ANTIQUES SHOPS

Liu Yang, a 33-year-old fighter pilot, will join two other astronauts aboard the Shenzhou 9 spacecraft when it lifts off from a remote Gobi Desert launch site on Saturday evening.

They will attempt a manned docking for the first time with the Tiangong (Heavenly Palace) 1 module, launched last September and part of China's exploratory preparations for a space lab.

Rendezvous and docking exercises between the two vessels will be an important hurdle in China's efforts to acquire the technological and logistical skills needed to run a full space lab that can house astronauts for long stretches.

Beijing is still far from catching up with the established space superpowers: the United States and Russia. The Tiangong 1 is a trial module, not the building block of a space station.

But the docking mission will be the latest show of China's growing prowess in space, alongside its growing military and diplomatic presence, and comes while budget restraints and shifting priorities have held back U.S. manned space launches.

Speaking to the official Xinhua news agency, Liu said she "yearns to experience the wondrous, weightless environment of space, see the Earth and gaze upon the motherland".

"Thank you for the confidence put in my by the motherland and the people, for giving me this chance to represent China's millions of women by going into space," Liu later told reporters at the Jiuquan launch center.

Medical experts who helped select the crew of the Shenzhou 9, have said that female astronauts must meet the same criteria as men, and then some, according to the China Daily.

Female Chinese astronauts must be married and preferably be mothers, the newspaper said, citing concerns that radiation would "harm their fertility".

Liu, from the poor and populous central province of Henan, has been praised in state media for her nerves of steel after safely landing her fighter jet after a bird strike that left the cockpit glass covered with blood.

China's latest space mission has attracted even more than the usual national attention thanks to Liu's presence.

Her selection to the mission team rapidly became the top subject on the country's Twitter-like microblogging service Sina Weibo, with 33 million posts.

"Liu Yang, on the eve of becoming our first woman is space, is the pride of Henan," wrote one user.

But others wondered if the money poured into space ambitions would be better used on Earth, where China is still a developing country and grappling with more mundane issues like food safety and a growing rich-poor divide.

"What use does Shenzhou 9 have? Will it help the people to not starve?" another user wrote.

(Additional reporting by Michael Martina, Ben Blanchard and Sabrina Mao in Beijing; Editing by Ron Popeski)

* Expected to become law around June 27

* Japan is first country to try to bypass EU ban (Adds detail)

By Risa Maeda

TOKYO, June 15 (Reuters) - Japan's lower house passed a bill on Friday to provide government guarantees on insurance for Iranian crude cargoes, a key step towards it becoming the first of Iran's big Asian oil buyers to get round new European Union sanctions.

The bill will now be sent to the upper house, where opposition parties have the majority but have signaled their support. It will become law by around June 27 if passed before the current parliamentary session ends next Thursday, said a government official who requested anonymity.

The Japanese government, which has succeeded in getting a waiver from U.S. financial sanctions, wants to provide coverage of up to $7.6 billion for each tanker carrying Iranian crude bound for Japan in the event of accidents.

An EU ban on member countries importing Iranian oil takes effect on July 1 and includes a ban on EU insurance firms from covering Iran's exports. That is a headache for Japan, South Korea, China and India, which together buy two thirds of Iran's oil exports and rely on EU companies to insure them.

EU and U.S. sanctions aim to cut the oil revenues on which Tehran depends to force the Islamic Republic to curb its nuclear programme. The West suspects Iran aims to develop weapons, while Tehran says it needs reactors for electricity supplies.

Iranian oil accounted for nearly 9 percent of Japan's crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts, but wants to avoid more drastic reductions that may drive up energy import costs and hurt the world's third-largest economy.

Refiners cut their purchases even as the country has needed more oil to fire power stations after last year's Fukushima disaster shut down the country's nuclear power capacity.

INDIA, CHINA FACE SAME ISSUE

India's government, which won an exemption to U.S. sanctions this week, has also been trying to figure out how it will get around the EU sanctions.

"We are struggling to find solutions," Oil Minister S. Jaipal Reddy told reporters in Vienna, where crude producers from OPEC are meeting. The government was studying sovereign guarantees, he added.

Iran's top buyer China has yet to detail how it plans to resolve the insurance problem, but industry sources there have said they will find a way to keep imports flowing.

South Korea will reduce imports to zero in July due to the insurance ban, industry sources have said. Seoul, like Tokyo, has lobbied the EU to delay or get a waiver on implementing the ban on insurers, but is not considering state guarantees, according to government sources there.

Those lobbying efforts have so far failed. The European Union will not cancel or delay the embargo on Iranian oil tankers, EU Energy Commissioner Guenther Oettinger said at an industry conference on Wednesday.

The International Energy Agency said on Tuesday that Iran's crude exports in April and May have fallen by 1 million bpd since the end of 2011 to 1.5 million bpd and that Tehran may need to shut in production.

China, Japan, India and South Korea have cut purchases by about a fifth from the 1.45 million bpd they were buying a year ago ahead of the imposition of the sanctions.

It is the first time Japan has sought to provide guarantees on marine shipments, said an official in the country's transport ministry, which is sponsoring the legislation. The official, who helped draft the bill, said he didn't know when the law will be passed by parliament. (Reporting by Risa Maeda; Editing by Aaron Sheldrick and Ed Davies)

June 15 -

===============================================================================

Summary analysis -- PT Medco Energi Internasional Tbk. ------------ 15-Jun-2012

===============================================================================

CREDIT RATING: B/Stable/-- Country: Indonesia

Primary SIC: Oil and gas

exploration

services

===============================================================================

Credit Rating History:

Local currency Foreign currency

07-May-2009 B/-- B/--

03-Feb-2002 B+/-- B+/--

===============================================================================

Rationale

The rating on PT Medco Energi Internasional Tbk. (Medco) reflects the company's exposure to volatile hydrocarbon prices, its large investment requirements, and its aggressive financial policy that relies on debt to fund growth. Medco's favorable location and cost structure, good growth potential in its development and exploration blocks, and its partial insulation from currency instability and sovereign-debt risk temper these weaknesses.

Medco's liquidity and operating cash flow are exposed to volatility in hydrocarbon prices. Nevertheless, liquidity and operating cash flow have benefited from an increase in average realized oil prices to $113.7 per barrel in 2011, from $81.4 per barrel a year earlier. Overall production remained broadly stable at 67.6 thousand barrels of oil equivalent per day. As a result, the company's debt-to-EBITDA ratio improved to 3.6x in 2011, from 4.1x in 2010, despite a 32% increase in debt.

Asset sales have also improved liquidity in the past 12 months. Medco sold a 20% stake in the Senoro-Toili production sharing contract to Mitsubishi Corp. (A+/Stable/A-1) for $260 million in early 2011. The company also sold Medco Tunisia Anaguid Ltd. for $58 million and a 51% stake in PT Medco Power Indonesia for $112 million in December 2011. These divestments have lowered Medco's future investment commitments under these projects.

We expect Medco's financial risk profile to remain "aggressive" in the next 12-24 months. This is due to the company's substantial estimated total capital expenditure of $695 million in 2012 and 2013. The spending relates to Medco's major development projects, namely the Senoro-Toili gas/liquefied natural gas development and the Block A gas reserves project in Indonesia. These projects will be predominantly debt-funded and would not generate any cash flows until 2014.

Progress at Medco's major projects is critical to prevent any deterioration in the company's "weak" business risk profile from the continuing decline in its producing asset: the Rimau block. In our view, the growth potential in Medco's major projects is solid. However, these projects expose the company to some execution and operational risks. Nevertheless, these projects are currently proceeding as planned. We continue not to factor in any benefit from Medco's Libya operations, given the contingent nature of the project and political instability in the region.

Liquidity

Medco has "adequate" liquidity, as our criteria define the term. We expect the company's sources of liquidity, including cash and available credit facilities, to exceed its uses of liquidity by at least 1.4x in the next 12 months.

Our liquidity assessment incorporates the following factors and assumptions:

-- As of Dec. 31, 2011, Medco has cash and cash equivalents of $703.9 million and short-term investments of $247.3 million, compared with $539.2 million of short-term debt due (including accrued interest).

-- As of March 31, 2012, Medco has access to unused committed credit facilities of $230 million. Some of these facilities are renewable every 12 months, which is in line with the typical banking practice in Indonesia.

-- Liquidity sources over the next 12 months include our expectation of FFO of about $190 million, short-term credit facilities, and cash and current investments.

-- Liquidity needs over the next 12 months include our expectation of capital expenditure of about $271 million and dividends and debt repayments of about $514 million.

-- We anticipate that the company's liquidity sources will exceed its needs even if EBITDA declines by 15%.

There are no rating triggers in Medco's current loan documents, but the company must comply with financial covenants on interest coverage, leverage, and liquidity. We believe Medco has been operating within these covenants.

Outlook

The stable outlook reflects our expectation that Medco's production and development projects will continue to progress as planned, and that oil prices will remain above US$90 a barrel and gas prices at about US$4.0 per million British thermal unit. Under this scenario, we expect the company's debt-to-EBITDA ratio to remain about 4.0x in 2012.

We may lower the rating if Medco's liquidity or financial risk profile weakens due to: (1) delays at the company's major projects that result in higher-than-expected capital expenditure or a delay in cash flow contributions; (2) lower-than-expected production in existing fields; or (3) a substantial fall in oil prices. A debt-to-EBITDA ratio rising to more than 4.5x on a sustained basis would indicate such a weakening.

We could raise the rating if the following occurs:

-- Higher-than-expected oil prices result in improved credit ratios and liquidity for Medco. A debt-to-EBITDA ratio of about 3.5x on a sustained basis would indicate such an improvement; and

-- The company's major development projects progress as planned. This includes a commercialization of the Block A gas reserves development by the second half of 2012 and timely progress of the Senoro-Toili block toward production in 2014.

Related Criteria And Research

-- Standard & Poor's Raises Its Oil Price Assumptions; Natural Gas Price Assumptions Unchanged, March 22, 2012

-- Key Credit Factors: Global Criteria For Rating The Oil And Gas Exploration And Production Industry, Jan. 20, 2012

-- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008