South Africa’s Possible Solution to Energy Woes

By MarEx 2015-09-15 12:50:09

South Africa has dealt with chronic energy issues over the years but appears poised to solve them with its first LNG import terminal. The $1.4 billion facility would be located at the west coast port of Saldanha Bay, which is South Africa’s deepest natural port and an emerging oil and gas hub.

Shell, Mitsubishi and Sasol, the South African energy giant based in Johannesburg, are expected to be among the companies placing bids for the 3,126 MW gas-to-power project in 2016’s first quarter. If the plan comes to fruition, South Africa will look into the possibility of using so-called power barges or power ships, vessels modified for power generation, as well as gas-fired power plants to generate electricity.

South Africa’s ultimate aim is to diversify its resources away from coal and bring an end to power outages.

South Africa currently uses rolling power outages to deal with its energy shortages. The strategy is known as “load shedding,” and its objective is to ease the pressure on the power grid to prevent its collapse. Load shedding is implemented whenever there is a discrepancy between energy supply and demand.


Panama Canal Uncertainty Continues

By MarEx 2015-09-15 12:34:42

In the Panama Canal expansion project’s latest hiccup, the Panama Canal Authority (ACP) announced that it was not satisfied with contractor Grupos Unidos por el Canal’s (GUPC) response to the leaks in the Pacific Cocoli locks.

“The contractor has sent two letters outlining the possible causes of the issue. However, it does not provide accurate information about the cause of this seepage,” ACP said in a statement. ”From the moment the failure was detected, the ACP requested GUPC to submit in writing a comprehensive and detailed diagnosis and cause, as well as a proposed solution and estimated time for correction, among other key elements. The most recent formal communications made by GUPC do not answer the questions raised.”

From cost overruns to labor strife, the expansion project has dealt with a string of setbacks that have delayed the canal’s original projected 2014 inauguration, which would have coincided with the original canal’s 100-year anniversary.

Filling of the locks began on June 22, and the ACP announced in late August that the canal had sprung a leak. ACP and GUPC officials met on August 22 to discuss the steps that would be taken to repair the crack. ACP released a statement in late August stating that it did not expect the leak to delay the canal’s April 2016 opening but backtracked in a September 7 statement, which said that it very well could.

Panama hopes the $5 billion expansion will stimulate its economy by increasing trade flows to and from the U.S. East and Gulf Coasts as well as Latin America. Upon completion, vessels up to 12,000 TEUs will be able to transit the canal.


Sanctioned Shipyard Hoping For Arctic Boost

By Reuters 2015-09-15 09:36:47

On a sunny day on the Helsinki seafront, sparks fly from steel welding at the bustling Arctech shipyard, which seems insulated from Finland’s economic recession as it strives to meet an order book that stretches into 2017.

The world’s biggest manufacturer of icebreakers, or ships that can navigate ice-covered waters, Arctech is poised to benefit from an expected flurry of activity in the Arctic, which is being reinforced by U.S. President Barack Obama’s Arctic push.

As climate change is melting sea ice and opening the Arctic to more shipping, mining and oil drilling, icebreakers will forge waterways for other ships, carry out rescue missions and do stand-by duties for oil platforms in the region.

“We are getting inquiries from several countries who have Arctic regions, or companies from such countries,” said Esko Mustamaki, Arctech’s managing director, sitting in his office at the vast shipyard as workers nearby still wearing helmets cycle off for lunch breaks on the compound.

The yard is currently building six vessels, four for Russian state-owned shipping company Sovcomflot and one each for the Russian and Finnish transport ministries. One will be for Arctic use and Mustamaki expects demand to grow.

“It is very possible that in the coming decades, there will be a lot of activity in the (Arctic) region,” Mustamaki said.

That should be good for business, but there is a cloud on the horizon: the yard is now owned by Russia’s state-owned United Shipbuilding Corporation (USC), which was added to a list of U.S. sanctions against Russia last year in the wake of the conflict in Ukraine.

The shipyard was once owned by Norwegian companies Kvaerner and Aker Yards, and later by Korea’s STX, whose financial problems eventually prompted the deal with Russia, completed last year.

So far Arctech has weathered the impact of sanctions but they are making business more difficult.

Nordea, the Nordic region’s biggest bank, closed Arctech’s account last year due to U.S. sanctions. Mustamaki said the shipyard has opened new bank accounts, declining to name the banks. But accessing finance now takes more time.

“Banks have compliance rules that require more checks for us now, so anything where we need banks takes time. But so far, it hasn’t affected our order intake,” Mustamaki said.

“That could happen if a client would not want to do business with us for that reason.”

Shipping sources have said that U.S. and EU sanctions against the company’s Russian clients could complicate their orders in the future.


As the Arctic opens to tourism and oil drilling and spurs more maritime traffic, the United States lags Russia’s resources in the region and President Obama said this month that it needs to quickly acquire at least one new icebreaker.

While Russia has 40 icebreakers and another 11 planned or under construction, the U.S. Coast Guard has three, only one of which is a heavy duty vessel, the White House has said.

For Arctech, sanctions alone would rule out any business with the U.S. government, putting potentially some of the industry’s most lucrative contracts in the next few years out of reach.

Mustamaki, however, is sanguine, arguing that even without sanctions, his company probably wouldn’t win any U.S. orders because the U.S. Jones Act requires that basically all American vessels must be built in local shipyards – a law which he says will force the United States to pay sky high prices for icebreakers. A Congressional research service report has put the cost of a new U.S. icebreaker at about $1 billion.

“That sounds like quite a lot. We are currently building an icebreaker for the state of Finland for 123 million euros ($139 million),” said Mustamaki.

The Helsinki yard, founded in 1865 and renamed Arctech in 2010, has built 60 percent of all icebreakers operating in the world – most used by Russia, including for offshore energy production.

While standard shipbuilding has largely moved to Asia, Arctech’s is one of a few niche shipyards left in Europe. Its competitors include Germany’s Nordic Yards, Norway’s Vard and the Netherlands-based Damen.

The Finnish company is currently building more energy-efficient ships able to operate in minus 35 degrees Celsius and navigate through 1.5 meters of ice.

Its icebreaker under construction for the Finnish transport ministry will be the world’s first to use liquefied natural gas as fuel, rather than relying on more polluting diesel.

“There are lots of details but no concrete list for building an Arctic vessel, it’s more about tacit knowledge,” Mustamaki said.


HHI win LPG carrier order

Petredec Limited has announced today that contracts have been signed with Hyundai Heavy Industries (HHI) to build up to four Panamax VLGC’S. The signed contract is for two firm 78,700 cbm LPG carriers with an option attached to build a further two vessels.
Delivery of the pair is scheduled to be