Friday, October 30, 2015

Markets - Iran on the way back


Over the past few months, further progress has been made on the lifting of Iranian sanctions in terms of legislation. 
For example, first, the US Congress failed to block the Iran nuclear deal reached in summer 2015 and second, the same deal has been approved by the Iranian parliament, London broking house Gibson said in a report

On 18th October, US authorities approved conditional sanctions waivers for Iran (known as Adoption Day). These waivers will only take effect after Iran complies with its commitments and this is verified by the IAEA (Implementation Day).

According to several senior US officials, the Implementation Day is at the very least two months away; while most industry experts are of the opinion that this is unlikely to happen before the first quarter of next year, Gibson said.

If and when Iranian sanctions are lifted, it will have important implications for global oil markets.

At present, the world is awash with crude, following OPEC’s policy to defend its market share, while at the same time, US crude oil production is not falling fast enough to balance supply and demand, despite prices remaining low. Finally, concerns are growing about the health of world economy, leading to lower expectations for global oil demand growth next year.

In these circumstances, if Iran is able to rapidly increase its production and exports, this will only add more crude to an already heavily oversupplied market, Gibson warned.

Undoubtedly, this year the overhang of crude oil has fuelled tanker markets not only in terms of supporting trade, but also leading to additional storage requirements and loading/discharge delays. Any increase in Iranian exports will at the very least increasingly support a tight supply/demand balance.

However, there are also concerns about the Iranian fleet, which will become internationally operational and is likely to compete aggressively in the conventional tanker market when sanctions are lifted.

Today, some 37 VLCCs, nine Suezmaxes and five Aframaxes are under control of the National Iranian Tanker Co (NITC). However, about half of this fleet is already employed, largely shipping Iranian crude to a limited number of international buyers - although there is some scope here for efficiency gains, such as faster speeds and reduced waiting time.

The rest of NITC’s fleet is used for crude/condensate storage, with the latest count at 20 units under its control and five by other owners, Gibson said.

If the nuclear dispute is resolved, a number of VLCCs used for storage will continue for operational/marketing reasons, as was the case prior to sanctions. Only those tankers which will be released from storage duties will be in position to provide an incremental boost to tanker supply.

It could take some time for these ships to meet international standards in terms of class and insurance. Furthermore, many units are likely to require drydocking. On this basis, the process of ‘re-entry’ will be gradual.

Finally, if Iran succeeds in rapidly increasing its production and in significant volumes, this would provide additional demand for the NITC fleet, limiting further the threat of competition to the international tanker supply, Gibson concluded.

Thursday, October 29, 2015

NNPC offers 26 Nigerian crude oil grades for sale

 Dr. Ibe Kachikwu
The News Agency of Nigeria recalls that NNPC had conducted public opening of bids submitted by 278 national and international companies competing to secure Nigerian crude oil grades
The Nigerian National Corporation says it has 26 crude oil grades to offer for sale to companies that would eventually win the bidding contracts for the sale of Nigeria oil grades.
The corporation gave this indication in a statement issued in Abuja on Wednesday, signed by its Group General Manager, Group Public Affairs Division, Ohi Alegbe
The News Agency of Nigeria recalls that NNPC had conducted public opening of bids submitted by 278 national and international companies competing to secure Nigerian crude oil grades.
The public bid process, which was conducted By NNPC officials, was witnessed by representatives of the bidding companies as well as officials of the Bureau of Public Procurement and the Department of Petroleum Resources.
Others are Nigerian Extractive Industry Transparency Initiative, Nigerian Content Development and Monitoring Board, as well as members of the civil society attending as independent assessors.
The contract for the engagement of qualified and reputable companies for the sale and purchase of Nigerian Crude Oil grades is in pursuance of the provisions of the Public Procurement Act 2007 and the BPP guidelines.
The statement quoted the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, as saying the essence of the public opening of the bid was to consolidate on the new promise of transparency and efficiency in line with President Mohammadu Buhari’s agenda for the oil and gas industry.
Kachikwu said: “The essence is to ensure that nobody needs to call me personally as Ibe Kachikwu for him to get crude allocation.
“So you can imagine the burden it takes off my shoulders.
“It means a good amount of my time will now go into other relevant areas of operation where the country needs me most.”
According to the statement, the 26 grades Nigerian crude oil on offer include Bonny Light, Forcados Blend, EA Blend, Bonga, Qua Iboe Light, Yoho Blend, Erha and Escravos Light.
Others are Pennington Light, Agbami, Brass Blend, Abo, Oyo, Okono Blend, Amenam Blend, Akpo Condensate and Usan.
The rest include Atam Blend, Okwori, Okoro, Ima, Ukpokiti, Obe, Okwuibome, Ebok and Asaratoru.
The statement said part of the requirements for interested companies included the possession of a minimum annual turnover of $750 million and net worth of at least $300 million in asset.
It said the companies were to also establish an irrevocable letter of credit for the payment of any allocated crude oil, subject to the contract terms.
It also gave as a condition that the companies must possess the ability to pay an initial deposit of $2.5 million, representing the first lifting deposit, upon signing of the contract agreement, among other requirements.

Wednesday, October 28, 2015

New York petroleum storage could reach capacity

USA, New York City, Oil storage tanks in refinery with Manhattan skyline in background : Stock Photo

Petroleum storage inventories at New York Harbour could reach capacity constraints by November.

According to Genscape data, inventories reached a record high above 19 million barrels after stocks swelled more than three million barrels the week ending October 2.

These increases are expected to continue due to falling RBOB petroleum prices and declining demand during the autumn, following the end of peak driving season.

Genscape estimates that as of October 16, there was more than eight million barrels of vacant petroleum storage capacity to accommodate increased inventories at the harbour.

Assuming that maximum operating capacity for petroleum storage is similar to that of other terminals monitored by Genscape, capacity constraints could surface within a month.

Genscape has recorded storage terminals operating at capacity utilisation rates that are above 80%.

Tuesday, October 27, 2015

Global VLCC Tracker: North Asia, West African flows slump in September

CMES, Sinotrans & CSC to form VLCC joint venture

* Turnarounds, delays knock North Asian landings to one-year low
* Slack in Chinese demand for Angolan crude picked up by Europe, US
* West African sailings tumble to lowest in 15 months

VLCC landings in North Asia during September fell to their lowest level in a year as refinery turnarounds, ullage problems, weak refining margins, and typhoon-related delays dampened demand, cFlow, Platts trade flow software, showed.

High regional inventories combined with rising freight rates also compounded the wider trend and helped drive West African sailings to 15-month lows.

Arrivals into North Asia, the key VLCC landing region, slipped to 161 over the month, down from 171 in August and last lower in September 2014, while sailings from West Africa -- at 24, a drop of six -- were at lows not seen since June 2014.

VLCCs haul the bulk of global crude oil shipments, with a small number of tankers also carrying fuel oil, but mainly on a few routes, such as from Rotterdam to Singapore.

In China, low margins, and high product inventories weighed on VLCC inflows -- particularly from Angola -- which dropped to 82 ships, falling by three to the lowest level since May.

Japan's arrivals fell to 41, down by three, while South Korea's inflows rose to 35 from 34 against landings in Taiwan that were flat on the month at 12.

Based on direct VLCC voyages to China, the top five suppliers in September were Saudi Arabia, Angola, Kuwait, Oman and Iran, while over the first nine months of this year, the top five were Saudi Arabia, Angola, Iraq, Oman and Iran.

However, as up to a third of vessels tend to co-load -- or pick up cargoes from more than one port -- several of these ships loaded a range of other crude oils prior to departing their respective regions.

From Saudi Arabia, 14 ships arrived in China and arriving from Singapore were eight vessels, as well as two from Japan, originally loaded in Saudi Arabia, and two from South Korea, carrying cargoes from Qatar and Kuwait.

Angola sent nine tankers to China, marking a five-month low, as softer margins and run cuts of 10-15% announced for October dented Chinese refinery demand.

The West African producer's crude is heavily dependent on China, which typically takes 40-60% of its exports every month, and Unipec, the trading arm of Chines state-owned Sinopec, is the largest buyer of Angolan crude, often taking 35-40% of the monthly export program.


With Angolan sailings to China in a downtrend recently, European -- largely Portuguese and Spanish -- and US buyers have been stepping in, with European refineries having increased buying, stimulated by strong margins.

In the US, Gulf Coast refineries increased demand for Angola's heavier grades such as Dalia and Saturno to be used for blending.

However, these trans-Atlantic exports were shipped entirely on Suezmaxes, with VLCC flows between Angola and the US at standstill since September 2014, a product of the boom in US tight oil.

While only around 20% of Middle Eastern exports are routinely shipped on Suezmaxes, the volume in West Africa is significantly higher, at roughly 70%, with most of the Suezmax flows bound for European markets.

An estimated 10-15% of daily global oil shipments are also sent on Aframaxes, but these voyages are largely limited to intra-regional movements in parts of Europe and Southeast Asia.


Saudi sailings in September, albeit up by one from August to 119, still hovered at levels last lower in February. From the UAE, 42 tankers sailed, up from 38, while from Iraq's Basrah, 33 ships left, a drop of two. Departures from Iran eased to 18 from 19.

The bulk of Saudi sailings went to South Korea, Japan, the US, Egypt and China, with the exports to Egypt nearly all bound for Europe, as Egypt's Sumed Pipeline -- running from Red Sea port of Ain Sukhna to the Mediterranean's Sidi Kerir terminal -- acts as a key trans-shipment route between Europe and its Gulf suppliers.

The UAE-sailings top destinations were Japan, China, South Korea, Malaysia and Singapore, while China, Egypt, Singapore, India and South Korea were the top landings countries for Iraq's tanker flows.

In Iranian departures, the bulk of ships -- excluding those that went to co-load -- sailed for China, South Korea, India and Japan.

Volumes leaving West Africa stumbled to their weakest levels in 15-months, with 24 VLCCs heading out of the region.

Angolan sailings dropped to their lowest count in six months, at 14, while the number of ships departing Nigeria eased to six, last lower in June.

In addition to weaker Chinese buying appetite, the uptrend in freight rates also curtailed demand for Angolan crudes across several regions.


September saw freight rates pressured to the upside along key VLCC routes, largely driven by a reduction in tonnage stemming from weather-related delays and ullage problems in Asia.

Further support for rates came from a major increase in charterer demand, with a particularly heavy Basrah loading program restricting the number of potential eastern ballasters to West Africa.

Along benchmark VLCC routes, monthly average rates from PG-Japan topped Worldscale 53.31, up 40% from August, while PG-China rates jumped to w52.81, marking the same monthly percentage increase, according to Platts assessments.

From West Africa to the Far East, rates jumped to w54.83, an increase of 18% on the month prior.

Elsewhere, from the Persian Gulf to west coast India rates rose to w65.18, up 36% from the previous month.
Global VLCC Fleet: Monthly Flows
Total N Asia161171-10
South Korea35341

Saudi Arabia1191181
Iraq (Basrah)3335-2
Total W Africa2430-6

--Sierra Highcloud,
--Edited by Dan Lalor,

Trafigura Predicts OPEC Will Maintain High Output

Trafigura Predicts OPEC Will Maintain High Output 
Richer oil-producing OPEC members are expected to feel some pressure from OPEC members with higher production costs.

Oil-producing members of the Organization of the Petroleum Exporting Countries (OPEC) are expected to keep supply flowing in order to continue its strategy of building market share, Reuters reports

"I'm expecting OPEC to be quite consistent in this position," said Trafigura CFO Christophe Salmon.

However, tensions between richer Gulf countries such as Saudi Arabia and countries like Venezuela, who have higher production costs, are expected to continue. 

OPEC members are set for a production policy meeting in Vienna on December 4, and Ian Taylor, CEO of Vitol, said "there is bound to be a huge amount of pressure on the Saudis from one or two people at that meeting to look at this policy again."
I cannot believe they will want to change their strategy at this moment in time
Ian Taylor, CEO, Vitol
"I cannot believe they will want to change their strategy at this moment in time, but you can't rule it out totally."

Traders are also expecting that even the added supply that Iran stands to contribute as it ramps up its production and exports will not affect OPEC's high output levels, with Salmon commenting that he thinks "the market has already factored in the likely increase into the price."

Iran is reportedly ready to raise production by 500,000 barrels per day in the first week after sanctions are lifted.

Ship & Bunker reported last week that a technical meeting between OPEC and non-OPEC members did not come to any conclusions on crude output limits or a target range for prices.

Monday, October 26, 2015

Southeast Asia pirate activity increases

Dryad Maritime, the UK’s leading maritime intelligence company, today released their third quarter trends and analysis of global maritime crime showing. 
For the first nine months of this year, there has been a 38% rise in piracy incidents across Southeast Asia, compared to the first nine months of 2014, a new report said.

Dryad Maritime said that the apparent impunity of maritime gangs operating in the region has led the company to call upon the three nations surrounding the Singapore Strait, in particular, to provide a permanent security presence to deter criminals and protect maritime trade.

The number of reported incidents had jumped from 140 on the same nine-month period in 2014 to 194 during the same period this year. The main focus for criminal gangs in the region was the petty theft of ships stores as gangs sought to steal engine parts and high value machinery for resale on the black market.

In total 14 vessels were hijacked in Southeast Asia in 2015 to date, with only one product tanker, the ‘Joaquim’ targeted for the purpose of cargo theft in the third quarter of 2015, when 3,000 tonnes of fuel oil were stolen from the vessel.

Dryad Maritime analysts identified the Singapore Strait as a key area for increased vigilance. Between January and September, they recorded 90 instances of theft or attempted theft with more than 80% of these crimes occurring in the traffic separation scheme (TSS) between Pulau Karimun Kecil and Pulau Besar during the hours of darkness.

The Malaysian Maritime Enforcement Agency (MMEA) and Indonesian authorities have made repeated announcements pledging to enhance patrol co-operation and co-ordination in the region, yet according to Dryad, there remains little by way of a regular presence in this particular area.

Dryad warned that despite the slowdown in fuel siphoning incidents during the last three months, the final quarter of 2015 is likely to see a further increase in hijackings and petty theft. 

Ian Millen, Dryad Maritime’s CEO, said;“In Southeast Asia, the final quarter of the last three years has seen the highest numbers of incidents per quarter and we see no reason why this will not remain the same this year; a year in which we’ve already seen the highest number of incidents in the first nine months. 

“There is a pressing need for a joined-up security effort in the Singapore Strait and other areas. Without a high visual presence from security agencies, criminal gangs will continue to operate freely with little fear of capture or prosecution.”

Dryad contrasted its report of the worrying increase in Southeast Asia maritime crime with good news, following BIMCO’s recent announcement on a planned reduction of the BMP 4 High Risk Area (HRA).

Mike Edey, Dryad Maritime’s head of operations, explained; “By complete contrast, the worrying figures in Southeast Asia come at a time when the combined efforts of the shipping industry, naval forces, armed guards and others have resulted in the first geographical reduction of the Indian Ocean High Risk Area (HRA).

“This is a testament to those who have taken a multi-faceted approach to containing the threat of Somali piracy and the first sign of a long-awaited period of de-escalation in the region. This will bring significant relief to the shipping industry who can, in some cases, transition to more cost-effective and dynamic methods of risk mitigation,”he said.

Thursday, October 22, 2015

Kinder Morgan finalises BP terminals acquisition

Additional capacity from the terminals will be marketed to third-party customers
Additional capacity from the terminals will be marketed to third-party customers

Kinder Morgan and BP will form a joint venture limited liability company terminal business to own 14 of the acquired assets. Kinder Morgan will operate and market these facilities on behalf of the joint venture. One terminal will be owned solely by the North American energy infrastructure company.

The transaction has been valued at around $350 million (€308 million) and is expected to close in the first quarter of 2016.

The terminals have approximately 9.5 million barrels of storage and are connected via pipeline to key refining and processing centres across the US. They are also supported by extensive truck, vessel and barge access and terminal service capabilities.

As part of the transaction, BP will enter into commercial agreements securing long-term storage and throughput capacity from the joint venture, which plans to market additional capacity to third-party customers.

John Schlosser, president of Kinder Morgan, says: 'By combining BP's expertise in product trading and marketing with Kinder Morgan's strength in operations and terminal development, the joint venture is well suited for growth opportunities in high-demand refined petroleum products markets. We believe this arrangement benefits BP, Kinder Morgan and third-party customers.'

Kinder Morgan will own a 75% interest in the joint venture, with BP owning the balance. The terminals are located in the Midwest, northwest, southeast and the west coast.

Wednesday, October 21, 2015

Can Nigeria's president defeat oil industry corruption?

 In this 29 May 2015 photo, Nigerian President, Muhammadu Buhari, salutes his supporters during his inauguration in Abuja, Nigeria

Nigerian President Muhammadu Buhari took power promising to tackle the "mind-boggling" level of corruption in his country's oil industry. But can he succeed?

Although oil is said to account for 75% of the Nigerian economy, no-one knows how much the country actually produces or refines because hundreds of thousands of barrels of oil are stolen every day, at each level of the supply chain. 

President Buhari has taken personal control of the oil ministry and split the state-owned NNPC oil company into two entities in a move aimed at reducing corruption.
Four experts talk to the BBC World Service Inquiry programme about the challenge he faces.

Kolawole Banwo: Oil theft 'at industrial scale'

Kolawole Banwo is a senior programme officer at Nigeria's Civil Society Legislative Advocacy Centre.

"We do not have an independent metering facility to measure the quantity of oil that is extracted. 

"We are not able to know the figures, [but] as at 2014, Nigeria could have been losing 300,000 barrels a day; about $12bn (£8bn) annually. That's a sizeable part of our budget. 

"We can hardly afford to pay basic salaries and fund our budget because oil is being stolen. Considering we have the highest number of out-of-school children all over the world; the highest risk of maternal mortality; decaying infrastructure, and about 60% of our population live in poverty, it's very shocking indeed. 

"Some of these pipelines were built in the 60s and 70s, so they are not strong. They are on the surface, they are rusted. 

"Breaking through them is not difficult. In the dead of night in deep creeks where it's difficult to have proper security, they are able to siphon the crude into smaller boats and ships with drums and barrels to convey it further into the forest in the coastal waters where they already have refineries.

"You have smaller vessels that actually get these things to bigger vessels that can go on the high seas. That is very sophisticated and can only happen when you have high-powered individuals who can afford a crew and have the connection to a buyer.

"You need some form of high-powered conspiracy to do that. We call it oil theft at industrial scale.

"The very volatile nature of the Niger Delta came from an area of militancy and effort has still been made to pacify the population and not to exact too much force. But there are many who may benefit from the outputs and so give cover to these people because in the end their interest is tied to it."

Dauda Garuba: People need to benefit from oil revenues

Dauda Garuba is Nigeria officer at the Natural Resource Governance Institute.
"If oil is the cash cow of Nigeria, nothing will be too much a price to get the situation right. 

"We need to have a multi-face meter that measures the quantity of oil at the level of the well head, at the level of the flow station, and at the level of export terminals. 

"People have an 'I don't care' attitude to what is happening, because if the oil is taken by the community or by thieves, it doesn't matter to them, because nothing comes to them in terms of development. 

"They don't get anything for the oil that is taken from their territories. To get oil theft addressed, one of the things we might consider is getting the community involved.

"Over the years, the refineries have not been maintained. And a lot of persons have gotten rich through corruption on the basis of this."

Idayat Hassan: Corruption in Nigeria is endemic

Idayat Hassan is director of the Centre for Democracy and Development in Abuja. 

"Corruption in the Nigerian context is endemic, because it permeates all stratas of the society. You can find corruption everywhere you actually dig into in the daily life activities of Nigerians. 

"When building hospitals and schools it's the norm that contractors in Nigeria get contracts, and then either don't implement them all, or they do what we call 'contract splitting', so people split the money and go away, and the hospital or school doesn't get built at all. 

"Who are the key players in the oil industry? Most of them are also involved in other parts of the economy. So you find somebody is actually in oil, but is also in banking, at the same time he's in manufacturing, he is in various parts of the economy of Nigeria.

"There is also a linkage to politics, because if they are not in active politics, don't forget that they are the financiers of the politicians. 

"It's a very, very difficult task, really, for President Buhari. He will also have to take on people that are part of his political party, really. 

"Most of the people that have been accused of corruption are normally let off. So, for instance, there are charges filed against somebody for stealing 10 billion Naira (US$100m, £65m) - a mindboggling amount. At the end of the case, after five years, this accused person is let off the hook because there is corruption in the judicial sector. One way or another, justice is not dispensed. 

"It will actually be impossible for President Buhari to do this. Saying he will end corruption itself is a mirage. 

"It's a long, long-term initiative. It's collectively Nigerians who will have to deal with the issue of corruption, or else we may all end up disappointed together."

Mansur Liman: Buhari could be the man to solve this

Mansur Liman is the head of the BBC Hausa service.

"I think he's in a very good position to tackle what is happening. People who remember him as the head of state of Nigeria when he toppled a civilian government in the 1980s remember him as someone who didn't tolerate any nonsense. 

"It was a dictatorship. He arrested many politicians that were accused of corruption and locked them up without any trial. The musician Fela Kuti was arrested for criticising the military government. 

"He introduced something called 'War Against Indiscipline'. People did not queue in Nigeria; Buhari made it law to queue because that is the proper thing to do - first come, first served. 

"The popular support that he enjoys at this moment was because of what he did as the military then. If Nigerians are looking for someone who is ready and willing and has the capacity to fight corruption, I think the name of Buhari will be top. 

"I think it's the way he conducts himself, the way he insulates himself from all the corruption that's been taking place in the country. He declared his own assets recently and you could see he had about 30 million Naira (US$145,000, £94,000) in his own bank account. 

"This is not a lot of money in the Nigerian context: there are many people who have held posts that are much lower than he has held and who have much more money. 

"When he was elected as the president, there were many rich people who were trying to get an audience with him - carrying lots of things to his house. And he turned them back. This is the kind of person that you're talking about."

Oil Markets Trying To Muster A Bounce Ahead Of OPEC Meeting 

On the day that Tom Petty turns sixty-five, the crude complex is trying to rebound after yesterday’s bout of free fallin’. Things are pretty thin on the economic data front, the sum of which has been lower building permits and higher housing starts out in the U.S., while Germany saw weaker (and deflationary) producer prices.
Meanwhile, the crude complex is trying to muster a bounce ahead of tomorrow’s OPEC + 8 (Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman, and Russia) meeting in Vienna, which really shouldn’t yield that much. At all.
8-14 day outlook to Nov 2
We are not only passing through the peak of maintenance season for U.S. refineries, but also through shoulder season (aka low demand period) for natural gas, where we see a slow-motion baton transfer from cooling to heating demand. Above-normal weather conditions are persisting on the weather outlooks, mean lingering storage injections in the coming weeks as heating demand is stymied.
An ongoing theme of strong supply, in combination with warmer weather, continues to keep a lid on natural gas in mid-two dollardom, as the prospect of a record storage level being achieved in the coming weeks is very much in the mix.
This warm start to winter is also providing a comfort blanket of hope that this winter’s El NiƱo weather pattern will mean these balmier conditions will continue.
So while the prospect of a warmer winter leans bearish for natural gas, it leans bullish for gasoline demand. We are in the throes of peak refinery maintenance season, with refinery utilization reaching the lowest point since mid-January at 86 percent. As maintenance ebbs in the coming weeks, we should see gasoline inventories starting to build as we head towards the end of the year.
While a milder winter should lead to more miles driven due to less inclement demand, lower retail gasoline price should too incentivize greater consumption. The national average for gasoline is still on track to retest the January lows of just above $2/gallon by year-end, while South Carolina is already averaging well below that level. California remains elevated (as usual), but is making progress, well below $3/gallon:
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(Click Image To Enlarge)
There is an interesting piece out today which highlights how OPEC’s battle for market share of the Asia-Pacific region (which accounts for over a third of global demand) is pitching cartel members against each other. The below chart illustrates this scrap; Kuwait is undercutting its crude versus Saudi Arabia by the most on record. Iraq is also undertaking a similar tactic, as is Qatar, who is pricing its oil at its biggest discount in twenty-seven months.
(Click Image To Enlarge)
Taking a quick peek at our #ClipperData, it highlights that ~80 percent of Kuwait’s crude exports go into Asia. Of these, the vast majority are going to three countries: China, Japan, and South Korea. Looking ahead, the battle for market share in the Asia-Pacific market is likely to only get fiercer as congestion builds in the area.
Related: How The Oil Price Crash Will Make Markets More Efficient

Oil majors up interest in VLCC period deals

Exxon Mobil and BP follow Shell in for period tanker contracts for AET and Greek vessels.

An upturn in oil majors chartering VLCCs on period contracts is the latest piece of good news for owners.

AET and Cavo d'Oro Navigation of Greece are the latest to benefit as majors look to take on vessels at a time of strong spot activity.

AET’s 300,200-dwt Bunga Kasturi Lima (built 2007) has been taken by BP on a two year charter at $42,500 per day, shipbrokers say.

Exxon Mobil is reported to have taken on the 306,300-dwt Mistral (built 2000), owned by Cavo d'Oro, for the same period at $40,000 per day.

“With VLCC spot rates expected to remain firm, it is encouraging to see several long-term time charters signed by oil majors last week,” Magnus Fyhr of GMP Securities said in a report today.

“However, while near-term fundamentals remain attractive going into the seasonally stronger winter market, we believe that slowing oil demand growth and increasing fleet growth could present challenges for the crude tanker market in 2016.”

Last week TradeWinds reported Greek owner Andriaki Shipping had locked one of its VLCCs into a two-year time charter that will yield $30.6m in revenue in the next 24 months.

Sources said the 309,000-dwt Arion (built 2001) had been taken by energy major Shell at $42,500 per day.

Spot rates for VLCCs have cooled in the past week having blasted past $100,000 pey day the previous week.

Noah Parquette of JP Morgan said the VLCC spot market slipped to $85,000 per day at the end of last week.

“Charterers seem to be waiting as long as possible to begin fixing November cargoes. We expect activity to pick up this week as November demand emerges,” he said in a report today. “However, supply still remains tight, especially in the Caribbean region.”

Monday, October 19, 2015

Buhari Gives JVs Budget Control

Muhammadu Buhari

Muhammadu Buhari, Nigeria’s president, as part of his overhaul of the country’s oil sector, has given its exploration JVs control over their own budgets as a way to overcome cash shortages.

The decision making process in Nigeria when it comes to the state-run firm NNPC has been slow, to say the least. Buhari’s decision to put the budgets in the hands of the JVs instead of NNPC having to seek parliamentary and regulatory approval could speed up the process significantly.

In the past a number of projects have languished due to the time it takes to get lawmakers to give the go ahead; which in turn leads to extra costs going up and new proposals needing to be submitted to lawmakers once again.

Friday, October 16, 2015

Ghanaian Oil Tycoon Kevin Okyere Bought A £4.5m London Mansion In 2014 Tied To Diezani’s Looting

Investigations by SaharaReporters have revealed that this property was purchased on May 30, 2014 by one Kevin Okyere, who has close ties with Mrs. Alison-Madueke, for the astonishing sum of £4.5 million.

SaharaReporters has found that a £4.5 million mansion belonging to the notable oil tycoon from Ghana, Kevin Okyere, provides a connection between him and the recently arrested former Nigerian Minister for Petroleum Resources, Diezani Alison-Madueke and her ongoing legal battles.

On Friday October 2, 2015 Diezani Alison-Madueke was arrested, along with four other individuals ages 30-60, by agents of the UK National Crime Agency (NCA) for financial crimes of bribery and money laundering, according to a press release by the NCA. 

The following Monday, October 5, UK police officers filed for the seizure of £27,000 found with Mrs. Alison-Madueke by British authorities under the powers enshrined in the Proceeds of Crime Act 2002. Beatrice Agama, Alison-Madueke’s mother, also had £5,000 and $2,000 detained. A third individual, Melanie Spencer, similarly had £10,000 detained by British authorities operating under the Proceeds of Crime Act.

Melanie Spencer has money detained by National Crime Agency
Since the detention of these funds, SaharaReporters has found that Melanie Spencer, implicated in the NCA’s ongoing investigations with Alison-Madueke, is a resident at 14A St Johns Wood Road, NW8 8RE in London.  Further investigations by SaharaReporters have revealed that this property was purchased on May 30, 2014 by one Kevin Okyere, who has close ties with Mrs. Alison-Madueke, for the astonishing sum of £4.5 million.

Melanie Spencer's address is at a property owned and lived in by Kevin Okyere
According to UK Land Registry documents obtained by SaharaReporters, the purchase was financed by the Standard Bank Isle of Man Ltd.  Law enforcement agents in the UK told our reporter that the loan obtained from the bank in the Isle of Man is highly suspicious as it shows that Mr. Okyere was using the loan to hide his money laundering activities.

During her stint as Minister, Mrs. Alison-Madueke used Mr. Okyere in interfacing with industry operators, directly appointing him as a personal assistant in 2014.  Mr. Okyere’s Springfield Energy Ltd was one of the indigenous companies cited in a $40 billion annual contract awarded by Mrs. Alison-Madueke in April 2014.

In June 2012 in Abuja Mr. Okyere incorporated “Springfield Ashburton Limited” located at No 8 Nyasa Close, Off Mississippi, Off Ontario Crescent, Maitama, Abuja with a share capital of N1million. The company had as co-directors,Ms. Gena Punjabi and Adetola Sarah Mary Olufemi. In the registration document obtained by Saharareporters, Springfield Ashburton Ltd did not disclose its objectives, however, it was one of the indigenous companies chosen by Mrs. Alison-Madueke to benefit from generous contracts to lift Nigeria crude oil in 2014 barely two years after it was incorporated. 

Energy company in Nigeria started by Kevin Okyere
Also, in February 2014, Mr. Okyere hurriedly registered a company “Springfield Oyoko Ltd” in London, appointing himself as Managing Director. He also appointed an Italian woman, Ms. Maria Luisa Cicognani and a Ghana-based Indian woman, Ms. Gena Punjabi as co-directors.

On August 30th, 2014, Mr. Okyere terminated the directorship of Ms. Cicognani, for undisclosed reasons. Ms. Punjabi remains on the board of several companies owned by Mr. Okyere.

In September 2014, Mr. Okyere changed the address of his newly formed company to number 14A Studio and garage, St Johns Wood Road from its original address at 145-157 John Street, London, England EC1V 4PW. As the Nigerian presidential elections approached first in February 2015 (later postponed till March 28, 2015), Mr. Okyere applied for the dissolution of the company in London.

On October 2, 2015, agents of the UK National Crime Agency busted Ms. Melanie Spencer at the address of Mr. Okyere’s Springfield Oyoko Ltd (now dissolved) with the sum of £10,000, the UK anti-crruption unit approached the  Westminster Magistrate Court in London with an application asking to freeze Ms. Spencer £10,000 until April 2016. The application was granted.

Mr. Okyere, like Mrs. Alison-Madueke, is the deep pocket for Ghanaian political gladiator of the New Patriotic Party (NPP). Mr. Okyere is married to Melanie Spencer, a niece of Rebecca Akufor -Addo, the wife of the NPP Presidential candidate, Nana Akufor-Addo. Melanie Spencer is the daughter of a former Ghana Airways pilot, Powis Spencer, according to SaharaReporters investigations. 

Mr. Okyere is using his influence to suppress media reports about his relationship with Diezani Alison-Madueke by suing select Ghanaian publications, including The New Statesman, The Al-Hajj, the Herald, and The Republic. His legal threats spread across to Nigeria where online publications that mentioned his name have been forced under threat to uproot the stories from their servers.

A source in the UK government told SaharaReporters that they have developed extensive leads to Mrs. Alison-Diezani’s corrupt deals and those of her collaborators. One of our sources stated that Mrs. Alison-Maduke’s corruption has an “Imelda Marcos” dimension to it that would shock the world whenever her trial commences. 

A Nigerian lawyer, Oscar Onwudiwe, who serves Mrs. Alison-Madueke, issued a statement last week stating that the former minister has cancer.  He later told our reporter that the former Minister would be undergoing surgery for breast cancer sometime [this] week.
International companies, which are aggressively cutting spending on costly drilling projects on the back of lower profit margins, will then revisit their investment exposure to Nigeria and look for other capital deployment opportunities. As it is, Anglo-Dutch major Shell – operating in the country since 1937 – has already postponed a final investment decision on its multibillion-dollar offshore Bonga South West project expansion until 2016 in the wake the ongoing oil price rout.
Last Thing Nigeria Needs: Uncertainty
Companies generally prefer a stable environment to do business. Therefore, any uncertainty emanating from the possible change in contract terms signed with international oil companies could jeopardize investment in new ventures. With oil prices falling through the floor, Nigeria is already struggling. Any battles over revenue break-up from the fields could only magnify the problem. Worryingly, this might alienate the multinational firms that it so desperately needs to churn out the country’s most valuable commodity from its reserves.
- See more at:
International companies, which are aggressively cutting spending on costly drilling projects on the back of lower profit margins, will then revisit their investment exposure to Nigeria and look for other capital deployment opportunities. As it is, Anglo-Dutch major Shell – operating in the country since 1937 – has already postponed a final investment decision on its multibillion-dollar offshore Bonga South West project expansion until 2016 in the wake the ongoing oil price rout.
Last Thing Nigeria Needs: Uncertainty
Companies generally prefer a stable environment to do business. Therefore, any uncertainty emanating from the possible change in contract terms signed with international oil companies could jeopardize investment in new ventures. With oil prices falling through the floor, Nigeria is already struggling. Any battles over revenue break-up from the fields could only magnify the problem. Worryingly, this might alienate the multinational firms that it so desperately needs to churn out the country’s most valuable commodity from its reserves.
- See more at:

Wednesday, October 14, 2015

Venezuela says eight non-OPEC nations invited to Vienna meeting

Venezuela's new Oil Minister Eulogio Del Pino attends a meeting at Miraflores Palace in Caracas August 20, 2015. REUTERS/Carlos Garcia Rawlins
Venezuela's new Oil Minister Eulogio Del Pino attends a meeting at Miraflores Palace in Caracas August 20, 2015.

Venezuelan Oil Minister Eulogio del Pino said on Tuesday that eight non-OPEC countries have been invited to an Oct. 21 oil meeting: Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia.
The technical meeting of oil experts from the Organization of Petroleum Exporting Countries and non-OPEC countries will be held in Vienna, he told Reuters.

"The confirmations are coming in gradually and I'm personally calling ministers to ensure that the delegation is of the adequate level of authority," del Pino said.

Venezuela, an OPEC member, will unveil a bold new strategy this month, taking a page from the organization's history books with a proposed price band to build an automatic floor for prices at $70 a barrel.

In an exclusive interview with Reuters, Venezuela's long-time oil minister and current United Nations ambassador, Rafael Ramirez, said the proposal would reapply the old mechanism of progressive production cuts to control prices, with a "first floor" of $70 per barrel and a later target of $100 per barrel.

Price hawk Venezuela has been pushing to stem a tumble in oil prices, but faces an uphill battle to convince its richer Gulf counterparts and non-OPEC nations. The meeting's date was already known but the location and full list of invitees was not revealed until Tuesday.

Venezuela's proposal will be discussed at the meeting this month, Kuwait's oil minister said on Tuesday.

"There is no decision. It will be discussed, and (based on) the outcome, we will decide whether to agree or disagree," Ali al-Omair told reporters. He did not elaborate.

Russia, the world's top oil producer, has refused to cooperate with OPEC, in which Saudi Arabia is the leading producer.

However, Energy Minister Alexander Novak has said that Russia was ready to meet with OPEC and non-OPEC producers to discuss the market and his comments have supported prices, although analysts have warned that relations may suffer over the two sides' differing positions on Syrian President Bashar al-Assad's future.

Mexico said earlier this month it is ready to participate in the technical meeting to discuss the market, but it will not cut crude production.

An oil price recovery would be positive for recession-hit Venezuela, where roughly 96 percent of hard currency income derives from oil.

However, the International Energy Agency says a global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC members maintain near-record output.

(Reporting by Alexandra Ulmer; Additional reporting by Marianna Parraga; Editing by Richard Chang and Matthew Lewis)

Oil eases further below $50 on oversupply, China concern

A petro-industrial factory is reflected in a traffic mirror in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter/Files

Oil eased further below $50 a barrel on Wednesday, pressured by concern a supply glut will persist and demand slow down as economic growth moderates in No. 2 consumer China.
Chinese growth for the third quarter is expected to fall below 7 percent for the first time since the global financial crisis. The International Energy Agency (IEA) said on Tuesday the oil market would remain oversupplied in 2016.

Brent crude was down 4 cents at $49.20 a barrel as of 1353 GMT (0953 EDT), in choppy trade. Prices have more than halved from June 2014. U.S. crude fell 10 cents to $46.56.

"Prices should remain low," said Daniel Ang, an investment analyst at Phillip Futures. "We are still in oversupply."

Crude gained some support from a weaker dollar, which fell to a 3-1/2 week low against a basket of currencies as signs of economic weakness in China bolstered expectations the United States will wait longer before raising interest rates.

The IEA forecast on Tuesday that oil demand growth would slow next year and a potential increase in supply from Iran would counter slowing output from the United States and other countries outside OPEC, keeping the market oversupplied. [IEA/M]

The Organization of the Petroleum Exporting Countries in 2014 dropped its longstanding policy of supporting prices by cutting output, choosing instead to defend market share against higher-cost producers such as U.S. shale oil.

In a sign the strategy is working, a forecast from the U.S. Energy Information Administration sees U.S. shale production falling by the most on record in November, extending a nationwide output decline into a seventh month.

"Non-OPEC supply will probably decrease more steeply than previously anticipated," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "Shale oil production in the U.S., for example, is now falling sharply."

Still, the latest round of weekly U.S. supply reports is likely to suggest no end to the glut is yet in sight. 

Analysts expect reports from industry group the American Petroleum Institute (API) and the U.S. Department of Energy (EIA) will show crude stocks rose by 2.9 million barrels. 

The API releases its data at 2030 GMT, followed by the EIA on Thursday.

(Additional reporting by Meeyoung Cho in Seoul; Editing by Jason Neely and David Evans

Monday, October 12, 2015

Oil Prices Climb Further On Falling U.S. Oil Rig Count

Crude oil prices rallied in Asia trade Monday on declining U.S. oil rig count and indications that major oil producers are ready to jointly tackle the prolonged low prices. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $50.08 a barrel at 0325 GMT, up $0.45 in the Globex electronic session. November Brent crude on London’s ICE Futures exchange rose $0.42 to $53.07 a barrel. Nymex crude last week saw the largest one-week percentage gain since the end of August, climbing 8.9%, while Brent registered a 9.4% increase. 

Baker Hughes Inc., an industry group, last week reported a decline in the active U.S. oil rig count for the fifth straight week, dropping by nine, bringing the total count to 605, the lowest since June 2010. Rig count is an important gauge of future production. 

“Market confidence is up because we are hearing the same message from everywhere that market is rebalancing,” said Barnabas Gan, an OCBC oil analyst, identifying Asia, particularly China, as the main demand driver in the near term. 

Oil prices have suffered a major blow due to oversupply. Moreover, reluctance of major oil producers to curb production to protect their market share has kept prices in the trough. Both Nymex and Brent prices are down by nearly half since last summer. 

However, recent talk of possible collaboration between members and nonmembers of the Oil Petroleum Exporting Countries has injected some optimism into the market. 

Market participants are watching to see if Saudi Arabia and Russia, the biggest non-OPEC producer, will meet later this month to discuss the oil market, as some reports have indicated, said Stuart Ive, a client manager at OM Financial. He noted that Monday trading volume would be small as the U.S. is closed due to a public holiday. 

Other data that the market is monitoring include China’s September trade data, set for released Tuesday. ANZ Research estimates China’s exports contracted last month, but the strong balance can offset the pressure of capital outflows. 

On Sunday, Qatar’s energy minister, Mohammed Al Sada, said oil prices have bottomed out and supplies from non-OPEC countries will likely turn negative next year, while demand could reach 30.5 million barrels a day from 29.3 million in 2015. 

Such upbeat sentiment mirrors the latest projection by the U.S. energy department. Last week, the Energy Information Administration reported daily U.S. crude production will tighten to 8.86 million barrels a day from 9.25 million barrels this year, while the spot average price on the West Texas Intermediate is projected to rise to $53.57 per barrel from $49.53 per barrel this year. The agency also expects the Brent spot average to be $58.57 a barrel in 2016, up from $53.96 this year. 

Nymex reformulated gasoline blendstock for November--the benchmark gasoline contract--rose 124 points to $1.4291 a gallon, while November diesel traded at $1.5996, 87 points higher. 

ICE gasoil for October changed hands at $482.50 a metric ton, up $0.75 from Friday’s settlement. 

Write to Jenny Hsu at

Former oil minister's family: Pray for her as she battles cancer and UK corruption claims

The Associated Press
FILE- In this Tuesday, March 4, 2014 file photo, former Nigerian petroleum resources minister Diezani Alison-Madueke answers a question following a speech at the IHS CERAWeek, in Houston. The family of the former oil minister is asking Nigerians to pray for her as she fights cancer and British allegations of corruption. A statement from Diezani Alison-Madueke's lawyer denies she was arrested and says she was "merely invited" to answer questions by Britain's National Crime Agency last week. Lawyer Oscar M. Onwudiwe said Friday, Oct. 9, 2015 the family asks for Nigerians' prayers as the ex-minister undergoes surgery next week after months of chemotherapy and hopes to emerge strong enough to confront the allegations. (AP Photo/Pat Sullivan, file) 

By MICHELLE FAUL, Associated Press

LAGOS, Nigeria (AP) — The family of the former oil minister is asking Nigerians to pray for her as she fights cancer and British allegations of corruption.

A statement Friday from Diezani Alison-Madueke's lawyer denied she was arrested in London last week and said she was "merely invited" to answer questions by Britain's National Crime Agency.

The agency confirmed only that it briefly arrested five unidentified people in a bribery and money-laundering investigation.

Nigerian newspapers reported Alison-Madueke had been arrested and released on bail.

The ex-minister has been in London for months since her party lost power and President Muhammadu Buhari took office in May promising to halt endemic corruption.

Nigeria's former Central Bank governor has alleged $20 billion in oil sales went missing in two years under Alison-Madueke's watch.

Nigerian media identified Alison-Madueke as the minister that the U.S. Justice Department told Buhari had looted $6 billion. Edo State Gov. Adams Oshiomhole was at the meeting and reported Buhari was given the name of the minister, but he did not identify the person.

Lawyer Oscar M. Onwudiwe denied allegations of corruption and media reports of the Madueke family's ownership of multimillion-dollar homes in Britain and the United States, denouncing "a deliberate and vicious campaign to demonize members of the Madueke family."

He said Alison-Madueke has been in London receiving months of chemotherapy and will undergo surgery next week.

"The family ... would plead with all reasonable Nigerians to pray for her recovery so that she can face these allegations and give account of her stewardship," the lawyer said.

Friday, October 9, 2015

Beware of signing Nigerian ‘Letters of Comfort’ - P&I Club


Tanker owners should not provide a ‘Letter of Comfort’ to the Nigerian National Petroleum Corporation (NNPC), a leading P&I club has advised.
This letter potentially exposes owners and operators to huge liabilities and, although it is appreciated that some may choose to provide the letter for commercial reasons, P&I cover may be compromised as a result, the Standard P&I Club warned.

Furthermore, providing such a letter to charterers is unnecessary, as lawful conduct should be implied in any charter.
This problem has arisen, following the lifting of the ban on the 110 plus crude oil tankers calling within Nigerian waters. NNPC has now said that it requires ‘Letters of Comfort’ to guarantee that the nominated vessel will not be used for any illegal activity in Nigerian territorial waters.   
It was believed that this letter was being requested from terminal operators and cargo interests rather than owners/operators. However, some owners are being asked to sign and send this letter to NNPC and/or to provide these onerous and wide ranging guarantees directly to charterers, the club said.

INTERTANKO’s Documentary Committee has discussed this issue and advised:
Do not sign any ‘Letter of Comfort’ addressed to NNPC.
Letters of Comfort to charterers are unnecessary. If charterers insist – use INTERTANKO’s model ‘Letter of Comfort for Nigeria Trade’ wording, or similar, and seek a back to back ‘Letter of Comfort’ from charterers.
Use the INTERTANKO Nigeria Trade Clause in charterparties. This makes the charterer the party responsible for any documents which might be requested from Nigerian Authorities, which would include the ‘Letter of Comfort’.
Take care with Bill of Lading (shore) figures, which must represent the amount the Master reasonably believes he/she has on board.
Provide out-turn figures to the terminal whether requested or not.
The club recommended resisting providing a ‘Letter of Comfort’ as far as possible and, as recommended by INTERTANKO, it suggested that owners propose that the letter be sought from either the terminal operator or the shipper.
If charterers insist that a letter is provided and owners choose to comply for commercial reasons, the club suggested amending it so as to follow INTERTANKO’s model ‘Letter of Comfort’ for Nigeria Trade wording and obtaining a back to back ‘Letter of Comfort’ from charterers.
The wording is as follows:
‘The vessel XXXX  is contracted to load at XXXX with a laycan of XXXXX.

Owners confirm that the vessel will not knowingly engage in any illegal activities and will strictly follow any legal instruction issued in accordance with the terms of the charterparty.’
INTERTANKO has written to the NNPC to discuss this issue to try to persuade the company to drop this request, but thus far, there has been no response.