' for Europe in her first 100 days in office, which would see a carbon-neutral continent by 2050.
“I will put forward a green deal for Europe in my first 100 days in office. I will put forward the first-ever European climate law, which will set the 2050 target in law,” she told the European parliament.
Von der Leyen pledged that the European Union will “lead international ambition” on fighting climate change when she delivered a speech to the assembly in Strasbourg, France, which was to vote on her nomination later yesterday.
At least 24 of the 28 EU member countries have so far pledged to set a target of a carbon-neutral Europe by mid-century, where it emits no more greenhouse gas emissions than it absorbs.
Eastern countries like Poland, Hungary and the Czech Republic have so far refrained from issuing such a pledge, amid concerns about financing their transition away from their dependence on coal and fossil fuels.
Von der Leyen, German defence minister, said the EU must go beyond its 2030 goal of reducing greenhouse gas emissions by 40%, compared to 1990 levels, if it is to produce zero net emission by 2050.
That goal was set under the 2015 Paris climate agreement.
Warnings have multiplied since 2015, when 195 countries meeting in Paris sealed a landmark agreement to keep temperature rises well below two degrees Celsius, compared with pre-industrial levels.
The UN Inter-governmental Panel for Climate Change (IPCC) warned in October that warming is on track towards a catastrophic 3 or 4 degree Celsius rise.
Von der Leyen also said she is prepared to extend Britain's exit from the EU beyond the 31 October deadline, if necessary.
“I stand ready for further extension of the withdrawal date, should more time be required for a good reason,” she told a confirmation hearing in the European parliament.
Her remarks triggered howls of derision from pro-Brexit members of the European parliament. – Nampa-AFP
A group of investors in Vale SA has filed a claim against the mining company with a Brazilian arbitration panel, seeking compensation linked to the deadly dam burst in Brumadinho early this year, newspaper Valor Economico reported on Wednesday.
The investors argued that Vale did not disclose information about risks facing the dam in the state of Minas Gerais to the market, according to the claim filed at an arbitration panel in the Market Arbitration Chamber of the stock exchange B3 SA, the paper said.
Nearly 25 asset management firms and some pension funds are seeking compensation for losses accruing from Vale’s plummeting share price following the disaster, but Valor did not say how much was being claimed. More investors may join the claim.
Vale’s stock plunged nearly 30% in late January, and has yet to return to where it was before the disaster.
Vale said it had not been informed of any claim. The B3 stock exchange did not immediately comment on the matter.
ArcelorMittal USA is calling upon its suppliers to work with them on cutting costs during a time of oversupply and weak demand in the US steel industry, which has seen finished steel prices plunge sharply from 2018 levels.
“We have strong relationships with our suppliers and are working with them directly to ensure strong cost efficiencies given current market dynamics,” Mary Beth Holdford, ArcelorMittal USA’s division manager, external communications told S&P Global Platts Tuesday in an email, after Platts sought further details about a letter sent July 11 to the steel producer’s suppliers.
The letter, signed by Curtis Geissler, vice president of procurement at ArcelorMittal USA, noted the company would implement “a 10% price reduction on all existing price agreements for all purchases issued after July 31, 2019.”
“The domestic US steel industry has entered into a very difficult period, driven by oversupply, uncertainty in the markets and continuing inventory reductions at manufacturers and service centers,” Geissler’s letter began. “In addition to rapidly declining demand, prices have plummeted from 2018 levels. As one of our valued suppliers, we are asking for your help in dealing with this decline.”
The Platts TSI assessment for US-made steel hot-rolled coil closed Monday at $561.25/st ex-works Indiana, up 11.7% after dropping to $502.25/st July 2. The benchmark price, however, is down $359 from $919.50/st a year ago.
A ferroalloys trader said he received Geissler’s letter and believed the steelmaker would attempt to renegotiate with individual suppliers, but he was unsure if it would apply to formula contracts.
Iron ore supplier Cleveland-Cliffs did not get the letter, according to a spokeswoman, who added that it would not apply to them because the raw material contracts between the two companies cannot be undone.
Several other steel sector suppliers were contacted and had yet to respond. A major manganese alloys trader said he did not receive the letter.
“Of course, a consumer can make such a request, but no company has the right to unilaterally change the terms of an agreement,” he added.
Holdford did not provide any further details, citing parent company ArcelorMittal’s quiet period ahead of its earnings report, scheduled August 1.
Geissler’s letter to suppliers concluded “if this process is not acceptable to you, please contact your local buyer to discuss a process to move forward or exit from our supply base.”
Australia’s South32 Ltd (S32.AX) on Thursday reported a 69% jump in full-year coking coal production, beating analyst estimates, as the diversified miner ramped up production at its Illawarra project.
The company, spun off from mining giant BHP Group (BHP.AX) in 2015, also said it had received bids for its South Africa Energy Coal assets in the June quarter and was currently in talks with interested parties.
Four sources familiar with the matter told Reuters last month that Seriti Resources and a consortium backed by global energy trader Mercuria were among up to six groups to have submitted final bids for the assets.
Coking coal output from Illawarra rose to 5.4 million tonnes from 3.2 million tonnes for the year. UBS had estimated annual output of 5.3 million tonnes.
South32’s Illawarra operations at New South Wales in Australia accounts for nearly all of the company’s coking coal output.
The Perth-based miner has struggled to keep down unit costs at its Appin and Dendrobium collieries after moving to longwall mining, a method used to extract long panels of coal in a single slice.
South32, the world’s No.1 producer of manganese ore, also said it commenced a review of options for manganese alloy smelters “as changes in market dynamics have reduced the attractiveness of our exposure.”
’s ( ) Sukuri gold mine produced 117,913 ounces of gold in the second quarter.
It takes the mine’s output to 234,096 ounces for the first half, which the company described as ‘in line’ with guidance.
The company highlighted that it is set for a stronger second half as it expects to see higher grade material coming from the Hapi zone. Annual guidance is set at 490,000 to 520,000 ounces.
"The outlook for the business continues to improve,” said Andrew Pardey, chief executive.
“Stronger production in the second half will be driven by mining open pit grades above 1g/t, as the Stage 4 pit progresses down into the Hapi Zone.”
He added: “We have a portfolio of attractive organic opportunities within Sukari and continue to deliver successful results from our Cote d'Ivoire exploration programmes.
“Our balance sheet is strong with no debt, no hedging and cash and liquid assets of US$327mln. We are confident in our plans to maximise shareholder value and returns."
Centamin will release interim results and give its outlook for 2020-2021 on 31 July 2019.
The Industrial Development Corp. affirmed its commitment to building a $5 billion steel mill in South Africa despite companies scaling back operations and a global glut because it wants to support infrastructure projects and urbanization on the continent.
The state-owned finance institution’s project with Hebei Iron & Steel Group, China’s biggest manufacturer of the material by output, will make products specifically for the local market and will be sold at competitive prices, Abel Malinga, head of mining and metals at the IDC, said in an interview in Johannesburg on Thursday.
"We are going ahead with it," Malinga said. "We are not going to change our minds. China will not produce steel for us, for our needs. We have different needs."
The new mill would produce as much as 5 million metric tons of steel annually, according to Malinga. That compares with the 6.6 million tons of crude steel the nation made last year, according to the South African Iron and Steel Institute. Some of the biggest local producers of the material, including a unit of ArcelorMittal, have announced plans to cut a total of more than 2,400 jobs as a surge in subsidized Chinese imports supplied at prices as much as 25 percent below local production costs have squeezed manufacturers’ margins.
The outlook for China’s steel market remains extremely bearish, with high steel inventories and subdued domestic demand expected to continue depressing prices in the near-term, according to an industry survey.
S&P Global Platts China Steel Sentiment Index (CSSI) edged up slightly to 15.97 out of a possible 100 points in July, the highest reading since April but still well below the 50 threshold.
The headline CSSI, which measures the outlook for new steel orders over the coming month, rose by 7.55 points from 8.42 in June – which was the second lowest reading since the index began in early 2013. A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a decrease/contraction.
The outlook for steel prices weakened even further from the previous month, dropping 7.97 points to just 6.25 points in July, the lowest ever reading in the CSSI.
CSSI respondents expected crude steel output to drop slightly in the next month, mainly due to production cuts in northern China’s Hebei province implemented in late June. The index reading for steel production dipped by 4.58 points to 39.66 in July.
The outlook for steel inventories remained high, but fell by 9.75 points from June to 76.79 in July. High steel stocks are likely to put downward pressure on steel prices, particularly if steel production picks up again from August when output curtailments have been lifted.
The CSSI is based on a survey of around 50 China-based traders and steel mills.
Despite weaker steel margins, there has been little talk of trimming steel production – other than for environmental reasons in northern China – among the country’s steel mills. Indeed, China’s daily crude steel production in June rose for a fourth consecutive month, hitting a record 2.918 million mt/day, up 1.5% on the month and 10.0% higher on the year, data released this week by National Bureau of Statistics showed.
https://www.hellenicshippingnews.com/platts-china-steel-sentiment-index-edges-up-to-15-97-points-in-july-outlook-bearish/
