Friday, November 17, 2017

VLCC Markets - Waiting for the Winter

November’s VLCC Meg programme was concluded last week with some 132 cargoes fixed, volumes not seen since January. 
We are currently between months and as usual activity is a bit subdued, Fearnleys said in its weekly report.

A couple of December deals were done, but basically BOT cargoes and rates  were concluded at last done levels.

Saudi stem-confirmations could possibly be out by the end of this week.

WAfrica/East activity was also a bit slower, but owners were resilient and rates remained stable, as optimism was still in place for the winter.

Suezmaxes experienced steadily eroding rates over the past week, with WAfrica slipping from the low WS80’s down to WS72.5 for TD20. End November cargoes were thin on the ground and other areas remained quiet allowing tonnage to build up.

Owners earnings were further eaten into by increasingly expensive bunkers adding to the pain. The earnings are now below the $10,000 per day threshold.

Thus far, the Turkish Straits delays have been unseasonably minimal, although this is expected to change in the weeks ahead of the winter months.

There is a glimmer of hope in the Med and Black Sea, where there was a sudden flurry of action with Aframaxes and lists tightened. This was the trigger a year ago for Suezmaxes and owners will be watching with keen interest for any opportunity to capitalise.

The week ahead has a softer feel but this could turn around on increased volume or weather delays. Norwegian meteorologists are guessing that there will be a warm start to this winter season, and North Sea and Baltic Aframax markets should be moving sideways heading towards December.

The fact that there is a five- day maintenance period coming up at Primorsk undermines the ’bold’ statement above.

The Med and Black Sea softened last week and has remained rather flat ever since. However, it is looking to firm up next week again, as tonnage is quickly being picked up for early 1st decade, leaving the cross-Med cargoes with fewer options going forward, Fearnleys concluded.

Crude tanker freight rates are expected to decline further next year, following a sharp decline in 2017, according to the latest edition of the Tanker Forecaster, published by shipping consultancy Drewry.

Although crude tonnage supply growth is expected to be low next year after surging in 2017, this will not be enough to push tonnage utilisation rates higher, as demand growth is expected to be sluggish. A slowdown in global oil demand growth and a likely decline in China’s stocking activity will keep growth in the crude oil trade moderate next year.

After a sharp decline in 2016, freight rates in the crude tanker market have declined further this year, despite strong tonnage demand growth in the two years, thanks to a surge in tonnage supply.

Fleet growth is expected to come down to 3.2% in 2018, after increasing by close to 6% per year in 2016 and 2017. However, this is unlikely to provide any respite to owners, as rates will continue to decline in 2018 on account of a slowdown in crude oil trade growth. Global oil demand growth is expected to fall to 1.4 mill per day in 2018 from 1.6 mill per day in 2017, Drewry said.

In addition, a likely slowdown in China’s stocking activity poses a big risk to crude tonnage demand. This activity, which remained one of the leading factors behind the strong growth in the crude oil trade over the last two years, may fall significantly in 2018.

According to the IEA’s data on China’s implied stock changes, the country should have accumulated close to 520 mill barrels since 2015, well above the total special petroleum reserve (SPR) capacity that was supposed to come online fully by 2020.

A sharp decline in stocking activity in the third quarter of this year to 0.5 mill barrels per day from 1.2 mill barrels per day in the second quarter suggests that we might see a significant decrease in the inventory build-up by China in 2018, Drewry concluded.

In the products trades, Asia’s front-month regrade (a measure of jet fuel’s relative strength to gasoil) recently eased from last Thursday’s 19-month high of $1.58 per barrel but remained relatively strong at $1.32 per barrel, Ocean Freight Exchange (OFE) reported.

While the surge in the Asian regrade can be partly attributed to seasonality during the winter heating oil demand season, the bulk of support is coming from the ongoing slump in the gasoil market.

Regional refineries have been running hard on the back of robust refinery margins, as well as the end of turnaround season, flooding the market with excess supplies. Unusually high diesel exports from India, despite the end of monsoon season, have added length to an already-pressured market, OFE said.

The jump in Indian gasoil exports can be attributed to Indian Oil’s 300,000 barrels per day Paradip refinery running at full capacity, as well as the ramp-up of BPCL’s 310,000 Kochi refinery and HMEL’s 230,000 barrels per day Bathinda refinery after recent expansions.

Sentiment in the Asian high sulfur gasoil market weakened further after the release of a new batch of Chinese export quotas, as well as China’s domestic ban on diesel with sulfur content greater than 10 ppm, which are likely to result in higher exports of high sulfur diesel.

The increase in cargo demand is reflected in the firm North Asian MR segment. Rates for a South Korea/Singapore trip basis 40,000 are currently assessed at $460,000, some 13% higher than at the start of the month.

An increasingly narrow gasoil EFS and relatively high freight rates have closed the arbitrage window to Europe, leaving Singapore as one of the few viable outlets for excess barrels.

As such, onshore middle distillate inventories in Singapore stood at 11.55 mill barrels for the week ending November 9, up by 9.7% month-on-month, OFE concluded.

Elsewhere, TEN has taken delivery of the Ice Class Aframax ‘Bergen TS’, the last in the 15-vessel pre-employed newbuilding programme.

The ship was built by Daewoo-Mangalia and started a long-term charter immediately after its delivery.

The fleet expansion resulted in a 30% increase of TEN’s fleet over the last 18 months.

The first ship from the tranche, the 300,000 dwt VLCC ‘Ulysses’ was delivered in May, 2016. She was followed by nine Aframaxes, two LR1s, a DP2 Shuttle tanker, another VLCC and an LNGC.

With 65 vessels fully operational, TEN’s minimum revenue backlog comes to 1.3 bill with average contract duration of 2.5 years, the company claimed.

“With the largest growth in the company’s history, successfully and timely completed, TEN is well positioned to take advantage of market opportunities as they will appear,” Nikolas Tsakos, TEN President & CEO, said. “The fully employed renewal programme is expected to significantly contribute to TEN’s bottom line and solidify the fleet’s income visibility and cash generation from now and into the future.”

In the charter market, the 2012-built VLCC ‘Trikwong Venture’ was believed fixed to Koch for $27,500 per day, while the 2012-built Suezmax ‘Decathlon’ was taken by Total for 12 months at $19,000 per day.

In the Aframax sector, the 2006/07-built ‘NS Captain’ and ‘NS Columbus’ were thought fixed to Clearlake for 12, option 12 months at $15,500 per day each. Vitol was said to have taken their near sister, the 2003-built ‘Petrozavodsk’ for six months at a similar rate. PBF Energy was said to have taken the 1998-built ‘Eagle Austin’ for 12 months at $15,000 per day and the 2004-built sisters, ‘Adafura’ and ‘Ashahda’ were reportedly fixed to undisclosed interests for $14,500 per day each.

The recently delivered LR1 ‘Cielo Blanco’ was reported as fixed to Trafigura for six, option six months at $13,750 per day, while Navig8 was believed to have taken the 2004-built ‘Theodosia’ for 12, option 12 months at $11,750 per day. 

In the MR sector, Golden Stena Weco was thought to have fixed the 2017-built ‘Altair’ for two years at $15,000 per day, while Chevron was said to have taken the 2009-built sisters ‘Nave Orbit’ and ‘Nave Equator’ for 12, option 12 months at $13,500 per day.

ST Shipping was very active.This charterer was believed to have fixed the 2005-built MR ‘Kriti Emerald’ for 12 months at $16,000 per day, the 2004-built ‘Jasmine Express’ for 12 months at $12,750 per day, plus the 2008-built Handysize ‘Hector N’ for 12 months for $12,000 per day.  

In the S&P market, brokers said that the 2003-built Aframax ‘Singapore Voyager’ had been committed to Greek interests for $9 mill, while Indian buyers were said to have committed $9.8 mill for the 1998-built Suezmax ‘Cap Georges’.    

Thursday, November 16, 2017

Saudi Retreat From U.S. Oil Market Cuts Exports to 30-Year Low

For a generation, the huge, whitewashed storage tanks at America’s largest oil refinery in Port Arthur, Texas, have stored almost nothing but Saudi crude.

The plant is owned by Saudi Arabia’s state-run oil company, Aramco, and since it first bought a stake in 1988, the Motiva refinery guaranteed the kingdom a strategic foothold in the world’s largest energy market. The tankers carrying millions of barrels a month of Arab Light crude from Saudi export terminals to Port Arthur were testament to the strength of the energy and political ties binding Riyadh and Washington.

All of a sudden, there are very few Saudi ships arriving in Texas. Since July, Aramco has constricted supply, attempting to drain the crude storage tanks at Motiva -- and many others across America -- part of a plan to lift oil prices, even at the cost of sacrificing its once prized U.S. market.

While Motiva is most affected, the rest of the U.S. oil refining system, from El Segundo in California to Lake Lake Charles in Louisiana, has also taken a hit. The result: Saudi crude exports into America fell to a 30-year low last month.

"The drop is huge," said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. "It’s not just that Saudi exports are low, but they have been low for several months.”
At a stroke, the freedom from Saudi oil that’s been a rhetorical aspiration for generations of American politicians, from Jimmy Carter to George W. Bush, is within reach -- even if it’s largely the choice of supplier rather than customer.

The U.S. imported just 525,000 barrels a day of Saudi crude in October, the lowest since May 1987 and down from 1.5 million barrels a day a decade ago, according to Bloomberg News calculations based on custom data.

The export drop was part of a wider undertaking by the Organization of Petroleum Exporting Countries to fight a global glut that has weighed on oil prices. OPEC and its non-OPEC allies including Russia are scheduled to meet later this month to discuss prolonging the cuts through 2018.

Saudi Arabia, which for decades fought hard to be the second-largest oil supplier to the U.S. after Canada, last month dropped to fourth position for the first time since at least 1990, falling behind Iraq and Mexico.

The drop in supplies has been so dramatic that Motiva bought in July almost exactly the same amount of crude from Saudi Arabia (4.01 million barrels) as it did from Iraq (3.96 million), according to custom data.  Saudi crude that month accounted for just 36 percent of Motiva’s imports, down from a typical 70-90 percent in the past.In August, the most recent monthly data available at company level, Saudi crude accounted for less than half of Motiva’s imports.

The combination of falling Saudi oil exports into the U.S. last year, cheap crude and higher exports of American weapons had already turned upside-down the trade relationship between the two countries. Last year, the U.S. enjoyed its first trade surplus with Saudi Arabia since 1998 -- only the third in 30 years, according to data from the U.S. Census Bureau. The sharper cuts in oil exports since the summer will likely amplify that trend.
As Saudi supplies fell, U.S. crude inventories dropped sharply over the summer and autumn to their lowest since January 2016. Oil prices have followed and Brent, the global benchmark, traded at a two-year high above $60 a barrel this month.

"The policy has been a tremendous success," said Anas Alhajji, a Dallas-based oil consultant who tracks Saudi oil policy. "The U.S. is the only country in the world that publishes oil inventories data on a weekly basis and investors closely follow it. Saudi Arabia needed to focus on the data that matters to investors, and it did by lowering exports to the U.S."

Saudi officials said that oil exports are set to drop even further in this month and next, with shipments into the U.S. expected to fall another 10 percent from November.

"The cuts show that when the Saudis say they will do ’whatever it takes’ they mean it," said Helima Croft, global head of commodity strategy at RBC Capital Markets LLC and a former analyst at the Central Intelligence Agency.

Yet, driving its exports into the U.S. to a three-decade low isn’t without risks for Riyadh. Once a country gives up its market share, it can be costly to recover it. The drop in Saudi shipments also reflects the changing U.S. energy market as rising shale production reduces the overall need for foreign oil. The EIA expects U.S. output to reach an all-time high of 10.1 million barrels a day by December 2018.

"Our import dependence has collapsed," said Bob NcNally, a former White House oil official and head of consultant Rapidan Energy Group LLC. "What should worry Riyadh is if they need to sustain the cuts not a few more months, but a lot longer.”

The International Energy Agency painted a rosy outlook for U.S. domestic production up to 2025 in its annual World Energy Outlook flagship report, saying the surge in oil and gas output in America is the biggest boom in history.

However, owning Motiva gives Saudi Arabia a route to regaining market share, traders and refining executives said.

"Motiva has taken the brunt of the Saudi cuts, so Riyadh would be able to increase exports to the U.S. relatively easily in the future as and when they decide to reverse the policy," said Sen at Energy Aspects.

For the Saudi Arabian Oil Co., as Aramco is formally known, the loss of market share comes at a delicate moment. The company is preparing for an initial public offering that Riyadh hopes will value the company at an eye-watering $2 trillion.

The American market has long been Aramco’s most prized, and the Port Arthur refinery is one of the company’s jewels -- nearly $10 billion was spent expanding its capacity in 2013. In preparation of its initial public offering, scheduled for the second half of 2018, Aramco earlier this year paid to $2.2 billion to take full control of Motiva, dissolving a 50-50 joint-venture it held with Royal Dutch Shell Plc.

Aramco declined to comment.

At any other time, the loss of U.S. market share would have worried the Saudi regime, fearing a loss in political influence. But with President Donald Trump, the Saudis believe the strength of their relationship with the White House is as good as it’s been in decades, said David Goldwyn, a Washington-based energy consultant and former U.S. State Department top oil diplomat.

"The Saudis are not worried about the need to have U.S. oil market share to secure themselves diplomatically," Goldwyn said.

The shift away from the U.S. show the increasing important of Asian markets for Saudi Arabia, most notably China, but also India, Indonesia, Japan and South Korea. While Saudi exports to the U.S. plunged, sales in Japan earlier this year jumped to a 28-year high.

"Saudi Arabia doesn’t care any more about its market share in the U.S -- it’s going after the Asian market," said Jan Stuart, an oil economist at consultant Cornerstone Macro LLC in New York.

Wednesday, November 15, 2017

Sinking Rich: Speedboat Racing Through a Failed State

Ghana in Talks with ExxonMobil

The government of Ghana and US supermajor ExxonMobil are in talks aimed at allowing the US firm to launch an exploration program off the West African country’s coast.

In 2015 ExxonMobil and Ghana signed a MoU to assess its Deepwater Cape Three Point region, where the water depths range up to 13,000 ft.

The country’s deputy oil minister, Mohamed Amin Adam, was quoted in a Reuters report as saying that the government chose direct negotiation with the US firm over a competitive tendering process due to the peculiar nature of the oilfield.

The block was relinquished twice by Vanco Energy and Lukoil and that has since increased its risk profile, according to the Ministry. A release from the Ministry described the block as “one of the ultra-deep water blocks, which severely tests the limits of modern technology and would take research and development to optionally develop and exploit any discovered resources.”

Tuesday, November 14, 2017

Gunvor USA Secures USD 875 Million Borrowing Base Facility

Gunvor USA LLC, a subsidiary of Gunvor Group, has successfully closed the syndication of its USD 875 million Borrowing Base Credit Facility.

The facility will support the company’s established operations in the United States, as well as planned expansion into Canada. Gunvor USA LLC has two main offices, located in Houston (TX) and Stamford (CT), which are focused on trading refined products, crude oil and natural gas.

Our expanded facility enables Gunvor USA to build on our trading activities across the commodities space in North America,” said Chris Morran, Treasurer of Gunvor USA. “The oversubscription of the transaction and 75% increase in the facility amount demonstrate the level of confidence our banking partners have with our North American strategy.

The new facility is jointly lead arranged by Rabobank, which will also serve as Administrative Agent and Active Bookrunner, and ABN Amro Capital USA LLC as Joint Bookrunner. ING Capital, LLC, Natixis, New York Branch, and Société Générale join as Joint Lead Arranger in the transaction.
The syndicate also includes Credit Agricole Corporate and Investment Bank, Deutsche Bank AG, New York Branch, Mizuho Ltd. and Sumitomo Mitsui Banking Corporation.

Gunvor USA has grown rapidly since its launch in 2016, and has significantly expanded its bank group as part of the refinancing,” said David Garza, President of Gunvor USA and Managing Director for its North American operations. “In the last year, Gunvor USA has hired more than 60 people for its North American operations, and opened trading offices in Houston and Stamford, and now a rep office in Calgary. We’ve been able to grow at an accelerated pace with the support of our banking partners.

Gunvor USA LLC is a wholly-owned indirect subsidiary of Gunvor Group Ltd., one of the largest independent energy commodity traders in the world.

Monday, November 13, 2017

What the Saudi Arrests Mean for the Kingdom's Oil Policy

We may never fully know what lies behind Crown Prince Mohammed bin Salman's decision to arrest more than 200 Saudi citizens, including 11 princes and four government ministers, on corruption charges, just as tensions with Iran are escalating.

What we do know is that his move simultaneously boosted the oil price and undermined the attractiveness of Aramco to potential foreign investors. But it would be a mistake to conclude that this political decision also heralds a shift in Saudi oil policy, or permanently damages the prospects of the state oil company's IPO. 

Crude prices always rise in response to unrest in the Middle East, even when the countries involved produce little or no oil. That it has done so now, in the wake of the arrests in the region's biggest producer and the threats against Lebanon and Iran in response to a missile launched from Yemen, should come as no surprise.

The jump, which took oil prices to their highest level in more than two years immediately after the arrests, might be expected to boost support for a pause before OPEC and its friends decide whether to extend their current deal on production cuts until the end of 2018. There are some, including Russian President Vladimir Putin, who have said that it is too early to decide what should be done beyond the deal's current expiry in March. 

But dissenting voices are likely to fade into the background when the groups meet in Vienna on Nov. 30. The output cuts do not target a specific oil price -- as Saudi oil minister Khalid Al-Falih said in June, the aim is to reduce excess inventories. That problem has not yet been resolved.

MbS, as the crown prince is widely known, is already setting the kingdom's oil policy. He turned on its head Saudi Arabia's earlier stance of boosting oil supply in an attempt to drive out higher-cost producers, and he has placed his country at the forefront of output cuts aimed at draining excess inventories, cutting production by more than required under the agreement. He has already expressed support for extending the production deal. Only by returning global oil inventories to more normal levels can Saudi Arabia, and OPEC, hope to return to a world where their actions influence the market. 

The Saudi anti-corruption purge should change nothing for the kingdom's oil policy. MbS is surely mindful that an extension of the current output deal has already been priced into the market, and failure to deliver it at the end of the month would kill the recent rally in prices, despite the elevated tensions in the Middle East.

Assessing the impact of the detentions on the Saudi Aramco IPO is less straightforward. Ninety-five percent of the shares will remain the property of what is now clearly an unpredictable government. If the arrests turn out to be no more than a purge of opponents to the crown prince's accession to the throne, potential investors will run for cover.

But perhaps the anti-corruption purge is the first step towards creating a more open and dynamic business environment in Saudi Arabia. If it truly marks the beginning of the end of the of the rentier state that has crippled the country's development then it could even improve the prospects for inward investment, and boost the attractiveness of the shares.

Foreign investors' appetite for a piece of a partially-privatized Saudi Aramco will not depend on whether the price of oil at the time of listing is $50, $60, or $70 a barrel. A decision to invest in the company will depend much more on the dividend and taxation policies of the major shareholder -- the Saudi government -- and the investor's view of the long-term future for oil.
Indeed, it could be argued that over the longer term Aramco would benefit from a lower oil price, which simultaneously boosts demand for crude and makes alternative energy sources less attractive while undermining other, higher-cost oil supplies. That ought to give the best outlook for production as Aramco still extracts some of the lowest cost oil on the planet. If Saudi Arabia's "Vision 2030" plan to wean the kingdom off its dependence on oil revenues is even partly realized, Aramco will be relieved of much of its burden of supporting government expenditure. That should serve to burnish the appeal of the shares.

To realize his dream of privatizing Aramco -- and the planned 5 percent offering may be only the beginning -- the young crown prince will need to show hoped-for investors that his recent purge of the kingdom's elite really is a first step on the road to a brave new Saudi Arabia.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners. 

To contact the author of this story:
Julian Lee in London at

To contact the editor responsible for this story:
Jennifer Ryan at

Friday, November 10, 2017

CNBC Investigates A Venezuelan Oil Deal | CNBC

Shipping Markets - Older VLCCs in favour

The VLCC market remained flat during the past week for modern tonnage, as charterers focused more on older units.
These older vessels tended to be ex drydock with no SIRE, etc, which were willing to accept a tempting rebate of some WS12-15 points for east voyages, Fearnleys said in its weekly report.

The rebate closed in as the week progressed and increased resistance from owners was seen. Looking ahead, owners’ sentiment remained strong as the remaining 3rd decade cargoes were being worked. Delays were still evident in the Far East, which added further pressure.

The Suezmax market also came under pressure over the past week. Activity in West Africa slowed to a trickle and naturally the tonnage list grew allowing charterers to chip away at levels from the early WS100s down to the low WS80s.

The Black Sea and Med weather delays were minimal and again cargo activity was been scarce allowing TD6 to fall sharply to WS90.

Current market conditions are bucking the normal 4Q17 more healthy market trend and owners are running out of time with December dates rapidly approaching. It is going to take a large volume of cargoes to soak up the current tonnage back log, Fearnleys said.

However, a higher oil price is pushing up the bunker costs, which in turn is eroding earnings. This could be the brake to stop further rate slippage ahead.

Aframaxes trading in the North Sea and Baltic experienced an ongoing decrease in rates this week. Less cargo activity, coupled with an oversupply of available tonnage, gave charterers the upper hand and an opportunity to push down rates.

Going forward, we see an even further downside before the market will firm again.

Last week, owners in the Med and Black Sea were holding out for high numbers. But as the market fundamentals pointed towards a softer market, the only thing keeping rates at such high levels was owners’ persistence.

By the start of this week, owners realised the list of available tonnage was too long to play hard to get, and caved in one at the time. The market has now dropped WS40 points and we could see it going below WS100 by the end of this week, Fearnleys concluded.
The recent Iraq/Kurdish conflict heralds the return of the geopolitical risk premium in oil prices, Ocean Freight Exchange (OFE) reported.
While the ongoing rally in crude prices is underpinned by fundamentals, such as robust demand growth, ongoing OPEC supply cuts and falling US crude inventories, growing tensions in the Middle East have been playing an increasingly significant role.

With Iraq seizing control of the disputed Kirkuk region on 16th October, Brent crude futures jumped to a three-week high of $57.82 per barrel, as production at two major oilfields was shut. According to Bloomberg, Kurdish crude exports fell by around 300,000 barrels per day in October, due to supply disruptions.

Spurred by the sudden and unexpected purge in Saudi Arabia, oil prices surged to their highest in two and a half years, as Brent crude futures crossed the $64 per barrel mark on Monday.

The anti-corruption crackdown is viewed by many as a move by Crown Prince Mohammed bin Salman to further consolidate his power at home, as he pushes through major reforms, such as ‘Vision 2030’, which includes the Saudi Aramco IPO.

Concerns over potential instability in the Kingdom and investment climate have added a geopolitical risk premium to oil prices.

If anything, the Saudi purge can be viewed as bullish for oil prices as it further cements Saudi Arabia’s commitment to reduce the global glut. Crown Prince Mohammed bin Salman has made his stance on extending the ongoing OPEC cuts of 1.8 mill barrels per day clear, as higher oil prices would benefit the IPO, OFE said.

The rollover of the OPEC production curbs for the whole of 2018 is likely to further delay any significant recovery in the tanker market, which is already facing headwinds from persistent overcapacity.
Lower cargo volumes ex-AG have contributed to the drop in average VLCC earnings this year, which are currently around 40% less than that of 2016. The backwardated market structure has also led to the ongoing decline in VLCC floating storage, which has released more tonnage into the trading fleet, OFE concluded.
Meanwhile, the 2006-built MR ‘Pretty Scene’ is due to be publicly auctioned at Durban, South Africa on 5th December this year.
Bowman Gilfillan is handling the auction, which has materialised as a result of a judicial arrest.
Monjasa has confirmed that it is to charter an SKS Tankers Holding ‘D’ class Aframax.
The 119,000-dwt tanker will form part of Monjasa’s operations covering West Africa, which comprises 15 tankers delivering a total of 1.5 mill tonnes of marine fuel anually.
Several advanced technical features and the ability to load, discharge and blend multiple grades of cargo simultaneously, made this vessel an interesting proposition, the company said.   

Group CEO, Anders Østergaard, explained:“It’s a pioneering move to apply an SKS D-class tanker as a floating storage and this first-class vessel becomes the largest ever member of Monjasa’s fleet.

"The aim is to strengthen the backbone of our West Africa logistics and offer more flexibility for our customers taking bunkers in the region. For this purpose, we see her as an excellent solution for current and future trading requirements,” he said.

The vessel has six double valve segregations and is equipped with Framo deepwell cargo pumps for each individual tank.

Monjasa will take delivery of the vessel in Europe, and she will be fully operational off West Africa during December, 2017.

In other chartering news, Koch was said to have fixed the 2011-built VLCCs ‘Maersk Heiwa’ and ‘Mercury Hope’ for two years at $29,000 per vessel.

The 2007-built Aframax ‘Bai Lu Zhou’ was believed taken by Trafigurafor 12 months at $13,500 per day, while ST Shipping was thought to have taken the 2009-2010-built sister Aframaxes ‘SN Claudia’ and ‘SN Olivia’ for 12 months at $15,500 per day.

Petrobras was said to have chartered the 2005-built MR ‘Aris’ for 30 months at $14,350 per day.

In the S&P sector, Greek interests were said to have taken the newbuilding Suezmax ‘RS Aurora’ for an undisclosed fee, while Aegean was thought to have bought the 1999-built Aframax ‘Althea’, which brokers said was an old sale. 

Central Shipping was believed to have ordered one, option one MR at Hyundai Mipo for a reported $32-$35 mill per ship and delivery in 2019.

Thursday, November 9, 2017

Saudi AG reveals corruption close to $100 billion, 208 individuals called in for questioning

Attorney General Saud Al-Mojeb

JEDDAH: Saudi Arabia has uncovered corruption to the tune of $100 billion.

In a statement on Thursday, Attorney General Saud Al-Mojeb said: “The investigations of the Supreme Anti-Corruption Committee are proceeding quickly ... The potential scale of corrupt practices which have been uncovered is very large.”

Based on the investigations over the past three years, Al-Mojeb estimated that “at least $100 billion has been misused through systematic corruption and embezzlement over several decades.”

He said a total of 208 individuals have been called in for questioning so far. Of them, “seven have been released without charge.”

Al-Mojeb, who is also the member of the anti-corruption committee, said the evidence for “this wrongdoing is very strong and confirms the original suspicions which led the Saudi authorities to begin the investigation into these suspects in the first place.”

He said given the scale of the allegations, the Saudi authorities, under the direction of the Royal Order issued on Nov. 4, had a clear legal mandate to move to the next phase of “our investigations, and to take action to suspend personal bank accounts.”

“On Tuesday, the governor of the Saudi Arabian Monetary Authority (SAMA) agreed to my request to suspend the personal bank accounts of persons of interests in the investigation,” he said.

Al-Mojeb admitted that there has been a great deal of speculation around the world regarding the identities of the individuals concerned and the details of the charges against them.

“In order to ensure that the individuals continue to enjoy the full legal rights afforded to them under Saudi law, we will not be revealing any more personal details at this time,” he said.

“We ask that their privacy is respected while they continue to be subject to our judicial process.”

He reiterated that it was important to repeat, as all Saudi authorities have done over the past few days, that normal commercial activity in the Kingdom is not affected by these investigations.

“Only personal bank accounts have been suspended. Companies and banks are free to continue with transactions as usual,” he said.

Al-Mojeb said: “The Government of Saudi Arabia, under the leadership of King Salman and Crown Prince Mohammed bin Salman, is working within a clear legal and institutional framework to maintain transparency and integrity in the market.”

Saudi Corruption Crackdown Topples Oil Kingpins


Saudi Crown Prince Mohammad bin Salman’s unexpected crackdown has shattered the tranquility of the kingdom.

After Saturday’s news emerged that a long list of high-profile Saudi royals, military leaders and multi-billionaires were arrested or confined to their quarters, all seemed to be only an implementation of the crown prince’s open threat that “no-one is above the law, whether it is a prince or a minister.”

The current list of arrests include names like Saudi billionaire Prince Al-Waleed bin Talal, one of the most media-loved Saudi businessmen, and Prince Miteb bin Abdullah, former head of the Saudi National Guard. At the end of the weekend, the impact was clear: The new Saudi power broker isn’t cutting anyone slack.

Just after that, in an effort to clean house in one fell swoop, Mohammad bin Salman (MBS) announced—by royal decree—a new anti-corruption committee.

At the moment, most eyes are on the anti-corruption narrative, which is being pushed by the Saudi government and media. The announcement of the arrests, made over Al Arabiya, the Saudi-owned satellite (whose broadcasts are controlled by the state), showed MBS’s willingness to address corruption. Clearly, corruption and a lack of transparency is still a significant issue in Saudi Arabia, and MBS is taking a risk in challenging it.

It seems the crown prince is far from finished, as news has emerged that one of the Arab world’s leading broadcasters, MBC, has been put under government control. Part of its management was removed and the owner detained. News is also emerging that even the former Saudi Minister of Oil Ali Al Naimi, Saudi Arabia’s media face for decades, has been forcibly confined to his quarters. 

Other sources state that a travel ban has been imposed for Saudi officials, including some figures within Saudi Aramco. The latter have been informed that travel requests are currently on hold. More interesting is that the Saudi Monetary Agency (SAMA) has ordered a freezing of accounts of individuals linked to corruption. SAMA reiterated the respective accounts of companies have currently not been frozen.

Regarding the Saudi royals, most princes and princesses are currently prohibited to travel, except with the permission of King Salman. Foreign money transfer also has currently been limited to $50,000 per month, with a two-month limit.  Security sources indicate that Saudi princes in Tabuk, Eastern Province and Mecca have been put under house arrest. At the same time, Saudi special forces have moved to surround the residencies of Prince Mishal bin AbdulAziz, Prince AbdulAziz bin Fahd and Prince Khalid bin Sultan.

These developments are going further than the original anti-corruption crackdown. The already long-foreseen power struggle to take the Saudi throne seems to be entering its second phase. Crown Prince bin Salman seems—supported by signs of support coming from Washington, Moscow and even Arab neighbors—to take the chance to overwhelm his local opponents by shockwave tactics. Some indicate that they expect a possible change of guard at the top in the next couple of days.

Each day’s developments grow more significant. MBS was able to increase his own position dramatically this weekend, and continues to remove remaining opposition by the dozen.

Although short-term volatility could occur, overall stability and change inside of the kingdom is to be expected, as MBS and his supporters are holding not only the military and security forces in their hands, but have also gained the trust and support of the majority of the Saudis.

MBS has the same charisma as John F. Kennedy had when took the U.S. presidential office.  The crown prince has gained an almost movie-star popularity under the young Saudis, who form the majority of the population.

These current developments didn’t come out of nowhere. The basis for the anti-corruption crackdown was supported by the success of the Future Investment Initiative 2017. Dubbed “Davos in the Desert”, this high-profile gathering of the world’s leading financial power brokers happened in Riyadh last week.

At the event, MBS received the green light to pursue his Saudi Vision 2030 dream to wean the kingdom from its hydrocarbon addiction. In the same week, U.S. president Trump and his administration increased their support for the Saudi hardline position to Iran, IRGC and Hezbollah. Washington also increased its pressure on Qatar to soon move away from Tehran.

These regional and geopolitical developments have bolstered the views of the MBS to pursue his strategy of confronting Iran and its proxies. It’s no coincidence that the start of the crackdown popped up at the same time that Lebanese prime minister Hariri took refuge in the kingdom. Thus, the link with Hezbollah-Iran and Lebanon isn’t difficult. 

Without trying to assess the present situation as dire and threatening, all signs show that the region, under influence of Saudi’s new de-facto ruler, is heading toward a full confrontation with Iran. The internal Game of Thrones of Saudi royals is now being slowly but obviously transformed to a full-scale showdown with Iran and its proxies.

Saudi Arabia—supported by the UAE, Bahrain and likely Egypt—was openly given the green light by Trump’s secretary of treasury and secretary of state. The silence on the Russian front indicates a possible change of heart in Putin’s coterie, as well. Saudi Arabia and others openly stated that Iran has committed several acts of war against the kingdom. The ballistic missile attack by Houthi rebels on the airport of Riyadh is directly linked to an act of war by Iran, perceived to be the provider of these systems.

The coming days are crucial for the region’s stability and future. The ongoing power struggle in the kingdom, which is currently openly on the streets, not only targets corruption, but is a move to consolidate power by Crown Prince bin Salman. His movement is clear, and should perhaps be supported in full, as it could lead the change that young Saudis want. The outcome will decide the further steps needed by all parties involved.

Considering the signs, the most positive outcome would be a consolidation of the position of MBS as the main power broker, leading to a full implementation of Saudi Vision 2030. In the short term, this won’t prohibit the Saudis and their allies to react and act with full military power against the Iranian power projections and its proxies in Yemen, Lebanon and Iraq.

Stability and security in Saudi Arabia is seen as a leading factor in MBS’s power strategies. Confrontations inside and outside the kingdom aren’t seen as a no-go area. After decades of listening to U.S., European or Russian advice, MBS is creating his own future. Short-term financial or economic instability and geopolitical risks have increased substantially in the last 24 hours.  

By Cyril Widdershoven for

Tuesday, November 7, 2017

Saudi Prince Alwaleed Bin Talal On Aramco IPO And Thoughts On President ...

Oil surges on Saudi purge, Trump’s Asia trip in focus

Crude oil prices surged to their highest level since June 15 as Saudi’s anti-corruption purge catalysed new waves of concerns over the stability of the world’s largest oil exporter.

Dozens of princes, ministers and business leaders were arrested under corruption and money laundering charges by Crown Prince Mohammed bin Salman. The news even triggered some profit taking and panic selling during early Asian trading hours on Monday. The crackdown’s full impact to the oil market remains to be seen, but usually market have short memory on regional political events and the impact tends to be impulsive and short-lived.

Technically, Brent’s price broke out above $61.4 resistance and is facing some selling pressure at around $64.6 area (161.8% Fibonacci extension level). The 10-day simple moving average line and SuperTrend (10, 2) are both sloped upwards, suggesting the current bull trend remains intact. Momentum indicator MACD remains strong, showing no sign of slowdown. The RSI, however, has entered into overbought zone at around 80%, suggesting that some technical pullback is possible in the days to come.

President Donald Trump announced there is a ‘very unfair trade situation’ with US’ largest trading partners including Japan during his visit in Tokyo yesterday. It is widely expected that he will further address the trade deficit and intellectual property disputes with Chinese leader Xi in his upcoming visit to Beijing, in an attempt to win a ‘free trade, fair trade, or reciprocal trade’ between US and China. Outside of trade agreements and investments, North Korea is also on top of his agenda this time.

Technical Analysis:

Brent – Cash
  • The 10-Day Simple Moving Average and SuperTrend (10,2) are both sloped upwards, suggesting uptrend remains intact
  • Facing strong resistance level at around $64.6 area, which is the 161.8% Fibonacci Extension level
  • Momentum indicator MACD and RSI suggest strong upward sentiment

Monday, November 6, 2017

Ship recycling - rays of hope

After what has been a rather dour period for the international ship recycling markets, the first glimmers of stability finally started to emerge last week.
After local steel plate prices declined by almost $50 per ldt, currencies battled a firming US dollar and recycled steel from ships imported over the summer months, increasingly failed to shift from domestic yards (resulting in growing stockpiles), the stabilising prices are a welcome breath of fresh air, especially to cash buyers and shipowners who are still looking to offload their prospective units, GMS said in its weekly roundup.

Over several weeks, China has entered into a state of artificial stasis as the Communist Party Conference continues locally. However, with news that President Xi is undertaking another five-year stay at the helm, hopes are high that this will in turn, help boost the domestic economy once again. For the time being however, many industries (including the domestic ship-recycling sector) have been in lockdown whilst all eyes fall on Beijing as the seldom seen Communist Party Conference concludes.

The ship recycling market in China has also endured a near and total shut down as officials attempt to tackle pollution/environmental concerns and bring figures in line with what is expected to be the outcome of this critical conference. The ongoing shut down has now resulted in levels declining by about $30 per ldt, subsequently securing China’s tail-end position in the market rankings. The domestic steel industry has also been sluggish and this has had a knock on effect on some of the competing markets.

As indications from the various markets have slipped over the recent weeks and Pakistan is now the only market where an $+400 per ldt offer can be expected for the right unit, it is safe to presume that the industry overall is now a sub-$400/tonne sector. Given that the supply of tonnage (especially from the drybulk and container sectors) has diminished considerably of late, an overall slowdown of potential candidates may help revive prices in the near future, GMS concluded.

Brokers reported that the 1995-built MR ‘Admiral 1’ had been committed to Bangladesh recyclers at an unknown price level, while Indian recyclers were said to have taken the 1990-built Handysize ‘Champion’ for $395 per ldt.

Sunday, November 5, 2017

Saudi arrests of princes consolidates another's power grab
Saudi billionaire Prince Alwaleed bin Talal al-Saud

RIYADH, Saudi Arabia — Saudi Arabia's heir to the throne is overseeing an unprecedented wave of arrests of dozens of the country's most powerful princes, military officers, influential businessmen and government ministers — some of them potential rivals or critics of the crown prince, whose purported anti-corruption sweep sent shockwaves across the kingdom Sunday as he further consolidated power.

Among those taken into custody overnight Saturday were billionaire Prince Alwaleed bin Talal, one of the world's richest men with extensive holdings in Western companies, as well as two of the late King Abdullah's sons.

The arrest of senior princes upends a longstanding tradition among the ruling Al Saud family to keep their disagreements private in an effort to show strength and unity in the face of Saudi Arabia's many tribes and factions. It also sends a message that the 32-year-old crown prince, Mohammed bin Salman, has the full backing of his father, King Salman, to carry out sweeping anti-corruption reforms targeting senior royals and their business associates, who have long been seen as operating above the law.

Reports suggested those detained were being held at the Ritz Carlton in Riyadh, which only days earlier hosted a major investment conference that the crown prince attended with global business titans. A Saudi official told The Associated Press that other five-star hotels across the capital were also being used to hold some of those arrested.

The Ritz Carlton had no availability for bookings until Dec. 1, 2017 — a possible sign that an investigation of this scale could take weeks. Marriott International said in a statement that it is currently evaluating the situation at the Ritz-Carlton in Riyadh, but declined to comment further, citing privacy concerns.

A Saudi government official with close ties to security forces said 11 princes and 38 others were being questioned. The official spoke to the AP on condition of anonymity because he was not authorized to speak to the media.

The surprise arrests were immediately hailed by pro-government media outlets as the clearest sign yet that Prince Mohammed is keeping his promise to reform the country as it moves to overhaul its economy away from dependence on oil and liberalize some aspects of the ultraconservative society.

The kingdom's top council of clerics issued a public statement overnight saying it is an Islamic duty to fight corruption — essentially giving religious backing to the high-level arrests.

It's unclear if the U.S. had any advance word of the arrests. President Donald Trump's son-in-law and White House adviser Jared Kushner and others made an unannounced trip recently to Riyadh. Earlier on Saturday, Trump said he spoke to King Salman, though the White House readout of that call did not include any reference to the impending arrests.

The Saudi government says the arrests are part of a wider effort to increase transparency, accountability and good governance — key reforms needed to attract greater international investments and appease a Saudi public that has for decades complained of rampant government corruption and misuse of public funds by top officials. Volatility from surprise moves reshaping the kingdom, however, are likely to worry investors.

Among those reportedly taken into custody were two sons of the late King Abdullah: Prince Miteb bin Abdullah, who Saturday evening was ousted from his post as head of the prestigious National Guard tasked with protecting the Al Saud family, and Prince Turki bin Abdullah, who was once governor of Riyadh.

Prince Miteb was once considered a contender for the throne, though he has not been thought of recently as a challenger to Prince Mohammed.

Saudi Twitter accounts released several other names of those arrested, inclduing Alwalid al-Ibrahim, a Saudi businessman with ties to the royal family who runs the Arabic satellite group MBC; Amr al-Dabbagh, the former head of the Saudi Arabian General Investment Authority; Ibrahim Assaf, a former finance minister, and Bakr Binladin, head of the Saudi Binladin Group, a major business conglomerate.

Analysts have suggested the arrest of once-untouchable members of the royal family is a clear sign that the crown prince is sidelining potential rivals for the throne.

The young prince has risen from near obscurity to become Saudi Arabia's most talked about and powerful prince in less than three years since his father ascended to the throne. The prince's swift rise to power has unnerved more experienced, elder members of the royal family, which has long ruled by consensus, though ultimate decision-making remains with the monarch.

The moves in Saudi Arabia mirrored those in China, where President Xi Jinping has used corruption charges "as a battering ram to consolidate his own power and authority," said John Hannah, the senior counselor at the Foundation for Defense of Democracies, a conservative think tank in Washington.

Hannah said Prince Mohammed has "latched onto corruption as a way to consolidate his power and remake the regime in his image," purging those who might be resistant.

It is not clear what Prince Alwaleed or the others were being investigated for.

Without naming those arrested, the Attorney General's office said "the suspects are being granted the same rights and treatment as any other Saudi citizen." The statement did not disclose specific details about the investigation, but stressed that no assets have yet been frozen and that individuals are presumed innocent until proven guilty.

A high-level employee at Prince Alwaleed bin Talal's Kingdom Holding Co. told the AP that the royal was among those detained. The senior employee, who spoke on condition of anonymity due to fear of repercussions, said security bodies informed him of the arrest.

Prince Alwaleed's many investments include Twitter, Apple, Citigroup, and the Four Seasons hotel chain. He is also an investor in ride-sharing services Lyft and Careem. He was once a significant shareholder in Rupert Murdoch's News Corporation, but sold much of those shares in 2015.

The prince, pictured sometimes on his 85-meter (278-foot) super-yacht in the Mediterranean, is among the most outspoken Saudi royals and a longtime advocate of women's rights. He is also majority owner of the popular Rotana Group of Arabic channels.

After word of his arrest, his company's stock dropped 7.6 percent in trading Sunday on the Saudi stock exchange.

An earlier crackdown this year on perceived critics of the crown prince included clerics and lesser-known princes.

In July, Prince Mohammed's most formidable challenger to the throne, Prince Mohammed bin Nayef, was plucked from the line of succession and ousted from his post as interior minister, overseeing internal security. This laid the groundwork for the king's son to claim the mantle of crown prince.

Prince Mohammed's gambles have not always succeeded . A yearslong war he has overseen as defense minister against Iranian-allied rebels in Yemen has not made the kingdom safer.

As news was unfolding about the anti-corruption probe, Saudi Arabia said late Saturday it had intercepted a ballistic missile fired from Yemen at Riyadh International Airport, on the outskirts of the capital.

"The dismissals and detentions suggest that Prince Mohammed rather than forging alliances is extending his iron grip to the ruling family, the military, and the national guard to counter what appears to be more widespread opposition within the family as well as the military to his reforms and the Yemen war," James M. Dorsey, a Gulf specialist and senior fellow at Nanyang Technological University in Singapore, said in an analysis of the shake-up.

Batrawy reported from Dubai, United Arab Emirates. Associated Press writers Jon Gambrell and Fay Abuelgasim in Dubai, Jonathan Lemire aboard Air Force One and Maggie Michael in Cairo contributed to this report.

Friday, November 3, 2017

Venezuela: We can't pay our debts anymore!

Venezuelan President Nicolas Maduro finally admitted his government can't afford to pay all of its mounting bills.

Maduro said in a televised speech Thursday that Venezuela and its state-run oil company, PDVSA, will seek to restructure their debt payments. 

The oil company made a $1.1 billion payment on Thursday, he said, a sizable amount for a country with only $10 billion left in the bank. "But after this payment, starting today, I decree a refinancing and a restructuring of the external debt," Maduro told the country. 

Venezuela is already deep into a humanitarian crisis, with people suffering from food and medical shortages. Many can't afford to buy basic items because prices are skyrocketing faster than wages. The country's currency, the bolivar, is worth less than a tenth of a U.S. penny.
If Maduro's government can't reach a new agreement with bondholders over the debt restructuring -- which often means trying to pay less money -- it will end up defaulting. 

That would trigger a potentially ugly series of events. 

Investors in the U.S. and elsewhere could seize Venezuelan oil as collateral. 

Oil is the government's only significant source of external revenue and therefore its only way to buy food and medicine for its 30 million citizens. Because the government mismanaged vast swaths of farmland, it must import almost all food. 

Agreeing on a new payment schedule is no easy feat with Wall Street investors. Just ask Argentina. Its government fought in U.S. courts for 15 years to resolve its unpaid debts. 

Argentina's government was shut out of international debt markets over that time, which ultimately crippled its economy. Argentines called the investors "vulture funds" because they bought the bonds on the cheap and then sued the government to get much higher payments. The two sides reached a settlement in early 2016, shortly after a new Argentine government took office.
Venezuela's experience at the negotiating table could actually be much worse. All told, Venezuela owes about $65 billion in bonds denominated in foreign currencies, mostly in dollars, according to research firm Capital Economics. Venezuela also owes debts to China, Russia, oil service providers, airlines and a slew of other entities
Its top negotiator also has a problem: He can't do business in the U.S. 

Maduro has appointed Vice President Tareck El Aissami to lead the debt restructuring efforts. In February, the U.S. Treasury Department accused El Aissami of drug trafficking and froze his assets in the U.S. El Aissami denies the accusations. 

Meanwhile, Maduro and others in his government have tried to pin the blame on President Trump for Venezuela's debt problems after Trump slapped stiff financial sanctions on the country in August. 

After the state oil company, PDVSA, made a large debt payment last week, it didn't mince its words. 

The company said it made the payment, "despite the economic war, unjustified imposition of sanctions by Donald Trump, and the sabotage, persecution and financial blockade to which the Republic and its institutions have been subjected by a significant portion of the international financial system as commanded by imperialism."

Thursday, November 2, 2017

Top OPEC Ministers Say Longer Cuts Needed But Duration Undecided
  • “Mission is not accomplished”: Al-Falih on output deal aim
  • Producers discussing timing of potential extension: Kuwait
While OPEC and its allies agree their output-cut deal needs to be prolonged as bloated inventories won’t shrink to normal levels by March, they’re yet to reach consensus on how long the pact must be extended, according to ministers from three of the top producers.

Global stockpiles are declining and demand is increasing, but there’s still a significant inventory overhang in the market, Khalid Al-Falih, Saudi Arabia’s oil minister, said at the Asian Ministerial Energy Roundtable in Bangkok on Thursday. Issam Almarzooq, his Kuwaiti counterpart, said producers are in the process of discussing and finalizing a decision on the extension of output curbs by the Organization of Petroleum Exporting Countries and partners such as Russia.
“We are looking now for the mechanism for the time, how long that would be and what would be more suitable to achieve the rebalancing of the market,” Almarzooq said in an interview with Bloomberg in Bangkok. While he expects an extension of the output curbs to be announced at the Nov. 30 meeting, details about the length or any changes in conditions may come only in February or March when more information is available, he said.

Almarzooq’s comments echo those from the United Arab Emirates’ Energy Minister Suhail Al Mazrouei in Bangkok on Wednesday. Since the agreement began getting implemented in January this year, the producers have moved toward their goal of balancing the oil market, but “aren’t there yet,” he said on Thursday in an interview with Bloomberg.

Crude prices have surged into a bull market amid speculation that OPEC and its allies will prolong their deal as well as a revival in demand. Saudi Arabian Crown Prince Mohammed bin Salman said last month that he backed the extension of the curbs beyond March 2018. Russian President Vladimir Putin also gave provisional backing to lengthening the restrictions, a signal that Riyadh and Moscow are ready to prolong their collaboration to lift energy prices.
Growth in global oil demand has reached 1.6 million barrels a day, up from 1.3 million at the start of the year, Saudi Arabia’s Al-Falih said Thursday at the Bangkok event organized by the International Energy Forum. And in October, there was a significant decline in inventories. “Despite that, unfortunately, the mission is not accomplished yet,” he said.

“We are discussing with all countries, and I haven’t been able to reach each and every one of them,” he said. “But what we want to do is reach a full consensus.”

Wednesday, November 1, 2017

Petroleum reserves could sustain UK oil production for two decades, finds report

The oil and gas regulator estimates 7.4 billion barrels are available from undeveloped resources in already discovered locations REUTERS

The UK has "significant petroleum reserves" which could sustain production for at least the next two decades, according to a new report.

The Oil & Gas Authority (OGA) estimates the overall remaining recoverable reserves and resources range between 10 to 20 billion barrels of oil equivalent (BOE).

It estimates there are approximately 5.7 billion BOE of proven and probable UK reserves.
These alone, based on current production forecasts and not taking into account potential future exploration successes, have the capacity to sustain production for at least the next two decades, the report stated.

Production could go on even longer if additional undeveloped resources can be matured, the UK Oil and Gas: Reserves and Resources report said.

The OGA estimates there are 7.4 billion BOE of discovered undeveloped resources, much of which is in mature developed areas and under consideration for development.

The maturation of contingent resources - those which are not yet considered mature enough for commercial development - presents "significant opportunity for the continued development of the UK's petroleum resources", it added.

However, this will require "substantial investment

Four new discoveries from exploration successes in 2016 added 210 million BOE to the contingent resource base.

The report also estimates there are six billion BOE of prospective (undiscovered) resources, ranging from a lower estimate of 1.9 billion BOE to an upper estimate of 9.2 billion BOE.

OGA operations director Gunther Newcombe said: "The UKCS is a world-class petroleum province with 10 to 20 billion barrels of remaining discovered and undiscovered potential.

"The OGA has an important role in helping to steward this resource base, revitalize exploration and maximize economic recovery, working closely with industry and government.

"Future success of the basin requires attracting additional investment, implementing technology and company collaboration on new and existing developments."

The report said the replacement of proven and probable reserves remains a concern.

In 2016, approximately 600 million BOE were produced but only 80 million BOE of contingent resources were matured to become reserves that can be recovered.

This indicates a reserve replacement ratio of 13 per cent.

Some £9bn will need to be invested to achieve a reserve replacement ratio of 25 per cent over the next five years at an average unit development cost of £12 per BOE, the report added