U.S. Senators Introduce Ship Recycling Legislation

By MarEx 2015-06-05 19:27:29

U.S. Senators David Vitter (R-La.) and Bill Cassidy (R-La.) introduced the Ships to Be Recycled in the States (STORIS) Act, legislation to reform the domestic marine recycling industry on Thursday.

Their legislation aims to improve the domestic ship recycling industry and promote transparency by requiring reports from Maritime Administration (MARAD) and an audit by the Government Accountability Office. Congressman Garret Graves (R-La.) is introducing the companion legislation in the U.S. House of Representatives.

“The Maritime Administration receives millions of dollars in federal funding, but they’ve never reported how the sales money is spent or how the agency awards contracts,” Vitter said. “Ship recycling is an important part of our domestic maritime industry, and these reforms would improve federal contracting, cut government waste, and help create jobs in Louisiana.”

“Louisiana directly benefits from the Maritime Administration—hundreds work in ship recycling facilities and many state museums receive maritime grants,” said Cassidy. “There have been concerns that the agency receives millions in federal funding but lacks transparency. The STORIS Act will strengthen oversight over the agency and help create more jobs for Louisiana workers.”

“Americans expect the federal government to operate in their best interest,” said Graves. “We have found multiple instances where the U.S. Maritime Administration has failed to maximize the return on investment on the sale of retired federal vessels by not accepting the highest bid on a number of contracts and not fulfilling its obligation to reinvest these funds in our merchant mariner workforce. This bill will prevent MARAD from leaving millions of dollars on the table in regard to ship recycling contracts and require that we have the workforce we need to increase global trade and exports from Louisiana.”

Current law requires all excess government vessels to be sold to domestic marine recyclers to be dismantled. A portion of funding from the sales goes toward the Vessel Operations Revolving Fund, federal and state maritime academies, and the maritime heritage grant program. The STORIS Act would make sure that the required funding goes to federal and state maritime academies and to heritage grants funding to the Department of Interior. It would also require MARAD to issue an annual report on how its money is spent and publicize its ship recycling agreements.

Additionally, the STORIS Act creates jobs by ensuring that all vessels can be dismantled in the United States in compliance with U.S. environmental and safety laws, and are not exported where those safety rules do not apply.

The STORIS Act is named in recognition of the former Coast Guard Cutter Storis, which was dismantled in Mexico in 2013 in violation of the current law.


BP Executive ‘Not Guilty’ on Deepwater Horizon Charges

By MarEx 2015-06-05 16:43:46

A US federal jury has acquitted former BP executive David Rainey on charges of lying to investigators in connection with the 2010 Deepwater Horizon oil spill.

Defense attorney Reid Weingarten expressed satisfaction over the court’s decision, stating that he was not surprised since evidence favored his client. Weingarten had previously commented that charges should never have been brought against Rainey and that prosecutors failed to offer the court a convincing reason why the executive would lie to investigators.

The court alleged that Rainey, former vice president of exploration in the Gulf, willfully made a fraudulent statement to federal law enforcement agents regarding the amount of oil spilled in the BP disaster.

On May 24, 2010, Rainey sent a 5,000-barrel-a-day estimate to Congress, terming it BP’s “best scientific guess” at the flow rate. A group of government and independent scientists later concluded that more than 60,000 barrels per day were leaking into the Gulf during the relevant time, the Department of Justice said.

On Monday, U.S. District Judge Kurt Engelhardt dismissed a separate charge that Rainey obstructed a congressional inquiry.

Days after the Deepwater Horizon rig exploded 50 miles (80 km) off Louisiana’s coast, BP said about 1,000 barrels of oil per day were flowing into the Gulf of Mexico. A week later, a government scientist estimated the flow at nearly 5,000 barrels, but said he could not vouch for the accuracy of that figure.

BP well site managers Robert Kaluza and Donald Vidrine still face manslaughter charges in connection with the 11 people who died when the Deep Water Horizon rig exploded. The court alleges that the leaders ignored indications that the well was not secure.

BP agreed to pay $4.5 billion in fines and other penalties and pleaded guilty to criminal charges related to the spill. It is also facing up to $13.7 billion in penalties under the Clean Water Act.


OPEC to Keep Pumping Oil Amid Glut

By Reuters 2015-06-05 15:04:07

Oil group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.

Concluding a meeting with no apparent dissent, Saudi Arabian oil minister Ali al-Naimi said OPEC had rolled over its current output ceiling, renewing support for the shock market treatment it doled out late last year when the world’s top supplier said it would no longer cut output to keep prices high.

The Organization of the Petroleum Exporting Countries will meet again on Dec. 4, Naimi said.

With oil prices having rebounded by more than a third after hitting a six-year low of $45 a barrel in January, officials meeting in Vienna saw little reason to tinker with a strategy that seems to have resurrected moribund growth in world oil consumption and put a damper on the U.S. shale boom.

“You’ll be surprised how amicable the meeting was,” a visibly pleased Naimi told reporters after the meeting.

Oil prices rose by nearly $1 a barrel after the decision, paring some of this week’s losses on news that OPEC had not raised its output ceiling to match current output levels that are much higher, as a handful of analysts had suggested.

Friday’s decision defers discussion of several tricky questions set to arise in the coming months as members such as Iran and Libya prepare to reopen the taps after years of diminished production.

Iranian oil minister Bijan Zanganeh had promised to press the group for assurances that other members would give Tehran room to add as much as 1 million barrels per day (bpd) of supply once Western sanctions are eased. But most delegates saw little reason for Tehran to pick a fight now.

“When the production comes, this matter will settle itself,” one OPEC delegate told Reuters. That may not occur until 2016, according to many analysts who question how quickly Tehran will win relief from sanctions and be allowed to sell more crude.

Libya, still afflicted by a crippling civil war, hopes to double production to some 1 million bpd by September if key ports resume working, but past efforts have failed to deliver a sustained recovery in shipments.

U.S. oil is on track for its first weekly decline since March as traders weigh deteriorating physical market conditions. But prices are still $15 off their lows, and some analysts see further gains ahead.

“The markets are moving in OPEC’s favor,” said Dr. Gary Ross, executive chairman of PIRA Energy Group. “Prices are stimulating robust demand growth and slowing capex. This was the objective of the Saudi strategy and it’s working.”

OPEC Secretary-General Abdullah al-Badri, speaking to reporters after the meeting, said he saw the oil market as “very positive”.

“The economy is growing, demand is growing. We see non-OPEC supply is not growing as in the past,‎” Badri said.


OPEC output has exceeded the group’s 30 million bpd ceiling for most of the past year, reaching 31.2 million bpd in May, its highest in three years, according to a Reuters survey.

Notably absent from this week’s agenda were efforts to push for output constraints – even from hawks such as Venezuela, which faces deepening budget woes at prices below $100 per barrel.

While oil ministers have maintained a relentlessly upbeat attitude this week, some analysts see dark clouds gathering.

The U.S. tight oil industry has been more resilient than many had expected, with falling costs helping sustain the revolution and possibly setting up another downward spiral.

“Balances show we are oversupplied and OPEC is in pedal-to-the-metal mode,” said Bob McNally, founder and president of Washington-based consultancy The Rapidan Group. He said Brent crude could fall back to $50 a barrel.


NATO Launches Cooperative Maritime Exercises in Baltic

By MarEx 2015-06-05 14:40:59

Seventeen NATO and partner nations gathered in the Baltic Sea Friday for a two week multinational maritime exercise aimed at increasing cooperative capabilities.

BALTOPS, currently on its 43 year, will consist of a total of 49 ships, 61 aircraft, one submarine. Approximately 5,600 ground, maritime and air forces from participating nations will conduct air defense, maritime interdiction, anti-subsurface warfare, and amphibious operations in a joint environment. The multinational exercise designed to enhance maritime functions and interoperability and to support regional stability.

“This exercise represents an important opportunity for our forces, as allies and partners, to enhance our ability to work together and strengthen capabilities required to maintain regional security. This exercise will be conducted in a truly joint environment, and I look forward to working with and learning from so many different nations and services.” – Vice Adm. James Foggo III, commander, U.S. 6th Fleet and commander, Striking and Support Forces NATO

While BALTOPS remains a U.S.-led exercise, Commander, Naval Striking and Support Forces NATO (STRIKFORNATO) is responsible for executing this year’s exercise. The operation will take place between June 5 – 20 throughout the Baltic Sea.

Participants in include Belgium, Canada, Denmark, Estonia, Finland, France, Germany, Georgia, Latvia, Lithuania, The Netherlands, Norway, Poland, Sweden, Turkey, the United Kingdom, and the United States.


Pirates Hijack Tanker off Malaysian Coast

By Kathryn Stone 2015-06-05 12:15:55

The crew of the product tanker Orkim Victory were taken hostage after their vessel was hijacked by pirates eight nautical miles off the coast of Pu Aur, Malaysia.

Two small boats approached the 7,119 dwt, Orkim Victory, owned by Orkim Ship Management in the early morning hours of June 4. The armed assailants boarded the tanker and altered its course to rendezvous with a larger vessel. Part of the oil cargo was then transferred to the pirate ship. The pirates also robbed the crew and seized ship property. Before leaving, the pirates damage the onboard communication systems.

All crew have been reported safe and the tanker was able to make its way back to a nearby port.

This is the second pirate attack in the South China Sea this week. On June 3 the Indonesian-flagged timber carrier KM Mutiara was also hijacked. Crew members were forced to jump overboard as the pirates made off with the ship and its cargo. The location of the ship is still unknown.

The International Maritime Bureau has reported that attacks against small tankers are increasing in the South China Sea. Additionally, around 75% of pirate attacks in 2014 occurred in Asian waters. Singapore has recently called for members of the littoral states to increase patrols in the lower portion of the South China Sea in order to combat the growing piracy threat.