Hong Kong listed SouthGobi Resources Ltd (SouthGobi) more than doubled its coal production in 2013 after the resumption of its Mongolian operations. Mining at SouthGobi’s Ovoot Tolgoi mine was halted in June 2012 following a failed takeover bid by Aluminium Corp. of China Ltd, deteriorating market conditions and a corruption investigation. On restarting production in March 2013 SouthGobi announced it had produced 3.06 million tonnes of the 3.2 million tonnes of semi-soft coking coal it had planned to produce by the end of the 2013 and that it expects sales volumes to decrease in the first quarter of 2014 compared to the fourth quarter of 2013 citing national holidays as the reason for the slowdown. SouthGobi is 56% owned by Turquoise Hill Resources Ltd., which is majority owned by the Rio Tinto Group. (Source: Bloomberg News 16 January 2014)

IEA: GLOBAL OIL DEMAND FOR FOURTH-QUARTER 2013 REVISED UPWARD

According to the International Energy Agency’s (IEA) global oil consumption in the three months ending 31 December 2013 was 92.1 million b/d. The figure, published in the IEA’s most recent Oil Market Report (OMR), represents an upward revision of 135,000 b/d, on forecasts contained in the IEA’s previous OMR. The IEA cited stronger than expected U.S demand as the reason for the adjustment. Global demand for 2014 is expected to rise by 1.3 million b/d to 92.5 million b/d an increase supported by the likelihood of stronger macroeconomic momentum as the year progresses. Supply from OPEC members increased by 310,000 b/d to 29.82 million b/d in the three months ending 31 December 2013. Iraq was the only member of OPEC to report a decline in production. Non-OPEC supplies for the three months ending 31 December 2013 fell by 335,000 b/d to 55.99 million b/d, primarily because of a seasonal decline in biofuels output. As a whole, global supply was an average 91.57 million b/d in 2013. Non-OPEC growth of 1.36 million b/d offset a decline in OPEC crude production. (Source: www.iea.org  21 January 2014)

NEW SUPPLIERS BOOST CHINA OIL IMPORTS

China is reducing its dependence on certain oil suppliers such as Saudi Arabia in an attempt to achieve supply diversification. In many cases new supplies originate from politically unstable regions such as Iraq and parts of west Africa. Combined imports from three of China’s largest suppliers, Saudi Arabia, Angola and Russia fell from 44% in 2012 to 42% in 2013. During the same period imports from smaller and emerging oil-producing countries increased. Imports from Iraq rose approximately 50% in 2013, ranking it behind Russia as China’s fifth-largest source of foreign crude. China’s imports from the Republic of Congo rose by approximately 32% in 2013 to 7.1 million metric tons, or approximately 142,000 b/d. More crude is available globally because of weaker demand from buyers in the U.S., Europe and Japan. Energy consumption in the U.S. and Japan is also shifting to natural gas.Overall, the increase in Chinese oil imports is slowing. Imports increased 4% in the year ending 31 December 2013 compared to 7% in year ending 31 December 2012. The slowdown is the result of several factors, including weaker economic expansion and a fall off in construction of refineries in China. China’s dependence on foreign crude continues to rise. China is expected to import 61% of the oil it consumes by 2015, an increase of 7% since 2010.