Libyan Oil Exports Settle into New Routine

By Reuters 2015-06-07 21:00:13

Eastern Libyan state oil firm AGOCO is producing 250,000 to 290,000 barrels per day (bpd), a company spokesman said on Sunday, unchanged from recent weeks.

On Monday, a tanker will lift one million barrels of crude at the port of Hariga, the spokesman said. He said the Nafoura field remained closed due to a protest by locals demanding jobs.

The Bayda field also remained shut due to a shortage of power, he said.

AGOCO produces the bulk of Libya’s total oil output which ranges from 400,000 to 500,000 bpd. More than a dozen fields in central and western Libya have closed due to protests and fighting, including Islamic State attacks.

Another tanker would lift 500,000 barrels of crude from the eastern Brega port, another oil official said. The port mainly supplies the western Zawiya refinery.

There was no tanker activity at the eastern port of Zueitina as crude flows remain disrupted due to the protest that has halted work at the Nafoura field, said a port official.

The southwestern El Sharara oilfield will remain closed, said Ibrahim al-Tebawi, a member of a security force from the western region of Zintan blocking a pipeline from the field. A rival force must leave El Sharara before pumping can resume.

El Sharara closed in November when a force allied with a self-declared government in Tripoli took over and Zintan guards, who had previously controlled the field, shut down a related pipeline.

The nearby El Feel field also remained shut due to a strike by guards, a field engineer said.

Libya is caught in a struggle between forces backing the internationally recognized government based in the east and a rival administration that has taken control of Tripoli, as former rebels who helped oust veteran ruler Muammar Gaddafi in 2011 have fallen out along political, regional and tribal lines.

In a bid to show its impartiality, Tripoli-based state oil firm NOC said it had begun delivering petrol to the western mountains, to which Zintan belongs, which had been cut off from fuel supplies.

Zintan is allied to the eastern government fighting the Tripoli government on a frontline west of the capital.

But Zintan’s mayor, Mustafa al-Barouni, said he expected a Tripoli force to block the deliveries.

“I, the mayor of Zintan, think that Zintan will not receive fuel shipments because the troops of Libya Dawn have been preventing it for more than eight months,” he told Reuters, referring to the faction which seized Tripoli last August.


China Mourns Loss of Life at Jianli

By MarEx 2015-06-07 16:00:01

Chinese officials, rescuers and family members gathered in mourning on Sunday for those lost on a cruise ship which capsized during a storm in the Yangtze River, as the death toll from the disaster reached 431, with 11 still missing.

Only 14 survivors, one of them the captain, have been found after the ship carrying 456 overturned in a freak tornado on Monday night in Jianli in Hubei province. Most of the passengers were elderly tourists.

The Eastern Star was righted and raised on Friday, allowing rescuers onto to it to clear away debris, break down cabin doors and look for bodies. The river is being swept to as far away as Shanghai looking for the missing.

Government spokesman Hu Kaihong told reporters that DNA tests were being carried out to identify the bodies.

Sunday marks seven days since the Eastern Star went down, and according to Chinese tradition this a key date on which to mourn the dead.

State television showed rescue workers and government officials standing on a barge facing the battered boat, removing their hats and bowing their heads, as surrounding boats sounded their horns.

At separate locations along the river, emotional family members also got together to burn joss sticks and make offerings of food to the spirits of the deceased.

More than 1,400 relatives have come to Jianli, with many expressing frustration at the lack of information from the government. On Friday, one burst into a just-concluded news conference, publicly accusing the government of treating its people like enemies.

The government says that it is doing everything possible to help the relatives, including providing free accommodation and medical services, and Vice Premier Ma Kai has been dispatched to meet family members personally.

Some relatives, speaking to foreign reporters in the presence of officials, praised the government’s efforts.

“It made me feel incredibly warm. When he shook my hand and said a few words to me, told us to keep on going. I felt that he didn’t seem like a political leader at all. He was so genial. He was like my own father,” Wang Hua, 42, who lost both parents on the ship, told Reuters of her meeting with Ma.

Major state newspapers on Sunday carried the same lengthy story by the official Xinhua news agency on their front pages, headlined “Bearing great responsibility to the people” and detailing the government’s efforts.

“In the midst of disaster, we are all of one heart, the whole nation helping each other, staunchly moving forward,” it wrote.

The company which operated the ship has apologized for the disaster and said it would “fully” cooperate with the investigation. Beijing has pledged there would be “no cover-up”.

Police have detained the captain and chief engineer for questioning as part of the investigation. An initial probe found the ship was not overloaded and had enough life vests on board.

The captain Zhang Shunwen, and chief engineer Yang Zhongquan both report the vessel being caught in a freak storm, and BBC reports one passenger describing the ship as tilting at a “45-degree angle” before going down.

The suddenness of the storm might explain why the no emergency call was sent, and why there were so few survivors despite enough lifejackets being available for those on board.

Some have questioned why the vessel was sailing given that there were multiple weather warnings issued by regional authorities in Hubei and Jingzhou. At this stage, it is not clear if the captain received the warnings.

Zhang was quoted as saying by Xinhua that the ship overturned within one or two minutes.

He could be found culpable if he had abandoned the ship, said James Hu, professor at the Shanghai Maritime University and an expert in maritime law, although there is no evidence he did.

“China has one rule that it’s particularly strict on – the captain must be the last one to leave the ship,” Hu said. “If the leader of the ship is not the last to leave the ship, it is a jailable offence.”

The disaster has now caused a higher toll than the sinking of a ferry in South Korea in April 2014 that killed 304 people, most of them children on a school trip. It is China’s worst shipping catastrophe in seven decades.


Iran in Russian Oil Barter

By Reuters 2015-06-07 16:22:42

Russia will begin importing Iranian oil under a long-heralded oil-for-goods barter arrangement in the coming week, Iran’s oil minister was quoted as saying, more than a year after negotiations began.

The Kremlin announced in April it had begun to implement the deal, in which Iran would export up to 500,000 barrels per day (bpd) of crude oil to Russia in exchange for goods of an equivalent value, but traders said they saw no signs of it.

“Russia will begin oil imports from Iran this week,” the semi-official Fars news agency quoted Bijan Zanganeh as saying on Saturday, citing a report by Bloomberg, as he returned to Tehran from an OPEC meeting in Vienna.

“We agreed with (Russian Energy Minister) Alexander Novak in Vienna that Russia will buy less than 500,000 bpd from Iran in exchange for cash, and Iran will use this cash to buy Russian goods such as steel, wheat and oil products from Russia.”

Iran’s oil exports have fallen by more than half to around 1.1 million bpd since 2012, when Western powers imposed sanctions aimed at curbing the Islamic Republic’s disputed nuclear programme.

Iran and six countries, including Russia, reached an interim agreement in early April and are working towards a final deal by the end of this month that could see sanctions lifted.

But the two sides still disagree on several issues, and Tehran has been working in parallel to develop what its leaders call a ‘resistance economy’ that can survive under sanctions.

Sources told Reuters more than a year ago that Iran was working on the barter deal with Russia, which they said could be worth up to $20 billion.

Russia also lifted a self-imposed ban on selling the advanced S-300 surface-to-air missile system to Iran shortly after the interim nuclear agreement, a move criticised by Western powers.


Ship Management: Some Things Never Change

By Wendy Laursen 2015-06-07 16:35:00

After 30 years of running one of the world’s leading ship management companies, Olav Eek Thorstensen has stepped down as CEO of Singapore-based Thome Group, leaving his successor, Olav Magnus Nortun, to take the helm. But with Olav Eek Thorstensen assuming the mantle of Thome Group Executive Chairman, there is plenty of experience and management brainpower available to help the group grow and strengthen in the years ahead.

MarEx spoke to Nortun to find out what is occupying his thoughts as he leads the company forward.

What challenges have been set for you at Thome?

The need for shipowners to cut costs is a never-ending theme of the market and with only 20 percent of owners using third party managers, there are plenty of opportunities to build on the scope of work and services we can offer our clients. In some cases, owners are earning freight revenues up to 20 percent below opex – a factor which creates its own efficiency issues for them. This is where a quality ship manager can help, not just through his larger purchasing and administrative power but also through implementation of tried and tested processes and procedures in key areas such as crewing – recruiting, training and retention – as well as all facets surrounding the technical management of the ship.

As a company, we are focusing on organic growth. We want to keep our position as the premier ship management company and make sure we continue to enjoy healthy, sustainable organic growth. Ship management is all about partnership with our owning principals, and it is important that the companies we work with share the same management ethos and the drive for quality that we as a group strive to deliver. As you well know, Thome is a major force in the management of today’s merchant ships, especially tankers, but we are also an established third party provider of offshore services, and we aim to be as much of a leader in the growing offshore sector as we are in our traditional vessel sectors.

Today’s low oil price is a blessing for fuel purchasing but a curse for the oil exploration and development industry. Offshore service vessel owners need to cut costs by between 20 and 30 percent, which opens up further opportunities for the outsourcing of technical services to third party ship management companies like us. So we see this ongoing situation as an opportunity.

The shipping industry has its work cut out pushing forward the boundaries of vessel operational efficiency – a challenge that Thome is already meeting and will continue to meet.

Where will you make changes?

Thome Ship Management offers full ship management services for vessels trading worldwide. We have a long history of successful management of all kinds of vessels particularly tankers, bulk carriers and container ships. The company was a pioneer in ship management and has a full suite of services it can offer its clients. It is a well-run organization.

So I am looking to see where we can leverage our strengths so we can further develop them. To be more efficient, we are looking at what we are going to outsource and how we are going to scale the organization moving forward.

We have a big presence in the Philippines, one we have had for a long time. We focus on crewing and purchasing there but may expand that further. Croatia is also a good source for officers, and we are looking at the feasibility of establishing a technical center there.

Additionally, LNG-fuelled vessel management is becoming more and more of a demand from our principals so we are planning to scale up that activity.

What experience do you bring to the job?

Prior to joining Thome, I worked with DNV GL in a variety of positions where I gained wide experience in the maritime industry, specifically strategic development and governance of production, knowledge management and systems related to ship classification.

I received a Master of Science in Naval Architecture from the Norwegian Institute of Technology with a postgraduate thesis in Management in a Technological Environment, and I have attended senior management courses at INSEAD, Fontainebleau and IMD in Lausanne.

That’s what your CV says. What about the real you?

Before I came to Thome, I was heavily involved in the integration of DNV and GL. I was also looking after vessels that traded globally from a technical point of view, factors I believe will add a strong perspective to the job I am doing here at Thome.

I now live in Singapore, which is the sixth country that I’ve had a work permit for. Here at Thome, we have different nationalities in our staff, our crew and our principals, and I believe I have a good understanding of what it takes to manage them effectively and productively.

How does Thome recruit its seafarers?

Launched in 2005 under Thome’s Human Element initiative, the Thome Global Cadet Program has already trained in excess of 1,350 cadets from at least 12 countries in Asia, Europe and the Far East. Currently there are 650 cadets at various stages of training on the program with another 250 plus due to join soon as deck, engine, and electrical and catering cadets in 2015. The success of this scheme has enabled Thome to fill all of its 2014 junior officer vacancies from within its own pool of trained seafarers.

As Thome Group continues with the controlled expansion of its fleet, the requirement for suitably trained officers to serve on board our tankers, bulkers, gas carriers and offshore vessels has increased exponentially. Our cadet program includes a robust selection process to ensure we recruit well-rounded individuals who benefit from our high quality coaching. Our cadets are a multi-national and multi-cultural group, fully representative of the diversity within Thome Group.

The cadet intake for 2015 is around 275 cadets globally with the Philippines remaining the core of the intake, but we continue to expand in Myanmar, Europe, India and China.

What are the technical challenges of the future?

Current and future legislation relating to emissions can be challenging for shipowners. Take the Ballast Water Management Convention, for example. Owners need to know what is the right product they need to invest in and when do they need to invest. They ask us: Is there a system that is actually complying with all the legislation? The convention has been around for about 10 years now, and we still haven’t got a firm implementation date. We still don’t have sufficient numbers of suppliers or equipment approved. What will happen? That is a real challenge for everyone.

Where is technology leading the industry?

Soon it will be possible for ships to stream video anywhere in the world. This will yield lots of possibilities for ship management companies including how to manage what is going on at sea, how to help the crew and how to can improve efficiencies by more enhanced online vessel-monitoring.

I see that this growing connectivity will help us guide and support them better – in ways we haven’t even imagined yet. It’s like when we got mobile phones, we didn’t really know what we would be able to do with them, and today they’re not really phones anymore – having a conversation is the least frequent job we use them for.

So connectivity will really shape the industry in the future, but how exactly? That’s still guess-work.

How do you view Thome operating in the future?

We will embrace technology sensibly, and we are heavily focused on how to harness Big Data to better serve our principals. We will give them the information they need, getting it directly from the source without too much filtering. With so many sensors on board it gives lots of new possibilities, and it will reshape the industry.

That said, technology is developing incredibly quickly, and that is a challenge. Is a new development something that is driven by need or by opportunity? We need to manage change so that it is driven by need, because there are a lot of things that you can do that don’t really give you benefit. It’s like young people and social media: Is it actual or is it virtual? How many friends do you really have?

While technology will change us, some things won’t change. Crewing is going to be just as important in the future as it is now. We will always need to know the level of competency we have on board, how the crew behave and how to develop the right safety culture that the crew can embrace.

Thome makes a point of ensuring that it is in control of the quality and numbers of new entrants it needs for the ships it manages. Being self-sufficient in this area is important. In ship management you have both the technical and the human element. You can’t have one without the other, and we are focusing on both going forward. – MarEx


Over 2,000 Migrants Rescued in Med

This weekend the Migrant Offshore Aid Station was involved in the rescue of more than 2,000 people from five separate migrant boats with the assistance of navy vessels from Italy, Germany and Ireland. After spending some nine hours coordinating the rescue efforts, Phoenix is currently on its way to Sicily to disembark some 372 people including 184 men, 126 women and 62 minors, mostly from Eritrea.


Woodside Starts Global LNG Supply Push

By Reuters 2015-06-06 21:06:05

Australia’s Woodside Petroleum is expanding its LNG business and aims to build a global supply network ahead of an expected surge in trading of the fuel, its chief executive said in an interview.

Peter Coleman said Woodside’s latest venture with U.S.-based Sempra, announced on Wednesday, to potentially build from scratch an LNG export plant in the United States at Port Arthur was the latest signal of its intention.

“What our strategy is: focus on Asia customers, but sourcing LNG globally,” and not just from the company’s existing Australian producing plants, he said on the sidelines of an industry conference in Paris.

Sources close to the matter say the strategy could take advantage of any disruption at BG Group, a heavyweight in LNG trading which analysts think could lose some of its flexibility following its takeover by oil giant Shell.

“We see an opportunity in the marketplace at the moment for a company like Woodside to differentiate,” Coleman said.

The world’s biggest LNG buyers in Asia have shown a strong appetite for United States-sourced supply due to its linkage to domestic Henry Hub gas prices, some of the world’s cheapest.

A shale gas-drilling boom brought U.S. futures prices down to decade-low levels, providing a cheap feedstock for LNG export plants. In contrast, LNG supply sourced from Australia is linked to a more expensive basket of crude oil grades.

“For us we see a real opportunity in the marketplace where Woodside can position itself, we want to be seller of choice to our buyers, but to do that we need to offer options,” Coleman said.

The Sempra deal follows Woodside’s agreement to buy LNG supply from Cheniere’s planned Corpus Christi export plant on the U.S. Gulf Coast. Last year, it also paid $3.7 billion to buy stakes in Canada’s Kitimat LNG and Australia’s Wheatstone projects.

“The Port Arthur deal (with Sempra) extends the Corpus arrangement where we are a buyer, to actually one step upstream where together we can add our value as Woodside,” Coleman said.

“What that does is it allows us to bring to our customer optionality with respect to the LNG’s pricing point, and also its geography and distance from markets.”


Taiwanese Coast Guard Launches Biggest Ships

By Reuters 2015-06-06 20:02:56

Taiwan’s coast guard commissioned its biggest ships for duty in the form of two 3,000-ton patrol vessels on Saturday, as the island boosts defenses amid concerns about China’s growing footprint in the disputed South China Sea.

The new vessels will be able to dock at a new port being constructed on Taiping Island, the largest of the naturally occurring Spratly Islands in the South China Sea, before the end of this year.

Taiwan’s coast guard has had direct oversight of the 46-ha (114-acre) island, also known as Itu Aba, since 2000.

“Taiping Island’s defense capabilities will not be weak,” said Wang Chung-yi, minister of the Coast Guard Administration, referring to recent upgrading done on the 1,200-metre (yards) long airstrip on Taiping and the building of a new port, which he said could be completed as early as October this year.

“As far as Taiping Island is concerned, we still maintain not so much a military as a civil role,” Wang told Reuters in an interview in Taipei. Taiwan will not create conflict, but if it is provoked “we will not concede,” he said.

Unlike the Philippines and Vietnam, Taiwan has largely avoided becoming ensnared in public disputes with China over the South China Sea, through which $5 trillion in ship-borne trade passes every year.

Beijing claims most of the South China Sea, while the Philippines, Brunei, Malaysia, Taiwan and Vietnam also have overlapping claims.

Rival claims by Taiwan and China go back to before defeated Nationalists fled to Taiwan after losing a civil war with the Communists in 1949.

Beijing sees self-ruled Taiwan as a renegade province to be retaken one day and bans actions that would confer sovereignty, such as negotiating territorial disputes in the South China Sea.

Taiwan President Ma Ying-jeou boarded one of the new ships on Saturday, observing rescue drills in waters off the southern Taiwan port city of Kaohsiung.

One of the vessels will be sent to the South China Sea, while the other will be assigned to waters north of Taiwan where it has overlapping claims with Japan.

Japan’s Yomiuri newspaper reported on Saturday that Group of Seven leaders meeting in Germany on Sunday would express their concern over any unilateral action to change the status quo in the East and South China Seas.

China has been criticized for extensive reclamation work and moves to turn submerged rocks into man-made structures. The United States last week said Beijing had placed mobile artillery systems in contested territory.


Government to Reveal Offshore Fracking Details

By MarEx 2015-06-06 20:58:00

The U.S. government has agreed to provide an environmental group with documents revealing information about the use of hydraulic fracturing for oil and gas drilling in the Gulf of Mexico.

The Center for Biological Diversity filed a lawsuit against U.S. offshore drilling regulators earlier this year seeking data on how much fracking has been allowed in the Gulf.

The federal government must reveal the extent of offshore fracking occurring in the Gulf of Mexico under a legal settlement filed in U.S. District Court in Washington, D.C. The agreement settles a Center for Biological lawsuit that challenged the government’s failure to disclose offshore fracking documents requested under the Freedom of Information Act.

Under the new agreement, the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement are required to turn over permits, reports, emails and other documents related to the federal government’s approval for oil and gas companies to frack offshore wells in the Gulf.

“Offshore fracking has been shrouded in secrecy, but this settlement will finally force the government to tell us where oil companies are using this toxic technique,” said Kristen Monsell, a Center attorney. “Fracking pollution is a huge threat to marine animals, and the high pressures used to frack offshore wells increase the risk of another devastating oil spill. This inherently dangerous activity just doesn’t belong in the Gulf of Mexico.”

Oil and gas companies are allowed to dump fracking chemicals mixed with wastewater directly into the waters of the Gulf, says the Center, but the government can’t say how much oil waste is being dumped into the ocean because it’s not tracking such discharges.

Offshore fracking is similar to fracking that occurs onshore — companies blast water and chemicals into the earth at high pressures to crack rock beneath the Earth’s surface, in this case the ocean floor. Onshore, fracking is done in 90 percent of wells on federal land, and it’s increasingly common offshore.

The federal government reportedly allowed oil and gas companies to frack at least 115 offshore wells in the Gulf of Mexico in 2013, but the full extent of offshore fracking is unknown. Oil industry representatives have said they plan to increase the use of the technique so that they can extract oil from even deeper wells. There are nearly 4,000 offshore platforms in the Gulf, so the scope of the practice could increase dramatically.

Center scientists recently released a report outlining the dangers of toxic chemicals, air pollution and earthquake risk linked to offshore fracking. Fracking can expose coastal communities to air pollutants that cause cancer and other illnesses, it states.

Earlier this year, the Center filed a separate lawsuit against the federal government for rubberstamping offshore fracking off California’s coast without analyzing fracking pollution’s threats to ocean ecosystems, coastal communities and marine wildlife. The case, which is currently pending in the Central District of California, could impact all federally permitted offshore fracking, including in the Gulf of Mexico.

“Every offshore frack increases the risk to wildlife and coastal communities,” Monsell said. “The government has no right to give the oil industry free rein to frack at will in our oceans or to keep coastal communities in the dark about this toxic industrial activity.”

EPA Control

The Bureau of Safety and Environmental Enforcement (BSEE) has stated that all discharges from offshore fracking must meet EPA specifications as required in the operators discharge permit. All discharges are regulated by the EPA under the general NPDES permit for offshore oil and gas operations, which addresses the chemical constituents that are allowable for overboard discharge of treated water.

The EPA has deemed the discharges related to hydraulic fracturing to be considered as well treatment fluids and are authorized for discharge subject to the requirements of the general permit for discharge and that no additional requirements or approvals would be needed from the EPA.

Hydraulic fracturing has been used offshore for several decades.


Death Toll Rises in Chinese Cruise Disaster

By MarEx 2015-06-05 21:08:52

The death toll from a Chinese cruise ship which capsized during a storm in the Yangtze River jumped to 331 on Saturday, leaving around 100 still missing, as the boat operator apologised and said it would cooperate with investigations.

Only 14 survivors, one of them the captain, have been found after the ship carrying 456 overturned in a freak tornado on Monday night.

Rescuers are searching the cabins of the ship, which was righted on Friday, looking for more bodies, the official People’s Daily, wrote on its microblog.

Jiang Zhao, general manager of the company which operated the Eastern Star, bowed in apology for the disaster during an interview with state media reported late on Friday, saying they would “fully” cooperate with the investigation.

Beijing has pledged there would be “no cover-up” in the probe.

Police have detained the captain and chief engineer for questioning. An initial investigation found the ship was not overloaded and had enough life vests on board.

More than 1,000 family members have come to Jianli in the central province of Hubei, where the ship went down, with many expressing frustration at a lack of information from the government.

On Friday, an irate relative of two passengers missing aboard the ship burst into a just-concluded news conference with senior officials and publicly accused the government of treating its people like enemies.