Maduro accused the US of taking over Venezuela’s oil

http://www.businessinsider.com/maduro-accused-the-us-of-taking-over-venezuelas-oil-2016-6

The Venezuelan president has accused the U.S. of trying to usurp his country’s oil riches after the head of the Washington-based Organization of American States (OAS) suggested a special meeting that could lead to Venezuela’s suspension from the group.

Luis Almagro, the Secretary-General of the 35-member OAS, has called for a special meetingto censure Venezuela for jailing critics and blocking the opposition-controlled parliament as the country reels from an economic crisis that is leading to dangerous unrest.

The OAS public lashing of Maduro is likely to lead to more blowback for the opposition-controlled parliament, as Maduro has threatened to charge congressmen with treason.

For the opposition, which is holding out for referendum that would recall Maduro, the OAS move is seen as full support of that.

"The empire has decided that it's time to take our resources," Venezuelan Foreign Minister Delcy Rodriguez told reporters. "We know that what's coming is an intervention ... that's why we are alerting the international community."

Venezuela has the largest reserves of underground oil in the world and provides 10 percent of U.S. imports.

Learn how to consistently profit in the markets by shadowing one of the most brilliant and strategic traders in the world.
The crisis in Venezuela will reverberate far and wide, including in the U.S., in both positive and negative ways. On one hand, if Venezuela starts losing significant oil output, it will help rebalance the market and move us beyond US$50 oil.

 

But the bigger picture, according to Houston Chronicle columnist Chris Tomlinson, is that we need Venezuela’s heavy crude.

"For our refineries to operate, we need heavy Venezuelan oil," Tomlinson wrote. "Because of the crisis, they don't have enough money to pay Texas companies to help extract that oil. That's leading to a reduction in their output, and that's worsening the economic crisis there."

Read the original article on OilPrice.com. Copyright 2016.

NY Fed first rejected cyber-heist transfers, then moved $81 million

http://www.aol.com/article/2016/06/05/exclusive-ny-fed-first-rejected-cyber-heist-transfers-then-mov/21389818/

Hours before the Federal Reserve Bank of New York approved four fraudulent requests to send $81 million from a Bangladesh Bank account to cyber thieves, the Fed branch blocked those same requests because they lacked information required to transfer money, according to two people with direct knowledge of the matter.

On the day of the theft in February, the New York Fed initially rejected 35 requests to transfer funds to various overseas accounts, a New York Fed official and a senior Bangladesh Bank official told Reuters. The Fed's decision to later fulfill a handful of resubmitted requests raises questions about whether it missed red flags.

The New York arm of the U.S. central bank initially denied the transfer requests because they lacked proper formatting for the SWIFT messaging system, the network banks use for international financial transfers, the two officials said.

The Bangladesh Bank official said they lacked the names of correspondent banks, which typically receive wired funds. The Fed rejected the requests, which came from hackers who had broken into the SWIFT network through Bangladesh Bank systems.

Later in the day, however, the cyber thieves resubmitted those 35 requests. On the second try, the messages had the proper formatting, the New York Fed official said. The requests had been authenticated by SWIFT, the first line of defense against fraudulent wire transfers.

Despite the technical compliance, the New York Fed rejected 30 of the requests a second time. But the Fed did approve five requests - for a total of $101 million. Later, one of those five transfers - a $20 million request - was reversed because of a misspelling.

The New York Fed has said it blocked the 30 resubmitted requests because they were flagged for economic sanctions review. Only afterward were they deemed potentially fraudulent.

The Bangladesh Bank official and another source close to the bank said the New York Fed should have rejected all the requests on both the first and second attempts.

The source close to the bank, who also had direct knowledge of the matter, said anomalies in the four transfers that ultimately went through should have raised questions at the New York Fed. They were paid to individual recipients, a rarity for Bangladesh's central bank, and the false names on the four approved withdrawals also appeared on some of the 30 resubmitted requests rejected by the bank, said the source close to the Bangladesh Bank.

"Of course, we asked the Fed why the repetition of the names did not create red flags," the source said.

"They are saying they rejected 35 badly submitted ones," the source said. But when the requests were re-submitted, they "paid 5 of them and stopped 30. Why? They can give no answer."

Bangladesh Bank and SWIFT declined to comment. The New York Fed has said there were no problems with its procedures for approving SWIFT fund transfers, and declined to comment on whether it missed any warning signs.

The cyber theft from Bangladesh's central bank - and recent disclosures of other similar fraud attempts - have brought scrutiny on the SWIFT messaging system. SWIFT is a cooperative of global banks formally known as the Society for Worldwide Interbank Financial Telecommunication, and its transaction system was used as a conduit for one of the largest cyber bank heists in history.

In the United States, a congressional committee has launched a probe into the New York Fed's role in the bank heist. The Bangladeshi central bank might seek compensation for the funds from the Federal Reserve, and Bangladesh Bank police have said that recent installation of a new SWIFT settlement system at the bank last fall may have provided thieves an opportunity to gain access to the bank's SWIFT servers.

RED FLAGS?

The New York Fed's reviews of payment requests that come over the SWIFT system are focused chiefly on guarding against money laundering and transfers to people and entities that are under U.S. government sanctions, Fed officials have said. But requests often also are temporarily halted to fix typos and other formatting problems.

The Fed branch has said its clients, including Bangladesh Bank, and SWIFT have primary responsibility for preventing unauthorized transfers.

Fed employees queried Bangladesh Bank about the purpose of the payments requested on Feb. 4 and again on Feb. 5, according to a letter to congresswoman Carolyn Maloney (D-NY) by New York Fed General Counsel Thomas Baxter.

The four transfers totaling $81 million went to accounts in the Philippines. The money wound up with casinos and casino agents and remains missing. An attempt to transfer $20 million to a foundation in Sri Lanka was reversed because the word "foundation" was misspelled.

The source close to Bangladesh Bank said questions about the anomalies in the approved requests were discussed at a meeting in Basel last month between New York Fed President William Dudley, Bangladesh Bank Governor Fazle Kabir and representatives from SWIFT.

Rep. Maloney and Tom Carper, the top Democrat on the Senate Homeland Security Committee, both have made inquiries to the New York Fed.

The House Science Committee informed the New York Fed in a letter this week that it is launching a probe into its handling of the transfer requests. The committee plans to examine the New York Fed's response to the heist, the oversight of SWIFT, and whether additional measures are needed to address vulnerabilities to cyber attacks.

SWIFT, which has come under scrutiny after the Bangladesh Bank heist and cyber attacks in at least three other cases, plans a new program to improve security and also wants banks to "drastically" improve information sharing. (Additional reporting by Tom Bergin in London; Editing by Raju Gopalakrishnan and David Greising)

Markets - VLCC demand picks up

http://www.tankeroperator.com/ViewNews.aspx?NewsID=7693 

The VLCC market saw renewed demand particularly ex MEG in the last week. 

 

Although charterers tried to move quietly under the radar, the market turned in favour of the owners, except ex Caribs, Fearnleys reported in its weekly report.

The few cargoes being quoted in the open market ex MEG received limited response, but at firm levels indicating the supply of tonnage up to 20^th June is slowly, becoming less.

Presently the fixture count for June is well ahead of the total concluded at same time last month for May liftings.

Owners are counting on strong demand in the third week, as was the case in April and May. They intend to push rates further up, but this remains to be seen, as up to now, May has been more active than the previous months.

Suezmaxes enjoyed a busy week with strong numbers seen in all areas. The initial spike was created by the tight Med/Black Sea market, due to uncertainties as vessels were tied up in French ports.

The Med/Black Sea tonnage list for vessels with firm itineraries was short and as a result, the rates jumped up to W100 level for TD6 voyages.

In W Africa, the ‘force majeure’ active in most of the Nigerian ports was repealed and as a result, deferred barrels entered the market. with laycan up to 25^th June. In the Baltic and N Sea areas, rates came off by a few points, mainly due to lack of activity cross North Sea.

In addition, an expected maintenance period at Primorsk added some downward pressure on rates. “We don’t expect rates to soften dramatically, but we could see a small downward correction,” Fearnleys said.

Rates in the Med and Black Sea have finally stabilised at around WS115 level. Black Sea was the most active area, however, at time of writing (Wednesday), more Med cargoes were materialising, thus adding some upward pressure on rates. Quite a few ships still have no firm berthing prospects, partly due to the French strikes and a slow turnaround at Trieste.

The Trieste situation looks like it could slowly be resolved. Consequently, we will see more ships being circulated with firm positions, which could ease the strong momentum if charterers play the coming day’s right, Fearnleys concluded.

Period charter rates look to be softening judging by some of the fixtures reported on brokers’ lists in the past week or so.

For example, the 1999-built VLCC ‘DS Commander’ was reported fixed to HOB for 12 months at $35,250 per day, while unknown charterers were said to have fixed the 2016-built VLCC ‘Landbridge Warrior’ for three years T $35,000 per day.

Vitol was believed to have fixed the 2010-built LR2 ‘Totonno Bottiglieri’ for 12 months at $24,000 per day.

In the MR segment, HPCL was rumoured to have fixed the 2005-built ‘Jag Pranav’ for 12 months at 17,000 per day, while Shell was thought to have taken the 2009-built ‘MR Pegasus’ for 3-6 months at $16,750 per day and ST Shipping was thought to have fixed the 2003-built MR ‘MTM Mumbai’ for six months at $16,000 per day.

The 2009-built Handysize ‘Atlantic Canyon’ was thought fixed to Signal Maritime for two years with an option for a further year at $13,500 per day.

In the S&P sector, having purchased four Handysize vessels, CP Offen Tankschiffarts was thought to have disposed of the MRs ‘CPO Japan’ (built 2010) and the ‘CPO Korea’ (built 2009) to UK-based Union Maritime for an en bloc price of $46 mill. This transaction may still be on subjects.

Also on subjects were believed to be the two 2008-built MRs ‘Batissa’ and ‘Bursa’ to unknown interests for $22 mill each.

The 2011-built VLCC ‘C Elephant’ was said to have been sold to Greek interests, believed to be involved with Minerva for about $55.6 mill.

Reported to be leaving the fleet were the 1986-built sister parcel tankers ‘Stolt Aqumarine’ and ‘Stolt Topaz’, both reportedly sold to Indian breakers for $270 per ldt each.

Deliveries included the fifth of five MRs sold by Scorpio Tankers to National Chemical Carriers (NCC), a subsidiary of the National Shipping Company of Saudi Arabia (Bahri).

The vessel was delivered on 26^th May, the ownership was transferred to NCC and the tanker was renamed ‘NCC Bader’.

All five vessels were built in 2014 at Hyundai Mipo Dockyard for Scorpio Tankers and were bought for a total purchase price of $166.5 mill earlier this year.

Elsewhere, Tristar has taken delivery of the first of six MRs from Hyundai Mipo - ‘Silver Manoora’. 

They are being built on the back of long term timecharters to Shell.

Newbuildings were scarce with just two VLGCs reported ordered by NYK at Japan Marine United (JMU).

The 84,000 cu m vessels are due for delivery in January, 2019 and are priced at $75 mill, according to brokers’ reports.

Suezmaxes at the crossroads

http://www.tankeroperator.com/ViewNews.aspx?NewsID=7692

In the Suezmax fleet, there are 89 vessels of over 15 years of age (18% of the current fleet), which is the preferred upper employment limit set by most charterers. 

 

However, many of the older units are able to trade in the shuttle markets, where age is not so much of an obstacle. Today, 60% of the current Suezmax shuttle fleet is over 15 years old, said Gibson Research in a recent report, following up its recent analysis of the VLCC fleet (see ‘Tanker Operator News’ 13^th May).

Older conventional tankers continue to find employment East of Suez, typically loading Middle East cargoes for India or Singapore.

Between 2014-2015, huge investment in new Suezmaxes took the orderbook profile as a percentage of the existing fleet to 24%; the highest of all the tanker newbuilding sectors.

Almost all of the newbuildings are scheduled to be delivered over the next 24 months. But how are these newbuilds going to be absorbed as there appears to be little chance of any withdrawals from the fleet?

Last May, Gibson wrote in the weekly report that “supply appears in check, although robust earnings are likely to lead to a slowdown in demolition activity and that the increase in the Suezmax trading fleet is still expected to be limited”.

We were correct at the time, Gibson said, but the 49 orders placed since last May now paint a different picture.

It appears that geopolitical events have a huge influence on the Suezmax segment, more so than other sectors of the tanker market and the short term prospects appear to be very much under treat.

For example, the loss of West African barrels to the US (TD5) over recent years (although recently enjoying a renaissance) has been substituted with WAF/UKC (TD20) as the crisis in Libyan production continues and is likely to do so for the foreseeable future.

It should be assumed that Libya will one day return to pre-crisis levels in the same way as Iraqi production has returned. Since 2006, Iraqi production has also supported Suezmax demand, with the largest jump in output from 3.3 mill barrels per day seen in 2014 to 4 mill barrels per day recorded last year, which included Kurdish exports through Ceyhan.

However, there is a view that Iraqi production has reached a plateau and may even decline in the short term. The loss of revenues from the low oil price has limited the government’s ability to pay oil companies, who in turn are not investing in Iraq’s infrastructure, which is needed to expand crude exports.

The recent supply disruptions in Nigeria represent another threat to the Suezmax market and again some industry experts are forecasting that the nation’s oil output will drop sharply over the next decade.

Wood Mackenzie, the energy consultancy, has cut its output forecast for Nigeria by more than a fifth, to 1.5 mill barrels per day on average over the next decade, due to uncertainty over promised reforms to the cash-strapped state oil company. This is not related to the militant activity which is currently disrupting exports.

Nigerian production has reached a 20-year low following recent acts of sabotage. Lost output destined for India discharge may in future have to be sourced from the Middle East, which could support the Suezmax market.

Meanwhile, other areas where forecast growth in cargo volumes have not materialised as expected, such as Kozmino and the Caribbean, have taken their toll on Suezmax demand.

The Suezmax market could face some tough challenges over the next few years; not just from the threat of the newbuildings, Gibson concluded.

A full list of Suezmaxes and every tanker of 25,000 dwt and over can be found in the recently published Gibson Tanker Register 2016.

This annual listing takes its usual format with the first section devoted to commercial owners and their vessels, followed an an alphabetical list of all of the tankers included with their basic details.

A CD is included with the printed version, which gives more in-depth information, such as vessels by charterer, tanker pools, vessels by dwt, newbuildings by size group and delivery dates. 

Piracy incidents increase off Nigeria

http://www.tankeroperator.com/ViewNews.aspx?NewsID=7689

Piracy incidents off the Nigerian coast were 21% higher in the first four months of this year than the previous peak levels recorded in 2008, according to a security report. 

 

Control Risks’ maritime risk analysis division said that piracy and armed robbery at sea from January to April, 2016 was one of the biggest threats to maritime operators in the region.

The frequency of incidents was 119% higher, compared with the same period in 2015. Control Risks data also revealed that offshore Bayelsa state was the top area for piracy incidents in Nigeria with 56% of the total reported being recorded in this location during the period.

While theft and robbery in Nigerian ports and at anchorages saw a significant decrease thus far this year, there was a corresponding increase in the number of kidnappings which took place place during piracy attacks offshore.

For example, the data showed an average of three kidnappings occurring per month in the first four months of this year, compared to one kidnapping per month in the same period in 2015.

Key findings:

·         Piracy and armed robbery incidents January - April, 2016 were most prevalent in offshore Bayelsa state (56%) and offshore Rivers State (17%).

·         56% of recorded incidents involved oilfield and tankers.

·         25% of incidents occurred along internal waterways.

·         119% increase in piracy, compared with same period in 2015.

Sebastian Villyn, Maritime Risk Analysis at Control Risks consultant, commented:“The number of piracy incidents we’ve recorded occurring off the Nigerian coast in the first four months of this year is striking. This is a significant increase in activity since the peak of 2008.

“One of the drivers behind this growth is a change in tactics by criminal groups, focusing on what is perceived as more financially rewarding activity such as kidnap for ransom, instead of offshore robbery and low level port and anchorage crime.

“Equally, while tankers and oilfield support vessels are prime targets, all vessels are potentially at risk of attack and should be prepared when operating in this region. Maritime operators can help to reduce the risks to their crew through a number of measures. These include having access to up to date maritime intelligence on potential regional risks; security training for crew members on how to respond should they be faced with a kidnap for ransom situation and maritime security design expert support to help protect assets both onshore and offshore,”he said.

In recognition of the increased level of piracy incidents in the area this year, Nigerian President Muhammadu Buhari recently launched Naval Operation Tsare Teku to patrol the area in a bid to reduce crime.

New Texas Oil Boom? Surging Shares Have Made This Young CEO A Billionaire

 

Heaven for frackers. Bryan Sheffield (left) with father Scott in a Permian Basin oilfield. (Photo by Scogin Mayo, for Forbes, 2014.)

http://www.forbes.com/sites/christopherhelman/2016/06/01/new-texas-oil-boom-surging-shares-have-made-this-young-ceo-a-billionaire/#44690fa45ae1 

Amid the carnage of the American oil industry, shares of Parsley Energy have doubled in the past year. How did Bryan Sheffield do it? 

Life is pretty good for Bryan Sheffield. From his office in a new high-rise in downtown Austin, the CEO of Parsley Energy has an expansive view of the Colorado River. Down below is 6th Street, the heart of Austin’s legendary live music scene. Considering the depression wracking the American oil industry, Sheffield, 38, is a little sheepish about his shiny digs, a carry over from the time of $100 oil.

The last time I saw Sheffield was out in Midland, Texas at Parsley’s original HQ. It was mid 2014 and I was working on a story for Forbes Magazine about how he got his start in 2008 taking over a bunch of old oil wells in the Permian Basin that his grandfather Joe Parsley had drilled decades before. Turned out that Parsley’s wells were smack dab in one of the sweet spots for a thick layer of oil-bearing rock called the Wolfcamp. It’s just one strata of dozens within the layer cake of rock under west Texas, but so promising that in 2014 Parsley raised $900 million in its IPO. Acreage in the region topped out in 2014 at about $37,000 an acre. When we did that Forbes story, Sheffield’s shares in Parsley made him nearly a billionaire.

Of course the industry tumbled from there. So far we’ve seen 75 bankruptcies, $1 trillion in equity value wiped out. American oil production has slid from 9.6 million barrels per day to 8.9 million, and falling. Parsley shares tumbled too, from $25 a share soon after the IPO to $11.50 in December 2014.

But a funny thing happened. Parsley last year showed that it can not only survive the downturn, but thrive. Bucking all the trends, Parsley is set to grow its oil and gas production nearly 50% this year to 34,000 barrels per day, with 44,000 bpd possible by the end of 2017. “We are fortunate, lucky,” says Sheffield. “It comes down to having the best rock inside the best play in the United States.” Parsley shares have retraced all their losses to trade at all-time highs. Sheffield owns 38.5 million shares, or about 20% of the company — worth just over $1 billion.

Investors have been throwing money at Parsley and other pure-play Permian operations because the company has shown that  at $45 oil prices it can generate a 50% rate of return drilling new wells in the Midland basin (a sub-basin of the bigger Permian). It’s not the only one. The Permian has emerged as the last man standing. Of course the region has seen massive layoffs and the mothballing of hundreds of rigs and fracking crews. But oil volumes out of the Permian have held pretty flat, levelling off at 2 million bpd. Of the 400 rigs still drilling in the U.S. (down 75% from 2014), 120 of them are working the Permian — more than any other region.

Parsley Energy Inc. (PE) Stock Price - 2 Years | FindTheCompany

 

Not even dilution has scared off the Permian bulls. Since early 2015 Parsley has sold $1.2 billion worth of new shares and $200 million in notes in order to fund acquisitions. In two deals last year it acquired more acreage in its core region for $280 million. And this year it paid another $640 million in two deals. Sheffield says he’ll keep acquiring as long as the prices are right. “The market is giving me the money to enable me to keep making acquisitions,” he says.

Prices for good acreage have bounced back as high as $25,000 in choice areas. According to Chris Atherton, president of online oilfield auction site EnergyNet, $1 million would get you between 80 and 125 leasehold acres in the Permian, or roughly 15 barrels per day of flowing oil production.

Parsley has more than 120,000 net acres in the Midland and south Delware basins. Its stock market capitalization is $5 billion against just $500 million in debt. Expected EBITDA this year is about $350 million. “We’re getting the best of both worlds,” says Sheffield. “Oil is going back up and costs are coming down. Now the operators have the advantage.” Parsley spends about $5 million to drill and complete each well, down from $8.5 million. The big savings is in fracking costs, down by half from the peak. That will go back up if oil prices do. “You can lock in rigs for 2 to 3 years, but you can’t lock in fracking.” Parsley expects to invest about $425 million on drilling this year.

Parsley has about 25 years of drilling inventory at its current pace. That kind of running room could prove appetizing to a bigger oil company. Those with decades of experience in the region include Chevron CVX +0.13%, Occidental Petroleum OXY +0.00%, Apache APA -1.70% and ExxonMobil XOM +0.25%, which doubled its Permian production last year. There’s also Pioneer Natural Resources PXD -0.52%, which has been run for three decades by Sheffield’s father, Scott Sheffield.

Any of them could be a consolidator of the smaller publicly traded Permian pure-plays, if they don’t consolidate among themselves. Sheffield says Parsley benchmarks itself against Diamondback Energy (Ticker: FANG), RSP Permian (RSPP), and Callon Energy (CPE). Friendly competition makes them all better operators. “We’re all in the same area,” says Sheffield. “It holds us accountable.”

All those companies are working hard at deals to acquire prospective acreage. “We’re trying to swallow the small fish and the minnows,” says Sheffield. “Exxon is looking at all of us and waiting for us to get bigger and bigger.”

As the oil market balances, Permian oil output will grow again. A climb to $75 would be more than enough to rekindle boom times in the Permian, and maybe overload the market once more. “We’re going to add rigs again and then the other guys will add rigs again and then we’ll overshoot,” says Sheffield. “If oil goes back to $65, then it will go back to $45. The risk is that we overproduce again.

Market Currents: OPEC crude oil loadings ripping higher

http://fuelfix.com/blog/2016/06/01/market-currents-opec-crude-oil-loadings-ripping-higher/ 

 

Posted by Matt Smith

 

Sixty-two years after Linus’ security blanket made its debut in the Peanuts comic strip, and the oil market is looking to tomorrow’s OPEC meeting to provide some comfort and price support (it is absent thus far). A new month means a renewed onslaught of economic data ahead of  the double whammy of OPEC and Nonfarm Friday.  Hark, here are five things to consider in oil markets today. 

 

1) China kicked off the data parade last night, with official manufacturing coming in a shade above consensus – and showing expansion to boot – at 50.1. In contrast, the Caixin manufacturing print for China was both below consensus, and showing contraction at 49.2. Across to Europe, and the Eurozone print was in line with consensus at 51.5; a stronger showing from France (allez! allez!) offset disappointing prints from Germany, Italy and Spain.

2) Across to the Americas, and the official U.S. manufacturing PMI came in better than expected – rebounding on last month to 51.3. Meanwhile, Brazilian GDP gave some much-needed reason for optimism, as Q1 ‘only’ contracted by -0.3% on the prior quarter, down -5.4% year-on-year (versus -5.9% expected).

3) The chart below from the Wall Street Journal highlights how a weakening ruble over the last two years has helped to ease the pain of a falling oil price in Russia. The currency has somewhat acted like a hedge, weakening in tandem with oil prices to buoy oil export revenues. While oil prices are still some 50% lower than in mid-2014, they are only than 10% lower when priced in Rubles:

4) Europe is losing its reputation of being the renewable energy leader as it dials back its investing, while Asia ramps it up. As we have highlighted previously, a record $328.9 billion was invested in solar, wind and other renewables last year – although European spending dropped to $48.8 billion from $62 billion in the year prior, with German financing dropping by 46%.

Concurrently, Chinese renewable investment rose above $100 billion last year, while spending in the rest of the Asia & Pacific region surpassed Europe.

5) Finally, ahead tomorrow’s OPEC meeting, here is the year-on-year increase in crude loadings over the last year for OPEC members (including Indonesia). With material increases in crude oil exports over the last year from the likes of Iran, Iraq, and Saudi Arabia, every single of the last twelve months has seen increased loadings on year-ago levels.

OPEC loadings are up over 7% through the first five months of this year compared to 2015, averaging 1.65 million barrels per day higher. Wow.