BoM and Erdenes Mongol signs USD 500 million worth agreement www.zgm.mn

Erdenes Mongol LLC, Erdenes Silver Resources (ESR) and Bank of Mongolia (BoM) have conclud-ed a sale and purchase agreement for precious metals yesterday and sent a sample of the refined silver from the Salkhit silver deposit to the State Treasury.Within the five-year agree-ment, ESR will extract pure silver, which is worth USD 500 million Fx reserves in cash, and send the silver from the Salkhit Silver Deposit to the Treasury Bank of the Treasury. As a start, the BoM will receive a silver with a price of at least 850-980 specimens.“The recently adopted Constitu-tion amendment has begun to take effect, making an opportunity to
the people for equal access. Fur-thermore, the agreement signed between Erdenes Silver Resources and the Bank of Mongolia will re-sult in major treasury management activities, including pledging gold and silver bonds,” said Parliament Speaker, Zandanshatar Gonbojav in the signing ceremony.

Aspire Mining to pay MNT 2.3 trillion to state www.zgm.mn

Aspire Mining Ltd, listed on the Australian Stock Exchange (ASX), announced to pay MNT 2.3 trillion for taxes to the state in the first 10 years of its Ovoot Coking Coal Project (Ovoot) implementation. Of which, about MNT 193 billion will be allocated to the Khuvsgul province budget.
Aspire is a large coal tenement holder in the Orkhon-Selenge Coal Basin in northern Mongolia with a 100 percent interest in the world-class Ovoot project, a 90 percent interest in the Nuurstei Coking Coal Project, and a strategic infrastructure owner via its 80 percent interest in Northern Railways LLC.The company plans to create at least 40 workplaces, employing at least 40 local people, through the Ovoot project. The Ovoot project has an estimated 227 million tons of coking coal resources, according to the Mineral Resources Professional Council.The company is aiming to invest about MNT 700 billion in the first phase within the project to set a factory with a capacity producing four million tons of enriched coal annually. Aspire Mining also planned to build a 560 km toll road from Ovoot to Erdenet to transport coal. Achit-Erdene Darambazar, CEO of Aspire Mining said, “Although Ovoot is not a strategically large deposit as Oyu Tolgoi and Tavan Tolgoi, it has a significant impact on the economy of the northern region of Mongolia.”

OSCE conducted training course on innovative techniques to identify impostors at borders in Mongolia www.osce.org

The OSCE’s Transnational Threats Department Border Security and Management Unit (TNTD/BSMU) held a training course on the detection of forged documents and impostors in Ulaanbaatar from 16 to 20 December 2019. The event was organized in co-operation with the University of Internal Affairs of Mongolia and conducted by document experts of the Austrian Federal Ministry of the Interior.

Salary of public servants to be raised by 8 percent www.news.mn

Ulaanbaatar /MONTSAME/ At its regular meeting on December 25, the Cabinet made a decision to raise the salary of all public servants by 8 percent from January 1, 2020, in consistent with the inflation rate.

ERC’s solar panel demonstrates efficient use of renewable energy www.montsame.mn

Ulaanbaatar/MONTSAME/. UNDP's Deputy Resident Representative Nashida Sattar and team of Nationally Appropriate Mitigation Actions (NAMA) in the Construction Sector project attended Energy Regulatory Commission's (ERC) solar panel opening ceremony. The initiative funded through the NAMA project demonstrates that renewable energy can be efficiently used in the construction sector, enforcing energy efficiency standards.

Belarus to supply fire-engines to Mongolia www.news.mn

Mongolia is to buy 71 fire-engines, along with other much-needed equipment for the National Emergency Management Agency (NEMA), which runs the fire stations across the country. The vehicles will be purchased with a soft loan from the Development Bank of Belarus. A total of EUR 13.1 million to cover the loans has been approved for Mongolia.

The 10 most important oil market trends for 2020 www.rt.com

As a busy 2019 in the oil and gas industry ends, analysts are busy issuing predictions about next year and what they would mean for oil markets and prices.
This year saw a mix of some of the more predictable events — such as OPEC and Russia extending their cooperation pact, twice — and a ‘black swan’ such as the September attacks on Saudi oil facilities which cut off 5 percent of daily global oil supply for weeks.

As black swans are, by definition, unpredictable, analysts focus on predicting the ‘knowns’ in the market for 2020 as they see them at the end of 2019.

For the sake of simplicity, here are 10 of the most important predictions and factors to watch in the oil and gas industry in the United States and worldwide.

Independent energy analyst David Blackmon has summed up some predictions, concerning mostly the US, for Forbes.

And these are:

1) US shale production will continue to grow
US shale growth is slowing down, but all analysts and organizations still expect oil supply from the United States to continue to rise in 2020. Growth may be slower, due to reduced capex from drillers, but US will still be the main contributor to non-OPEC supply growth next year.

2) Rig count will remain stable
Despite the fact that the US oil and rig count declined by more than 250 units this year to December 20 compared to the same time last year, the number of active oil rigs last week saw an increase of 18 rigs—the first double-digit growth since the beginning of April, according to Baker Hughes data.

3) US oil and LNG exports will continue to rise
Exports of US oil and liquefied natural gas (LNG) are expected to grow with the increase in infrastructure capacity in 2020.

The United States exported more crude oil and petroleum products than it imported in September 2019—the first month in which America was a net petroleum exporter since monthly records began in 1973, the US Energy Information Administration (EIA) said earlier this month.

Total US crude oil and petroleum net exports are expected to average 570,000 bpd in 2020 compared with average net imports of 490,000 bpd in 2019, according to EIA’s latest Short-Term Energy Outlook (STEO).

4) Oil and gas prices will remain range-bound in 2020
Rising production from non-OPEC nations not part of the OPEC+ deal, driven by the US, Brazil, and Norway, is expected to keep a lid on oil prices, while OPEC+ cuts and an expected pick-up in global economic and oil demand growth will keep a floor under prices.

5) Sudden supply outages will have smaller impact on oil prices
Due to the growing non-OPEC supply, unexpected and short-lived outages are likely to have a smaller impact on oil prices than they would have on markets five or ten years ago, analyst Blackmon says.

Case in point—the mid-September attacks on critical Saudi infrastructure sent oil prices soaring—with WTI Crude touching a five-month high of $62.90 a barrel—but just for one day, as slowing demand growth and a protracted trade war weighed on prices.

6) Bankruptcies in the US shale patch are set to grow
The number of bankruptcies and companies seeking protection from creditors is expected to rise in 2020, continuing the trend from 2019.

Haynes and Boone estimated at end-September that the US oil and gas industry had 33 filings year to date in September, more than the number of filings in each of 2017 and 2018, at 24 and 28 filings, respectively.

With reduced capital availability in equity and debt markets, more of the smaller companies could struggle through the next year.

7) US oil and gas mergers & acquisitions are poised to rise
A growing number of distressed US oil and gas firms and few funding options could mean that the ‘smaller guys’ could be acquired by bigger shale players or the smaller guys could team up to scale operations and cut costs.

Signs of consolidation in US shale have already started to emerge, and the wave is expected to continue in 2020.

Shareholders of Callon Petroleum and Carrizo Oil & Gas approved an all-stock merger last week.

Two months ago, Parsley Energy and Jagged Peak Energy announced that Parsley would buy Jagged Peak in an all-stock transaction valued at $2.27 billion, including Jagged Peak’s debt.

“The inevitable consolidation in the Permian has started and Jagged Peak made a decisive move to team up with the right partner,” said S. Wil VanLoh, Jr., a Jagged Peak director and the founder and CEO of Jagged Peak’s controlling shareholder, Quantum Energy Partners.

In its Q3 2019 Oil & Gas deals insights, PwC said:

“In the quarters ahead, we expect to see more companies merging to create scale, companies continuing to focus on generating positive cash flows and shareholder value, while struggling companies will become more amenable to being acquired or seeking restructuring through bankruptcy.”

8) How oil demand growth will fareas the US-China trade dispute de-escalates
Oil prices hit a three-month high on December 13 amid growing optimism of a phase-one trade deal. In the days following the announcement that a phase-one deal had been reached, China removed six chemicals and oil derivatives from its list of tariffed US imports.

9) How OPEC+ cooperation will proceed after March 2020
Another key factor to watch is what OPEC and its Russia-led non-OPEC partners will do after March 2020, when the current agreement for deeper cuts expires. The next move by the cartel and its allies will largely depend on how oil demand growth will fare in the typically low-demand growth season in Q1. The move will also depend on how much oil OPEC and friends will have managed to withhold from the market compared to plans—that is, whether all members will have fallen in line and stopped cheating.

10) Sudden supply outages in restive regions
Oil market participants will continue to monitor developments in Libya and Iraq, which could suddenly tighten the market more than anyone had intended to.

This article was originally published on Oilprice.com

The average interest rate on loans increases by 0.2 percentage points www.zgm.mn

According to the Bank of Mongolia’s statistics, the weighted average interest rate on new loans issued in November was 17 percent. The average interest rate on loans which fell to 16.8 percent in the previous month increased by 0.2 percentage points. However, the interest rate has dropped by 0.2 percentage points since the beginning of the year. Particularly, the average interest rate on loans issued to citizens in the corresponding month reached 16.9 percent and to private entities 17 percent. “Stable macroeconomic environment contributes to lower interest rates,” said director of the BoM’s Statistics Department. The central bank’s interest rate reduction strategy is in progress with 60 percent. A total of 340 measures were taken within the framework of the strategy. Most recently, the Bank of Mongolia has kept the policy interest rate at 11 percent. The policy rate has been maintained steady for the last year. The central bank has announced to reduce its inflation target rate by two percentage points to six in 2021. It is expected to have a direct impact on reducing savings and interest rates.

Construction industry faces risk to slow down www.zgm.mn

The Bank of Mongolia (BoM) will implement the eight-percent mortgage lending program jointly with the government until 2020. The construction market has grown 5.3 times over the last six years as the mortgage loan program with an annual 8 percent interest rate was initiated in 2013. Regarding the IMF’s Extended Fund Facility (EFF) program, the central bank plans to halt the mortgage loan funding next year, risking the market to decline. “The government budgeted only MNT 60 billion for the program, which plays an important role in decreasing air pollution, and it may carry risk for the construction sector,” said Hashchuluun Chuluun- dorj, Member of Monetary Policy Council of the Bank of Mongolia. He also addressed that the budgeted funding is not adequate for supporting the sector to develop. In other words, government funding will shrink three times in 2020 com- pared to this year; current funding will be cut as the central bank exits the project. Within the eight-percent mortgage loan program, the Bank of Mongolia transferred approximately MNT 118 billion out of MNT 310 billion which was budgeted for funding the program in 2018. As of today, a total of 95,000 people have involved in the program. This number is expected to exceed 100,000 in the next year. The construction industry has attracted the most investment in the last decade. Therefore, economic growth can be sustained by supporting this sector without hardly depending on the mining sector. Mongolia’s main sectors that contribute to economic growth are construction, mining, agriculture, and services sector.

MMC chooses service suppliers www.zgm.mn

Mongolian Mining Corporation (MMC), listed on the Hong Kong Stock Exchange, has chosen Uniservice Solution and M-Armor as its service providers. The company signed an agreement worth MNT 36 billion with Uniservice Solution, which matures in 2022 and as much as MNT 26.9 billion worth agreement with M-Armor. MMC exported 4.5 million tons of coal as of November. The company's stock was down 1.45 percent since the trading started on Monday, reaching HKD 0.68.