ExxonMobil Denies Lobbying on Iran Sanctions

By MarEx 2015-05-22 19:29:19

Media reports that ExxonMobil is lobbying the U.S. government on Iran sanctions are inaccurate, says the company in a statement.

“ExxonMobil is not lobbying on Iran sanctions,” said Ken Cohen, vice president of Public and Government Affairs. “Erroneous media reports resulted from errors in a consultant’s lobbying disclosures. Current U.S. law prohibits American companies from operating in Iran.”

The U.S. and other nations have been struggling to reach an agreement on nuclear technology development with Iran for months and have set a June 30 deadline for negotiations. If an agreement is reached, it could mean sanctions are lifted, leaving oil companies such as ExxonMobil free to pursue oil interests in the country.

The announcement from ExxonMobil follows a media report stating the company is ramping up efforts to track U.S. government work on Iranian sanctions. The report goes on to balance any claims relating to lobbying by reporting: “We are not lobbying on Iran sanctions,” Alan Jeffers, an Exxon spokesman, said during a telephone interview on Thursday. “We are monitoring activities related to Iran in the U.S. government.”

Similar news was covered by several media outlets.

Iran holds the world’s fourth-largest proved crude oil reserves and the world’s second-largest natural gas reserves. However, despite the country’s abundant reserves, Iran’s oil production has substantially declined over the past few years, and natural gas production growth has slowed. International sanctions have profoundly affected Iran’s energy sector, prompting a number of cancellations or delays of upstream projects, resulting in declining oil production capacity.

Yemen-Bound Aid Ship Docks in Djibouti

By Reuters 2015-05-22 18:22:01

An Iranian aid ship docked on Friday in Djibouti, where its cargo will be inspected by the United Nations before being moved to conflict-torn Yemen, Iran’s semi-official Fars news agency reported.

“The ship docked a few minutes ago in Djibouti,” Fars said. “The ship entered Djibouti waters yesterday and after inspection by the international organization will head towards Yemen.”

Tehran agreed this week to allow an international inspection of the vessel, the Iran Shahed, averting a potential showdown with Saudi-led forces who are enforcing searches of ships entering Yemeni ports to stop arms reaching Houthi rebels.

Shi’ite power Iran backs the dominant Houthi militia in Yemen’s civil war while regional arch-rival Saudi Arabia and its Sunni Muslim allies have carried out almost two months of air raids against them and want Yemen’s president reinstated.

Tehran has rejected Saudi accusations it is arming Houthi fighters.

The ship had originally been bound for the Yemen’s Red Sea port of Hodaida, which is controlled by the Houthis, but its aid cargo will now be delivered by the World Food Programme, the U.N agency said on Friday.

“The cargo of the ship will be handed over to WFP in Djibouti and will be transferred to WFP-chartered vessels for shipment to the Yemeni ports of Hodaida and/or (the southern port city of) Aden,” WFP spokeswoman Abeer Etefa said.

“It will be delivered to humanitarian partners on the ground for distribution.”

Etefa said the WFP had been told the 2,500 ton cargo included supplies of rice, flour, canned fish, medicine, water, tents and blankets.

GMS Warns E.U. on Beaching Ban

By MarEx 2015-05-22 18:10:59

GMS has called upon the European Commission to think carefully before banning beaching as an option for recycling European ships following the very positive study visits by a Japanese delegation and representatives from the Danish Shipping Association (DSA) to shipyards in Alang.

The improvements made by some of the yards have led to a rise in standards to ensure compliance with the forthcoming Hong Kong Convention. The DSA is on record as saying in an article on its website that: “We consequently saw, among other things, workers wearing safety equipment and undergoing six-monthly routine medical check-ups.

“We also noted that the shipyards were engaged in operations such as asbestos handling, and regularly compiled reports from water and soil pollution tests etc. Finally, we were able to personally observe that three of the shipyards had laid a concrete base beneath the beach to stop seepage of harmful substances.”

A beaching ban by the European Commission will be counterproductive as it would discourage improvements in the ship recycling industries of South Asia.

Firstly, it will mean that E.U. flagged ships will be able to be recycled only in Turkey and China. The Turkish recycling market has a finite capacity with only 20 small yards and China’s demand for steel from recycled ships varies greatly year to year. Currently there is little demand in China for scrap steel and there has not been for about a year and a half. This situation will undoubtedly lead to some E.U. flagged ships changing flag to register with states where no such ban is imposed to allow them a realistic choice of recycling destinations.

Secondly, prices will also be severely affected as E.U. registered ships forced to deal with only Turkish yards could face a collapse in value. Traditionally, southern Asian prices have been higher by about 40-60 percent than in Turkey and China due to the higher demand and value for ship steel, machinery, equipment, spares and ancillary items. Incidentally, most of these items are re-used; a more environmentally friendly option.

Banning beaching will only discourage other yards in the region from raising standards, thereby destroying the current ‘virtuous circle’ of improvements among shipyard owners in Alang.

If all yards in India are excluded from European approval, regardless of the improvements they have made in their infrastructure and work procedures, they will have no interest whatsoever to support their government’s ratification of the Hong Kong Convention.

Finally, and perhaps most importantly, for the European Commission to base its decision on beaching on secondary data (instead of primary investigation) is illogical. There is no reasonable justification for the European Commission to punish its own members without thorough analysis.

So for these reasons GMS urges the Commission to see for themselves the improvements that have been made by some of the shipyards in Alang and is happy to extend an open invitation to officials from the Commission, and to officials from E.U. member states responsible for ship recycling.

“The last visit by officials from the EU was back in 2009 and much has changed for the better since then. It would be a travesty of justice now that yard owners in Alang are making huge improvements to working conditions for the EU to make a decision without seeing for themselves the positive changes made in the region. GMS would be happy to organize such a visit,” said Dr Anil Sharma founder and CEO of GMS.

West Coast Longshoremen Approve New Contract

By MarEx 2015-05-22 17:29:13

U.S. West Coast Longshore workers have overwhelmingly voted to ratify a tentative contract agreement reached in February with employers represented by the Pacific Maritime Association (PMA).

Members of the International Longshore and Warehouse Union (ILWU) voted 82 percent in favor of approving the new 5-year agreement that will expire on July 1, 2019. The previous contract was ratified in 2008 with a vote of 75 percent in favor.

Voting results were certified today by the ILWU’s Coast Balloting Committee, which was chosen by Coast Longshore Caucus delegates elected from each of the 29 West Coast ports.

“The negotiations for this contract were some of the longest and most difficult in our recent history,” said ILWU International President Robert McEllrath. “Membership unity and hard work by the Negotiating Committee made this fair outcome possible.”

The new agreement provides approximately 20,000 good-paying jobs in 29 West Coast port communities. The contract will maintain excellent health benefits, improve wages, pensions and job safety protections; limit outsourcing of jobs and provide an improved system for resolving job disputes, said ILWU in a statement.

Long Beach Board of Harbor Commissioners President Doug Drummond has praised the result. “I would like to heartily congratulate the men and women of the International Longshore and Warehouse Union on their approval today of the new West Coast labor contract for ports including Long Beach. I would also like to extend my congratulations to the companies of the Pacific Maritime Association for their approval of the contract.

“This new pact is terrific for management and labor, and proves that by working together, we can build a partnership that will continue to help to improve this economy and provide jobs all across the United States.

“I’d also like to thank Long Beach Mayor Robert Garcia and Port CEO Jon Slangerup for their part in urging everyone to reach this mutually beneficial agreement.

“On behalf of the Port of Long Beach and the Long Beach Board of Harbor Commissioners, this is a job well done. We all look forward to many years of strong and fruitful efforts to keep trade moving.”

The National Retail Federation’s Vice President for Supply Chain and Customs Policy Jonathan Gold, said: “At long last the year-long contract dispute between the ILWU and PMA has come to an end. Shippers can rest a bit easier knowing that the West Coast ports will be more stable over the next few years. While we are happy to see the contract ratified it’s not going to be long before we are going through this process all over again.

“The past year was fraught with disruptions, slowdowns and partial shutdowns. This is something we will no longer tolerate. The world is changing, and our ports must adapt to ensure they provide shippers with the predictability and stability they need. We can no longer accept last-minute negotiations and months and months of talks while slowdowns and stoppages disrupt the global supply chain and international trade.

“Negotiators need to begin their talks early enough to have an agreement in place well before another contract expires without active or passive threats to the economy and the millions of jobs dependent on our nation’s ports and supply chain. The current process is impractical and unsustainable and fails to meet even the most basic requirements of a modern, global supply chain.

“A new process is needed for labor and management on both coasts. Stakeholders cannot afford to go through this process every couple of years. We need a new system in place that benefits all parties and provides for the efficient transportation of the nation’s cargo and commerce.”

India Plans New Oil Subsidy Rules

By Reuters 2015-05-22 17:14:51

India plans to reform rules governing the level of discounts upstream state oil firms including ONGC offer to retailers, a senior finance ministry official said on Friday, a move that could expedite the sale of a stake in the company.

The government hopes to sell shares in ONGC and India Oil Corp. to raise about a third of its budget target for asset sales of $11 billion – and reduce its fiscal deficit to 3.9 percent of GDP in the 2015/16 fiscal year.

Currently ONGC (Oil and Natural Gas Corp), Oil India and GAIL (India) sell crude and fuels like cooking gas at discounted rates to partly compensate retailers for losses they incur on selling fuels at government-set rates.

But the finance ministry and oil ministry are in talks to work out a mechanism for easing the subsidy burden for the upstream companies, Ratan P. Watal, expenditure secretary at the Ministry of Finance, told reporters on Friday.

Earlier, sources told Reuters that the oil ministry had set a new subsidy formula for the April-June quarter that would exempt upstream companies from discounting sales of crude oil and refined products if global oil prices are up to $60 per barrel.

India had to defer plans to sell a 5 percent stake in state-run oil company ONGC last year as investors wanted a clarity on subsidy payments, which had previously been set by government decree, creating uncertainty around its earnings outlook.

Market experts said that if talks between the two ministries lead to the temporary subsidy arrangement being prolonged, that would make the ONGC stake sale a more bankable proposition.

“Investors have been asking for more clarity on ONGC’s subsidy outgo, and that will be key for a divestment to take place,” said Mahesh Patil, co-chief investment officer at Birla Sun Life Asset Management.

“We still need to see what the final formula is.”

TEMPORARY RELIEF

Finance Minister Arun Jaitley gave a bullish view on asset sales, telling a news conference called to mark Prime Minister Narendra Modi’s first year in power that deals worth 500 billion rupees ($7.9 billion) were “in the pipeline”.

Officials worry that a downturn in the Indian stock market, which has unwound most of its gains for the year, could hurt government fundraising plans. India has missed its privatisation target for the last five years in a row.

ONGC shares rose 1.5 percent on Friday. They have shed 18 percent in the year since Modi’s election victory, while the benchmark Sensex Index is up by 15 percent in that period, according to Reuters data.

Reuters reported exclusively earlier that the oil ministry had set interim rules to exempt upstream state firms from giving any discounts on crude and refined fuels if global oil prices average up to $60 a barrel this quarter.

For prices beyond $60 a barrel the companies will have to give a discount of 85 percent of the incremental oil prices and this discount will rise to 90 percent for additional prices beyond $100 a barrel.

ONGC chairman D.K. Sarraf later confirmed receiving a government order concerning the subsidy formula and said the details were in line with Reuters’ reporting.

Last quarter, the government had exempted ONGC, Oil India, and GAIL from paying any subsidy after a crash in global crude prices. Currently global oil prices are hovering around $66 a barrel.

On the top of the discount, state-run fuel retailers – Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum – are compensated by the finance ministry for selling cooking gas and kerosene at cheaper rates.

The government directly transfers subsidy for cooking gas into the bank accounts of consumers.

Last fiscal year domestic kerosene sales accounted for a third of overall revenue losses of 723 billion rupees ($11.4 billion) of state fuel retailers.

($1 = 63.5300 Indian rupees)