Standed Tanker Arrives in Port

By Kathryn Stone 2015-06-01 12:44:22

The disabled Afromax tanker Lady M finally arrived at the Port of Las Palmas Sunday after being stranded two weeks following an onboard fire.

The 115,418 DWT fuel tanker, owned and operated by Atlas Maritime, was carrying around 90,000 tons of fuel when a May 14 fire struck the vessel, disabling its engines. The incident occurred about 500 nautical miles off the Azores Islands.

Following the fire, the Lady M was denied entry into port until inspectors could determine the condition of the vessel and that it matched descriptions from the owner. According to European Union law, petroleum tankers are forbidden from docking in foreign ports without receiving prior permission. While ascertaining the exact situation onboard, the Coast Guard ordered the vessel to stay at a location about 60 miles off the Coast of Gran Canaria.

Greenpeace Spain expressed concern over this action last Friday citing that the Lady M was carrying 13,000 tons of oil more than the Prestige vessel, which in 2002 resulted in the largest oil spill for both Spain and Portugal. The organization urged Spanish authorities to permit the vessel entry in a nearby port to avoid any potential spill of the ‘dangerous cargo’.

Four tugs assisted in bring the vessel into the Port of Las Palmas Sunday and the port authority has reported that the hull is in very good condition and not at risk of spilling oil. On Monday the Lady M was subsequently transported to the Reina Sofia dock for repairs, which are expected to take between 10 and 15 days.

The vessel was traveling from the Perisan Gulf to Texas when the fire was reported and is set to resume course once repairs are completed.


Homeless Atlantic Oil Cargoes Deepen Global Glut

By Reuters 2015-06-01 09:22:46

A shadowy build up of oil has intensified in the Atlantic Basin with homeless cargoes of crude turning into unintentional floating storage – another sign the global surplus has some way to go before clearing.

Off the coast of West Africa and in the waters of the North Sea, vessels holding millions of barrels of oil have become, in effect, accidental storage, as their owners fight for buyers.

These are competing with new loadings, as well as time-chartered cargoes that major trading houses such as Unipec and Trafigura booked to store crude months ago and are now selling.

“It’s pretty bad,” one West African crude oil trader said. “There is a lot floating there that wasn’t meant to be.”

The development highlights the diverging fates of crude grades as U.S. shale oil shuts light, sweet West African crudes out of North America, while state-of-the-art refinery additions worldwide are geared towards heavy crudes.

Just before OPEC (the Organization of the Petroleum Exporting Countries) meets to determine its next move, the Nigerian surplus in particular amplifies the yawning disconnect between futures and physical markets.

“The country is a good barometer for global oversupply, with its exports to Asia, Europe and the Americas fluctuating with regional demand,” analysts JBC said in a note on Friday.

Traders said there are around six million barrels of crude from Nigeria’s May program available – some already loaded onto vessels. Cargoes such as the Front Ariake, which loaded in late April, are only now sailing out of the region.

That joins more than 65 million barrels left in June and July for Nigeria alone, leaving producers looking to extra-high run rates at European refineries for salvation.

In the North Sea, four expected June VLCC (very large crude carrier) bookings to Asia dwindled to one confirmed fixture, leaving Europe to absorb almost the entire Forties program.

The stranded cargoes are limiting vessel availability, pushing May freight rates on the key West Africa to Asia route more than 10 percent, roughly 40 cents per barrel, higher than April, putting those buyers further out of reach.

Meanwhile, trader Unipec has reoffered Forties crude from Aframaxes the Thornbury and the British Falcon. Such ship-to-ship transfers are another symptom of the glut, as this is crude that failed to find a home weeks after it would normally have. Traders said that unless demand intensifies, these types of distressed sales would continue.

“This is the worst North Sea market for a long time,” one trader said.

This has weighed heavily on prices; Forties traded at the lowest differential to dated Brent since December 2008 this week, whilst Ekofisk traded at a nine-year low. Differentials for Nigerian grades were trading near five-year lows.

“The effect of unsold crudes is pressure on differentials, and potentially crude prices, as Asian buyers have to be enticed to acquire volumes,” said Arctic Securities analyst Erik Nikolai Stavseth.

Asian tenders that were the salvation of West African crude this spring have in the past week been awarded from floating storage, to Unipec and Trafigura, or pulled due to prices made expensive, partly by freight.

Unless refineries run at full blast over the summer, ship brokers said freight rates could stay elevated, which would keep pressure on differentials and sustain the glut.

“We see the overhang of Atlantic crude as supportive for both VLCCs and suezmaxes and as such remain positive near term despite the lack of a real contango curve which would renew interest in floating storage,” Stavseth said.

By Libby George and Claire Milhench


Humanitarian Aid Ship Shelled in Yemen

By MarEx 2015-06-01 10:41:39

A humanitarian relief vessel heading to war-torn Yemen was diverted on Sunday after it was shelled about one nautical mile from its destination.

The ship MV Amsterdam, carrying enough grain and other food aid to sustain 60,000 Yemenis for a month, was forced to turn away from the port of Aden as it came under fire from pro-government Houthi fighters. The ship was then diverted to the port of Hudaydah, another Yemeni port over 100 miles north.

“We will continue to try to reach Aden and surrounding areas by sending supplies from Hodeidah by road as millions of people are in desperate need of food in areas that have been inaccessible for a long time due to the fighting,” commented Tahir Nour, World Food Program Emergency Coordinator for Yemen. “Yemen has hit a critical stage in terms of food availability as there is not as much food in the markets and that is now pushing more people into hunger.”

The WFP has established a base in Djibouti to coordinate shipments of food and humanitarian supplies to Yemen and will continue to send more emergency shipments by sea in the coming weeks. Sending supplies via road is highly unreliable due to heavy fighting in the region.

This weekend’s attack is the latest in a string of setbacks for aid agencies trying to reach hundreds of thousands of desperate people in the Arabian peninsula’s poorest country amid a Saudi-led bombing campaign against Houthi fighters.

Aden has been one of the hardest hit areas in more than two months of conflict, including heavy street fighting, between Saudi-backed forces trying to restore the exiled president and Shi’ite Muslim Houthi fighters.

A second vessel, the MV Celine, however was able to successfully transport her cargo of over 7,000 metric tons over the weekend. This shipment is expected to benefit over 70,000 people in need of aid in the region.


Oil Majors Call for Carbon Pricing

By MarEx 2015-06-01 03:39:02

Major oil and gas companies, BG Group, BP plc, Eni S.p.A., Royal Dutch Shell, Statoil ASA and Total SA, have announced their call to governments around the world and to the United Nations Framework Convention on Climate Change (UNFCCC) to introduce carbon pricing systems and create clear, stable, ambitious policy frameworks that could eventually connect national systems. These would reduce uncertainty and encourage the most cost effective ways of reducing carbon emissions widely.

The six companies set out their position in a joint letter from their chief executives to the UNFCCC Executive Secretary and the President of the COP21. This comes ahead of the UNFCCC’s COP21 climate meetings in Paris this December.

With this unprecedented joint initiative, the companies recognize both the importance of the climate challenge and the importance of energy to human life and well-being.

They acknowledge the current trend of greenhouse gas emissions is in excess of what the Intergovernmental Panel on Climate Change says is needed to limit global temperature rise to no more than 2 degrees Centigrade, and say they are ready to contribute solutions.

As the chief executives write: “Our industry faces a challenge: we need to meet greater energy demand with less CO2. We are ready to meet that challenge and we are prepared to play our part. We firmly believe that carbon pricing will discourage high carbon options and reduce uncertainty that will help stimulate investments in the right low carbon technologies and the right resources at the right pace.

“We now need governments around the world to provide us with this framework and we believe our presence at the table will be helpful in designing an approach that will be both practical and deliverable.” (Helge Lund, BG Group Plc; Bob Dudley, BP plc; Claudio Descalzi, Eni S.p.A.; Ben van Beurden, Royal Dutch Shell plc; Eldar Sætre, Statoil ASA; Patrick Pouyanné, Total S.A.).

The chief executives have also sent an additional letter to the media, setting out this position on carbon pricing and also the role that natural gas can play in reducing carbon emissions.

The full letter is available here.


Seafarers Speak Out on Oily Water Separators

By Wendy Laursen 2015-06-01 00:43:30

Preliminary results from a six-month study on the effectiveness of oily water separators indicate seafarers have some serious complaints about an onboard technology that can land them in jail.

The discharge of oily water from a ship is a serious criminal offence, yet seafarers find the equipment designed to prevent such discharges challenging. In a few rare cases, they resort to magic pipes to bypass the oily water separator itself or to fraudulent paperwork to bypass the regulations that govern it.

A new study is underway to see what can be done to improve shipboard oily waste management. MAX1 Studies is a six-month study commissioned by the National Fish & Wildlife Foundation and managed by the maritime consultancy firm Martin & Ottaway. The study looks at all shipboard waste stream management, but explores machinery space waste streams and oily water separators in particular depth as a case study.

Some of the seafarer comments obtained in the study point to the human element:

“People are scared of the possibility of fines/jail time for violating accidentally. A lot of times, the oily water separator is not run out of fear. Teach everyone how to properly use and care for one,” said one survey respondent.

“Make them simpler and documentation easier, especially in the oil record book. Crews are in absolute panic for even documentary mistakes as they believe they will be viewed as criminals even if the mistake is genuine or minor,” says another.

“Too many companies use the oil record book as a threat to mariners. Teaching methods to make entries streamlined and simple is more effective than telling your employees that they’ll go to jail for making a mathematical error.”

Some seafarers taking the survey pointed to equipment design failings:

“In older ships, more than 10 years old, leakages do tend to increase, and are at times unavoidable. Hence sludge and waste oil/bilge water tanks with adequate capacity should be provided for collection to discourage illegal disposal by the ship’s crew.”

“Most separators do not function properly with the volume of sludge needed to be processed on the vessels I have been on.”

“Often the as-fitted piping arrangements are not 100 percent in accordance with manufacturers’ drawings.”

“Onboard storage and holding capacities are too often inadequate, but the worst problem is the significant lack of economical shore-based reception facilities for ALL types of waste.”

Rik van Hemmen President and Senior Partner at Martin & Ottaway, says environmental functions on board ships continue to expand. Meanwhile, evidence based on a continual stream of noted violations indicates that some operators continue to have problems with machinery space waste stream management. The number of regulations and procedures is increasing, and this paperwork has resulted in resentment and loss of focus by all stakeholders, he says.

Resolution of these problems will require a combination of improvements in technology, operational practices, training and human factors considerations, says van Hemmen. This study endeavors to bring together all stakeholders in order to develop best practices on all of these fronts.

A conference with all interested parties will be held on June 24, 2015 in North Carolina. The main objective of the conference will be to engage stakeholders in discussions and deliberations regarding the path forward for machinery space waste stream management.

The conference agenda is available here.


Tokyo’s February exports drop

Exports from Tokyo port fell in February as 991,464 tonnes of cargo were shipped out, down 12.4% year on year (y/y).
Imports were up 5.2% y/y to 2.565 million tonnes, according to figures released by the Tokyo metropolitan government on 29 May.
The Port of Tokyo saw its cargo traffic rise 1.3% in