Statoil Sees European Gas Demand Recovery

By Reuters 2015-06-02 18:25:32

Norwegian energy firm Statoil sees some signs of gas demand in Europe recovering after years of decline, particularly in Britain, its chief executive told Reuters on Tuesday.

Norway overtook Russia as Western Europe’s main gas supplier in the last quarter of 2014 and was also ahead in the first quarter of this year, industry data showed.

“For some years we have seen a reduction in the European gas consumption starting with the financial crisis, with coal substituting gas in the power generation segment and that has been a very disappointing development for us,” Statoil CEO Eldar Saetre said.

“There are some positive signs that hopefully will at some point be a turning point for gas,” he added, referring to carbon tax introduction in Britain, which has led to gas demand rising in the power sector last year after three years of decline.

Saetre was speaking during a visit to Statoil’s Troll A platform in the North Sea with Miguel Arias Canete, European commissioner for climate and energy.

The platform, standing firmly on four huge concrete legs extending some 300 metres to the seabed, is the tallest such structure ever transported.

Norway’s biggest gas field Troll alone produces about 30 percent of gas output from the Norwegian continental shelf, enough to meet Spain’s annual demand.


Gas demand for power generation in Britain rose last year for the first time since 2010, data from UK’s Department of Energy and Climate Change showed.

“I can’t comment on whether a shift has happened for Norwegian gas, but… we see growing interest for more longer-term commitments on gas in many parts of Europe,” Saetre said.

Statoil expanded the scope of its long-term gas supply contract with Britain’s SSE on Monday, after agreeing to supply more gas to rival Centrica in May.

Norway’s exports to the EU totalled 29.2 bcm in the first three months of the year against 27.2 bcm Russian supplies, Reuters calculations showed.

Russia remained EU’s main gas supplier for 2014 as a whole.

European buyers held off purchases of Russian gas during the last two quarters, expecting its oil-indexed prices to catch up with last year’s fall in crude oil.

Canete said that while Russia and Norway were to remain the EU’s main gas suppliers, the Commission wants to increase competition from other sources, including imports of liquefied natural gas (LNG).

“We will launch an LNG strategy in December and in that framework we will make our forecast for gas consumption,” Canete said. Currently about 80 percent of the EU’s LNG import capacity is idle.

Norway could explore for more gas, but needed a more predictable long-term climate policy, which would favour gas over coal, Statoil officials said.

“We need signals from Europe that gas remains important in the future energy mix,” said Oeivind Dahl-Stamnes, Statoil’s vice president for Troll operations.


Navy Secretary Urges Pentagon to Cut Overheads

By Reuters 2015-06-02 18:09:20

U.S. Navy Secretary Ray Mabus has urged budget cutters to target what he called duplicative and ineffective agencies such as the Pentagon’s payment services arm instead of cutting needed weapons programs.

“If you want to look at real money, 20 percent of the Pentagon’s budget – one dollar out of every five – is spent on … the Office of the Secretary of Defense and defense agencies. Pure overhead,” Mabus said during a speech at the conservative American Enterprise Institute think tank.

Mabus said the Navy had cut spending on service contracts, which accounted for about $40 billion out of the Navy’s overall budget of $160 billion, by 1 percent, saving about $4 billion. Further savings were still possible, he said.

The U.S. Defense Department is girding for large budget cuts that are due to resume in fiscal 2016 unless Congress revises existing law. Mabus said he would do all he could to protect shipbuilding accounts if the cuts went back into effect.

Mabus said the inability of Defense Finance and Accounting Services, the payment services agency, to account for data that it had received from the Navy could impede the Navy’s ability to conduct a clean audit this year.

Nine of 10 of the agency’s internal controls had been found to be ineffective, Mabus said, adding, “Do we really need that?”

Mabus said he had learned while serving as governor of Mississippi that consolidating agencies often made sense in theory but not always in practice because it created larger, more bureaucratic organizations.

For instance, he said the Defense Logistics Agency was set up to purchase materials for the entire military and benefit from larger economies of scale, but the Air Force and the Navy used different types of fuel, which meant that goal could not be achieved anyway.

“I think you ought to take a look at every one of these … There’s a lot of duplication going on,” he said.

He said the individual military services could also likely cut overhead costs further.

Mabus also criticized the Pentagon’s current approach to testing weapons, noting that hundreds of millions of dollars were spent on tests that were sometimes not needed.

For instance, he said, the Pentagon’s office of test and evaluation had criticized the Navy’s littoral combat ships for not being able to survive in a conflict, but the plan had never been to send those smaller ships out by themselves, he said.


Nigerian President May Keep Troubled Oil Portfolio

By Reuters 2015-06-02 17:58:40

President Muhammadu Buhari is likely to keep the oil portfolio for himself in the new Nigerian cabinet, rather than trust anyone else with the source of most of Nigeria’s revenue and traditional fount of corruption, associates say.

Nigeria’s oil sector is so dirty that nobody’s hands are clean enough to do the “surgical changes” needed, one long-standing associate told Reuters on condition of anonymity because the cabinet decision is still under wraps.

Another political associate said: “He will do it. It would be stupid to give that position to anyone else.”

The first source said Buhari has still not settled on his cabinet and has laughed off media speculation about figures he will appoint, joking with friends as he read out a newspaper article that mentioned possible names: “They have picked my ministers for me! Have I even told you who I want?”

A former general who ruled Nigeria 30 years ago, Buhari has extensive knowledge of the oil sector, having been head of the Petroleum Trust Fund under military ruler Sani Abacha in the 1990s and oil minister in the 1970s under Olusegun Obasanjo.

He was voted in by Nigerians on an anti-corruption platform after years in which graft appeared to worsen under the leadership of his predecessor Goodluck Jonathan.

Buhari sent a list of 15 special advisors to the outgoing national assembly for approval on Tuesday, but the cabinet is unlikely to be publicly revealed until the end of July or early August.

The senate, which must confirm the cabinet, will convene only briefly on June 9 before its members are expected to go on recess for up to six weeks.

“It’s going to be a lean government, I doubt he’ll have 42 ministries like Jonathan but he must have at least 36 (for the number of states) as prescribed by the constitution, though it does not specify whether they have to be senior or junior,” an advisor in the ruling APC party told Reuters.

The new administration had not yet gone through reports on Jonathan’s handover notes on policy, the advisor said.

“There is a huge body of proposals being bandied around the place,” the advisor said, adding that nothing beyond broad strokes had been outlined.


Jonathan has left Buhari with a cash-strapped government, with a rainy-day fund so depleted that it must borrow just to cover salaries.

The government relies on oil sales for the bulk of its revenues but there has been little oversight on how these are handled. Former central bank governor Lamido Sanusi was sacked under Jonathan after he declared that some $20 billion in oil revenues were missing between 2012 and 2013.

The dealings inside the state owned company NNPC are so opaque that PriceWaterhouseCoopers, commissioned to do a forensic audit over the missing funds, said it was unable to obtain enough account documentation.

Not only is oil money stolen through accounting gymnastics and oversight gaps, but oil itself goes missing at unmetered oilfield well heads, pipeline taps and export terminals.

Pipeline protection and coastal inspection contracts have been given to ex-militants of the oil-producing delta who kidnapped foreign oil workers and blew up key infrastructure until a 2009 amnesty. Buhari plans to let the 60 billion naira-a-year amnesty program end in December as scheduled to save money and it is unclear what he will fund in its place.

The new leader has also made clear that he wants to revamp Nigeria’s refining sector, which declined while the country became dependent on imports for fuel.

“He’s emotionally attached to the refineries because he built some of them. He wants them to start functioning again,” the APC source said.


Environmentalists File Suit Over Arctic Drilling

By Kathryn Stone 2015-06-02 17:17:44

Twelve environmental groups filed a lawsuit Tuesday challenging Royal Dutch Shell’s drilling permits off the north-west coast of Alaska.

Earthjustice filed the suit in San Francisco’s Ninth Circuit Court of Appeals in hopes of stalling the oil giant’s exploratory drilling plan in the Chukchi Sea, which is set to begin July. The environmentalist claim that the Bureau of Ocean Energy Management’s (BOEM) review of Shell’s drilling plan was rushed and failed to accurately address the ecological impact of Shell’s efforts.

“Shell’s approved exploration plan is even bigger, dirtier, and louder than 2012, including the use of two drilling rigs in a concentrated area and a bigger armada of vessels, all posing a threat to wildlife including whales, walruses and seals, as well as air and water pollution discharges,” Earthjustice claimed in a written statement.

The groups have obtained two prior court rulings indicating that the environmental anlysis for the 2008 Arctic lease contained mistakes. However, the U.S. Interior reported that all problems had been corrected as of March.

In May BOEM gave Shell conditional approval for the two-year drilling plan. Director Abigail Ross Hopper stated that, “We have taken a thoughtful approach to carefully considering potential exploration in the Chukchi Sea, recognizing the significant environmental, social and ecological resources in the region and establishing high standards for the protection of this critical ecosystem, our Arctic communities, and the subsistence needs and cultural traditions of Alaska Natives. As we move forward, any offshore exploratory activities will continue to be subject to rigorous safety standards.”

Shell has previously stated that it expects these types of legal challenges and that its exploration plan will be able to withstand legal scrutiny. Additionally, Shell has said that it would be able to mobilize onsite oil spill assets within one hour should an incident in the Arctic occur.

Today’s lawsuit follows over two weeks of protests in the state of Washington as Shell readies its fleet in preparation for drilling this summer.


ICS Launches 2015 Annual Review

By MarEx 2015-06-02 15:24:22

The International Chamber of Shipping (ICS) has published its latest Annual Review of maritime policy developments in advance of its Annual General Meeting and to coincide with this week’s meeting of the IMO Maritime Safety Committee.

Key issues covered in this year’s ICS Annual Review include the impact of the rescue at sea crisis in the Mediterranean on the shipping industry; the status of IMO environmental regulations on low sulphur fuel and ballast water management; the shipping industry’s efforts to deliver further CO2 emissions reductions; and an ongoing ICS initiative to encourage a new approach to the development of future IMO regulation.

The ICS Annual Review also provides updates on the wide-ranging scope of ICS’s activities as the principal global trade association for shipowners and operators, including safety and operations, labour affairs, manning and training, maritime law and insurance, and shipping and trade policy.

In the introduction to the Review, ICS Chairman, Masamichi Morooka, observes: “In December 2015, the attention of the world will be focused on the critical United Nations Climate Change Conference in Paris. ICS will be representing the industry in order explain the impressive performance of international shipping, which reduced its total CO2 emissions by more than 10% between 2007 and 2012.”

The 2015 Review can now be downloaded free of charge from the ICS website. Printed copies are also being distributed via ICS’s member national shipowners’ associations, which collectively represent all sectors and trades and more than 80% of the world merchant fleet.

The 2015 ICS AGM is being hosted by the Royal Association of Netherlands Shipowners in Rotterdam from 9-11 June.


Shipbuilder Looks to Drone Technology

By Kathryn Stone 2015-06-02 13:51:48

Drone technology may become a staple of day to day operations for a Japan-based shipbuilder that is currently exploring the commercial applications of drones in one of its facilities.

Tsuneishi Holdings Corporation is analyzing the potential for using drones at its Hiroshima shipbuilding facility in an effort to increase both safety and productivity in daily operations. The drone, weighing in at about 3 kilograms (6.6 pounds) is able to capture high-quality photos and video and transmit the data live back to a central information processing area. From there, the Tsuneishi team hopes to use the collected information to oversee operational progress, facility inspections and potentially manage disaster situations from a distance.

In a written statement yesterday the company spoke about the technology’s potential to aid in business operations by saying, “We have high hopes that this latest technology will help us increase efficiency at our factories and facilities, and also allow us to gather information quickly in times of disaster.”

Tsuneishi’s test took place over a four day period from May 18 – 21 and covered a wide variety of applications. In particular, the activities sought to test a drone’s capabilities in situations that might be dangerous for workers. This included the inspection of equipment located on roofs or high places on cranes as well as the survey of disaster areas. Additionally, the drone was used to oversee operational progress of the facilities such as construction and placement of blocks.

These most recent tests by the Japanese corporation reflect a growing trend of applying drone technology to commercial applications.

According to Business Insider the Compound Annual Growth rate in the U.S. for commercial and civilian drones combined is 19% over the next five years compared with only a 5% growth rate in the military sector. The technology news site also predicts that regulation aimed at easing commercial drone bans could allow for widespread restricted UAV flights by 2017.

Various organizations are overwhelmingly looking to drones in a bid to reduce risks and improve efficiency. Drones are able to safely access high or remote areas that otherwise could prove dangerous for human workers. Typically workers need ladders, scaffolding or hazard suits to even enter certain areas and face compounded safety risks once on-site.

Additionally, time spent data collecting often decreases as thousands of conceivable angles can be canvased in a fraction of the time it would take workers. With next generation drone technology, images and video is becoming increasingly sharp, allowing for the potential to reduce or even eliminate the on-site human component entirely.

However, while close-proximity, physical tasks for humans might be reduced in the coming years, drone manufactures claim the need for skilled workers to analyze data will increase. Thus, drones may not replace human workers, but may simply shift more menial tasks away from them, while at the same time creating more jobs on the operational and analytical end.

Tsuneishi Holdings Corporation also includes businesses in the environment and energy as well as service sectors. If successful, the corporation is looking into applying the drone technology to various facilities within its organization.