Friday, July 19, 2019

Radical de-carbonisation implications for shipping - study

The de-carbonisation of global energy supplies to address climate change will have radical implications for the global shipping industry, said a new report.
If the Paris Agreement goals are met, the fossil fuel cargo base that shipping serves would undergo an aggressive and prolonged transformation, analyst MSI said.
The consequences for shipping markets of a major shift in energy consumption away from hydrocarbons and towards renewables and biofuels is the subject of a report prepared by MSI on behalf of the European Climate Foundation.
“Whilst some sectors of the shipping industry, such as containerships, would be virtually unscathed, those for which hydrocarbons comprise a significant proportion of - or all - the cargo mix would undergo decades of falling demand,” said MSI Director, Stuart Nicoll. “The results, detailed in the report, would be multi-decade declines in fleet capacity, earnings and asset prices across the affected sectors. Shipowners would be forced to slash new ordering and scrap uneconomic vessels.”
MSI’s shipping market modelling systems enable analysis of how changes in energy demand will affect inter-regional commodity trade flows, and the associated shift in required shipping capacity, industry earnings and asset prices, across all segments of the shipping industry.
The analysis projects two demand frameworks – ‘Reduction’ and ‘Reference’ – designed to provide broad narrative and structure to long-term global energy demand.
Global energy consumption in the ‘Reduction’ scenario is largely based on projections made for pathways consistent with limiting warming to 1.5 deg C above pre-industrial levels, as described in the IPCC SR1.5 report.
The ‘Reference’ scenario is designed to provide a comparison to ‘Reduction’. Although it describes a more limited change in the global energy consumption profile, ‘Reference’ still incorporates substantial restraints on future energy consumption.
The more extreme’ Reduction’ scenario is the focus of the report, under which fossil fuel demand sees radical decline over the next three decades. By 2050 world coal consumption falls by 80%, oil consumption halves, and gas demand drops by about a quarter.
“The energy transition from fossil fuels to renewables means that investors in shipping and ports are exposed to substantial financial risks, which have not been adequately assessed before,” co-author Tim Smith, MSI’s Director, Oil and Tanker Markets, added. “Those in the industry who believe that that global commitments to cut carbon emissions will be achieved need to prepare for radical transition that this implies. Vessel selection will be critical, and divestment from sectors with the greatest exposure to fossil fuels may prove the only way to profitably navigate the changing landscape.”
This report will be further analysed in the July/August issue of ‘Tanker Operator Magazine’.

Thursday, July 18, 2019

African Crude For This Ill-Fated Refinery Heads To Canada

Crude oil on its way from Africa to the United States, destined for an ill-fated refinery that plans to close its doors permanently in Pennsylvania, is being diverted to other places, according to Reuters sources.

The 335,000-barrel-per-day , which will close permanently on Monday, used 43.1 million barrels of African oil last year. Only the Phillips 66 refinery in New Jersey imported more oil from Africa.

The oil currently being diverted is a one-million-barrel shipment of Nigerian crude oil, which is now headed into storage in Canada, Reuters said, citing Kpler, which also shows a million barrels of crude idling in nearby waters.

But even more crude has been diverted away from the refinery and to new buyers, according to Refinitiv Eikon data, and at a “heavy” discount, Reuters added.

The United States purchased 4.1 million barrels of Nigerian crude oil in April, the last month for which the Energy Information Administration published data.

Pennsylvania decided not to pour money into saving the largest refinery on the Eastern seaboard after a couple of explosions in June took it offline. Pennsylvania’s decision to let the refinery wither on the vine was multifaceted, citing not just safety concerns but “competitive challenges against more modern refineries that would be extremely costly and difficult to overcome,” a spokesman for Pennsylvania’s governor said at the time.

The 1300-acre, 145-year-old refinery is a near dinosaur, went through bankruptcy proceedings in 2018, citing its financial failings due to the federal Renewable Fuels Standard Policy and a lack of access to cheap domestic crude oil, among other factors.

The closure of the Pennsylvania refinery will cut US refining capacity by 2% to 18.46 million bpd, according to Reuters calculations of government data.

By Julianne Geiger for

Iran Says Its Revolutionary Guard Seized Foreign Oil Tanker In Strait Of Hormuz

Iran says its military seized a foreign oil tanker in the Strait of Hormuz. In this 2018 photo, a boat from the Iranian Revolutionary Guard's naval force is seen in the Persian Gulf, near the strait.
Jon Gambrell/AP 
Iran says that its Islamic Revolutionary Guards Corps Navy has seized a foreign-flagged oil tanker in the Persian Gulf, alleging that the ship was smuggling 1 million liters (264,000 gallons) of fuel. Iranian state news outlets report that the ship had a crew of 12 aboard.

The vessel was seized south of Larak Island in the Strait of Hormuz, according to the state-run IRNA news agency. The island sits less than 20 miles off the Iranian mainland, south of Bandar Abbas.

As quoted by Iran's semiofficial Fars news outlet, the Iranian military said in a statement Thursday that the tanker was on its way "to deliver the smuggled fuel received from the Iranian dhows to foreign ships in farther areas but it failed thanks to the IRGC Naval forces' vigilance."

Without naming the tanker, the military says it has a cargo capacity of 2 million liters — making it a small vessel when compared to supertankers that can carry 2 million barrels of oil.

The elite military force's statement did not describe the condition or whereabouts of the crew, saying only that Iranian authorities are studying the case. It also added that the Revolutionary Guard Corps "denied claims that it has seized any other foreign ship as claimed by the foreign media in the last several days."

The ship was seized on Sunday, Iran says. While it did not name the vessel, U.S. media outlets and maritime news sites have identified it as the MT Riah, a small Panama-flagged tanker that went missing in the Strait of Hormuz around midnight Saturday, according to ship-tracking data. According to the Vesseltracker website, the tanker has been missing since it "turned off its AIS" — its automatic identification system transponders.

News of the at-sea seizure comes one day after another semiofficial Iranian news site, ISNA, quoted an Iranian Foreign Ministry spokesman saying that Iran had "rescued" a foreign oil tanker in the Persian Gulf, taking it to shore for repairs.

In recent months, the Riah frequently traveled between ports of the United Arab Emirates. As the Associated Press reports, "An Emirati official had told the AP the small oil tanker made no distress call before switching off its tracker."

The seizure adds another layer of complexity to Iran's standoff with the U.S. — and its insistence that European countries that signed a landmark nuclear deal in 2015 keep their promise to ease economic sanctions, despite U.S. withdrawal from the pact.

The Strait of Hormuz is the world's most important strategic chokepoint for oil transport, according to the U.S. Energy Information Administration. The agency says that last year, the strait was the conduit for 21% of the world's crude oil and other petroleum products.

In recent weeks, oil tankers have been the targets of attacks, tense standoffs and interdictions.
Two weeks ago, a British marine force helped seize an Iranian tanker in the Strait of Gibraltar, on the grounds that it was believed to be carrying oil from Iran to Syria — a violation of European sanctions.

In retaliation for that confiscation, a former Revolutionary Guard commander said, Iran should seize a British oil tanker. And last week, it seemed that Iran's navy tried to do just that, as the U.K.'s defense ministry announced it had foiled an attempt by three Iranian ships to divert a British oil tanker. Iran denied being involved.

That back-and-forth followed a claim last month by the U.S., which accused Iran of attacking two tankers in the Gulf of Oman using magnetic mines.

Wednesday, July 17, 2019

Chevron oil spill dumps nearly 800,000 gallons of crude, water in California canyon

800,000 Gallons of Oil and Water Spilled by Chevron in California 
 In this May 10, 2019 photo provided by the California Department of Fish and Wildlife's Office of Spill Prevention and Response, oil flows at a Chevron oil field in Kern County, Calif. Nearly 800,000 gallons of oil and water has seeped from the ground since May. (California Department of Fish and Wildlife's Office of Spill Prevention and Response via AP)

Chevron crews have begun to clean up a massive and ongoing oil spill in California after nearly 800,000 gallons of oil and water were dumped into a canyon near Bakersfield in May.

The company recently revealed that 794,000 gallons of water and oil have leaked out of the ground where Chevron uses steam injection to extract oil in the large Cymric Oil Field about 35 miles west of Bakersfield.

Spokeswoman Veronica Flores-Paniagua told The Associated Press on Friday that the latest flow has stopped and officials have now begun the process of cleaning up the affected areas.

According to the California Department of Fish and Wildlife’s Office of Spill Prevention, the cleanup and ultimate investigation into what caused the oil flow were somewhat delayed as officials had to ensure there were no dangerous fumes or sinkholes that could trap workers or heavy equipment.
It is not yet clear what caused the spill but officials say it is not near any waterway and has not significantly affected wildlife. Around 70 percent of the fluid is water, meaning that around 240,000 gallons of oil were spilling out.

The state has issued Chevron a notice of violation ordering it to stop steam injections around the spill. The company also increased its production of oil from wells in the area. Both actions are intended to relieve underground pressure that may be forcing the mix of oil and water to the surface.

The process of steam injection softens the thick crude so it can flow more readily.

Environmental groups said the Chevron spill is another sign of weakened regulations under an embattled California agency. Gov. Gavin Newsom this week fired the head of the state's oil and gas division over a recent increase in hydraulic fracturing permits and amid a conflict-of-interest investigation of other division employees.

Chevron will pay for the cleanup while California state officials will oversee the process.

The Associated Press contributed to this report.

Tuesday, July 16, 2019

JFK - We choose to go to the Moon, full length

UAE oil tanker missing in Strait of Hormuz after drifting into Iranian waters

, UAE oil tanker disappears in Persian Gulf near Iran, Buzz travel | eTurboNews |Travel News

An oil tanker traveling through the tiny strip of water located in the mouth of the Persian Gulf stopped transmitting its location more than two days ago when it drifted into Iranian waters.

It is not clear what happened to the Panamanian-flagged oil tanker – which is based in the United Arab Emirates – on Saturday night as it traveled through the Strait of Hormuz, but its apparent disappearance has raised concerns amid heightened tensions between Iran and several Western nations.

The Riah, a 190-foot oil tanker, typically made trips from Dubai and Sharjah on the UAE’s west coast before going through the strait and heading to Fujairah on the UAE’s east coast.

However, something happened to the vessel after 11 p.m. on Saturday when it stopped transmitting its location with tracking data shows its last position pointing toward Iran.

Capt. Ranjith Raja of the data firm Refinitiv told The Associated Press on Tuesday that the tanker hadn't switched off its tracking in three months of trips around the UAE.
"That is a red flag," Raja said.

Oil tankers have previously been targeted as the Persian Gulf region took center stage in a crisis over Iran’s unraveling nuclear deal with world powers.

Recently, Iran has inched its uranium production and enrichment over the limits of its 2015 nuclear deal, trying to put more pressure on Europe to offer it better terms and allow it to sell its crude oil abroad.

However, those tensions also have seen the U.S. send thousands of additional troops, nuclear-capable B-52 bombers and advanced fighter jets into the Mideast. Mysterious attacks on oil tankers and Iran shooting down a U.S. military surveillance drone has added to the fears of an armed conflict breaking out.

Iranian officials have not said anything publicly about the ship, nor have officials in the UAE. The U.S. Navy's 5th Fleet, which oversees Mideast waters, declined to immediately comment.

The ship's registered owner, Dubai-based Prime Tankers LLC, told the AP it had sold the ship to another company called Mouj Al-Bahar. A man who answered a telephone number registered to the firm told the AP it didn't own any ships.

Separately, Iran's Supreme Leader Ayatollah Ali Khamenei said Tuesday his country will retaliate over the seizure of an Iranian supertanker carrying 2.1 million barrels of light crude oil. The vessel was seized with the help of British Royal Marines earlier this month off Gibraltar.

Khamenei called the seizure of the ship "piracy" in a televised speech Tuesday.

"God willing, the Islamic Republic and its committed forces will not leave this evil without a response," he said.

British Foreign Secretary Jeremy Hunt said Saturday that Britain will facilitate the release of the ship if Iran can provide guarantees the vessel will not breach European sanctions on oil shipments to Syria.

 The Associated Press contributed to this report.

Monday, July 15, 2019

Chevron Phillips, Qatar Petroleum Sign $8 Billion Petrochemical Deal

President Donald Trump holds a bilateral meeting with Qatar's Emir Sheikh Tamim Bin Hamad Al-Thani, in Riyadh, Saudi Arabia on May 21.

 President Donald Trump and Qatar’s ruling emir, Sheikh Tamim bin Hamad al-Thani.

Chevron Phillips Chemical and Qatar Petroleum signed an agreement on Tuesday to develop an $8 billion petrochemical plant along the U.S. Gulf Coast, the second pact between the companies to build such plants in the last few weeks.

The U.S. Gulf Coast II Petrochemical Project will include a 2,000 kilotons per year (KTA) ethylene cracker and two 1,000 KTA polyethylene units. The plant will mostly make hard plastics for everything from pill bottles to coolers to kayaks.

Chevron Phillips Chemical, a joint venture of Chevron and Phillips 66, will be the majority owner with a 51 percent share, with Qatar Petroleum owning 49 percent of the project. The companies expect a final investment decision no later than 2021 for the project, which has a target of starting in 2024.

Mark Lashier, chief executive and president of Chevron Phillips Chemical, said the plants would help fill demand for plastics from an expanding global middle class, which is expected to grow by about 160 million people per year for at least the next decade.

Last month the companies announced they would build a petrochemical plant north of Doha in Ras Laffan Industrial City that will come on line by 2025 and tap Qatar’s North Field for natural gas feedstock.

Qatar, a tiny but wealthy country, is the world’s largest exporter of liquefied natural gas (LNG). Qatar is broadening its energy interests after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with it in 2017, in one of the worst diplomatic disputes in the region in years. The countries accused Doha of support for Islamist militants and Iran, charges it denies.

In February, Qatar Petroleum and Exxon Mobil Corp said they are investing in a $10 billion project to expand an LNG export plant in Texas, as companies race to meet global demand for the fuel.

Tuesday’s deal was signed at the White House in the presence of

The two petrochemical plant deals spread the financial and trade risks for Chevron Phillips and Qatar Petroleum, Lashier said.

Friday, July 12, 2019

US calls for international effort to police Hormuz

The US has called for an international naval force to patrol the area around the Strait of Hormuz in the light of increased tensions in the area. 
For example, a BP Suezmax had been approached by three Iranian naval vessels earlier while sailing in the Arabian Gulf towards the Strait. 

“Three Iranian vessels attempted to impede the passage of a commercial vessel, ‘British Heritage’, through the Strait of Hormuz,” a UK Government spokesman confirmed. ‘HMS Montrose’, a UK Royal Navy frigate, positioned herself between the Iranian vessels and ‘British Heritage’ and issued verbal warnings to the Iranian vessels, which then turned away.

Iran’s Revolutionary Guard Corps have since denied any involvement in the incident.

The Suezmax, scheduled to load oil in Iraq for Europe, had remained inside the Gulf earlier in the week in ballast over concerns Iran could seize her in a tit-for-tat response to the arrest of the VLCC ‘Grace 1’ by British forces off Gilbraltar.

On Thursday, she was reported to be sailing off the coast of Oman, according to Marine Traffic.

‘HMS Montrose’ had also shadowed the Isle of Man registered, MOL controlled VLCC ’Pacific Voyager’ for part of her voyage towards Hormuz.

She had left Ras Tanura on 7th July loaded with Saudi crude.

‘Grace 1’ was stopped, as she was said to be loaded with Iranian crude allegedly bound for Syria, which is in breach of EU sanctions.

The Gibraltar authorities have since confirmed that the VLCC’s senior officers were taken ashore and arrested. The authorities also claimed that they could legitimately hold the vessel for at least 14 days. 

The VLCC was detained last week when it sailed into British Gibraltar Territorial Waters to a point two miles off the Eastern side of Gibraltar, having previously exited international waters of the Straits of Gibraltar, on a pre-arranged call for provisions and spare parts, the Gibraltar Government said.

Her detention related to the suspected destination of the cargo, the Banyas refinery in Syria, which is owned by the Banyas Oil Refinery Co. This company is the subject of European Union sanctions under EU Regulation 36/2012, which is directly applicable in Gibraltar.

Thursday, July 11, 2019

OPEC: This Is Where Most New Oil Will Come From In 2020

The OPEC flag on a desk ahead of a news conference at the 175th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on Dec. 6, 2018. Photo: Stefan Wermuth/Bloomberg / Bloomberg

Non-OPEC crude oil supply will rise by 2.4 million bpd next year, OPEC said in its latest Monthly Oil Market Report.

The cartel added that the rise would be driven by the addition of new pipeline capacity in North America, most likely meaning the United States as Canada’s pipeline woes continue and Mexico struggles to reverse declining production. In fact, OPEC mentioned the natural decline of production in Mexico would offset the effect of rising non-OPEC supply somewhat.
It’s not just the U.S. that will expand production, however. New projects in Norway, Brazil and Australia will also contribute to the increase in non-OPEC supply.

However, OPEC has revised downwards its non-OPEC supply growth projections for this year: it sees growth at 2.05 million bpd, down by 95,000 bpd from its previous monthly forecast. That would bring the total non-OPEC supply to a daily average of 64.43 million bpd.

In demand, OPEC expects the 2020 increase to remain unchanged from this year, at 1.4 million bpd. Non-OECD countries will account for most of this, at 1.05 million bpd while OECD countries will contribute about 900,000 bpd to global demand growth.

Somewhat surprisingly, China will not be the largest driver of new oil demand. That, according to OPEC, will be the rest of Asia, with China’s oil demand growing at a weaker pace than during this year.
The growth in demand for OPEC oil specifically is seen slowing down next year: OPEC has forecast that the total would average 29.3 million bpd in 2020, down by 1.3 million bpd from this year. The daily rate of demand decline is 100,000 bpd more than the cuts OPEC agreed to with its non-OPEC partners in December last year and suggests the deal might have to be extended further than the end of March 2020, which OPEC and its partners agreed on earlier this month.

By Irina Slav for

Wednesday, July 10, 2019

Iranian IRGC boats tried, failed to seize British oil tanker in Persian Gulf, senior US defense official says

The Grace 1 super tanker lies off the coast of Gibraltar on Thursday.
The Grace 1 super tanker lies off the coast of Gibraltar on Thursday.

Five Iranian Islamic Revolutionary Guard Corps gunboats tried to seize a British oil tanker in the Persian Gulf Wednesday but backed off after a British warship approached, a senior U.S. defense official told Fox News.

The British warship was said to have been less than 5 miles behind the tanker but soon intercepted the Iranian boats and threatened to open fire. A manned U.S. reconnaissance aircraft was above as well, the official said, adding that Iranian forces left without opening fire.

Navy Captain Bill Urban, spokesman for the U.S. Central Command (CENTCOM), said the military was aware of the reported actions. He added, “Threats to international freedom of navigation require an international solution. The world economy depends on the free flow of commerce, and it is incumbent on all nations to protect and preserve this lynchpin of global prosperity.”

The British frigate was identified as the HMS Monstrose, according to CNN, which was first to report the encounter.

The incident was the latest in a series of provocations between the Islamic Republic and the West. British forces last week seized an Iranian supertanker that officials believed was operating in violation of European Union sanctions. The British Royal Marines captured the vessel in Gibraltar after believing it was trying to provide crude oil to Syria, an ally of Iran.

Iranian President Hassan Rouhani warned that Britain would face repercussions over the seizure.

Last month, Iran shot down a U.S. drone over the Strait of Hormuz, a vital waterway separating Iran from the United Arab Emirates. Oil exporters transport around 22 million barrels of oil per day through the strait.

U.S. officials also blamed Iran for attacks on six oil tankers in the area. Secretary of State Mike Pompeo has accused the regime of trying to disrupt the flow of oil in the area.

Tensions between Iran and the U.S. have escalated in recent weeks and could spiral downward after Iran admitted Monday it surpassed uranium enrichment levels that were set by the Iran nuclear agreement in 2015.

President Trump pulled the U.S. out of the deal last year but several EU nations remained involved. Those countries -- Russia, China, Germany, France, Britain, and the European Union -- have called on Iran to stick to its commitments under the deal.

Iran has abandoned restraint in recent months as it seeks relief from U.S. sanctions. The republic has asked the deal's signatories to provide economic incentives in exchange for the de-escalation of its nuclear program.

Trump has indicated he will impose additional sanctions on Iran and urged those nations not to give in to its demands.

Monday, July 8, 2019

ITM Power Begins Construction on World’s Largest Hydrogen Refinery in Germany

Hydrogen, atomic structure

ITM Power, the energy storage and clean fuel company, is pleased to note the announcement by the REFHYNE consortium of the commencement of construction of the 10MW hydrogen electrolysis plant at the Shell Rheinland refinery in Wesseling, Germany, that will help contribute to a cleaner, lower-carbon energy future.

Construction of the new plant, which features advanced polymer electrolyte membrane (PEM) technology, is expected to be completed in the second half of 2020. The plant will produce up to 1,300 tons of hydrogen per year when operating at peak rates.
Hydrogen will be produced using electricity instead of natural gas. Producing hydrogen with electricity generated from renewable power sources could help significantly reduce CO2 emissions from the Shell Rheinland refinery.

Oil products will continue to play an important role in the decades ahead, and this project means we will be able to make more and cleaner fuels, bitumen and base chemicals.” explained Frans Dumoulin, Director of the Shell Rheinland Refinery. “At the same time, we want to contribute to accelerating the use of hydrogen in transport and other sectors.

Hydrogen can play an important role in the energy transition. Today, hydrogen is already being used in fuel cell vehicles and in industrial applications. In transport, hydrogen can help improve local air quality, as fuel cell vehicles only emit water vapor.

Renewable energy is becoming increasingly important for Shell”, said Dr Thomas Zengerly, Chairman of the Management Board of Shell Deutschland Oil. “Royal Dutch Shell has set up its own business unit specifically for this purpose: New Energies.

Shell expects a new hydrogen model region to be set up in the Cologne area, based on activities around filling stations, cars and buses. The project is based on the idea of a “hydrogen model region” that can jointly demonstrate the potential of hydrogen in the energy turnaround.”

On behalf of the state government of Northrhine-Westfalia, Christoph Dammermann, State Secretary in the Ministry of Economic Affairs, Innovation, Digitisation and Energy, NRW, welcomed the construction of the plant: “Hydrogen has great potential for a climate-neutral energy system of the future. Produced from renewable electricity, it can serve as an important energy carrier and long-term storage in the transport, heating and industrial sectors and thus become a key element for the energy and traffic transition.”

Bart Biebuyck, Executive Director, EU Fuel Cells and Hydrogen Joint Undertaking, said: “FCH-JU funded projects like REFHYNE give the opportunity to European electrolyser industry to build equipment that meets the strict standards of the European refining industry. They will help reducing the CO2 footprint of large industrial processes through the production of green hydrogen.

Simon Bourne, Chief Technical Officer of ITM Power, said: “This ground breaking of the world’s largest PEM electrolyser is an important moment for ITM Power and our partners. Working with Shell has been a real privilege for us and the process has transformed our market offering as a result. Large scale electrolysis is now seen as an important element in the decarbonization of key industrial processes and the REFHYNE project lays the first building block to 100MW industrial plants and beyond.

Friday, July 5, 2019

VLCC held in Gibraltar for alleged sanctions busting

Grace 1 oil tanker

Iran has demanded that the UK and in particular, the Gibraltar Government, hand back the seized 1997-built VLCC ‘Grace 1’. 
According to a Gibraltar Government statement, in the early hours of last Thursday morning, Gibraltar Port and Law Enforcement agencies, assisted by a detachment of UK Royal Marines, boarded the VLCC in the Gibraltar Anchorage, as it was alleged to be carrying crude oil to Syria.

“We have detained the vessel and its cargo,” the Chief Minister, Fabian Picardo, said. “This action arose from information giving the Gibraltar Government reasonable grounds to believe that the ‘Grace 1’, was acting in breach of European Union sanctions against Syria.

“In fact, we have reason to believe that the VLCC was carrying its shipment of crude oil to the Banyas Refinery in Syria.

“That refinery is the property of an entity that is subject to European Union sanctions against Syria,” he said.

As the sanctions being enforced are established by the EU, the Gibraltar Chief Minister wrote to the Presidents of the European Commission and Council, setting out the details of the sanctions, which Gibraltar has enforced.

In the meantime, Panama’s Maritime Authority said that ‘Grace 1’ was no longer listed in Panama’s international vessel registry as of 29th May.

The authority added that ‘Grace 1’ had been de-listed after it received an alert indicating that the ship had participated in or was linked to terrorism financing.

According to the Equasis database, the ISM and shipmanager is listed as IShips Management of Singapore.

Wednesday, July 3, 2019

Fourth of July gas prices: Here's why they're going up

HIV needle gas pump

Gas prices, which had been declining for weeks, turned around and rose again just before the Fourth of July.

The average price of regular-grade gas in the U.S. was $2.748 per gallon Wednesday, according to AAA. That’s up from $2.684 a week ago, but still down from $2.865 this time last year.

California had the highest average price, $3.776 per gallon, according to AAA. The lowest average prices were in Mississippi, at $2.347 per gallon.
AAA has predicted that a record-breaking number of Americans will travel for the holiday this year.

“For the more than 41 million motorists hitting the road this week to celebrate the Independence Day holiday, they will find gas prices cheaper than Memorial Day weekend, but more expensive than they’ve been paying the last few weeks,” said Jeanette Casselano, a AAA spokesperson.

Patrick DeHaan, head of petroleum analysis at GasBuddy, said oil prices, which have rebounded by $9 per barrel in recent weeks, contributed to drivers seeing higher prices at the pump.

“The stage was set for a nearly perfect holiday — gas prices hit their 7th straight weekly decline, oil prices had dropped as low as $51, every state had seen notable declines at the pump, it really couldn’t get a whole lot better as we approach July 4,” he said. “But then Iran attacked two oil tankers and shot down a U.S. drone and markets panicked, sending oil prices higher and now we’re suddenly under the threat of rising gas prices again amid escalating tensions with Iran and talks with China on trade, leading to higher gas prices just as millions hit the road to celebrate the holiday.”

AAA also pointed to issues like supply and demand contributing to the higher prices. The Energy Information Administration reported total U.S. stocks hit the lowest June stock level since 2015, while demand typically peaks in the summer as people travel on vacations.

Also, the owner of the largest refinery on the East Coast decided to close the facility late last month after a large fire burned there. It had produced 335,000 barrels of crude per day, according to AAA.

There also won’t be an increase in the amount of oil hitting the market from overseas. Members of OPEC and other countries agreed this week to continue oil production cuts into 2020.

That all means gas prices may continue rising after the Fourth of July, Casselano said.

“It’s typical to see increases at the pump ahead of the holiday, but we may see prices continue to jump throughout the month due to refinery interruptions on the East Coast, increasing demand and fluctuations in crude oil price,” Casselano said.

Tuesday, July 2, 2019

OPEC And Partners Officially Ratify New Deal


Russia and the other non-OPEC members of the production cut pact first sealed in 2016 have officially ratified an extension of the latest round of cuts agreed last December, Energy Minister Alexander Novak said at the OPEC meeting in Vienna today, after crafting the details of the deal a day earlier.

CNBC reported that OPEC had agreed to extend the cuts—of a total 1.2 million bpd—until the end of March 2020 as prices stubbornly refuse to rise much above the US$60-65 band.
The news comes on the heels of earlier reports that Russia, Saudi Arabia, and Iraq had declared their support for another extension of the cuts. Iran also agreed to the extension yesterday despite the growing internal divide in the oil-exporting cartel.

The decision to extend the cuts is not particularly surprising. With relentlessly rising U.S. oil production, OPEC has few good moves left, if any. Russia has repeatedly noted it would be happy with lower oil prices than its Middle Eastern partners but even so it has once again agreed to continue cutting. Some saw in this a deal, in which the Middle Eastern partners—notably Saudi Arabia—would compensate Moscow for the inconvenience of having to sell less oil with investment contracts in energy and other sectors.

This compensation may not, however, eliminate the risk of Rosneft demanding its own compensation for production restrictions: last month chief executive Igor Sechin said the company would be seeking such compensation from the Kremlin if it agreed to support an extension of the cuts.

What is perhaps more worrying for OPEC is that oil prices reacted weakly to the news: Reuters reported earlier today Brent and WTI had both retreated from the spike that followed the initial announcement of the cuts agreement, pressured by trader worry about the prospects of the global economy in the context of the U.S.-Chinese trade war.
At the time of writing, Brent crude was trading at US$64.87 a barrel and West Texas Intermediate was trading at US$58.91 a barrel, both down from opening.
By Irina Slav for

Friday, June 28, 2019

Possible conflict with Iran - impacts on trade

VesselsValue has analysed the effect on a conflict with Iran would have on the VLCC market. 
A wider war with Iran would be negative for most types of ships and for the oil markets in general. Fewer ships will transit the Straits of Hormuz, the analyst said.

In the Iran/Iraq tanker war of 1987-1988, US vessels escorted ships through the Strait of Hormuz by temporarily re-flagging Kuwaiti tankers under the US flag.

Rates for ships fell overall as tensions pushed up the oil price at the start of the war, eroding TCE returns and reducing demand for Arabian barrels.

Today’s events have already led to a higher war risk cost. This will be borne by most likely the charterer, according to the current war risk clause wording. However commercial terms will be negotiated on a case by case basis. Armed guards are also a possibility, which introduces an additional cost and escalates overall risk.

VesselsValue said that a significant increase in exports from other key oil producing countries who can provide seaborne trades, would be expected. For example, Red Sea loadings would increase almost immediately, as Saudi Arabia would maximise export volumes, which could be sent through the country’s Red Sea terminals.

US crude exports, which continue to de-bottleneck, would surge upwards as pricing differentials would encourage more exports, and more West African barrels would be brought onstream.

Another likely outcome would be an immediate relaxation of Venezuelan sanctions, which have a more discretionary basis for their implementation. This could result in the Aframax trade in the Caribbean seeing a surprise resurgence.

Putting aside other sources of crude oil, Far East countries dominate the destinations for VLCC cargoes out of the Arabian Gulf.

Oil flows to Asian refiners and India would be disrupted, which would reduce refinery crack spreads in these countries, discouraging runs. There would be some demand fall as a result of price increases, but the markets these refineries support would seek refined products from other regions, which would benefit US and European refiners who have easier access to Atlantic Basin trades.

Rising tensions could spur renewed interest in some offshore projects outside the Arabian Gulf, and producers may seek to optimise production from offshore locations depending on the severity of the conflict. Regardless, the increased probability of supply disruptions will push some towards making positive investment decisions.

The main result of any Arabian Gulf conflict would be higher oil prices, resulting in lower demand for oil products in the short and medium term.

Producers outside the Arabian Gulf would see the greatest benefit, particularly in the US, West Africa, and Brazil.

These markets are mainly served by Suezmaxes and Aframaxes, due to port limitations. VesselsValue concluded its analysis by saying that it would expect many VLCC ballasters to head to West Africa, Brazil, and the US Gulf.

Thursday, June 27, 2019

Billionaire Carl Icahn steps up his fight with Occidental over Anadarko deal, wants 4 board seats

CNBC: Carl Icahn, 150715
Adam Jeffery | CNBC
  • Carl Icahn ratcheted up his fight with Occidental Petroleum over its pending purchase of rival Anadarko Petroleum by calling for a special shareholder meeting where he hopes to win board seats.
  • Icahn said he planned to oust and replace four Occidental directors and change the company’s charter through a stockholder consent solicitation to prevent it from ever engineering a similar takeover again.
  • Occidental said it will review the latest materials filed by Icahn, and looks forward to addressing them in ongoing conversations with shareholders.
Billionaire investor Carl Icahn on Wednesday ratcheted up his fight with Occidental Petroleum over its pending purchase of rival Anadarko Petroleum by calling for a special shareholder meeting where he hopes to win board seats.

In a regulatory filing, Icahn said he planned to oust and replace four Occidental directors and change the company’s charter through a stockholder consent solicitation to prevent it from ever engineering a similar takeover again.

Responding to the filing, Occidental said it will review the latest materials filed by Icahn, and looks forward to addressing them in ongoing conversations with shareholders.

Icahn, one of industry’s most powerful activist investors, cast himself as one of the deal’s most fervent critics by charging that Occidental’s $38 billion bid for Anadarko was too expensive and could endanger Occidental’s future if oil prices sink.

The deal has been approved by the U.S. Federal Trade Commission and is expected to close in the second half of the year.

Icahn’s move on Wednesday put fresh pressure on Occidental’s management and Chief Executive Vicki Hollub at a critical time and has sparked speculation that Occidental may try to settle with him.

“It is important to add new directors to Occidental’s Board of Directors to oversee future extraordinary transactions like the Anadarko transaction and to ensure that they are not consummated without stockholder approval when appropriate,” Icahn said in a statement to shareholders on Wednesday.

Icahn owned a $1.6 billion stake in Occidental as of May 30.

While the move was notable, it hardly came as a surprise as Icahn had been hinting for weeks that he might push for a special meeting where other shareholders would be able to express their frustration with management.

In May he sued Occidental in Delaware court, and earlier this week he went out of his way to criticize the Occidental-Anadarko deal while discussing the merger of major casino operators Caesars Entertainment and Eldorado Resorts.

“The recent Occidental Petroleum fiasco is a great example of how CEOs and boards will go to great lengths, including ‘betting the company’ to serve their own agendas,” Icahn said in a statement about the Caesars-Eldorado merger. “If their bet is successful, they and possibly their shareholders win, but if it is unsuccessful, only the shareholders lose.”

While Icahn has said publicly that the Occidental-Anadarko deal likely would not be derailed, his filing illustrates how he wants to make sure that nothing similar happens again.

He said Occidental lacks effective corporate governance and that its directors made mistakes in how and at what cost they pursued the acquisition of Anadarko, according to the filing.

Icahn is calling on the board to set a record date to determine which shareholders could petition to hold a special meeting.

The oil and gas producer’s bid for Anadarko topped one by Chevron and includes a $10 billion financing deal with Warren Buffett’s Berkshire Hathaway.

The merger of the two U.S. shale producers would increase Occidental’s debt to around $40 billion. Icahn, in his lawsuit filed in Delaware Court of Chancery in May, sought access to the oil producer’s financial records and details of negotiations.

Tuesday, June 25, 2019

Top Copper Miner Strike Seen Wiping 10,000 Tons From Market

Works at Codelco’s iconic Chuquicamata mine down tools

  • Chuquicamata stoppage enters 12th day as talks remain stalled
  • Workers rejected Codelco’s latest offer in a vote on Saturday
A strike at a major copper mine in the world’s largest producer of the metal risks wiping out 10,000 metric tons from a market that’s already expected to end the year in deficit, according to an industry consultant.

The stoppage at the Chuquicamata mine in northern Chile could cost No. 1 global supplier Codelco $50 million as it loses production if it lasts two weeks, said Juan Carlos Guajardo, executive director at Santiago-based consultancy Plusmining. The strike at the mine, which produced 321,000 tons of copper last year, entered its 12th day on Tuesday with no signs of agreement between the company and unions.

“Codelco has been quite clear that they are offering the best possible terms for workers,” Guajardo said in a telephone interview Monday. “And workers say the only way to end this conflict is not higher bonuses, but equal conditions between existing and new workers.”

Copper futures rose in New York Tuesday as supply risks mount at Chile’s state-owned Codelco. The disruption at Chuquicamata, the company’s third-largest mine, has helped lift the outlook for prices at a time when supply is already tight, with the International Copper Study Group forecasting a deficit of 189,000 tons by the end of this year.

BMO Capital Markets was expecting 3% of global production in the copper market would be disrupted in 2019, when it calculated its supply and demand outlook for the year, according to analyst Colin Hamilton. The Chuquicamata strike adds to production losses earlier in the year, including rains in northern Chile and stoppages at several smelters in Zambia, shaving about 5% of output so far this year.

“While we have expectations of a prolonged period of trade friction, copper will struggle to get in the good books of macro asset allocators,” Hamilton said. “But the deficit the copper market has been waiting on for years is now here.”
Workers Vote for Strike at Codelco's Third-Largest Copper Mine
Copper miners celebrate the rejection of the state-run Codelco Chuquicamata mine's final offer for a contract at union headquarters in Calama, Chile on May 29, 2019.
Photographer: Cristobal Olivares/Bloomberg

Talks stalled

No talks are scheduled between Codelco and Chuquicamata’s Unions 1, 2 and 3, which represent around 3,200 workers at the mine, Liliana Ugarte, president at Union No. 2, said Tuesday by telephone. Chuquicamata workers blocked the road that leads to the company’s northern division, and to Freeport-McMoRan Inc.’s El Abra mine for a few hours on Tuesday for the second consecutive day in a protest that delayed workers from reporting to the facility.

A Codelco official declined to comment on the state of negotiations or the effects of the protests on Monday. While El Abra operations are running normally, Freeport is monitoring the situation, a company official said by email Monday.

On Saturday, 55% of workers voted to reject the company’s latest offer and continue the strike. Under Chilean labor rules, Codelco can make a new offer on June 28, or workers can abandon the strike individually from June 29, automatically accepting a previous offer from the company.

One central issue in the negotiations is the retirement plans of about 1,700 workers whose jobs will be cut once the mine transitions from open pit to underground operations in the next 12 months. Younger workers -- who joined the company after the last commodities downturn with lower salaries and fewer benefits -- also want the same package of benefits as experienced workers.

“When the older workers leave as part of the retirement plan, it will be the young guys with precarious jobs who will replace them,” Rolando Milla, president at Union No. 3, said by phone. “The strike ends with equal conditions for all workers, that’s it.”

— With assistance by Danielle Bochove

Monday, June 24, 2019

Gulf war risk insurance soars

US Navy helping ships in Gulf of Oman after distress calls

War risk insurance has soared to around $185,000 for tankers passing through the Strait of Hormuz area, according to a report from Bloomberg.
This was,due to increased tensions in the Gulf region, following the 13th June attacks on two tankers in the Gulf of Oman.

Following the earlier incidents in May at Fujairah, the war risk insurance had risen to  $50,0000 per vessel.

A day after the two recent attacks, Royal Boskalis Westminster was appointed salvor for both vessels.
Shortly after the incidents, the insurers of both vessels appointed Boskalis subsidiary SMIT Salvage to salvage the vessels and their cargo.

The salvage operations were undertaken in close consultation with the relevant local authorities, including the Marine Emergency Mutual Aid Centre (MEMAC).

Frontline said that the ‘Front Altair’s’ crew members had either returned home or have re-embarked on the vessel to assist with recovery operations and ship-to-ship transfer of cargo into another Frontline operated vessel. 

The company claimed it was able to deploy emergency responders in a timely manner, who extinguished the fire on the vessel within hours of the incident and ensured no pollution resulted.

‘Front Altair’ was in stable condition and anchored off Fujairah. Following transfer of cargo, the LR2s damage will be further inspected and the vessel will ultimately be moved to a shipyard for repair.

As previously reported, the possibility that the damage was caused by mechanical or human error has been ruled out completely. 

Until further information is received regarding the cause of the explosion and the security of this important shipping lane is secured, Frontline will exercise extreme caution when considering new contracts in the region and will consider all possible measures to insure the safety of our crews and vessels operating in the area, the company emphasised.

The other vessel involved in the alleged attacked, the ‘Kokuka Courageous’ was also towed to Fujairah Anchorage. Her crew were reported to be safe.

Meanwhile, VLCC spot freight rates between the Arabian Gulf and China rose 101% in the days between 13th and 20th June 2019, in the aftermath of the attacks, BIMCO’s Peter Sand said.

Spot freight rates for a VLCC reached $25,994 per day on 20th June, the highest level since March and significantly above the May average of $9,979 per day.

Despite this increase, rates on this route only narrowly exceeded the daily breakeven costs of a VLCC, which on average amounts to $25,000 per day.

Measured against global oil demand, around a fifth of global oil consumption sails through the Strait of Hormuz, making the strait a critical choke point for global energy markets, Sand said.

Taking into consideration seaborne transportation of crude oil, the 19.7 mill barrels per day transiting Hormuz represents 49% of the 40.5 mill barrels shipped in total - source: Clarksons Research.

Although spot freight rates for crude oil tankers ex Arabian Gulf have risen sharply, rates for LR2s carrying clean oil products, such as naphtha, remained much more stable. For example, spot freight rates for an LR2 carrying 500,000 barrels of naphtha condensate from the Middle East Gulf to Japan, rose by only 4% between the dates since the attack.

 “The unchanged rates for oil product tankers compared with the jump in freight rates for crude oil tankers, illustrate the differences between the two market as well as the effects of sentiment on crude oil freight rates,” Sand said. “The vast majority of tanker owners are more or less going about with business as usual, although they have ratcheted up their safety and security precautions when trading their ships in the Arabian Gulf.”

These additional measures include speeding up while sailing through the Strait of Hormuz, as well as avoiding sailing through it at night when watchkeeping becomes more difficult.

The added costs of safety measures as well as higher insurance premiums, which rose sharply following the news of the attacks, meant that shipowners will not only face higher risks but also higher costs when trading in the region.

“To avoid major disruption, it is vital for global energy trade that the Strait of Hormuz remains accessible and safe for ships to sail through. As long as tensions aren’t escalated the attacks are unlikely to have a more profound effect. However, the risks that the conflict will escalate remains very present and a great worry to everyone involved with oil trading in the region,” Sand added.

BIMCO has urged all nations to do what they can to de-escalate the situation and allow ships to pass safely through the Strait of Hormuz.

Thursday, June 20, 2019

US Navy drone shot down by Iranian missile over Strait of Hormuz in 'unprovoked attack,' central command says

U.S. military officials returned fire -- verbally -- hours after Iran blasted a Navy high-altitude drone out of the sky over the Strait of Hormuz, with U.S. Central Command leaders on Thursday slamming the "unprovoked" strike and Tehran's subsequent "false" justifications for it.
President Trump said on Twitter that Iran "made a very big mistake!"

The downing of the drone, via surface-to-air missile, is only the most recent Iranian provocation in the region, coming on the heels of a disputed attack on a pair of oil tankers in the Gulf of Oman last week. U.S. officials say Iran was behind the tanker attacks, however, the Islamic Republic has not claimed responsibility and even suggested American involvement in the plot. -- but American officials stated unequivocally the incident occurred in international airspace.

Similarly, Iran claimed the U.S. drone on Thursday was over Iranian airspace when it was shot down -- but American officials stated unequivocally the incident occurred in international airspace.

The U.S. Navy’s RQ-4A Global Hawk drone deployed to the Middle East in the past few days as part of reinforcements approved by President Trump last month.
The U.S. Navy’s RQ-4A Global Hawk drone deployed to the Middle East in the past few days as part of reinforcements approved by President Trump last month. (U.S. Navy/Handout via REUTERS)
U.S. Central Command said in a statement that a U.S. Navy Broad Area Maritime Surveillance ISR aircraft, known as a BAMS-D, was shot down at approximately 7:35 p.m. ET on Wednesday.

"Iranian reports that the aircraft was over Iran are false," Capt. Bill Urban, a U.S. Central Command spokesman, said in a statement. "This was an unprovoked attack on a U.S. surveillance asset in international airspace."

The U.S. Navy’s RQ-4A Global Hawk drone was over international airspace and about 17 miles from Iran at the time, a military source told Fox News.  The drone provides real-time intelligence, surveillance, and reconnaissance missions  "over vast ocean and coastal regions," according to the military.

Iran also tried to shoot down another drone, but missed, U.S. officials told Fox News. Officials are now scrambling to find the wreckage in the water before Iranian forces recover it.

The Navy RQ-4A Global Hawk drone that was shot down by Iran.
The Navy RQ-4A Global Hawk drone that was shot down by Iran. (Fox News)
The Navy RQ-4A Global Hawk drone deployed to the Middle East in the past few days as part of reinforcements approved by President Trump last month.

The high-altitude drone can fly up to 60,000 feet or 11 miles in altitude and loiter for 30 hours at a time. It's used to spy on Iranian military communications and track shipping in the busy waterways. Each drone costs up to $180 million dollars. 

The U.S. Navy’s RQ-4A Global Hawk drone is a high-altitude drone can fly up to 60,000 feet or 11 miles in altitude and loiter for 30 hours at a time.
The U.S. Navy’s RQ-4A Global Hawk drone is a high-altitude drone can fly up to 60,000 feet or 11 miles in altitude and loiter for 30 hours at a time. (U.S. Navy/Handout via REUTERS)
Besides the drone incident, U.S. officials told Fox News that Iranian-backed forces fired cruise missiles Wednesday night into Saudi Arabia, hitting a power plant. The spate of recent attacks come amid the backdrop of heightened tensions after the U.S. decision a year ago to withdraw from Tehran's nuclear deal reimpose sanctions.

A commander for Iran's Revolutionary Guard claimed the drone was shot down over Iranian airspace to send a "clear message" to the U.S., and marked the first direct Iranian-claimed attack of the crisis.
"We do not have any intention for war with any country, but we are fully ready for war," Revolutionary Guard commander Gen. Hossein Salami said in a televised address.

Iran's paramilitary Revolutionary Guard, which answers only to Supreme Leader Ayatollah Ali Khamenei, said it shot down the drone on Thursday morning -- causing some confusion about the timeline of the incident -- when it entered Iranian airspace near the Kouhmobarak district in southern Iran's Hormozgan province. Kouhmobarak is some 750 miles southeast of Tehran and close to the Strait of Hormuz.
The Guard said it shot down the drone at 4:05 a.m. after it collected data from Iranian territory, including the southern port of Chahbahar near Iran's border with Pakistan. Iran used its air defense system known as Third of Khordad to shoot down the drone — a truck-based missile system that can fire up to 18 miles into the sky, the semi-official Fars news agency reported.

The Panama-flagged, Japanese owned oil tanker Kokuka Courageous, that the U.S. Navy says was damaged by a limpet mine, is anchored off Fujairah, United Arab Emirates, during a trip organized by the Navy for journalists, Wednesday, June 19, 2019.
The Panama-flagged, Japanese owned oil tanker Kokuka Courageous, that the U.S. Navy says was damaged by a limpet mine, is anchored off Fujairah, United Arab Emirates, during a trip organized by the Navy for journalists, Wednesday, June 19, 2019. (AP Photo/Fay Abuelgasim)
The Guard described the drone as being launched from the southern Persian Gulf but did not elaborate. American RQ-4A Global Hawks are stationed at the Al-Dhafra Air Base in the United Arab Emirates, near the capital, Abu Dhabi.

Salami, speaking to a crowd in the western city of Sanandaj, described the American drone as "violating our national security border."

"Borders are our red line," Salami said. "Any enemy that violates the borders will be annihilated."

The U.S. said Iran fired a missile at another drone last week that responded to the attack on two oil tankers near the Gulf.

Another senior U.S. official told Fox News last week that an MQ9 Reaper drone was fired on by the Iranians shortly after it arrived at the scene where the MV Altair tanker sent out a distress signal.

Sailors stand on deck above a hole the U.S. Navy says was made by a limpet mine on the damaged Panama-flagged, Japanese owned oil tanker Kokuka Courageous, anchored off Fujairah, United Arab Emirates, during a trip organized by the Navy for journalists, Wednesday, June 19, 2019.
Sailors stand on deck above a hole the U.S. Navy says was made by a limpet mine on the damaged Panama-flagged, Japanese owned oil tanker Kokuka Courageous, anchored off Fujairah, United Arab Emirates, during a trip organized by the Navy for journalists, Wednesday, June 19, 2019. (AP Photo/Fay Abuelgasim)
Secretary of State Mike Pompeo has blamed Iran for the "blatant assault" on oil tankers in the Gulf of Oman.

After the tanker incident, Pompeo said his assessment was based on "intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar Iranian attacks on shipping, and the fact that no proxy group operating in the area has the resources and proficiency to act with such a high degree of sophistication.”

Fox News' Jennifer Griffin, Lukas Mikelionis and The Associated Press contributed to this report