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Assad’s Army Kicks ISIS Out Of Jararih Oilfield

August 29, 2017 Zainab Calcuttawala 0

The Syrian Arab Army staged an offensive this week to recapture oil-rich areas of the Al-Raqqa governorate that had previously been under the shadow of the Islamic State (ISIS), according to local reports. The area is home to the Jararih oilfield near Salaam ‘Alaykum village, a military report said. An attack by Syrian President Bashar al-Assad’s military eliminated ISIS elements from the field early this week. Syria’s oil resources have exchanged hands several times since 2014, when ISIS declared its caliphate in parts of both…

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One Chinese Coal Power Company Employs 4x More Workers Than The Entire US Coal Industry

August 29, 2017 Tyler Durden 0

On Monday, China’s government and president Xi blessed the merger between the country’s top coal miner, Shenhua Group and China Guodian Group, one of the country’s top five state power producers, in a deal that will create the world’s largest power company, worth 1.8 trillion yuan, or $278 billion. Putting the sheer size of the two merged behemoths in context, the resulting entity will be the world’s second-biggest company by revenue and largest by installed capacity.

As the following Bloomberg chart shows, the vast majority of the new company’s power generation will be coal-driven.

A fascinating comparison emerges when putting just this one company in the context of the entire US coal industry: with an estimated 326,000 staff, the combined entity will have a workforce that is four times bigger than the entire U.S. coal-fired power industry in 2016 (at roughly 77,000).

Some other comps: the combined entity will have an installed capacity topping 225 gigawatts, eclipsing European energy giants EDF and Enel to become the world’s biggest power company by capacity. It will also be the largest wind power developer in the world with 33 gigawatts of capacity and, more importantly, the biggest coal producer.

The giant Shenhua-Guodian tie-up is among the first mergers in China’s power industry that have resulted as top policy makers try to cut industrial overcapacity and the number of state-owned enterprises. Monday’s announcement concludes months of speculation about the combination, which was first reported by Bloomberg in June.

“People have been waiting for the other shoe to drop,” said Tian Miao, a Beijing-based senior analyst at Sun Hung Kai Financial Ltd. “This confirms the direction of state-owned enterprise reform, with companies in the same industry merging to reduce redundant investment and improve efficiency.” Of course, improving efficiencies would require mass layoffs, and it is unclear whether the resulting company will do that, or it will simply combine two state-supported zombies into one giant state-supported zombie.

* * *

Here are the logistics of the transaction, courtesy of Bloomberg:

  • Shenhua Group, which will change its name to China Energy Investment Corp., will absorb Guodian Group and become the parent of the reorganized entity. The listed companies are also forming a coal-fired power joint-venture, which is subject to shareholder and regulatory approvals.
  • As a result of the takeover, Shenhua will be able to lower its reliance on coal-fired capacity, currently about 90%, by gaining some of Guodian’s clean energy assets. Guodian, meanwhile, will be able to benefit from Shenhua’s coal supply and price risk management, as well as its integrated infrastructure of railways, harbors and ships. The merged entity will account for 13% of both China’s power-generating and coal-mining capacity, according to analysts at Citigroup Inc. including Jack Shang, who pegs the new company’s totals at 221 gigawatts and about 500 million tons a year, respectively.

The key driver behind the transaction is to make the coal giant a little more “eco-friendly”: Xi’s government has been seeking to lower the country’s reliance on coal power and increase the use natural gas, as well as wind, solar, hydropower and nuclear. The generation capacity of the merged company will be 23% renewables, according to BNEF. “This is crucial for Shenhua since due to new changes, wind, solar, nuclear and hydro generation hours are still guaranteed by regulators, while coal generators must increasingly compete in liberalized wholesale markets,” BNEF analyst Sophie Lu wrote in an Aug. 9 report. “This is only one in a series of mega-mergers China plans for power sector consolidation.”

“The ultimate goal is to form bigger energy companies that can hedge against market risks between coal and power,” Yu said. “Or they can sell their nuclear technology or their coal-power technology to emerging markets in Asia. That’s what the government wants to promote.”

Should the merger of the two energy giants conclude smoothly, more such transactions are in the works.

  • China Huaneng Group, the country’s biggest coal-fired power producer, may merge with State Power Investment Corp., a coal-fired generator that also owns State Nuclear Power Technology Corp., Bloomberg reported in May. SPIC Chairman Wang Binghua said in July that the company is in contact with Huaneng Group about a restructuring and “something big may happen later.”
  • Also, China Huadian Corp. and China Datang Corp. are the remaining two of China’s big-five state-power generators. Hong Kong-listed Datang International Power Generation Co. rose as much as 1.9, while Huadian Power International Corp. added as much as 1.5 percent in Shanghai.

While we wait to see just how these unprecedented mega mergers pan out, here are some more facts on the standalone companies, courtesy of Reuters:

GUODIAN GROUP:

  • Guodian Group had total installed capacity of 143 gigawatts of power, including 26.17 GW of wind at end-June. It is also a leading hydropower and renewables developer and produced 58.72 million tonnes of coal in the first of the year.
  • Its listed unit GD Power has 22 coal-fired power plants with capacity of 34.3 GW and also has 7.6 GW under construction. Five of those operating plants lost money in the first half.
  • According to Fortune magazine, it had 124,057 staff.
  • Other listed units of China Guodian are Guodian Changyuan Electric Power Co, Yantai LongYuan Power Technology Co Ltd and Ningxia Younglight Chemicals Co.

SHENHUA GROUP:

  • Shenhua said on Monday it expects to produce 278 million tonnes of coal in 2017, down from a previous target of 290 million tonnes. It also set a sales target of 396 million tonnes for 2017.
  • In 2016, it accounted for 8 percent of China’s total output and produced almost four times more than the second-largest producer Shanxi Coking Coal Group Co Ltd.
  • Its website says that at end-2015 it had 54 coal mines; total installed power capacity of 78.5 GW; 2,155 km of rail network; and a port cargo capacity of 270 million tonnes.
  • According to Fortune, it has a workforce of 202,200 staff.
  • Shenhua’s listed unit Shenhua Energy Co Ltd has 18 power plants with capacity of 33 GW, with 3.9 GW under construction.
  • Seven of those were in deep loss in the first half. The listed company was one of the most profitable public commodity companies in the first half.

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Is Trump Holding Back On Venezuela Sanctions?

August 29, 2017 Zainab Calcuttawala 0

A few days ago, the White House authorized new sanctions against Venezuela – a country struggling under the burden of running a socialist government while the value of its main asset, oil, continues to hover around $50 a barrel. “This order demonstrates more clearly than ever that the United States will not allow an illegitimate dictatorship to take hold in the Western Hemisphere at the expense of its people,” National Security Adviser H.R. McMaster said Friday as President Donald Trump rolled out the fourth round of sanctions against Caracas…

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Why Wall Street Is Bullish On Refiners

August 29, 2017 OilPrice.com 0

WTI tumbles below $47 as negative sentiment about excess crude supply grows in light of extended refiners’ shutdowns, while Wall Street piles on with more detailed estimates about Harvey’s impact on U.S. oil and refinery production. (Click to enlarge)As oil slides, crack spreads have stabilized near the highs of the session, on concerns about gasoline availability, with Tudor Pickering saying that crack spreads could continue to rise in coming weeks in other U.S. regions served by the Gulf Coast refining center. (Click to enlarge)As reported…

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Ron Paul: “Will Congress And Trump Declare War On WikiLeaks?”

August 29, 2017 Tyler Durden 0

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,
The Senate Intelligence Committee recently passed its Intelligence Authorization Act for 2018 that contains a chilling attack on the First Amendment. Section 623 of the act exp…

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UN: No migrant deaths in Mediterranean in last 20 days

August 29, 2017 Middle East Monitor 0

There have been no deaths of migrants in the Mediterranean Sea in last 20 days, the UN Migration Agency said on Tuesday. “Since 9 August, IOM, the UN Migration Agency, has not received any reports of migrant deaths in the Mediterranean. The total count for Mediterranean Sea fatalities has remained at 2,410 for 20 days,” IOM spokesman Leonard Doyle said in a news conference in Geneva on Tuesday. “Something is happening. We are not sure what is behind it all,” Doyle said, regarding the cause for the absence of casualties in the past 20 days. Doyle said the refugee flows from Libya to Europe had diminished in August. Noting that 19 deaths had been recorded in Mediterranean so far in […]

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Total Could Miss Out On 14 Billion Barrel Brazilian Reserves

August 29, 2017 Tsvetana Paraskova 0

Total’s study on the environmental impact of drilling in one of the Amazon’s basins hit a roadblock on Tuesday when Brazilian regulator Ibama said it rejects the validity of the efforts. The subject of the study is an area that could contain up to 14 billion barrels worth of oil reserves. Total has spent four years trying to validate the estimates to determine the commercial viability of a venture in the area, but the discovery of a sensitive coral reef near the blocks that would be up for tender has put the environmental approval process…

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The Last Time This Few Americans Thought Stocks Would Drop, They Crashed

August 29, 2017 Tyler Durden 0

According to the latest Conference Board survey, 80% of Americans surveyed believe that stock prices will not be lower in the next 12 months. The last time the nation was so convinced of the market’s ‘permanently high plateau’ was in the fall of 2007, as the S&P topped…

Only 20% of Americans believe stocks will fall in the next 12 months – that is the lowest number since mid-2017

What happened next was not pretty (oh and in 1999/2000…)

And don’t forget that speculators have never been more net long Dow futures

 

Still it’s probably nothing. If biblical floods and threats of nuclear armageddon can’t take stocks down, what will?

 

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UAE criticises “colonial” role of Iran, Turkey in Syria

August 29, 2017 Middle East Monitor 0

The United Arab Emirates urged Iran and Turkey on Monday to end what it called their “colonial” actions in Syria, signalling unease about diminishing Gulf Arab influence in the war. Allied to regional powerhouse Saudi Arabia, the UAE opposes Syrian President Bashar al-Assad and his backer Iran and is wary of Turkey, a friend of Islamist forces the UAE opposes throughout the Arab world. UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan urged “the exit of those parties trying to reduce the sovereignty of the Syrian state, and I speak here frankly and clearly about Iran and Turkey.” He was speaking at a news conference with Russian counterpart Sergei Lavrov, whose country helps Assad militarily. “If Iran and Turkey continue the same historical, colonial and […]

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