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Tokyo Is Planning To Piss Off China By Buying These Disputed Islands In The East China Sea



TOKYO (AP) — Tokyo‘s outspoken governor says the city has decided to buy a group of disputed islands in the East China Sea to bolster Japanese claims to the territory, a move that could elevate tensions with China.

Gov. Shintaro Ishihara said the city is close to reaching an agreement with the private Japanese owner of three of the four islands in the group known as Senkaku in Japanese and Diaoyu in Chinese.

The islands, surrounded by rich fishing grounds, are also claimed by China and Taiwan. They have been a frequent flash point in diplomatic relations between Japan and China.

A collision between a Chinese fishing boat and Japanese coast guard vessels in 2010 near the islands set off a serious diplomatic spat, with Beijing temporarily freezing trade and ministerial talks.

“Tokyo has decided to buy the Senkaku islands. Tokyo will protect the Senkakus,” Ishihara said in a speech Monday at the Heritage Foundation, a conservative think tank in Washington. “The Japanese are acquiring the islands to protect our own territory. Would anyone have a problem with that?”

Ishihara, a strong nationalist, said the idea is to block China from taking the islands from Japanese control, as the central government is reluctant to upset China.

He did not indicate how much the city would pay, but said the deal would be finalized while he is visiting the United States.

In Beijing, Liu Weimin, a spokesman for China’s Ministry of Foreign Affairs, reacted harshly to Ishihara’s comment and reiterated China’s claim over the islands.

“Any unilateral measure taken by Japan is illegal and invalid, and will not change the fact that those islands belong to China,” he said in a statement.

Tokyo city official Tatsuo Fujii said details of the deal could not be released immediately and further discussions would be held with Okinawa prefecture, which has jurisdiction over the islands, and other related authorities.

The government currently pays rent to the owners of the four islands in the Senkaku group so they won’t be sold to any questionable buyer. It pays 24.5 million yen ($304,000) a year to the owner of the three islands, which are unused. The fourth island is used by the U.S. military for drills.

Chief Cabinet Secretary Osamu Fujimura reiterated on Tuesday that Japan has sovereignty over the Senkaku islands and said the central government might purchase them.

Japan and China also have disputes over undersea gas deposits in the East China Sea and Japan’s wartime history.

Ishihara previously helped to erect a lighthouse on one of the Senkaku islands, which a group of nationalists later replaced with a larger one recorded on navigation charts.

Ishihara’s comments about the disputed islands are also seen as politically motivated to discredit Prime Minister Yoshihiko Noda‘s government, which is struggling to gain public support.



Recap: Worldwide Field Development News (Mar 2 – Mar 8, 2012)


This week the SubseaIQ team added 12 new projects and updated 31 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Africa – West
Afren Confirms High Quality Oil at Okoro East
Mar 7, 2012 – Afren has completed testing at the Okoro East oil discovery, confirming high-quality API oil of 38 to 40 degrees in excellent reservoir sands. Based on the test data the company expects future horizontal production wells at Okoro East to be capable of yielding between 4,500 to 7,000 bopd per well. The company will drill two production wells using existing facilities in the second half of 2012 and up to eight production wells, under a full field development scenario. Three drill stem tests have been performed and completed, said Afren. The purpose of this test was to obtain fluid samples and pressure data in order to establish reservoir connectivity, heterogeneity and quantify permeability and porosity. The tests have confirmed a high quality 38- to 40-degree API oil, multi-Darcy permeabilities and an average porosity of between 30 percent to 35 percent in the subject reservoirs. The pressure data obtained has helped with the company’s structural understanding of the field and supports the pre-drill volumetric estimates (Pmean STOIIP of 157 million barrels). Based on the test data, the company expects future horizontal production wells at Okoro East to be capable of yielding rates between 4,500 bopd to 7,000 bopd per well. The company intends to drill up to two production wells in 2H 2012 using the free well head slots on the existing Okoro platform, which will be tied-back to the Armada Perkasa FPSO. This production information will allow Amni and Afren to finalize development options with up to eight possible production wells under a full field development.
GSF Monitor Set to Spud Gazelle-P3
Mar 7, 2012 – Rialto Energy announced its plans to drill the first two development wells in the Gazelle Field using the GSF Monitor jack-up rig. The phased development of CI-202 is set to begin with the spudding of Gazelle-P3 followed by Gazelle-P4. An additional two development wells are planned after final investment decision. Two infill wells are planned for 2016.
Project Details: Gazelle
Chariot Inks Deal to Drill Tapir South Prospect
Mar 6, 2012 – Chariot Oil and Gas has signed a contract with AP Moller Maersk for a one-well drilling slot using the Maersk Deliverer (UDW semisub) rig offshore Namibia. The operator expects to spud the Tapir South prospect early April. The prospect is part of the Tapir trend and is located in Northern Block 1811A. The well is located 50 miles (80 kilometers) offshore Namibia in 6,915 feet (2,108 meters) of water with a drilling depth of approximately 16,730 feet (5,100 meters). It is expected to take around two months to drill and will be the first well in Chariot’s four-to-five well exploration program that is planned to take place in 2012 and 2013.
S. America – Other & Carib.
BPZ Further Develops Corvina, Albacora Fields
Mar 5, 2012 – BPZ Energy reported that production from the Corvina and Albacora offshore fields has average about 3,920 bopd from Feb. 2012 to date. The 3D seismic survey acquisition on the offshore Block Z-1 has been underway for four weeks and should be completed in the second quarter of 2012 followed by processing and interpretation of the data. Furthermore, work on the new CX-15 platform continues with installation scheduled for the third quarter of 2012. The CX-15 drilling program, which will be the second platform installation at the Corvina field, will target 23 million barrels of proved undeveloped reserves (PUD). The PUD estimates increased in the 2011 reserve report by one million barrels, stated the operator.
Project Details: Corvina
Europe – North Sea
Wintershall Turns On Taps at K18-Golf Field
Mar 8, 2012 – Wintershall has commenced natural gas production from the K18-Golf field in the Dutch North Sea. Wintershall plans to produce around 1 MMcm/d from the tight gas deposit via a subsea well (subsea completion). A second production well next summer is set to maintain plateau between 1 and 1.4 million cubic meters of natural gas per day. The field was connected via a sea bottom pipeline to the K15-FA platform, about 6.2 miles (10 kilometers) further north. The gas will be treated before being sent via the Wintershall-operated WGT pipeline network. Wintershall has a share of 41.7 percent in K18-Golf. The other participating companies are EBN B.V. (40 percent), NAM (15.9 percent), Tullow Oil (2.2 percent) and Oranje-Nassau Energie (0.2 percent). Wintershall was awarded the concession block K18 in 1983. The natural gas field was discovered in 2005.
Premier Oil P&A Bluebell Prospect
Mar 8, 2012 – Premier Oil will plug and abandon the Bluebell exploration well, 15/24c-10, on Block 15/24 in the UK sector of the North Sea. The well reached a total depth of 7,507 feet (2,288 meters). The Paleocene target was encountered on prognosis; the logs showed excellent sand quality but were water wet.
Project Details: Bluebell
Technip to Conduct FEED for Luva Platform
Mar 8, 2012 – Statoil awarded Technip a lump sum FEED contract for the development of the Luva platform. The contract covers the design and planning for procurement, construction and transportation of a Spar hull and the mooring systems as well as the design of the steel catenary risers. The scope of work includes design and planning for procurement, construction and transportation of a Spar hull and mooring systems, as well as design of the steel catenary risers.
Project Details: Luva
Summit to Begin Drilling Operations at Orchid Prospect
Mar 8, 2012 – Summit Petroleum has commenced well operations at the Orchid prospect in the UK sector of the North Sea, with spudding anticipated in the next couple of days. Orchid is a dual target, four-way dip closure at Tertiary and Chalk level with gross prospective resources associated with the entire prospect estimated internally by Valiant to be 30 mmboe (net 9 mmboe). The well is being drilled by the Sedco 711 (mid-water semisub) and is anticipated to take 35-40 days to complete, once drilling commences.
Project Details: Orchid
Faroe Petroleum Completes Drilling Ops at T-Rex, Bolan
Mar 7, 2012 – Faroe Petroleum has discovered oil in both the T-Rex and Bolan exploration prospects in the Norwegian sector of the North Sea, but not in commercial quantities. The 6406/3-9 well, reached a total depth of 13,725 feet (4,183 meters) within shales of the Lange Formation. The well targeted Lower Cretaceous sandstones of the Lange formation (T-Rex) and Lysing formation (Bolan). T-Rex was the primary target and preliminary results based on extensive coring, wireline logs and pressure data have confirmed the presence of oil, but in a thinner than expected reservoir interval, and the well will therefore not be production tested. Fluid samples were successfully recovered in T-Rex. The quality of the oil was in line with fluids seen in the original discovery well 6506/11-2 (drilled by Statoil in 1991). The Bolan prospect in the shallower Lysing formation also encountered an oil column within an inter-bedded sandstone package. A similar extensive data gathering program was performed on the Bolan prospect as with T-Rex. Additional evaluation is required in order to delineate the areal extent of the oil bearing layers, before any decisions in terms of a further appraisal program can be made.
Project Details: T-Rex
Statoil Touts Success at Skrugard Appraisal
Mar 6, 2012 – Statoil is in the process of concluding the drilling of appraisal well 7220/5-1 on the 7220/8-1 (Skrugard) gas/oil discovery. The discovery was proven in 2011 in Middle and Lower Jurassic reservoir rocks. The objectives of the appraisal well were to confirm the previous volume estimate for the Skrugard discovery and to collect reservoir and overburden data for field development planning. Both objectives have been met, said Statoil. Drilled by Transocean Barents (DW semisub), appraisal well 7220/5-1 has proven a gas column of 85 feet (26 meters) overlaying an oil column of about 158 feet (48 meters). Both column heights and reservoir properties came in as expected. This confirms the previous volume estimate for the Skrugard discovery and the total resource estimate for the Skrugard and Havis structures ranging from 400 to 600 million barrels of recoverable oil. Statoil is currently considering several alternative development concepts for the discovery.
Project Details: Skrugard
Lundin Ups Stake at Brynhild Field
Mar 5, 2012 – Lundin Petroleum has entered into an agreement with Talisman Energy Norge AS to acquire an additional 30 percent interest in PL148, which contains the Brynhild field, offshore Norway. Following the acquisition, Lundin Petroleum will hold a 100 percent interest in PL148. The Brynhild field, which is currently under development, is forecasted to produce first oil in late 2013 at a gross plateau production of 12,000 bopd.
Project Details: Brynhild (Nemo)
Lundin, Det norske Reach Agreement for Luno, Draupne Combined Development
Mar 5, 2012 – Lundin Petroleum and partners Wintershall and RWE Dea have reached an agreement for Det norske-operated licenses PL001B, PL028B, PL242. A plan for development and operation for the Luno field was submitted on January 19, 2012 to the Norwegian Ministry of Petroleum and Energy and includes 15 wells drilled from a jackup. First production is expected in the fourth quarter of 2015. In the coordinated development solution, the partially processed fluids from the Draupne field will be transported from the Draupne platform to the Luno platform for stabilization and export of oil and gas. The combined production from the Luno and Draupne fields will be phased in time with Draupne production planned to start in late 2016 and increasing toward a peak rate in late 2018. The Luno platform design capacity will accommodate in excess of 120,000 bopd and up to 175 MMcf/d when Draupne production is combined with that from the Luno field.
Project Details: Luno, Draupne Project
Statoil Contracts EMAS AMC for Fram H Nord
Mar 5, 2012 – EMAS AMC has received a SURF contract for marine installation and pipe lay from Statoil for the Fram H Nord subsea development. The field is situated in the Troll C/Fram area in the northern part of the North Sea. The Fram H Nord subsea development is the third phase of the development of the Fram field which is tied-back to the Troll C Platform. Fram H-Nord will be developed with one satellite well tied-back to the existing infrastructure at Fram Vest A2 template via twin flowlines and a control and service umbilical. The contract scope includes the engineering, procurement, transport and installation of one 10-inch flexible production and one 4-inch gas injection flowline both 3.2 miles (5.3 kilometers) long, as well as all activities necessary for the installation of the following: integrated template structure and manifold; subsea control umbilical; near-by protection structures; tie-ins of all lines to the Fram H Nord and Fram Vest A2 manifolds plus pre-commissioning/testing; trenching and rock dumping of all line systems; and the supply and installation of protection covers over tie-in areas at Fram H Nord and Fram Vest A2 templates. Engineering, procurement and planning activities will commence immediately, and the offshore work is scheduled to commence in the third quarter of 2013.
Project Details: Troll Area
Asia – SouthEast
Premier Successfully Tests Lama Formation in Anoa Field
Mar 5, 2012 – Premier has successfully tested the Lama formation within the Anoa field on the Natuna Sea Block A. The WL-5 development well was deepened to a total depth of 11,012 feet (3,356 meters) to investigate the exploration potential of the Lama formation within the Anoa field. The well encountered about 300 feet (91 meters) of fractured Lama sandstones. The Lama formation was tested over an interval of 10,658 to 10,770 feet (3,249 to 3,283 meters) and flowed gas at a rate of 17 MMcf/d through a 48/64-inch choke. The results of the test will be intergrated with the log and seismic data to determine the ultimate recoverable resource of this deeper reservoir that will be produced through the Anoa facility. Moreover, the jackup West Callisto (400′ ILC) will move to drill the Biawak Besar prospect on Natuna Sea Block A. The results of this well are expected in April 2012.
N. America – US GOM
Petrobras Brings Cascade Online in GOM
Mar 5, 2012 – Petrobras reported that on Feb. 25, 2012, it commenced production at the Cascade field through the Cascade No. 4 well, which was interconnected to the BW Pioneer FPSO. The Cascade 4 production well was drilled and completed in reservoirs of the Lower Tertiary geological period, which is a promising exploratory maritime boundary of the Gulf of Mexico, at a vertical depth of around 26,247 feet (8,000 meters). The BW Pioneer is the first FPSO to produce oil and gas in the U.S. portion of the Gulf of Mexico, and has the capacity to process 80,000 barrels of oil and 500 Mcm/d.
Project Details: The Greater Chinook Area
Technip to Supply Flexible Pipe for Fletcher, Finucane Development
Mar 5, 2012 – Santos has awarded Technip a flexible pipe supply contract for the Fletcher Finucane oil field development in Western Australia. The contract, which includes project management, engineering and the supply of 19 miles (31 kilometers) of 10.2-inch and 9-inch production flowlines, along with 14 miles (22 kilometers) of 3-inch service lines, will start in April 2012. Delivery is planned for the second semester of 2012.
Project Details: Fletcher/Finucane
BHP Billiton Spuds Tallaganda
Mar 2, 2012 – BHP Billiton has commenced drilling the Tallaganda-1 well at permit WA-351-P offshore Australia. The operator is using the Atwood Eagle (DW semisub) to drill the well. The prospect will test the gas potential of sandstones in the prolific Triassic age, Mungaroo formation, in a well defined horst block as imaged by high quality modern 3D seismic data. The well will be drilled vertically in a water depth of 3,743 feet (1,141 meters) and is expected to take 37 days to drill with a projected total depth of 13,944 feet (4,250 meters).
Project Details: Tallaganda
S. America – Brazil
Petrobras Commences Iracema Well Test
Mar 5, 2012 – Petrobras and partner BG Group have commenced a new well test in the Iracema area of the BM-S-11 concession in the pre-salt Santos Basin. The Cidade de Sao Vicente FPSO was connected to the RJS-647 well in water depths of 7,257 feet (2,212 meters). The FPSO will operate in the area for approximately six months gathering technical information on reservoir behavior and oil flow in the subsea lines amongst other data. During this initial test phase the well is expected to produce at around 10,000 bopd, constrained by facilities. The information gathered will support the development of the final production system in the area, expected to be in operation by the end of 2014 with the installation of the 150,000 bopd capacity FPSO Cidade de Mangaratiba.
Project Details: Iracema
Noble Energy Preps to Drill Pinnacles
Mar 5, 2012 – Delek Group has reported that Pinnacles No. 1 exploratory well, offshore Israel, is due to start soon and is expected to last about five weeks. According to a report prepared by Netherland, Sewell and Associates (NSAI) the estimated unrisked gross prospective gas resources for the Pinnacles Prospect, as of December 31, 2011, is expected to be 25.7 (low) to 78.2 (high). The operator will use the ENSCO 5006 (DW semisub).


UK: Red Spider Reduces Risk


Red Spider, the Remote Open Close Technology specialist delivering multi-million pound savings and reduced risk to the oil & gas industry, has completed its biggest-ever deal with work valued at £1.5million to supply new products for well completion operations.

The agreement involves Red Spider supplying eRED-FB products, with deployment scheduled for this Summer in the UK North Sea.

The eRED-FBs will be used for a series of subsea dual ESP (Electric Submersible Pump) wells and will allow the removal of all wireline runs from the completions operations.

Red Spider’s UK sales manager Andy Skinner said: “We are very excited about the technology and believe it takes our ROCT products to the next level, offering unparalleled savings and risk reduction.’’

eRED, Red Spider’s first tool to use its patented ROCT for remotely operating downhole valves, has been used by more than 20 operators resulting in significant risk reduction and maximising production time by removing wireline runs from operations. The technology is on its way to becoming the industry standard solution for various downhole applications.

The valve has allowed major operators to save more than £300,000 during a single subsea completion operation, typically reducing slickline runs from 8 to 1. In deepwater workover operations, savings of up to 36 hours and £500,000 have also been recorded in a single job, as well as major reductions in risk.

It quickly became apparent from the eRED’s continuing success that there were other potential applications for ROCT in the completion of wells. Further customer requests led to nearly £2million of investment and over two years of extensive research and development work, which has resulted in products including the eRED-FB.

eRED-FB valves provide a downhole barrier that can be opened and closed by remote command, allowing the tubing integrity to be tested without using conventional plug and prong equipment. This eliminates the need to deploy traditional wireline methods which results in the following benefits:

• removing the requirement for rigging-up and rigging-down wireline units

• speeding up operations

• reducing risk to personnel and equipment

• reducing the risk of exposure to bad weather

• delivering savings of between 32 to 38 hours (£400,000 to £500,000)


RXT to Conduct OBC Survey in Middle East


The multi-component seismic company Reservoir Exploration Technology ASA (RXT) has received a letter of award from an oil company for an ocean bottom cable survey in the Middle East.

Formal agreement will be entered into. The survey is scheduled to commence during 2012 and is estimated to take 13 months.

The estimated contract value is USD 104.5 mill.


Repsol Sinopec Makes High-Impact Discovery Off Brazil


Statoil together with operator Repsol Sinopec and partner Petrobras has confirmed a high-impact discovery (*) in the Pão de Açúcar prospect offshore Brazil.

The partnership announced today that it has made a high impact discovery in the Pão de Açúcar prospect located in the BM-C-33 block in the Campos Basin.  The well, drilled by the Stena DrillMAX drillship, is located some 195 kilometres offshore Rio de Janeiro State in 2,800 meters of water.

The Pão de Açúcar well encountered two pre-salt accumulations comprising a hydrocarbon column of 480 meters with a total pay of around 350 meters. A test performed in a partial section of the pay zone flowed 5,000 barrels per day of light oil and 28.5 million cubic feet per day of gas. This was a choked Drill Stem Test (DST) with very limited drawdown. The Pão de Açúcar discovery is the third find made in the BM-C-33 block after Seat and Gávea and confirms the area’s high potential.

“The development potential of the Pão and Gávea discoveries will now be evaluated by the partnership. This discovery increases our understanding of the pre-salt potential in the Campos Basin and improves our confidence in the recently acquired acreage position in the pre-salt Kwanza basin of Angola,” says executive vice president for Exploration in Statoil, Tim Dodson.

“Statoil’s exploration strategy focuses on high impact opportunities and the deepening of core areas. The Pão de Açúcar success shows that we are delivering on our strategy,” continues Dodson.


“Statoil has clear ambitions to grow in Brazil through new exploration opportunities. The Pão discovery will become an important building block in our growth ambitions,” says Kjetil Hove, country president for Statoil in Brazil.

Repsol Sinopec is operator of the exploration consortium with a 35% stake. Partners Statoil and Petrobras hold respective 35% and 30% shares.

Statoil is also the operator of the Peregrino field in Brazil, which came on stream in April 2011.

The Pão discovery is the sixth high impact discovery made by Statoil in the last 12 months. The other discoveries are Skrugard and Havis in the Barents Sea, Johan Sverdrup (former Aldous/Avaldsnes) in the North Sea, Peregrino South in Brazil and Zafarani in Tanzania.

(*) ”High-impact well” =  a total of more than 250 million barrels of oil equivalent (boe), or 100 million boe net to Statoil.


Chart of the Day: Drill, Drill, Drill = Jobs, Jobs, Jobs


Professor Mark J. Perry’s Blog for Economics and Finance

While the overall economy struggles to create jobs during another “jobless recovery,” it’s been a much rosier employment picture in one of America’s most successful “shovel-ready” job-creating industries: Oil and Gas Extraction.
The chart above displays the monthly percentage changes in employment levels since January 2007 for oil and gas extraction jobs compared to total nonfarm payroll jobs.  As of January 2012, payroll employment is 3.3%, and 4.7 million jobs, below the month of January five years ago.  In contrast, the explosion of new oil and gas jobs has increased employment in that industry by about 1/3 since January 2007.  Over the last 12 months, oil and gas companies have added 23,200 new workers, at a rate of almost 100 new hires every business day.




Washington’s Clumsy China Containment Policy


by Ted Galen Carpenter

Although U.S. officials have insisted for years that they do not regard China’s rise to great-power status as a threatening development, Washington’s statements and actions increasingly belie those assurances. Any doubt on that point disappeared following President Obama’s November 17 speech in Canberra, Australia. In his address to the Australian parliament, Obama boldly asserted that “the United States is a Pacific power, and we are here to stay.” Observers in Australia and throughout the region interpreted that comment as sending a message to China that the United States was not about to quietly relinquish its hegemony in East Asia and let the PRC become the leading power.

The Canberra speech was not the only measure that suggested that Washington was adopting a harder line toward Beijing on security issues. Just hours before his address to parliament, Obama announced that the United States would send military aircraft and as many as 2,500 Marines to northern Australia over the next few years to develop a training hub to assist allies and protect American interests throughout the region.

The next day, while attending an East Asian economic summit in Bali, the president went out of his way to emphasize the importance of the U.S. defense alliance with the Philippines and pledged to strengthen that relationship. His comment followed a blunt statement from Secretary of State Hillary Clinton regarding the ongoing dispute between China and several of its neighbors (including the Philippines) over territorial claims in the South China Sea. “Any nation with a claim has a right to exert it,” Clinton stated during a visit to Manila on November 16, “but they do not have a right to pursue it through intimidation or coercion.” She added that “the United States will always be in the corner of the Philippines and we will stand and fight with you.” Although the latter remark could be interpreted merely as a restatement of the rationale for the six-decade-old mutual-defense treaty, given the secretary’s comments about the South China Sea dispute Beijing could certainly view her statement as a specific warning regarding that issue.

Those moves, along with previous efforts to strengthen cooperative military ties with other traditional allies such as South Korea and Japan and one-time U.S. adversaries such as Vietnam, have all the earmarks of a rather unsubtle containment policy directed against China. It is a foolish strategy that will complicate and perhaps permanently damage the crucial U.S.-China relationship. Perhaps even worse, it is a containment strategy that is long on symbolism and short on substance, thereby managing to be simultaneously provocative and ineffectual.

Take the U.S. decision to send 2,500 Marines to Australia. It is hard to imagine a scenario in which such a small deployment would be militarily useful. If there is a security contingency somewhere in East Asia, it is likely to be decided by air and naval power, not a meager force of Marines. Yet, while militarily useless, such a deployment conveys a hostile message to Beijing, thereby managing to antagonize the Chinese.

A similar conclusion is warranted with regard to the Obama administration’s transparent effort to revitalize the nearly moribund alliance with the Philippines. That chronically misgoverned, third-rate military power would hardly make a good security partner in any crisis. Yet by siding with a country that is deeply embroiled with China over territorial claims in the South China Sea, the United States once again appears to be going out of its way to antagonize Beijing.

That would be an ill-advised approach under the best of circumstances. But to embrace a containment policy—especially one that is primarily bluster and symbolism—when Washington badly needs China to continue funding the seemingly endless flow of U.S. Treasury debt verges on being dim-witted. It’s never a good idea to anger one’s banker. And one can assume that Beijing is watching U.S. actions, not just the pro-forma assurances that the United States wants good relations and does not regard China as a threat. Those assurances ring increasingly hollow, and one can assume that Chinese leaders will react accordingly. That does not bode well for the future of the U.S.-China relationship.


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