China becomes L America's privileged partner: ECLAC official

Xinhua news reports,

China has become a "privileged partner of Latin America," and the region needs to define a joint strategy to develop its ties with China, an official of the Economic Commission for Latin America and the Caribbean (ECLAC) said Wednesday.

The "post- (economic) crisis will find a bigger and more important China than the one it has been in the world economy," said Osvaldo Rosales, ECLAC's director for international trade and integration.

Citing the World Trade Organization's report on Tuesday that China had displaced Germany in the first half of 2009 as a leading exporter, Rosales observed that "this has been reflected in its (China's) growing relative presence in the world's trade, mainly in Latin America."
"The numbers of destinations and exporters show that China has become a privileged partner of Latin America," Rosales told Xinhua in an interview.

This was because the Chinese government had "already defined the strategy for Latin America in its white book," Rosales explained, adding that the region needed to do the same.

Regarding bilateral trade relations, Rosales worried about Latin America's export structure, which focused on a few products and natural resources. He called for a diversification of the export basket.

"Latin America is in some ways linked with China, the world economy's engine of the 21st century, but it is doing that with an export structure from the 20th century," Rosales observed.

Click here to read the full story from Xinhua

As promised... China steps up overseas investments in commodities

Aug 14, 2009 -- State-owned Yanzhou Coal Mining Co. buys Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), reports Bloomberg

Aug 13, 2009 -- Sinochem Corp., China’s biggest chemicals trader, makes an offer to buy to buy Emerald Energy Plc for 532 million pounds ($881 million). Giving Sinochem Corp., access to oil fields in Syria and Colombia, reports Bloomberg

“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper. There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day." Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday.

Chinese Oil Firms Bid for Repsol's Argentine unit

Chinese oil conglomerates China National Petroleum and Cnooc have offered to pay an estimated $17 billion usd for all of Repsol YPF's state in its Argentine unit called YPF.

You can read the Wall Street Journal's paraphrased article (the original costs money) at thestreet.com, by visiting this article.

Will this deal actually be completed? China South America reported on this possible deal back on July 7, 2009. You will notice, the offer at this point was only $14.5 billion for a 75% stake. China has since upped the offer and is now looking to buy the entire thing.

Why China? Are you angry over Australia rejecting your Rio bid? Are you feeling flustered that countries from the industrialized world, but also in Africa and Latin America are starting to think twice about selling the rights to their raw materials?

I don't blame them, after all, Australia is quite similar to South American commodity producing countries. Two note worthy and simple similarities include

1. A large portion of GDP is generated from commodity exports
2. The relative strength or weakness of domestic currencies such as the Ausie Dollar, Argentine Peso, Peruvian Sol and Brazilian Real, are all inherently linked to the global market price of the commodities the countries export. [ie: if the spot price for copper drops 50%, observe what happens to Peru and Chile's Peso's.
   

According to the WSJ article, the main obstacles to this deal include

• Spain is hesitant to see some of its best assets in Argentina be sold to China

• Argentina's government has no financial stake in YPF, but nonetheless under Argentine law has the right to veto decisions such as transfer of ownership. In my personal opinion, this translates into who is willing to pay more “under the table” to the Argentine government.

• China National Petroleum and Cnooc are state owned organizations. Despite their growing influence and presence in oil markets around the world, many governments still remain weary of doing business with companies officially tied to a foreign government.

Newswire: South-South Cooperation

[Peru – Brazil] - Eletrobrás sets sights on Peruvian generator – BNAmericas

Brazilian federal power holding company Eletrobrás (NYSE: EBR) is planning to buy a Peruvian generator to participate in an upcoming hydro auction in Peru, company CEO José Antonio Muniz Lopes told journalists. The executive declined to say which generator Eletrobrás was looking to acquire but said the purchase was essential for the Brazilian holding group to operate in Peru.


[Peru – Brazil] – Brazil, Peru Work Out Details of Hydro Plants – Latin American Herald

Energy ministers from Brazil and Peru announced details of plans for several hydroelectric plants to be built in the Andean nation, saying after a meeting that 80 percent of the energy generated by the stations would go to Brazil and the rest to Peru.

Both partners will have the right to sell their respective energy quotas to other South American countries, Brazilian Mines and Energy Minister Edison Lobao said Friday after a meeting in Rio de Janeiro with his Peruvian counterpart, Pedro Sanchez.

The first five power stations – to be built in Peru’s eastern lowlands at a cost of between $12-15 billion – will generate a combined total of 6,000 megawatts annually once they come on stream in 2015.


[Peru – South Korea] - Peru, S Korea examine tomorrow progress of APEC bilateral agreements – Andina

Peru and South Korea examine on Wednesday the progress of the bilateral agreements achieved by Presidents Alan Garcia and Lee Myung-bak during the summit of leaders of the Asia Pacific Economic Cooperation (APEC) held in Lima in November 2008, the Korean Embassy reported. "The agreement achieved last year includes mutual cooperation in oil, mineral and natural gas sectors", the Ambassy reported.


[Peru – Japan] - Peru, JICA to invest US$ 23.3 million in 6 new docks in Peru – Andina

Peru’s Government and the Japan International Cooperation Agency (JICA) will invest 70 million soles (around 23.7 million dollars) in the construction of 6 new docks located along the Peruvian coast, reported today Production Minister Mercedez Araoz.


[Venezuela – Russia] - Russia Promotes “Energy Alliance” with Venezuela – Latin American Herald

Prime Minister Vladimir Putin said Tuesday he was ready to promote an “energy alliance” of global oil giants Russia and Venezuela, and confirmed his willingness to study Caracas’ requests for additional arms purchases.

Putin told Venezuelan Energy Minister Rafael Ramirez that Russia will employ “the most modern equipment and technologies” to carry out plans for cooperation with Venezuela in the oil and gas sector.


[Venezuela – Brazil] - Brazil To Export Coffee Immediately to Venezuela – Latin American Herald

The accord was struck by representatives of the ministry and the state-run firm Cafe Venezuela last Friday and represents $4.1 million in revenue for small producers and family cooperatives in southeastern Brazil.

[Commodities] -- Is the rally over?

Commodity Rally May Falter on Supply, Speculators

June 29 (Bloomberg) -- Commodities, heading for the first quarterly advance in a year, may struggle to repeat their gains in the next three months as supply expands and speculators sell.

Nickel may average 29 percent less in the third quarter than now, crude oil 16 percent, copper 14 percent and gasoline 10 percent, analyst estimates compiled by Bloomberg show. Hedge funds and speculators cut their bets on higher prices by 23 percent in the two weeks ended June 23, the first back-to-back drop since March, based on an index using U.S. Commodity Futures Trading Commission data. The World Bank said June 22 the global recession will be deeper than it expected three months ago.

“Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”

Commodities rose 14 percent this quarter, led by nickel, oil and sugar, after three consecutive declines, according to the Reuters/Jefferies CRB Index of 19 raw materials. This year’s 57 percent advance in oil costs, combined with widening budget deficits, may cause another global slump, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Click here to access the full article from Bloomberg

Newswire: China South America

[Peru - China] -- Peru, China relations "at best moment"

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru "are at their best moment" in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

"I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit," said Zhengyue.


[Latin America - China - Africa] -- China's new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) -- At phone operator Movistar's sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don't realize, though, that the company providing the gear for their broadband connections isn't a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China's telecom suppliers are coming to the Americas. Pursuing the same formula they've used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain's Telefónica: "Price is important."


[Caribbean - China] -- China's expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil's state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China's oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil's two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.

Newswire: Commodities with a added bit of South-South Energy Cooperation

[Uranium] -- India Bids for Stakes in Russian, Kazakh Uranium Mines to Fuel Reactors
Nuclear Power Corp. of India is bidding for stakes in uranium mines in Russia and Kazakhstan, and offered to build reactors in central Asia, Chief Executive Officer S.K. Jain said.

“We’re trying to achieve stakes in mines,” Jain said today in an interview at a Moscow nuclear forum organized by Rosatom Corp., the country’s nuclear holding company. The company is discussing buying into sites including the untapped Elkon deposit in Russia’s Far East, he added.

India, which suffers peak power shortages of as much as 17 percent, needs uranium to fuel 28 planned reactors and meet a target of adding 40,000 megawatts of nuclear generation by 2020. The second most-populous nation will seek an annual 1,500 metric tons of uranium for 60 years to fuel new reactors, Jain said.

“We’re exploring the possibility of a long-term partnership and not only for uranium supplies,” he said. India proposed building 220- to 500-megawatt reactors in Kazakhstan, which doesn’t yet have any nuclear power plants, he added.


[Crude Oil] -- Crude Oil Advances as U.S. Consumer Confidence Increases, Equities Climb
Crude oil rose to a six-month high after a report showed that U.S. consumer confidence jumped to the highest level since September, signaling demand may rebound.


[Copper] -- Copper Climbs in N.Y. as U.S. Consumer Sentiment Jumps Most in Six Years
Copper prices rose in New York and London after a report showed U.S. consumer sentiment jumped this month to the most positive since September.



[Gold] -- Gold May Climb to Record $1,250, Standard Bank Says: Technical Analysis
Gold may target a record $1,250 an ounce as a continuation head-and-shoulders pattern may be forming within a longer-term trend, Standard Bank Group Ltd. said, citing trading patterns.


[Platinum, Palladium] -- Platinum, Palladium Fall in New York on Weak Auto-Industry Demand Outlook
Platinum fell the most in two weeks in New York on concern that auto-industry demand for the metal will take longer to recover than other parts of the economy. Palladium futures also declined.


[Corn] -- Corn Falls as Dry Spell Allows U.S. Farmers to Accelerate Delayed Planting
Corn fell, erasing an earlier gain, on speculation that Midwest farmers accelerated plantings delayed by rain, improving prospects for output in the U.S., the world’s largest exporter.

China Negotiates for Deepwater Oil Blocks Offshore Brazil

[South-South Cooperation] -- Brazil, China -- Rigzone

Lula's visit to China has been anything but boring. On the heels of the $10 billion oil for cash deal reached between Brazil and China this past week, comes news of negotiations for two deepwater oil blocks between Petroleo Brasileiro SA (PBR) and China Petroleum & Chemical Corp.

Rigzone reports in this article:

The two oil blocks under negotiation between oil giants China Petroleum & Chemical Corp. (SNP) and Petroleo Brasileiro SA (PBR) are deepwater exploration blocks located in the north of Brazil, the Brazilian company's top financial official told Dow Jones Newswires on Thursday.

Conversations, however, are still ongoing and the deal isn't closed, said Almir Barbassa, chief financial officer of Petrobras, as the Brazilian company is known.

The blocks under consideration are within Brazilian waters, are 100% owned by Petrobras and run deep, or about 2,000 meters, he said. They are located off the coast of the two neighboring states of Para and Maranhao in northern Brazil, Barbassa added.

Earlier this week, China's National Energy Administration Chairman Zhang Guobao told reporters in Beijing that Brazil would offer two oil blocks to Sinopec, as the Chinese company is known, as a way to strengthen energy cooperation between the two countries. He didn't give any further details.

Click here to access the full article from Rigzone

China and Brazil seal $10 billion deal

[South-South Cooperation] -- China, Brazil

Lula da Silva & Hu Jintao

Chinese President Hu Jintao and his Brazilian counterpart, Lula da Silva, finished writing the latest chapter in Sino-Brazilian Cooperation earlier today in Beijing.

ChinaSouthAmerica has been following this story for a few months now, and I must say, it is nice to see a classic example of South-South Cooperation / Emerging Market Cooperation (whatever you want to call it) develop and eventually get finalized.

Here are a few excerpts from a WSJ article that a great job of summing up the details.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

State-owned Brazilian oil giant Petroleo Brasileiro SA said it finalized a $10 billion loan agreement from China in return for a long-term supply of oil, another victory for China's new strategy of using its cash-rich banks to help secure the natural resources the country needs to keep its economy growing.
...

Petroleo Brasileiro, known as Petrobras, said under the terms of the 10-year loan from China Development Bank, which has been at the center of China's resources policy, Brazil would supply China Petrochemical Corp., known as Sinopec, 150,000 barrels of oil a day for the first year, rising to 200,000 barrels a day for another nine years.

...

Mr. Gabrielli said the loan's interest rate was under 6.5%, and the loan used oil revenue as collateral but would be repaid in cash -- not oil. Although the deal didn't include guarantees to buy Chinese products or services, other deals will work on exploring closer cooperation, such as moving Chinese equipment factories to Brazil.

...

China's mission to secure commodities does not stop with Brazil--as you are well aware if your a frequent reader at this site.

Beijing has struck similar agreements with energy producers world-wide in recent months, including a $10 billion deal with Kazakhstan and a $25 billion deal with Russian oil and pipeline companies.

...

Stay tuned for further developments and ChinaSouthAmerica's analysis this deal and growth of Sino-Brazilian Cooperation.

Brazil's president arrives in Beijing

[South-South Cooperation] -- China, Brazil -- Al Jazeera

Lula arrives in China - [Reuters]

Brazil's president has arrived in China for three days of talks expected to focus on broadening ties between two of the world's largest developing economies and moves to decrease their dependency on the US dollar.

The visit by Luiz Inacio Lula Da Silva is his second in 12 months, highlighting the importance of China which recently overtook the US as Brazil's most important trading partner.

On Tuesday Lula will hold talks with his Chinese counterpart, Hu Jintao, as well as host a bilateral business forum and visit an aircraft factory.

Speaking ahead of the visit he said he was looking to the trip to promote "a new economic order", while an official from the country's foreign ministry said a theme of the talks would be a "reorganisation of the international scene".

...

Al Jazeera's Tony Cheng reporting from Beijing says the main point of discussion during Lula's visit will be on Brazilian energy resources which Beijing, with reserve funds to spare, was keen to exploit.

...

Brazil's two-way trade with China, one of the few economies still growing strongly despite the global crisis, reached $3.2bn in April, surpassing the $2.8bn trade total with the US.

So far this year, government data showed that Brazilian exports to China grew 65 per cent over the same period in 2008, rising from $3.4bn to $5.6bn.

Click here to access the complete article from Al Jazeera

Weekend Newswire: Commodities

[Crude Oil] -- Oil Falls on Speculation Recovery Will Falter, Reducing Global Fuel Demand
Crude oil fell the most in almost a month on concern the global economic recovery may falter, reducing demand for fuel.


[Natural Gas] -- Nymex Gas Falls as Reports Show Industrial Demand Will Be Slow to Recover
Natural gas futures fell for a third day as reports showed that demand for the fuel from factories and power plants will be slow to recover during the recession.


[Copper] -- Copper's U-Shaped Base Signals Rise, StanChart Says: Technical Analysis
Copper may rise to levels not seen since October in the month ahead, as the metal forms a U-shaped base, Standard Chartered Bank said, citing trading patterns.


[Gold & Silver] -- Gold Advances in N.Y. on Speculation Equity Rally May Stall; Silver Gains
Gold prices rose, extending a rally to two weeks, as investment demand increased on rising consumer prices and signs that a rally in U.S. equities may be ending. Silver futures fell.


[Platinum & Palladium] -- Platinum Falls as Dim Auto Outlook Cuts Demand in N.Y.; Palladium Gains
Platinum prices fell as the U.S. auto- industry slump eroded demand for the metal used in pollution- control parts. Palladium rose for the first time this week.


[Steel] -- China Steel Industry Likely to Post Loss in 2009, Baosteel Chairman Says
China’s steel industry may post a loss this year, Baosteel Group Corp. Chairman Xu Lejiang said at a conference in Shanghai today. Xu said the Chinese steel industry is oversupplied and faces severe structural problems that have been worsened by the financial crisis.


[Soybeans] -- Soybeans Head for Third Weekly Gain as Demand Cuts U.S. Supply
Soybeans climbed, heading for a third weekly gain, on speculation that increased global demand may further reduce inventories in the U.S., the world’s biggest grower and exporter of the crop.


[Investments] -- Where Commodities Fit In Your Portfolio
Commodities are a great way to diversify your portfolio, but if you are considering allocating some money to the group, don’t expect to catch a draft in the near future, even if there are signs the worst of the global slowdown may be over.

Commodities: Natural Gas Outlook

[Rigzone] -- Natural Gas Prices and LNG's Dirty Little Secret, by Allen Brooks

Optimism about the ending of the U.S. recession and its impact on future demand for natural gas coupled with positive comments from large domestic gas suppliers about the trend in gas supplies has ignited a rally in natural gas futures prices during the past week. Natural gas prices jumped from a low of $3.25 per thousand cubic feet (Mcf) on April 27th to a recent high of $4.31 per Mcf last Friday. A near 33% rise in gas prices in such a short time-period reflects a severely oversold market. The dramatic price run-up may have more to do with commodity short-sellers than people buying into the view of a sustainable and healthy recovery for the market.


There were several very positive statements made by the CEOs of major natural gas producers about the changing supply/demand dynamics of the business on their company earnings conference calls with analysts. Mark Papa, CEO of EOG Resources, Inc. (EOGNYSE), said he expects the impact from the decline in gas-oriented drilling will result in natural gas production falling by 4.5 billion cubic feet per day (Bcf/d) by the end of the year.He believes the resulting North American natural gas production declines could be reversed by early in 2010 if $7 per Mcf gas prices return or the gas-directed rig count falls below 650. This view compares with that of the Petroleum Industry Research Association (PIRA) that believes gas production will be 3 Bcf/d lower at year end.

Equally bullish was Aubrey McClendon, CEO of Chesapeake Energy (CHK-NYSE), who sees gas storage being full by October and that gas production would be 10% lower at year-end compared to 2008. That implies natural gas production should fall by 4 Bcf/d. Should these estimates prove accurate, the supply drops would go most of, if not all, the way to wiping out the perceived supply/demand imbalance in the domestic gas market of about 5 Bcf/d due to the falloff in industrial and commercial consumption related to the economic recession and credit crisis.

Click here for complete article from Rigzone

Newswire: Commodities

[Energy] -- Crude Oil Falls on Speculation U.S. Supplies Climbed Last Week

May 5 (Bloomberg) -- Crude oil fell from a five-month high on speculation a government report will show that U.S. supplies climbed to the highest level in more than 18 years.

The Energy Department tomorrow will probably say that crude-oil inventories increased 2.5 million barrels last week, according to a Bloomberg News survey. Prices surged yesterday as the Standard & Poor’s 500 Index gained 3.4 percent and pending sales of existing U.S. homes jumped.



[Base Metals] -- Copper Tumbles From Two-Week High on Renewed Growth Concerns

May 5 (Bloomberg) -- Copper fell from the highest price in two weeks on concern that government stress tests may show some of the largest U.S. banks need more capital and that financial losses will continue to curb growth.

The tests may show that about 10 banks need additional capital to weather a deeper recession, people familiar with the matter said. The Federal Reserve is expected to deliver the results of the tests to executives today. Copper surged 12 percent in the previous four sessions on speculation that the global contraction may be bottoming.



[Precious Metals] -- Gold Climbs to One-Week High as Dollar Declines; Platinum Gains

May 5 (Bloomberg) -- Gold rose to a one-week high in New York and London as the dollar declined against the currencies of major trading partners. Platinum and silver also climbed.

Gold jumped 1.8 percent yesterday as the dollar fell to a four-week low against the euro. Some investors have bought gold betting on “negative data” about U.S. banks in a report from the Federal Reserve scheduled in two days, said Manqoba Madinane at Standard Bank Group Ltd. in Johannesburg. The dollar index has slid 0.9 percent this week.



[Agriculture] -- Wheat Gains as Wet, Cold Weather Delays U.S. Planting Progress


May 5 (Bloomberg) -- Wheat prices rose as wet, cold weather delayed planting and the emergence of crops in the U.S., the biggest exporter of the grain.

About 23 percent of the spring wheat was planted as of May 3, down from 55 percent at the same time last year and an average of 59 percent from 2004 to 2008, the Department of Agriculture said yesterday in a report. Planting was 3 percent completed in North Dakota, the crop’s biggest producer, down from 54 percent at this time last year, USDA data show.

Brazil's President seeks new safe guards on Tulip Oil field investments

Monday, May 04, 2009 - Rigzone

Brazilian President Luiz Inacio Lula da Silva called Friday for officials to finalize new oil laws giving the country a greater stake in recent oil finds, saying the legislation was urgently needed to guarantee Brazil's future.

Click title of post to access the full article from Rigzone

Investors hopeful for a recovery in Natural Gas

A year ago people there was hysteria because of sky rocketing energy and commodity prices. In this analysis I focus on Natural Gas, which last summer reached a record setting high of $13.69 a million British Thermal units.

Things have changed (as you can see in the graphs below. The global economy now finds it self in the middle of a world wide economic crisis. Expensive commodities are the least of the world's problems right now.

Natural Gas Prices - 3 months


Natural Gas Prices - 12 months

So does this present a investment opportunity?

It definitely does, albeit one with a fair amount of risk... Commodity prices not withstanding, the fact remains that without commodities there would be nothing to fuel the global economy. Eventually when macroeconomic demand for goods and services pick up around the world so too will demand for energy.

However, how do you go about picking the companies that stand to benefit from a potential rebound?

Choose:

1. Companies with low debt and viable growth plans. Try do your homework so that the companies you choose fit your time line and expectations on when natural gas prices will recover. You don't want to choose a company exploring for the largest deposit of natural gas in Brazil only to find out it won't be extracting and selling the gas until 2015.

2. Look for natural gas producers with operations in NORTH America. As this Dow Jones Newswire article articulates, "Domestic gas producers that learned how to tap natural gas trapped in rock formations known as shales and that have enough credit or cash to survive the current lower price environment are expected to benefit the most from the possible in surge prices."

Venezuela's to do list: Sell China 1 million barrels oil/ day by next year

Chavez's tour de Asia produced a new bit of news on Friday:

"I proposed that given the global situation we study the possibility and we agreed to move up the target set in the strategic accord for 2013," said Chavez on Friday.

Basically this means that in the context of the current global economic crisis Venezuela needs to increase its oil revenues which account for about 90% of the country's budget. Second, China which only a year ago was paying astronomical prices for all its commodity inputs (including oil), is now on a shopping spree in order to secure future supply while the price is good.

Click here to access a concise article which covers the major points on this development from Rigzone -- Efe

Newswire: Commodities

Mid-week review of the commodity markets from Bloomberg's Commodity Section.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Crude oil - $49.38 / barrel

Oil Rises as Government Shows Smaller U.S. Supply Gain Than API - Bloomberg Article

April 8 (Bloomberg) -- Crude oil rose for the first time in four days after a U.S. government report showed a smaller inventory gain than an industry report.

Supplies increased 1.65 million barrels to 361.1 million last week, the highest since July 1993, the Energy Department said today. Stockpiles were forecast to climb by 1.5 million barrels, according to a Bloomberg News survey. The industry- funded American Petroleum Institute yesterday said stockpiles jumped 6.94 million barrels to the highest since 1990.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Gold - $885.90 / ounce
Silver - $12.34 / ounce

Gold Rises on Investor Demand for Store of Value; Silver Climbs - Bloomberg Article

April 8 (Bloomberg) -- Gold rose for a second straight day in New York as some investors purchased the metal to hedge against financial turmoil. Silver also gained.

The U.S. Treasury Department extended last year’s taxpayer- funded bank bailout to life insurers. Earlier, the bailout was broadened to include automakers and credit-card companies. Researcher GFMS Ltd. said yesterday that gold may reach a record this year as government spending raises inflation concerns.

“The reasons why investors bought gold -- fears of longer- term inflation and currency debasement -- remain intact,” John Reade, the head UBS AG metals strategist in London, said today in a report. Once gold prices have stabilized, “we expect bottom-fishers to begin the next cycle of investment,” he said.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


Copper - $4,400 / ton
Zinc - $1,365 / ton
Aluminum - $1,490 / ton
Lead - $1,335 / ton
Nickel - $10,925 / ton
Tin - $10,880 / ton

Copper Gains, Erasing Earlier Drop, in London as Shares Advance - Bloomberg Article

April 8 (Bloomberg) -- Copper advanced on the London Metal Exchange, erasing earlier declines, as shares rose on prospects government support will help automakers and banks.

The Dow Jones Stoxx 600 Index of European shares rebounded after dropping as much as 1.7 percent today, while the U.S. Dow Jones Industrial Average climbed. The Dollar Index, a measure of the currency against six counterparts, fell 0.2 percent. A weaker greenback cuts the cost of commodities priced in the dollar for holders of other currencies.

“A little bit of buying has crept through on the back of the Dow,” said James Roberts, a broker at Sucden Financial Ltd. in London. “The turnaround in prices is equity-driven.”



Mid-week review of the commodity markets from Bloomberg's Commodity Section.

South-South Cooperation -- Chile and Pakistan

Eni has signed a Protocol for Cooperation with the Government of Pakistan aimed at developing new, important projects in the upstream, midstream and downstream sectors in the country.

The agreement further strengthens relationships between Eni and Pakistan, as it makes available exclusively to Pakistan state oil companies the capabilities, the know how and the innovative technologies developed by Eni in the oil sector, especially in terms of efficiency in exploiting hydrocarbon fields. The agreement also enables Eni to become a strategic partner in developing the oil & gas sector in Pakistan and to enter fields which are so far managed by state-run oil companies.

Click here to access this article from Rigzone

ENERSIS (ENI) 2 year

Brazil Petrobras Reports Reconcavo Oil Find to ANP

Brazilian state-run energy giant Petrobras notified regulators late Monday that it found traces of oil in a test well drilled in the Reconcavo Basin.

Dow Jones Newswire

Energy Markets

Investments:

ExxonMobil Opens Wallet for Major Long-Term Investments - Exxon Mobile Corp.

Exxon Mobil Corporation has announced plans to invest at record levels -- between $25 billion and $30 billion annually over the next five years -- to meet expected long-term growth in world energy demand.

Galp See Brazil's Tupi Profitable at Current Oil Prices Map - Dow Jones Newswires

Portugal's Galp Energia believes production at the Tupi subsalt oil field in Brazil is viable despite the slide in international oil prices, Galp's chief executive said Wednesday.

"Production at Tupi is competitive, even at the actual level of oil prices," Galp CEO Manuel Ferreira de Oliveira was quoted by the Estado news agency as saying after his company released its fourth-quarter earnings.

PetroChina to Speed Up Pipeline Construction in 2009 – Xinhua News Agency

Chinas' top oil company PetroChina will accelerate building pipelines in 2009, according to China Securities Journal.


Shrinking output / exports:

Venezuela to Cut Oil Contracts As Prices Fall – Dow Jones Newswires

Venezuela said it will seek to renegotiate contracts with oil-service companies, with PDVSA planning to cut its spending on oil-service contractors by 40%.

Pemex gas output to fall for the first time since 2002 - BNAmericas

Mexican state oil company Pemex is forecasting that its natural gas production in 2009 will fall for the first time since 2002.

Output is expected to slip on lower associated gas production at the prolific Cantarell field, which is in its stage of natural decline, Pemex spokesperson Carlos Ramírez said, citing PEP authorities.

PetroChina Cuts '09 Output Targets on Falling Demand – AFX News Limited

Top Asian oil and gas producer PetroChina has cut its domestic production targets for 2009 by 10 to 20 percent at many oil fields because of falling demand, a company executive said on Wednesday.

Iraq's Oil Exports Fall in February – Xinhua News Agency

Iraq's crude oil exports slipped slightly to 1.804 million barrels a day in February, down from 1. 893 million barrels a day in January, an Iraqi Oil Ministry source said on Tuesday.

BP Scales Back Production Growth Plans – AFX News Limited

Oil major BP Plc dropped a key oil and gas production growth target on Tuesday, dashing investor hopes that Chief Executive Tony Hayward would chart a return to output growth after years of stagnation.


Drama in Ecuador:

Ecuador will not confiscate Perenco's Oil Fields Over Tax Debt Burden - Rigzone

Ecuadorean Oil Minister Derlis Palacios said Wednesday that the country will not seize the oil fields of French company Perenco over debts, reports Reuters. This statement comes a day after Ecuador said that it would freeze Perenco's oil income to collect the debt.

Ecuador Attaches Output of French Oil Company – EFE News Services

The Ecuadorian government on Wednesday announced its decision to retain 70 percent of Perenco's output as part of its bid to collect $338 million in windfall-profits tax owed by the French oil company.