Yemen War Puts Sea Trade Routes at Risk

By Reuters 2015-05-13 15:22:29

With Middle East giants Saudi Arabia and Iran squaring up on opposing sides in the Yemen war, the dangers to vital oil tanker and goods voyages are growing daily.

Millions of barrels of oil pass through the Bab el-Mandeb and Strait of Hormuz everyday to Europe, the United States and Asia – waterways which pass along the coasts of Yemen and Iran respectively. Insurance costs for shippers are likely to jump.

Last week Iran released Marshall-Islands container ship Maersk Tigris and its crew which were seized in the Strait of Hormuz. This prompted the United States to send vessels to temporarily accompany U.S. flagged ships through the strait. Iranian patrol boats had shadowed a separate container ship earlier last month.

“The whole area is a tinder box now,” said John Dalby of Marine Risk Management Ltd, which provides private armed security teams for ships in the area.

“The main tension appears to be between the navies – be it Iranian patrol boats or ships or other forces in the area. That in some ways creates more uncertainty than dangers from Somali pirates as we saw previously, and – more worryingly – far more firepower capability.”

Iran’s foreign ministry spokesman was quoted as saying on Wednesday that it would not led Saudi-led naval forces inspect an Iranian cargo ship bound for Yemen.

Saudi-led forces have imposed inspections on all ships entering Yemen in an attempt to prevent weapons being smuggled to the Iran-allied rebel Houthi group that controls much of the country.

“The question for us is: could the Bab el-Mandeb become so perilous to navigate that guns onshore – controlled by Houthis – might shoot at ships? … If so, fasten your seatbelts, the insurance rates are going to go up,” said Michael Frodl, of U.S. based consultancy C-Level Global Risks.

CHANGING ROUTES?

The likelihood of a sharp rise in the premiums on voyages could be as much a deterrent to trade as the conflict itself.

“The reality is that ships heading to the Gulf, the Red Sea and the Eastern Mediterranean will be obliged to reconsider their movements not simply because of the widening scope of the attacks on, and seizures of, commercial vessels but also because of prohibitive insurance premiums,” said Jonathan Moss of law firm DWF, who acts for insurers.

Khalid Hashim of Precious Shipping, one of Thailand’s largest dry cargo owners, added: “If gets really bad, insurers may altogether stop covering calls to the badly affected areas.”

Hashim said if the Iranian cargo ship went ahead with its intention to deliver aid to Yemen despite a call by the U.S. to deliver it to neighbouring Djibouti, it may lead to a response by the Saudi-led coalition.

“That could possibly escalate tensions in a wide area including the Red Sea, the Gulf of Aden and through to the Straits of Hormuz. That would surely be bad for shipping, and for all the countries in the region,” Hashim said.

The U.S. Maritime Administration and the Marshall Islands flag registry have both warned of increased risks for ships operating around Hormuz.

“If a boarding by Iranian forces occurs even after declining permission, the boarding should not be forcibly resisted by persons on the U.S. flag merchant vessel. Refraining from forcible resistance in no way indicates consent or agreement that such a boarding is lawful,” one of the advisories said.

The region has already seen disruptions in recent years due to Somali piracy and attacks by militants.

A suicide bombing carried out by al Qaeda killed 17 sailors on the U.S. warship Cole in the southern Yemeni port of Aden in 2000. Two years later, al Qaeda hit a French tanker in the Gulf of Aden, south of the Bab el-Mandeb, which led to a tripling of insurance premiums.

“The tensions are rising, with some concern evident as tanker owners have long memories of the tanker war from the 1980s,” said Phillip Belcher of tanker association INTERTANKO, referring to vessels that were fired at during the Iran-Iraq war.

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Drilling to Begin Near Deepwater Horizon Site

By Kathryn Stone 2015-05-13 15:09:48

Drilling is set to begin again in Mississippi Canyon Block 252, the site of the infamous 2010 Deepwater Horizon disaster that killed 11 workers and resulted in the largest oil spill in U.S. history.

In April the Bureau of Safety and Environmental Enforcement approved plans for Louisiana-based LLOG Exploration to drill a new well near the site of the BP spill. The privately owned company will be using the Sevan Luisiana, semisubmersible rig that will drill to a depth of 4,927 ft. The seadrill is working under a three year contract from Sevan Drilling ASA based in Oslo, Norway.

Representatives from the Ocean Foundation have expressed concern over small companies drilling near the Macondo reservoir area due to the complicated nature of the work. Also, opponents raised concern over the spill response capabilities of a smaller company. It took BP, one of the world’s largest offshore operators, 87 days to cap the flow of oil following the Deepwater Horizon disaster.

However, LLOG states on its website that it has nearly 40 years’ experience in the industry and that it has drilled 850 wells in total. The company’s recent endevours have focused on the drilling of underdeveloped area of in the Gulf of Mexico with particular focus on the Mississippi Canyon, Green Canyon, and South Timbalier.

According to statements given to the associated press, LLOG is the first company to go after the oil reserves that BP was looking for back in 2010. Additionally, the Bureau of Ocean Energy Management has stated that regulators have intensively reviewed LLOG’s plans for drilling the area.

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Texas Plant Gets Approval to Export LNG

By MarEx 2015-05-13 13:37:56

On Tuesday, The U.S. Energy Department gave final approval for Cheniere to export liquefied natural gas from its plant in Corpus Christi, Texas. The authorization allows for the plant to export LNG to countries that do not currently share a Free Trade Agreement with the United States.

The Corpus Christi Liquefaction Project is authorized to export LNG up to the equivalent of 2.1 billion standard cubic feet per day (Bcf/d) of natural gas for a period of 20 years. In a written statement yesterday, the Energy Department commented that, “The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country.”

The U.S. Energy Information Administration further believes the country could become a net LNG exporter by 2017. The boom in domestic energy drilling and demand from gas consumers in Europe and Asia has pushed companies to build multi billion-dollar facilities to export the fuel.

Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA with the United States, the Natural Gas Act directs the Department of Energy to grant export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.”

Cheniere hopes to export LNG from Corpus Christi beginning in 2018. Last week, the DOE approved LNG exports from Dominion Resources Inc’s Cove Point plant in Maryland.

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Not a Plane, but a Ship

By Kathryn Stone 2015-05-13 11:04:27

The search for Malaysian Airlines Flight MH370 has turned up something unexpected this week. Instead of the downed Boeing 777 Australian-led search teams were looking for, the salvage operation has uncovered a previously uncharted shipwreck 13,000 feet beneath the ocean’s surface.

“It’s a fascinating find,” said Peter Foley Director of the Operational Search for the MH370, “but it’s not what we’re looking for.” The Fugro Equator, a deep tow system, first detected a series of bright reflections on an otherwise empty seafloor. Though skeptical that the contacts were related to the investigation for the missing plane, the search team diverted additional vessels to the area to perform sonar scans and gather underwater imagery. The search revealed that the debris field was man-made as previously thought and that it was the wreckage of a 19 century ship, not the MH 370.

For the past 14 months the Australian government has coordinated an international search team to locate and salvage the remains of Malaysian Flight MH 370, in which 239 crew members and passagers died. The ill-fated plane disappeared on March 8, 2014 en route to Beijing and has become one of the biggest aviation mysteries of all time.

As of May 2015 over 75 percent of the 23,000 sq. mile priority search area has been investigated and the full search of the area is expected to conclude by the end of the month. The investigation currently consists of three vessels with deep tow systems and a third autonomous underwater vehicle (AUV).

Foley showed continued optimism toward the search efforts saying, “This event has really demonstrated that the systems, people and the equipment involved in the search are working well. It’s shown that if there’s a debris field in the search area, we’ll find it.”

It is estimated that the search has cost over $100 million to date. The Austrialian government has set aside an additional $40 million to continue search efforts through 2016. If no wreckage from the MH370 flight is found in the priority search area, the investigation will include a doubled search area of seafloor adjacent to the priority zone.

The Australian government has stated that the wreck found this week and all captured imagery will be given to marine archeologists in the hope of identifying the ship.

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Star Bulk sells discounted shares

NASDAQ-listed Star Bulk has priced a heavily discounted equity offering to raise funds for its newbuilding programme.
The bulker owner is selling 56.25 million shares at USD3.20/share, a 15.1% discount versus the closing price on 12 May, immediately prior to the offering announcement.
Star Bulk
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