Chinese Shipping Firms Talk Arctic LNG Newbuilds

By Reuters 2015-09-22 19:41:20

China Merchants Energy Shipping, Sinotrans Shipping and Greek shipping firm Dynagas are in talks to form a joint venture to build five vessels to ship LNG from the Arctic, the firms said.

China Merchants said in a stock exchange statement on Tuesday that its board had approved a proposal allowing subsidiary China LNG Shipping to take a 25.5 percent stake in the joint venture, which will pay $1.59 billion for the ships.

Sinotrans, a unit of state-owned Sinotrans & CSC Holdings on Monday said it would take a 25.5 percent share of the joint venture without revealing who its partners were. Dynagas, a private Athens-based LNG shipping firm, will take a 49 percent stake, China Merchants’ statement said.

China LNG is a joint venture between China Merchants and China Ocean Shipping (Group) Company.

The ships will be principally tasked to transport gas from the $27 billion Yamal LNG project, a joint venture being built by Russia’s Novatek, France’s Total and China National Petroleum Corp. Chinese banks are expected to lend $12 billion to the project.

A growing number of firms have been eyeing shorter shipping routes through the Arctic as the ice melts rapidly amid rising temperatures, though the recent slump in oil prices has deterred investment.

The joint venture represents Sinotrans’ first foray into LNG shipping, which Barclays analysts said would help shift its earnings profile from spot to long-term contracts. China LNG and Teekay LNG Partners signed a deal last year to build six carriers.

The deal also marks the second significant partnership between China Merchants and Sinotrans after they set up a $1.1 billion crude oil tanker joint venture last year as part of a desire to help China seek better control over its oil imports.

Engaging the Next Generation

By Wendy Laursen 2015-09-22 19:23:45

School children from local and international schools based in London attended an informative session at IMO on Tuesday as part of World Maritime Day celebrations.

The pupils enjoyed an interactive session where they learned about ships, the cargoes they carry, regulations for ships and the whole range of careers in the maritime world. They then took turns on ship simulators, loaned by ARI World, and were interviewed about what they had learned.

This year’s World Maritime Day theme “maritime education and training” reflects a range of initiatives underway to help build the next generation of maritime executives.

Engaging with Science

The U.S. Coast Guard GEOTRACES research, currently underway, involves engagement with school children.

In preparation for their Arctic work the GEOTRACES team, on board U.S. Coast Guard vessel Healy in the Arctic, linked with “Float Your Boat”, an education program with a unique concept. Float Your Boat blends the themes of historic Arctic drift studies, modern GPS technology and hands on science, to engage local communities with work in remote science locations.

Scientists currently on board Healy spent time last spring recruiting and meeting with school groups to share information about the Arctic, their upcoming science cruise and collecting small student decorated wooden boats that would become part of the project.

For over a month the science team has been anticipating the deployment of these small wooden vessels, since this builds a direct connection to their families and communities back home.

The student boats are deployed in a 100 percent biodegradable box lowered carefully onto an iceberg along with an iridium satellite tracking buoy. The tracker is activated and sending signals so that it can be used to track the circulation of the ice. Over time the ice is expected to melt and the box will biodegrade sending these small floating wooden boats into the high seas of the Arctic Ocean.

Once the box degrades the boats will be separated from the tracker, but each boat has been identified by the students with their school and their own name and stamped with the project contact information. If any of the boats wash up onshore there is enough information for the locator to contact Float Your Boat with a date and location. Through online tracking of the iridium satellite this project provides opportunities for students to learn about Arctic change, marine circulation, marine debris transit and maritime careers.

Engaging with Industry

Earlier this year, for a group of high school boys, summer school was an opportunity to learn about the maritime industry. Over the last decade, the Association of Maryland Pilots and Baltimore’s St. Ignatius Loyola Academy have partnered on the St. Ignatius Commodities Project, an innovative, interactive program designed to lay the foundation for a potential career in the maritime industry.

The four-week program was introduced by former Maryland congresswoman Helen Delich Bentley. The students visited Fort McHenry and toured the port aboard a McAllister tugboat. They studied commodity imports and exports, visited terminal operators, the 1960s-era nuclear ship NH Savannah and the WW II Liberty ship SS John W. Brown.

They also spent a day at the Maritime Institute of Graduate Studies-Pacific Maritime Institute (MITAGS-PMI) where they experienced vessels operating in marine environments via tugboat- and full-mission simulators.

The Message

Koji Sekimizu, IMO Secretary-General, has made his official on this year’s World Maritime Day including mention of the next generation:

“Shipping is vitally important to the global community, playing a key role in sustainable development. The world depends on a safe, secure and efficient shipping industry; and the shipping industry depends on an adequate supply of seafarers to operate the ships that carry the essential cargoes we all rely on…

“In the future, the human element in shipping will be increasingly important, not just for the commercial reasons but also as the industry moves towards ever higher standards of safety, environmental impact and sustainability. It is the human element that will translate new objectives in these areas into solid actions. Further effort must be made to bring new generations into seafaring as a profession. Seafaring must be seen to appeal to new generations as a rewarding and fulfilling career.

“It is impossible to overstress how important this is. Without a quality labor force, motivated, trained and skilled to the appropriate international standards, shipping cannot thrive. Not only that, all the many advances that have been made, in terms of safety and environmental impact, are at risk if personnel within the industry are unable to implement them properly.

“The importance of training and education for the maritime personnel of today and tomorrow is greater than ever before.

“Effective standards of training are the bedrock of a safe and secure shipping industry, and that is why this year, maritime education and training is our theme for World Maritime Day.”

Court Finds U.S. Jurisdiction Over Foreign Vessels

By MarEx 2015-09-22 16:31:56

By H. Allen Black

United States courts continue to uphold prosecutions of non-U.S.-flag vessels for pollution incidents beyond U.S. waters when the pollution is covered up with false records presented to U.S. officials.

In a decision issued on September 15, 2015, the U.S. District Court for the Southern District of Alabama followed precedents from a number of courts that hold that the U.S. has criminal jurisdiction over violations of the Act for the Prevention of Pollution from Ships, even though the underlying actions – allegedly wrongful discharges of oily wastes and plastics and false entries in records books – were committed on the high seas.

DSD Shipping A.S. and certain of its crewmembers from DSD’s tank vessel STAVANGER BLOSSOM are facing charges in federal court in Mobile, Alabama, for criminal violations of the U.S. Act for the Prevention of Pollution from Ships. The charges stem from the alleged wrongful discharge of oil-contaminated bilge water and plastic bags at sea and the failure of the ship’s crew to document those discharges in the vessel’s Oil Record Book and Garbage Record Book. Unlike the vast majority of defendants in similar cases, the company and crewmembers here have decided to fight the charges in court rather than accept a plea agreement.

​H. Allen Black

With trial currently set for October 2015, the defendants argued that the U.S. lacks jurisdiction to charge them for alleged violations of maritime pollution regulations occurring outside of U.S. waters on a foreign flag vessel. However, the court disagreed, noting that the charged offenses are based on the entry of the vessel into U.S. waters with a knowingly inaccurate oil record book and not on the conduct on the high seas. The court pointed out that the charges are not for the pollution or even the making of false entries, but rather for the misrepresentation in U.S. ports resulting from bringing the false record book into the U.S. The court then went even further, ruling that even if the offenses were the making of the false entries on the high seas, the APPS prohibitions against that conduct apply extraterritorially, because the harm protected against – the misleading of Coast Guard investigators – effects matters in the U.S. and the crimes do not depend on where they are committed.

In its ruling, the court also held that separate charges for bringing the same false oil record book into different ports was not an improper multiplication of the charges. The defendants had been charged with similar offenses for bringing the allegedly false record books into Mobile, Alabama, and into Lake Charles, Louisiana. In their pre-trial motion, the defendants argued that the charges violated the Constitutional prohibition against double jeopardy by charging them with multiple criminal counts for the same alleged misconduct. However, the court pointed out that the offenses were not the alleged pollution itself or the making of the allegedly false oil record book entry, but separate incidents of bringing inaccurate books into multiple U.S. ports.

Allen Black is a partner in Winston & Strawn’s Washington, D.C. office with strong experience handling the full range of maritime matters, including regulatory issues, cargo and shipping issues, vessel financing and documentation, maritime litigation and arbitration, maritime commercial transactions, marine construction and product liability issues, and general maritime counseling.

Petrobras Terminates More Contracts

By MarEx 2015-09-22 15:50:44

Petrobras, the embattled Brazilian state-run energy company, has terminated vessel contracts with World Wide Supply, Siem Offshore and Ultrapetrol.

World Wide Supply, a Netherlands-based offshore services company, received a notice of early termination for two platform supply vessels (PSVs) from Petrobras. The company had six vessels working for Petrobras.

Norway-based Siem Offshore also received an early termination notice for its Siem Carrier, a 1996-build PSV. According to Siem, the termination was due to Petrobras failing to obtain proper operating licenses for the vessel. Petrobras signed a four-year contract to take operation of the Siem Carrier in 2013.

Ultrapetrol, a Bahamian offshore vessel operator, also received a notice from Petrobras that three of its PSV contracts (UP Amber, UP Pearl and UP Esmeralda) have been terminated.

The company still operate six PSVs with Petrobras under Brazilian flag or with Brazilian Special Registries (“REB Rights”). Additionally, the non-Brazilian flagged RSV UP Coral has recently commenced a six-year contract to provide subsea support services to Petrobras. And, two laid-up North Sea vessels, UP Agate and UP Jasper, are currently participating in tenders to enter service with Petrobras as an RSV subsea support vessel and a PSV with REB Rights, respectively.

Petrobras has been entangled in Brazil’s largest-ever corruption case and has been forced to write down about $17 billion worth of assets this year.

In June, the company announced that it would slash its capital expenditures to $130 billion (estimated 2015-2019), which is 41 percent lower than the $221 billion it anticipated spending from 2014 to 2018. This is Petrobras’ smallest capital investment plan since 2008.

Petrobras also trimmed its 2020 forecast for global production by nearly a third to 3.7 million barrels of oil and equivalent natural gas per day from its estimate of 5.3 million per day

U.S. GOM Rigs in Decline

By MarEx 2015-09-22 15:40:21

As crude oil prices tumble, the number of active offshore rigs has declined by about 20 percent worldwide since 2014. In August 2015, there were 377 active rigs compared to just 304 in August 2015.

But the number of active offshore rigs in the U.S. Gulf of Mexico (GOM) has fallen more rapidly as more than 46 percent of the rigs are unused compared to 2014. Over the past 15 years, the U.S. GOM’s share of active offshore rigs worldwide has declined significantly—from almost half of all active offshore rigs worldwide in 2000 to less than 20 percent since 2008.

In the U.S. GOM, technology advancements accelerated the development of the deepwater. The move to deeper waters prompted the departure of rigs operating in the shallow waters of the U.S. GOM.

Natural gas prospects in the U.S. GOM have also become less profitable, as the largely shale-driven increase in onshore natural gas supply contributed to decreases in U.S. natural gas prices. The number of active offshore rigs in the U.S. GOM declined from 122 in January 2000 to 41 in January 2010, before falling to 19 in June 2010 following the Deepwater Horizon offshore explosion and blowout.

The U.S. GOM active offshore rig count recovered to 57 by December 2014, and currently the number is 33.

From 2000 to 2006, the share of active rigs operating offshore in Asia Pacific, the Middle East, and Latin America grew significantly. That share remained steady over the past decade. The expansion of offshore drilling in India and China largely accounted for the growth in offshore rigs in the Asia Pacific region. During the early 2000s, Qatar and Iran accounted for much of the growth in active offshore rigs in the Middle East, with Saudi Arabia accounting for a large portion of the regional growth since 2006. Mexico accounted for the growth in active offshore rigs in Latin America in the early 2000s, as national oil company Pemex increased its offshore activity to arrest declining production from aging fields. Since 2006, Brazil has been responsible for much of Latin America’s growth.

Most of the more recent growth in active offshore rigs outside the United States has occurred in Africa. Angola and Nigeria account for much of the growth in the region after 2010. Angola has more than 10 offshore oil projects expected to come online within the next five years. Nigeria’s offshore activities have been focusing on the deepwater and ultra-deepwater; at least three deepwater projects are in development and are projected to come online within the next five years.

SOURCE: U.S. Energy Information Administration