Sembcorp -“Show Me the Money”

By MarEx 2015-07-29 16:25:08

Sembcorp Marine still has not gotten paid by Sete Brasil for the drillship ordered in 2012 to be delivered between 2015 and 2019 at the Brazilian Estaleiro Jurong Aracruz Ltd. shipyard. The seven ultra-deepwater drill ships, which are capable of drilling to 40,000 feet, are going to be chartered to Petrobras for 15 years.

Sembcorp said it has been in discussions with Sete Brazil over the lack of payments made on the drillships, which are each valued at about $800 million. Sembcorp President Wong Weng Sun said that Sete Brasil currently owes about $59 million. He also said the Brazilian orders accounted for more than half of the company’s order book. Sembcorp is now saying that the company will eventually slow the projects if the situation persists.

Sembcorp also announced that its second quarter profits fell 17 percent compared to last year citing rising oil prices and cuts in production and global exploration. In a statement, Sembcorp said many of their customers are seeking to defer payments of their ordered rigs because of a lack of charter contracts.

And because Petrobras is currently entangled in a corruption scandal that involves charges of money laundering and organized crime, Sete Brasil has been forced to consider different avenues to obtain financing. In February, Sete Brasil said it was seeking conclude a long-term credit line with the Brazilian Developmental Bank in addition to obtaining new lines of short-term financing to satisfy its debt to Sembcorp.

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Korean Shipyards Empty

By MarEx 2015-07-29 16:17:15

The three largest ships yards in the world are in Korean and they are struggling for work and losing lots of money.

Daewoo Shipbuilding and Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries (HHI) say it is due to plummeting oil prices and delayed offshore projects. The giant yards are reporting significant losses in 2015’s second quarter– Daewoo leads the way reporting a 3.03 billion KRW ($2.62 billion) operating loss. Samsung reports1.55 trillion KRW loss while Hyundai says it lost 171 billion won. The combined losses is the 4.75 trillion KRW or $4.1 billion.

Daewoo cites delays in the construction of gas oil rigs as well as lower freight rates in the cargo markets. Korean yards invested heavily in oil and gas rigs around 2010 in an effort to circumvent competition with the Chinese yards. Oil prices were sitting at about $100 per barrel at the time and the industry was booming.

The maritime sector on whole has been sluggish due to the global recession and economic slowdown. China has been the world’s workbench for the last decade or so. It shipyards have been some of the busiest in the world, but oil prices have plummeted by 60 percent and demand for drilling rigs and ships has slowed.

The 2nd quarter losses for the three Korean giants were Daewoo’s 2015 Q2 revenue fell 63.1 percent, Samsung’s revenues fell 44.8 percent, and Hyundai posted a 240 KRW loss down from last year’s loss during the same period of 489 KRW.

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Nigeria LNG Receiving Four Vessels

By Reuters 2015-07-29 15:20:11

Nigeria Liquefied Natural Gas Company (NLNG) expects to take delivery of four LNG carrier ships before year-end and another two next year, its chief executive said, positioning the state-backed gas exporter to expand its share of the growing market.

NLNG signed agreements with South Korea’s Samsung Heavy Industries and Hyundai Heavy Industries in 2013 to acquire six LNG carrier ships, costing more than $1.2 billion, to boost its fleet of 23.

It had tapped South Korea Export and Import Bank and other lenders to fund the construction, CEO Babs Omotowa said.

Omotowa said the global market for LNG – natural gas that has been cooled to a liquid form, which shrinks the volume and makes it easier to store and ship – was forecast to grow to 430 million tonnes per year by 2030 from 230 million now.

Nigeria, with the world’s fourth-biggest LNG plant, wants to capture some of that by expanding its market share to more than 10 percent – a spot it held in 2008 – from 7 percent now, Omotowa said, without giving a time frame.

“With our growth projects train 7 and train 8, we hope to expand our capacity by 40 percent and take us back to over 10 percent,” he said in an interview in Lagos, referring to NLNG’S gas liquefaction production lines. NLNG, located on the Atlantic basin, has the capacity for 12 trains.

NLNG, owned by Nigerian state oil firm NNPC, Royal Dutch Shell, France’s Total and Italy’s Eni , has the capacity to produce 22 million tonnes of LNG a year. The company, set up 15 years ago to produce the gas for export, did not give current capacity figures.

It has long-term supply contracts with Spain’s Repsol, Italy’s Enel, Britain’s BG Group, France’s GDF Suez and Portugal’s Galp. It also sells on the spot market.

Nigeria, one of the world’s top-10 gas rich countries, has estimated reserves of 180 trillion cubit feet, Omotowa said, but it converts only about 1.5 trillion cubic feet per year to LNG.

NLNG, which generates more than $10 billion in annual revenue, is also sponsoring the construction of the first major ship yard in Nigeria at a cost of $1.5 billion, in order to develop capacity for maintaining large vessels at home.

Omotowa said LNG exports had not impacted domestic supply. The domestic gas market had been held back by a lack of infrastructure including a functional rail system to ferry gas around the country and government funding challenges, he said.

Gas demand in Africa’s most populous nation is expected to rise to 3 billion standard cubic feet (scuf) per day by 2017 as gas-fired power plants ramp up generation, industry officials say. Demand has risen to 1.2 billion scuf per day, from 300 million six years ago.

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US inland port to boost Savannah trade

Cargo volume through the Port of Savannah is expected to receive a lift from a new intermodal rail facility to be built 570 km inland.
Plans for the USD24 million Appalachian Regional Port at Chatsworth, Georgia, were unveiled on 28 July by the Georgia Ports Authority (GPA), rail operator CSX, and
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Scorpio continues buying spree

NYSE-listed Scorpio Tankers has finalised more newbuildings orders as it reports second-quarter results that exceeded analysts’ forecasts.
From Hyundai Mipo, the Emmanuele Lauro-led company has ordered two MR product tankers, each priced at USD34.5 million, and two Handymax product tankers, each
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