Marine Link
Monday, September 25, 2017

IUMI: Offshore Energy Insurance Market “Sinking”

Photo: International Union of Marine Insurance

At annual IUMI (International Union of Marine Insurance) conference in Tokyo, James McDonald, chairman of IUMI’s Offshore Energy Committee warned that the sector was “sinking”. His warning was based on declining total premium income set alongside upstream energy large losses for 2015-16 of USD 4.8 billion. McDonald explained: “In recent years it would appear that claims have exceeded the global premium base and the last two underwriting years have seen significant losses. The…

OPEC Leader Calls For Price Stability

Venezuelan President Hugo Chavez, who has emerged as a leading OPEC oil price hawk, said he did not want world oil prices to fall from last year's level, when they averaged their highest in 17 years. Despite complaints from the United States and Europe that high oil prices were damaging economic growth, the South American leader said current prices, about $2.50 per barrel below last year's average, were not high enough. "It is vital for us that the average oil barrel price is maintained around where it was last year, at $26.28 per barrel (for Venezuela's basket)," Chavez told a gathering of public sector workers. "This year the price has been below last year…

Shipbuilders See More Growth with Oil Price Rise

The Korea Times reported that shipbuilders who were enjoying solid sales have also secured an additional growth engine for further expansion rising oil prices. With oil prices hitting record highs, offshore oil exploration has picked up, leading to strong demand for drilling rigs and for the conversion of oil tankers into floating-production, storage and offloading (FPSO) vessels. The unit price of Dubai crude oil, South Korea’s benchmark, rose to a record high of $71.13 in August, an increase of $1.64 from a month earlier, according to data from the National Statistical Office (NSO). The statistics agency added that it is the first time for oil import prices to exceed $70 a barrel. Industry sources said oil prices have quadrupled since 2002.

Indonesia, CNOOC Talks End in Deadlock

Early renegotiation of gas selling price with China National Offshore Oil Company (CNOOC) has ended in deadlock as the ceiling price proposed by CNOOC was seen as too low, according to Asian Pulse. Indonesia has signed a long term contract to supply China's Fujian province with 2.6 million tons of liquefied natural gas (LNG) annually from Tangguh, Papua. Under the agreement in 1992 the LNG price was tide with crude oil price or around $2.4 per MMBTU based on a ceiling price of $25 per barrel of crude oil. The ceiling price is no longer acceptable to Indonesia with the soaring crude oil price at present. Currently the LNG price is around $8 per MMBTU based on a crude oil price of $65 per barrel.

Low Bunker Prices to Support Tanker Earnings

Image: Hamilton Energy

Lower oil prices performed wonders for the tanker market in 2015, says  Drewry Maritime Research. Tonnage demand surged and oil trade expanded because of high consumption demand and increased stocking activity. Tonnage supply was also kept in check as the contango in oil prices engaged many large tankers as floating storage because onshore storage tanks were full. The most important positive effect of lower oil prices came in the form of reduced bunker costs for vessel owners.

Market Report Shows Oil Prices Bullish

Burgeoning momentum to own oil seems poised to push oil prices higher for now. On the week, U.S commercial stocks built led by crude, while Japanese crude stocks drew strongly, according to a market report by NYC-based PIRA Energy Group. It is hard not to be bullish oil prices with the global economy gradually improving, tight physical oil markets and MENA turmoil, which is already substantially reducing global oil supplies and has the potential to reduce supplies further. Current positioning and likely September deflationary type headlines, due in part to a challenging calendar, but also the startup of Iranian nuclear negotiations, pose downside risks to oil prices.

NAT CEO: Low Oil Prices Benefit the Tanker Market

Herbjørn Hansson (Photo courtesy of NAT)

Nordic American Tankers Limited Chairman & CEO Herbjørn Hansson addressed the impacts of low oil prices on the tanker business in a letter to shareholders, citing the decrease in oil price as an overall positive for the world tanker market and possible trigger for the recent rate upswing for Suexmax tankers. “The upswing in Suezmax tanker rates in the recent past may have to some extent to do with the decrease in the oil price,” Hansson said. Hansson went on to say that low prices…

Oil Price Crash Claims First US LNG Project Casualty

Excelerate Energy's Texan liquefied natural gas terminal plan has become the first victim of an oil price slump threatening the economics of U.S. LNG export projects. A halving in the oil price since June has upended assumptions by developers that cheap U.S. LNG would muscle into high-value Asian energy markets, which relied on oil prices staying high to make the U.S. supply affordable. The floating 8 million tonne per annum (mtpa) export plant moored at Lavaca Bay, Texas advanced by Houston-based Excelerate has been put on hold, according to regulatory filings obtained by Reuters. The project was initially due to begin exports in 2018. Excelerate's move bodes ill for thirteen other U.S.

CGG to cut Vessel Fleet Further

French seismic group CGG said on Thursday it would further cut its fleet of seismic vessels after declining demand from oil and gas clients hit by the falling oil price led it to record an impairment and one-time charges of $643 million in the fourth quarter. Like peers across the oil services industry, CGG has been badly hit by cutbacks in the sector in 2014 as major producers slashed exploration to counter oil prices that have more than halved since June. "Taking into account the reduced client activity due to the very strong fall in oil prices at year-end and in line with our portfolio rebalancing strategy, we have decided to further reduce our fleet to 11 vessels in 2015," Chief Executive Jean-Georges Malcor said in a statement.

Oil Price Bottoming Depends on Global Growth - IEA chief

International Energy Agency (IEA) chief Fatih Birol

International Energy Agency (IEA) chief Fatih Birol said on Sunday that oil prices may have bottomed but that would depend on global economic growth. Asked if oil prices had reached a bottom, Birol told Reuters: "It may well be the case, but it depends on economic growth." He expected global oil demand to grow by 1.2 million barrels per day this year while non-OPEC oil production would fall by more than 700,000 bpd. (Reporting by Osamu Tsukimori; Editing by Jacqueline Wong)  

Australian Supply Crunch Squeezes LNG Exporters

File Image: A typical LNG Carrier at Sea (CREDIT: MISC)

Spot LNG exports in government's cross-hairs; ConocoPhillips, Origin, Shell now in the firing line. The Australian government on Monday warned that the country's east faced a worse-than-expected natural gas shortfall in 2018, but the competition watchdog said the gap could easily be filled by diverting uncontracted exports to the local market. It is now up to the government to decide by Nov. 1 whether to pull the trigger on its Australian Domestic Gas Security Mechanism, which…

Is Oil Price Pain, Shipping Industry's Gain?

Tumbling prices and oversupply may be cause for concern in the oil industry, but shipping industry it can represent a window of opportunity. A simple statistical data can put things in perspective for you: Two out of every three barrels of oil that are transported are moved around in ships. The remaining one-third is transported via pipelines. Therefore, the shipping industry plays a crucial role in the integrated oil business. To start with, the cost of shipping could go down thanks to the current slide - this is what a study by Middle East's The National shows. Malaysia's MIDF Equities Research shipping sector is set to benefit from the current low crude oil prices. It doesn't have a direct instant impact on shipping, but the situation augers well for maritime sector.

Oil Prices To Remain At Current Levels: Bankers

Central bankers meeting at the Bank for International Settlements reportedly expect world oil prices to remain around current levels, starting that higher prices are not in producers' interests. Oil prices, which had doubled since producers inside and outside the Organization of Petroleum Exporting Countries agreed in March to cut two million barrels from daily output, came under selling pressure in recent weeks on perceptions that some producers were easing restraints. Benchmark Brent futures hit their highest level in three years in September, at $24.30. Brent for December delivery was trading around $22.73 on Monday.

BHP: GoM Mad Dog Project Viable with sub-$50 Oil

File Image: a typical BHP Offshore operaion (Credit: BHP Billiton)

BHP Billiton said the second phase of its Mad Dog offshore joint venture with BP in the Gulf of Mexico was economical at oil prices below $50 per barrel. Originally slated for development in 2013, the project has been deferred due to low oil prices and moves to reduce construction costs. After losing three-quarters of its value from mid-2014 to early 2016, the price of benchmark U.S. crude has rallied more than 80 percent since February to nearly $50 per barrel.   Reporting by James Regan

Oil Prices a Nine-Year High As Iraq Suspends Exports

Oil prices rocketed to a new nine-year high on Nov. 22 after Iraq suspended oil exports under its humanitarian exchange program with the United Nations. London January Brent futures opened at $25.90, the highest oil price since January 1991, when allied forces were preparing to eject Iraqi troops from Kuwait. Later in the day Brent stood at $25.67 a barrel, 63 cents up from Friday's close. Prices leapt as Iraq's Oil Minister Amir Mohammed Rasheed confirmed that Iraq had stopped oil deliveries under the latest six-month phase of its oil-for-food exchange with the UN. Baghdad protested the UN's proposal to extend by two weeks the sixth phase of the program and accused the United States of trying to push other Security Council members into accept a draft resolution on weapons inspections.

US Oil Output May Stall in Late 2015 -IHS

U.S. oil production may stop growing in the second half of this year and could fall in 2016 as low oil prices make the majority of oil wells uneconomic, according to a report released on Tuesday by IHS Inc energy analysts. Global oversupply of oil has knocked 60 percent off prices since June last year, forcing a slowdown in drilling and putting the brakes on a five-year boom that pushed U.S. production to record highs. Production will likely grow in the next few months as oil producers honor contractual obligations and finish work on a backlog of wells that have already been drilled. But growth will halt in the second half of the year if oil prices remain below $60 a barrel, according to the IHS report based on a study of 39,000 oil wells. U.S.

Denmark's Budget Gap May Flirt with EU Limit if Oil Stays at $50

Denmark's government estimates its budget would lose 7.5 billion Danish crowns ($1.1 billion) if oil prices remained around $50 a barrel, according to a document submitted by the finance minister to a parliamentary committee. That figure, which takes into account the positive financial impact from lower oil prices, represents 0.4 percent of gross domestic product (GDP) and would push the budget deficit to 2.9 percent, close to the European Union's 3.0 percent cap. In the document, the ministry outlines oil price scenarios. Crude at $60 for the whole year would bring losses of 5.7 billion crowns and at $70, 3.7 billion crowns. Denmark produces oil and gas from the North Sea but its 245,000-barrel per day (bpd) production is dwarfed by Norway's 1.5 million bpd.

Weak Oil Threatens US Export of LNG

Plunging global oil prices may turn hopes for cheap liquefied natural gas supplies from the United States into a costly disappointment for Asian buyers who have already invested billions of dollars in long-term contracts. The 26 percent price slide since June to $85 a barrel exposes cracks in the assumption by utilities and industrial companies from Japan to India that cheap U.S. LNG would muscle into high-value Asian energy markets from 2016. Oil prices form the backbone of LNG trade to Asia, because exporters outside the United States typically tie 25-year supply deals to crude oil prices. If prices continue to fall, these suppliers from Qatar to Australia will regain their edge over upstart U.S. producers. "From the buyer's view, $80 oil makes oil-linked supplies less expensive ...

Oil Prices Rally On Tight Supplies

Crude oil prices bolted higher Monday as traders returned from a long holiday weekend to indications that exporting countries may extend the supply cuts that have helped double petroleum prices this year. Crude oil for delivery in February closed 46 cents higher at $26.33 a barrel on the New York Mercantile Exchange, but still failed to lift shares of companies such as Exxon Mobil Corp. and Chevron Corp. in stock market trading.

Offshore Recovery Stalled For Now

As crude oil prices reach Gulf War highs and recent memories of historic low crude prices fade, capital spending on finding and developing new oil reserves continue to play catch up. "The recent oil-price crisis set back non-OPEC output growth for at least a year," a recent report released by Deutsche Banc Alex. Analysts say there is a lag time for exploration spending to play catch up with oil prices - for every one month when crude prices are below the cost of production, it takes three months of high prices to regain the volume of production lost during the low cost period. Crude prices began to rebound from lows near $10 a barrel when OPEC and other major producers cut crude production to raise prices in March 1999.

TEN Bags Storage Contract for VLCC

Tsakos Energy Navigation Ltd. (TEN) announced it has won a six month storage contract for a very large crude carrier (VLCC) vessel to an international major for which the minimum proceeds are expected to be in the region of $10 million. “Accretive transactions like the one announced today is proof of the strong tanker market currently in evidence due to the drop in oil prices, which on its own merit offers TEN significant benefits on two fronts. On the first, it allows for strong spot rates which our flexible and diversified fleet takes advantage of while on the second, it materially reduces voyage expenses,” said George Saroglou, Chief Operating Officer of TEN commented.

Clinton Administration Worried About High Oil Prices

The Clinton administration said that oil prices have soared to "dangerously high" levels, and crude oil could be sold from the nation's emergency stockpile if already-tight supplies are disrupted by Y2K computer problems at the end of the year. Energy Secretary Bill Richardson sent to the White House contingency plans for selling oil from the Strategic Petroleum Reserve if necessary. The reserve, created after the 1970s Arab oil embargo, holds about 572 million barrels of oil in underground caverns. While the millennium computer bug problem is a major concern, Richardson also made it clear that the administration was closely monitoring current oil prices with an eye toward possible action if necessary.

Russia's Sechin: US, Not OPEC, Rules Oil Market

Igor Sechin, the head of Russia's top oil producer Rosneft, said on Wednesday the United States is calling the shots on global oil markets, while the influence of OPEC has shrunk. The United States emerged with renewed vigour as a top producer thanks to its shale boom. By refusing to curb its  output to prop up oil prices, OPEC has tried to maintain its share in the global market, shrugging off lower prices which damage U.S. producers. "In essence, the sole market, which has all the sets of financial and technological tools, is the U.S. market, which has became the key regulator," Sechin told reporters, adding that oil prices in the United States set the tone of the global industry.

Maritime Reporter Magazine Cover Sep 2017 - Maritime Port & Ship Security Edition

Maritime Reporter and Engineering News’ first edition was published in New York City in 1883 and became our flagship publication in 1939. It is the world’s largest audited circulation magazine serving the global maritime industry, delivering more insightful editorial and news to more industry decision makers than any other source.

Subscribe
Maritime Reporter E-News subscription

Maritime Reporter E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

Subscribe for Maritime Reporter E-News