Friday, February 23, 2018

Tanker Recycling - Pakistan tanker re-opening becoming closer?

Pakistani bystanders gather around the wreckage of a burning ship after a gas cylinder explosion at the Gadani shipbreaking yard, some 50 kilometres (30 miles) west of Karachi on 1 November, 2016

Last week, on the back of a meeting between the Pakistan Ship Breakers Association (PSBA) and local authorities, ongoing rumours about Pakistan re-opening its yards for tankers within the next month began to further intensify.
This news may well be greeted with the usual degree of cash buyer speculation that has been frequently seen in the recent past. However, the reality is that the Pakistan market has also softened in recent weeks and an influx of tanker candidates is hardly going to help in boosting levels from Gadani Buyers, GMS said in its weekly report.
Sinokor continued a clear-out of older tonnage with the sales of a Capesize bulker (a highly sought after and rare breed of vessels these days) and an Aframax, at some unsurprisingly bullish levels.
Moreover, given the spate of fixtures through 2018, there was another VLCC concluded on private terms last week, to swell the growing ranks of unsold tonnage available, and perhaps another sign that cash buyer confidence on a Pakistan re-opening maybe well-founded.
Prices have remained stagnant for several weeks, with marginal declines witnessed in both India and Pakistan, while Bangladesh was just about holding onto its levels, through what has been an overall underwhelming start to the year for Chittagong buyers.
Finally, Chinese New Year holidays interrupted the flow of deals and deliveries (as minimal as they were) last week and it may be a stilted week ahead, as people slowly drift back to work from their various holidays, GMS concluded.


The VLCC mentioned above was the 1994-built ‘Yangtze Star’ believed committed for about $430 per ldt on the basis of ‘as is’ Fujairah, while the Aframax was said to be the ‘Pacific Pioneer’ reported sold to Bangladesh or Indian interests for $455/$460 per ldt.


Thursday, February 22, 2018

U.S. Oil Boom Tempts Saudis to Consider American Crude Sale

Saudi deports 39,000 Pakistanis in 4 months
  • Aramco said to have mulled Feb. sale via Motiva unit to Asia
  • State-run Saudi firm decided sale was unviable for the month

Even Saudi Arabia wants in on the U.S. oil boom.

The kingdom’s state oil firm considered the possibility of sending American crude to Asia in February via a U.S. unit before determining it wasn’t economically viable, according to a person with knowledge of the matter. It also asked potential buyers in Asia if they would be interested in U.S. supply, according to officials at two regional refiners. The people asked not to be identified because the information is confidential.

The fact that the Saudis decided against moving a cargo to the world’s biggest oil consuming region this month doesn’t mean they won’t consider it again. Such a sale would be unprecedented, and a potential strategy by the Middle East nation in the face of rising U.S. production. American supplies are proving a threat to efforts by the OPEC producer and its allies to clear a global glut and prop up prices.

State-run Saudi Arabian Oil Co., known as Aramco, considered shipping the U.S. crude to Asia via its Houston-based Motiva Enterprises unit, which operates North America’s largest refinery in Port Arthur, Texas, with a crude capacity of more than 600,000 barrels a day. Aramco didn’t respond to an email seeking comment.
Relatively cheap U.S. crude has increasingly been making its way to major consuming nations such as China, India and South Korea over the past year and eating into the market share of traditional suppliers like Saudi Arabia. While American oil is still a fledgling in Asia, Aramco is attempting to take advantage of the opportunities presented by the U.S. shale boom that has transformed the flow of cargoes in the global market.

This week, the price of the benchmark U.S. oil went above the Middle East marker Dubai for the first time in more than a year. This recent rising strength in West Texas Intermediate may have played a role in scuppering the potential shipment from the Gulf Coast.

“At current levels, the strength in WTI relative to Dubai prices doesn’t justify arbitrage flows of U.S. crude into Asia,” said Nevyn Nah, an analyst at industry consultant Energy Aspects Ltd.

WTI in New York traded at $61.27 a barrel at 6:50 p.m. Singapore time. Prices have risen more than 40 percent since June.

The Suezmax tanker AST Sunshine, provisionally sought to transport crude from the U.S. to Asia, failed to be finalized for the journey, according to shipping data compiled by Bloomberg. The vessel was meant to transport 130,000 metric tons of crude loading in late February from the U.S. Gulf Coast, bound for Singapore and Ningbo in China.

As Aramco prepares for what could be a record initial public offering, it’s announced plans to expand its trading business by buying and selling non-Saudi crude. The IPO is the centerpiece of the kingdom’s plan to wean its economy off oil. The government has estimated the share sale could value the company at $2 trillion, though analysts make lower estimates.

Wednesday, February 21, 2018

Oil seen flowing onshore in Jamaica

Oil observed flowing to the surface naturally from a site onshore in Jamaica. Photo courtesy of the Petroleum Corporation of Jamaica and CGG GeoConsulting

Oil was found flowing naturally for the first time ever onshore in Jamaica at two locations in what could be a door opener in the Caribbean, companies said.

Two companies, the Petroleum Corporation of Jamaica and CGG GeoConsulting, said oil was found flowing at two sites during petroleum field work.

"This significant find marks the first documented occurrence of 'live', or flowing, oil from onshore Jamaica and will be of particular interest to oil explorationists focused on Central America and the Caribbean," they said in a joint statement.

Jamaica is considered frontier territory for oil and gas explorers. Tullow Oil, a British company that focuses in part on pioneer opportunities, has a license there from 2014 in shallow waters on the south of the island nation.

According to Tullow, oil and natural gas were seen in 10 of the eleven onshore and offshore wells drilled in Jamaica to date. The company said it was still reviewing seismic data that's used to get a better understanding of the reserve potential.

In November, the company sold off a 20 percent stake in its full-operating interest in a license area in Jamaica, but secured a license extension so new seismic surveys could begin in April.

"The discovery of these seeps indicates the presence of working petroleum systems on the island that are generating and expelling liquid hydrocarbons to the surface," CGG GeoConsulting and the Petroleum Corporation of Jamaica announced.

To the north in Cuba, authorities there issued the consent necessary for Australia's Melbana Energy to move forward with plans for oil drilling onshore. The company's Alameda-1 prospect near the northern coast of Cuba is targeting a reservoir with more than 2.5 billion barrels of oil in place.

Saudi Arabia Quietly Decreasing Dependence on Crude Exports: Lee

  • Crude share of exports falls 10 percentage points in 4 years
  • More rigs drilling for gas than oil for first time in 7 years

While an Aramco IPO continues to grab the headlines, Saudi Arabia is quietly getting on with the business of weaning itself off a dependence on crude oil exports, with flows of refined products soaring and direct burning of crude near multi-year lows, writes Bloomberg oil strategist Julian Lee.


Crude's share in total Saudi oil exports has fallen to around 82% from as much as 96% a decade ago
Sources: Bloomberg, JODI
  • Data for December from the Joint Organisations Data Initiative in Riyadh show that Saudi Arabia is continuing to make progress in reducing its dependence on crude oil for export and power generation, with its refinery inputs hitting a new high and direct crude use near the lowest since 2009.
  • Crude’s share of total Saudi oil exports was 82 percent on average in the last three months of 2017, down from 92 percent in the final quarter of 2013.
    • Comparing the two periods, crude oil exports fell by 650,000 barrels a day, while daily overseas sales of refined products increased by 876,000 barrels.
  • Refinery crude intake rose to 2.83 million barrels a day, the highest in JODI data going back to January 2002. A new 400,000 barrel a day refinery under construction at Jazan on the southern Red Sea coast will boost the kingdom’s crude intake and refined product exports when it comes into operation in 2021.
  • Direct use of crude oil was 260,000 barrels a day in December, just 8,000 barrels above the January 2017 level, which was the lowest since April 2009, according to JODI data. 
    • The kingdom boosted gas use in power generation with the start of the Wasit gas plant in March 2016. The country is now in talks with Russia and others to import natural gas in order to cut oil use further.
    • Meanwhile, the search for domestic gas resources goes on. Baker Hughes international data show more rigs drilling for gas than for oil in Saudi Arabia in January for first time in seven years.
  • NOTE: Julian Lee is an oil strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

Tuesday, February 20, 2018

Is Nigeria Breaking Its Promise To OPEC?

Image result for nigerian oil well

As OPEC allies push to restrict oil output in an international attempt to bolster crude prices, Nigerian producers are heading in the opposite direction, aspiring to increase output by 250,000 more barrels a day to reach their overall goal of 2.5 million per day by 2020. Look no further than Shoreline Group, Nigeria’s third-largest independent oil producer, which intends to double their output by the end of this year alone.

Ironically, this is all happening at the same time that the Nigerian government has pledged to participate in a global pact lead by Saudi Arabia and Russia to restrict oil supply. This month the government made an official pledge to keep output under 1.8 million barrels a day in 2018. Meanwhile, as Nigerian oil minister Emmanuel Kachikwu makes his lofty promises to OPEC, the nation’s crude output is at its highest level in more than two years.

In January, Nigeria produced an average of 1.93 million barrels per day, well above the promised 1.8 million. On top of this figure, the nation is set to start up production in a new large-scale oil field by the end of the year, their first in half a decade. The new offshore Egina oil field will has a production capacity of 200,000 bpd. Clearly, Nigerian producers show no sign of heeding their own oil minister’s calls.

While Nigerian government officials say one thing and independent producers are doing the opposite, the rest of the oil-producing world is looking nervously on, hoping that other countries won’t begin to follow Nigeria’s lead and ramp up their own production, causing the tenuous OPEC deal to fall apart.