Kinder Morgan shelves $3 billion pipeline project

 

http://www.bostonglobe.com/business/2016/04/20/kinder-morgan-shelves-billion-new-england-pipeline-project/iEafnAP2P41o0B9tmM0lEI/story.html

Energy giant Kinder Morgan Inc. has suspended additional work and spending on its Northeast Energy Direct project, a controversial natural gas pipeline proposed through Massachusetts and New Hampshire.

Kinder Morgan said on Wednesday that the company didn’t receive the extra commitments from big customers that it needed to proceed with the $3.3 billion project. As a result, Kinder Morgan said in a statement, “there are currently neither sufficient volumes, nor a reasonable expectation of securing them, to proceed with the project as it is currently configured.”

Kinder Morgan’s initial approval of the project, through its Tennessee Gas Pipeline subsidiary, was based on existing contracts with gas utilities as well as the expectation that others would sign on to buy gas from the line. Executives at the Texas company were also counting on an unprecedented shift in New England’s market that would allow electric customers to be assessed for pipeline construction costs.

Kinder Morgan cited several reasons for this shortfall, including the fact that it remains far from assured whether New England states will be successful in setting up rules to allow electric customers to be charged for gas pipelines.

Kinder Morgan’s statement didn’t mention the concerns raised by the project’s numerous opponents, including residents of towns that would be affected by the pipeline’s construction and environmentalists who worried that the size of the project could make New England too dependent on natural gas.

“Kinder Morgan is stopping the pipeline because it is both expensive to ratepayers and simply not needed,” George Bachrach, president of the Environmental League of Massachusetts, said in an email. “Massachusetts has the capacity to develop its own energy in solar, wind and hydro. In the process, we can create new industries and jobs here, rather than exporting our dollars and jobs to fossil fuel states.”

State Senate president Stanley C. Rosenberg, one of a number of Western Massachusetts politicians who opposed the project, said in a statement: “Kinder Morgan’s decision to suspend the Northeast Energy Direct (NED) project is a game changer. This allows us to have a broader discussion about how to meet Massachusetts’ energy needs.”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.

China wants ships to use faster Arctic route opened by global warming

 

https://www.yahoo.com/news/china-wants-ships-faster-arctic-route-opened-global-033910904.html

 

BEIJING (Reuters) - China will encourage ships flying its flag to take the Northwest Passage via the Arctic Ocean, a route opened up by global warming, to cut travel times between the Atlantic and Pacific oceans, a state-run newspaper said on Wednesday.

China is increasingly active in the polar region, becoming one of the biggest mining investors in Greenland and agreeing to a free trade deal with Iceland. 

Shorter shipping routes across the Arctic Ocean would save Chinese companies time and money. For example, the journey from Shanghai to Hamburg via the Arctic route is 2,800 nautical miles shorter than going by the Suez Canal.

China's Maritime Safety Administration this month released a guide offering detailed route guidance from the northern coast of North America to the northern Pacific, the China Daily said.

"Once this route is commonly used, it will directly change global maritime transport and have a profound influence on international trade, the world economy, capital flow and resource exploitation," ministry spokesman Liu Pengfei was quoted as saying.

Chinese ships will sail through the Northwest Passage "in the future", Liu added, without giving a time frame. 

Most of the Northwest Passage lies in waters that Canada claims as its own.

Asked if China considered the passage an international waterway or Canadian waters, Chinese Foreign Ministry spokeswoman Hua Chunying said China noted Canada considered that the route crosses its waters, although some countries believed it was open to international navigation.

In Ottawa, a spokesman for Foreign Minister Stephane Dion said no automatic right of transit passage existed in the waterways of the Northwest Passage.

"We welcome navigation that complies with our rules and regulations. Canada has an unfettered right to regulate internal waters," Joseph Pickerill said by email.

Maritime experts say shipping companies would most likely be deterred by the unpredictable nature of Arctic ice, the total absence of infrastructure in the region, relatively shallow waters, a lack of modern mapping and increased insurance costs.

The route would also be strategically important to China, another maritime official, Wu Yuxiao, told the China Daily.

Melting sea ice has spurred more commercial traffic, and China wants to become more active in the Arctic, where it says it has important interests.

Chinese ships, even merchant vessels, using the Northwest Passage could raise eyebrows in Washington.

In September, five Chinese Navy ships sailed in international waters in the Bering Sea off Alaska, in an apparent first for China's military.

(Reporting by Ben Blanchard; Editing by Clarence Fernandez and Jonathan Oatis)

Russia Wins $50 Billion Ruling in Decade-Old Fight With Yukos

http://www.bloomberg.com/news/articles/2016-04-20/dutch-court-overturns-50-billion-yukos-ruling-on-jurisdiction?cmpid=yhoo.headline

Russia succeeded in its battle to overturn a $50 billion arbitration ruling after a Dutch court ruled that the panel of judges who issued the record-setting award to the former owners of Yukos Oil Co. had no right to review the dispute.

The ruling by a court in the Hague Wednesday was a sweeping victory for the country in its more than decade-old fight with the owners of what was once Russia’s biggest oil company. The court said that the arbitration panel misinterpreted a treaty that Russia signed, but never ratified, according to a copy of the judgment.

The decision may free up accounts and property belonging to state companies targeted by GML Ltd., a holding company belonging to four former Yukos owners, in attempts to collect the award. Russia’s legal team will file a motion to overturn asset seizures in Belgium and France, said Andrey Kondakov, the general director of the International Center for Legal Protection, which is coordinating Russia’s defense.

“This will make Russian companies operating in foreign countries feel more comfortable,” Evgeny Minchenko, head of the International Institute for Political Expertise in Moscow, said by phone. “It also improves Russia’s image abroad as a whole.”

Ruling Overturned

Yukos was dismantled amid billions of dollars of tax claims that its former chief Mikhail Khodorkovsky called revenge by the Kremlin for his funding of opposition parties. He is campaigning in exile for the ouster of Vladimir Putin. The Russian president issued a pardon to free Khodorkovsky in 2013 after a decade in prison on convictions for fraud and tax evasion linked to Yukos.

“This is a victory for the rule of law and justice has prevailed,” Kondakov said. “This is the first time in 20 years that the district court has overturned an arbitration ruling.”

The decision showed that the West has decided to ease pressure on Russia, Khodorkovsky said on his Twitter account.

GML plans to appeal the decision, GML director Tim Osborne said on a conference call. The shareholders will continue enforcement proceedings for the tribunal’s award despite the ruling, which misapplied the laws governing the treaty, he said.

Coming Battles

The Kremlin is prepared for battles to continue. “We fully understand that this is not the end of the story,” Putin’s spokesman Dmitry Peskov said. “We are talking about a judicial process. I wouldn’t want to politicize it.”

The finding in favor of Russia runs counter to some arguments by hardliners who want the Kremlin should abandon values championed by Europe and the U.S. The Yukos case is an example of an information war against Russia, Alexander Bastrykin, the head of Russia’s Investigative Committee, wrote in an article in Kommersant-Vlast magazine Monday.

“This will contain the movement in Russia to reject international law because it turns out that it can be beneficial,” Gleb Pavlovsky, a former political adviser to Putin, said by phone. “At the same time, this solution should soften the image of a hostile West.”

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Botched Doha deal undermines OPEC credibility, oil prices tumble

 

http://www.aol.com/article/2016/04/18/botched-doha-deal-undermines-opec-credibility-oil-prices-tumble/21345803/

Oil prices tumbled on Monday after a meeting by major exporters in Qatar collapsed without an agreement to freeze output, leaving the credibility of the OPEC producer cartel in tatters and the world awash with unwanted fuel.

Tensions between Saudi Arabia and Iran were blamed for the failure, which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.

"OPEC's credibility to coordinate output is now very low," said Peter Lee of BMI Research, a unit of rating agency Fitch. "This isn't just about oil for the Saudis. It's as much about regional politics."

Morgan Stanley said that the failed deal "underscores the poor state of OPEC relations," adding that "we now see a growing risk of higher OPEC supply," especially as Saudi Arabia threatened it could hike output following the failed deal.

Oil prices have fallen by as much as 70 percent since mid-2014 as producers have pumped 1 to 2 million barrels of crude every day in excess of demand, leaving storage tanks around the world filled to the rims with unsold fuel.

Sunday's meeting in Qatar's capital Doha had been expected to finalize a deal to freeze output at January levels until October 2016 in an attempt to slow that ballooning oversupply.

But the agreement fell apart after top exporter Saudi Arabia demanded that Iran, which was not represented, should also sign up.

The Sunni Muslim kingdom of Saudi Arabia and Shia Islamic republic of Iran compete for influence in the Middle East, where they are currently fighting proxy wars in Syria and Yemen.

Brent crude futures fell almost 7 percent in early trading on Monday before recovering to $40.97 per barrel at 0647 GMT, still down 2.15 percent since their last settlement.

Traders said only an oil worker strike in Kuwait had prevented Brent from tumbling below $40 per barrel, while a cut in U.S. drilling down to 2009 levels had prevented steeper falls there.

Benchmark U.S. crude futures were down more than 5 percent at $38.31 a barrel.

Goldman Sachs said the Doha no-deal could a "bearish catalyst" for U.S. crude prices, which it forecast would average $35 a barrel in the current quarter.

FINANCIAL VOLATILITY

Analysts said that the failed agreement would also impact the broader economy.

"In the near-term, lower oil prices are bound to weigh on investor confidence and could exacerbate financial volatility," said Frederic Neumann, co-head of Asian economics research at HSBC.

"Concerns over financial stability in the energy sector and a further fall in drilling capex are headwinds to growth against an already fragile global economic backdrop."

With producers such as Saudi Arabia and Russia pumping near record levels and Iran also increasing output following the lifting of international sanctions against it last January, there is no end in sight for the global oil glut.

Iran was the only OPEC member not to attend the Doha talks.

 

Despite calls on Saudi Arabia to save the agreement, Riyadh, OPEC's de facto leader, insisted that all 13 members must take part in any freeze.

"It seems that for the Saudis politics and national pride are still more important than the price of oil," said Ralph Leszczynski of shipbroker Banchero Costa.

Iran has refused to stabilize production, seeking to regain market share post-sanctions.

"Iran has no reason to auto-sanction themselves when they are just trying to get back some of the market share they lost in recent years due the western-imposed sanctions," Leszczynski added.

While tumbling oil prices hurt producers, straining the budgets of energy exporters from Russia to Malaysia, they can also benefit consumers.

Asked whether the failed talks could result in further crude supply discounts for his company, Daniel Purba of Indonesia's Pertamina, a major importer of refined products, said: "We hope so."

As a result of the failure at Doha, Barclays said that Brent would likely average $36 per barrel during the second quarter of this year as a global glut continued unabated.

"This meeting and its outcome should have built... trust among producers for possible future cooperation and coordinated action. In this regard, the meeting was a complete failure," Barclays said, adding that "the failure of the talks gives the market another clear indication that OPEC's relevance in this market environment has faded."

(Additional reporting by Keith Wallis in SINGAPORE and Wilda Asmarini in JAKARTA; Editing by Alex Richardson)

Gulf of Guinea - a cause for concern

http://www.tankeroperator.com/ViewNews.aspx?NewsID=7551

The Gulf of Guinea continued to blight an otherwise cautiously optimistic piracy analysis thus far this year. 

 

In its first quarter 2016 piracy analysis, Dryad Maritime said that from January to March, the region saw a surge of industrial sabotage ashore, and offshore. The activity of pirate action groups (PAGs) operating with impunity in the face of overstretched Nigerian naval patrols has surged.

Around 14 commercial vessels were attacked off Rivers and Bayelsa States, with eight raids classified as ‘unsuccessful’ due to evasive manoeuvring or the crew’s evasion of capture by retreating to their ship’s citadel.

In six of these incidents, 23 crew members were kidnapped for ransom, which is proving to be a far more effective business plan for PAGs than hijacking product tankers for cargo (instances of which have fallen dramatically in the last 18 months), despite one unsuccessful attempt which was thwarted by Nigerian forces in February, Dryad said.

In Southeast Asia, this region had seen a 50% drop in reported maritime crime compared to the same period in 2015 - the lowest figures recorded by the security company in 10 years.

Similarly, the end of 1Q16 represented the longest period without attacks on vessels underway or at anchor within the Singapore Strait since 1Q13. 

Somali piracy continued to be broadly contained with no confirmed attacks on large vessels since January, 2014, despite some commentators’ views that the pirates continue to ‘probe.’

Ian Millen, Dryad Maritime COO, said; “The first three months of 2016 have visibly demonstrated the dynamic nature of maritime crime and how effective action to combat it can turn the tide in favour of the good guys. There are some welcome causes for optimism in certain regions, notably the Indian Ocean where Somali piracy remains broadly contained, and in Southeast Asia, where we have seen a remarkable turnaround in a little over six months to deliver our lowest first quarter figures in a decade.

“In other areas, such as the Gulf of Guinea, the picture is a less positive one, with kidnap of crew for ransom rampant off the Niger Delta. Wider concerns, from the effects of civil war and concerns over maritime terrorism to the impact of humanitarian crises, such as maritime migration, continue to focus the minds of all with duty of care responsibilities for ships, crew and passengers, but these are manageable issues with proper planning and support.

“Despite the good progress in some regions, we should avoid complacency at all costs. Criminal enterprises are adaptable and flexible and unencumbered by ethics, morality or international corporate law. No less business savvy than legitimate, law-abiding businesses, they can and will adapt to changing market conditions, finding new, less risky and more profitable ways of making their ill-gotten gains.

“The drop off in cargo theft and increase in kidnap activity in the Gulf of Guinea, could be one such example of this adaptability. Keeping one step ahead of the criminals is the key to what we do and how we help our clients,” he concluded.

China Imports Record Oil as Higher Margins Boosts Purchases

• Nation imported 91.1m tons crude in 1Q, up 13% year-on-year
• China 1Q refining margin surged 68 percent from 2015: ICIS

http://www.bloomberg.com/news/articles/2016-04-13/china-imports-record-crude-oil-as-higher-margins-boosts-buying

China’s crude imports climbed to a record in the first quarter as higher refining margin encouraged refiners to boost purchases.

The world’s biggest energy user increased inbound shipments to 91.1 million metric tons in the first three months of the year, data from the Beijing-based General Administration of Customs showed on Wednesday. That’s equivalent to about 7.34 million barrels a day, 6 percent higher than the previous quarter and 13 percent up from the same period last year, according to Bloomberg calculations. Imports last month fell about 4 percent from February’s record to 7.71 million barrels a day, the third-highest ever.

The nation’s net oil-product exports jumped to 1.3 million tons in March, the highest in three months, Wednesday’s data show. Refiners are importing more oil to take advantage of local retail fuel prices that are frozen when oil trades below $40 a barrel. The margin for major Chinese refineries to process Oman crude was about $16 a barrel in the first quarter, 68 percent higher than last year’s average, according to ICIS China, a Shanghai-based commodity researcher.

“Low oil prices and healthy margins are supporting imports,” Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd., said in an e-mail. “The strong imports also reflect demand from the teapot refiners.”

Stabilizing Economy

China’s total exports in March jumped the most in a year and declines in imports narrowed, adding to evidence of stabilization in the world’s second-biggest economy. The export rebound may suggest China’s economy fared better than expected in the first quarter, with data due Friday expected to show a 6.7 percent expansion for the period.

A total of 27 independent refiners, known as teapots, have obtained or applied for crude-import quotas, totaling 89.5 million tons as of the end of February, Zhang Liucheng, chairman of China Teapot Alliance, said on March 31. Meanwhile, China awarded additional 230,000 tons of oil product export quotas to teapot refineries in a second-batch allocation, according to ICIS China.

“The teapot plants are very sensitive to refining margins and profitable oil processing in the first quarter certainly boosted their appetite for crude,” Guo Chaohui, an analyst at Beijing-based China International Capital Corp., said before the data were released.

Largest Importer

China may surpass the U.S. as the world’s largest crude importer this year with average inbound shipments of 7.5 million barrels a day, driven by independent plants’ purchases and stockpiling demand, said Zhong Fuliang, vice president with China International United Petroleum & Chemicals Co., the trading arm of the nation’s biggest refiner. The U.S. imported 7.37 million barrels a day last year, according to Energy Information Administration data.

The nation’s crude imports may fall in the second quarter as processing plants take units offline for scheduled maintenance and port congestion delays unloading of cargoes, according to ICIS China and Energy Aspects.

Inbound shipment may fall to as low as 23 million tons a month in the quarter as about 104 million tons of annual primary processing capacity will be shut for maintenance in the April-June period, ICIS China said in an e-mailed report on April 6.

Energy Aspects estimates vessel wait times at ports in Shandong province, where most independent refineries are based, have increased to as long as 30 days, it said in a note dated April 4.