http://www.tankeroperator.com/ViewNews.aspx?NewsID=8265

Sovcomflot’s (SCF) Arctic shuttle tanker, ‘Shturman Albanov’, has become the first vessel to receive a Polar Ship Certificate. 

 

This certificate confirmed the vessel's compliance with the requirements of the Polar Code, which took effect this week. It was issued by the Russian Maritime Register of Shipping (RS) on 22^nd December, 2016.

’Shturman Albanov’ is the lead ship in a series of Arctic shuttle tankers ordered by SCF under a long-term contract with Gazprom Neft. They are designed to carry crude oil from the Yamal Peninsula (YNAD) to Murmansk all year round.

Each tanker is of about 42,000 dwt. RS had assigned the vessels an ice class - Arc7.

She flies the Russian flag and is registered at St Petersburg. Her technical characteristics are claimed to be unique, as the vessel’s design takes into account the specific features found in the Gulf of Ob, where some areas are relatively shallow – about 10 m deep – and which is covered with ice from October to July.

‘Shturman Albanov’ is capable of operating in the Arctic at temperatures down to –45 deg ?. Her propulsion system consists of two ABB Azipod thrusters with a total capacity of 22 MW, which provide a high ice-breaking capability and good manoeuvrability in sailing through ice drifts and heavy ice fields.

She was built and operated under the RS technical supervision. RS class notation is KM (*) Arc7 AUT1-ICS OMBO LI CCO ECO-S BWM(?) BLS-SPM Oil tanker (ESP) CSR.

Konstantin Palnikov, RS director general, said: “In a technical sense, the tanker meets the highest requirements of safe navigation in the Arctic seas. Application of the RS rules allowed to comply with the Polar Code requirements as early as the design stage, due to the fact that our requirements correspond to the Polar Code provision in advance.

“ Thus, the ships having Arc7 in their class notation correspond to the Category A of the Code in respect of compliance with the requirements to hull structure, machinery installation, intact stability and damage stability,” he said.

Polar Code compliance is a pre-condition for ships operated in the Barents Sea, Cara Sea water area south of 60 deg S and in other seas included in Polar waters. The Polar Ship Certificate confirms the ship's compliance with the Code requirements related the safe navigation - for example, the ability of the ship's hull to withstand severe temperatures and ice conditions, anti-ice arrangements, the ability of ship's navigation systems and communication systems to provide the ship with the required information at the high latitudes.

In addition, RS has completed research on the preparation of proposals regarding procedures for the development of the Polar Water Operational Manual (PWOM) for the RS classed ships, the contractor being Admiral Makarov State University of Maritime and Inland Shipping (SUMIS).

The PWOM must now be available on board in compliance with the Polar Code. To assist shipowners, a detailed structure and the requirements to the content of the manual have been developed within the framework of the research, provided with recommendations for each section.

A list of the ice navigation risks and the measures for their prevention and the minimisation of their negative impact was compiled, based on the analysis of ships’ operating experience in polar waters.

The practical significance of the research work was discussed by experts at the Scientific and Technical Council Section ‘Human element problems’, including the representatives of shipowners and ship operators, as well as the maritime educational institutions providing the personnel training for the industry.

SUMIS presented its recommendations on the PWOM preparation in full compliance with the Polar Code requirements in October, 2016 at the conference ‘Polar Code and Safety of Ice-going Ships’, organised in co-operation with SCF.

Tillerson discloses $400 million in assets

 

http://fuelfix.com/blog/2017/01/05/tillerson-discloses-400-million-in-assets/

Rex Tillerson, President-elect Donald Trump’s pick for U.S. secretary of state, disclosed assets worth as much as $400 million in a federal ethics filing that reflected investments spanning more than a dozen nations.

If confirmed by the U.S. Senate, Tillerson will recuse himself for a year from government decisions involving Exxon Mobil Corp., where he served as chairman and chief executive officer until Jan. 1, according to a separate filing posted by the Office of Government Ethics on Wednesday. Because the company explores for oil and natural gas on six continents, he may have a lot of recusing to do.

Tillerson stands to receive a cash payout of roughly $180 million from Exxon in lieu of restricted stock awards that have yet to vest, the company said Tuesday. In his ethics filing, Tillerson said that money would be placed in an irrevocable trust that would be managed by an independent trustee. In all, Tillerson’s disclosures reflect more than $300 million in Exxon interests and pension benefits and between $28.6 million and $98 million in other assets. (Nominees disclose the value of their assets within broad ranges.)

Tillerson’s filing says he will divest from 156 different entities within 90 days of his confirmation.

Cutting Ties

To avoid a conflict of interest with the multinational corporation he joined in 1975 and led for 11 years starting in 2006, Tillerson also needed to work out a resolution for the deferred compensation package that typically ties former executives’ personal fortunes to Exxon’s performance for a decade after they retire. Exxon’s board said it consulted with federal ethics officials to ensure the agreement severing Tillerson’s ties to the company was sound.

Related: Rex Tillerson’s holdings including stock in rival oil companies

Such recusals typically require that “you remove yourself from the chain of command of anything that would affect your former company,” said Stan Brand, an attorney and government-ethics expert at Akin Gump Strauss Hauer & Feld.

One example: Tillerson might have to recuse himself from Trump administration decisions over whether to ease sanctions placed on Russia for supporting separatists in eastern Ukraine and for the 2014 annexation of Crimea. Under Tillerson’s leadership, Russia became Exxon’s single biggest exploration theater as the company amassed drilling rights across tens of millions of acres, according to U.S. Securities and Exchange Commission filings.

Confirmation Hearing

Tillerson’s confirmation hearing before U.S. senators may begin as soon as next week. The 64-year-old Texan is no stranger to Capitol Hill, having testified before congressional inquiries in the past decade on topics as diverse as gasoline prices and the Deepwater Horizon disaster.

Tillerson could face a tough confirmation process, with Democrats eager to push back on Trump’s nominees and a handful of Republicans concerned about his longtime business ties to Russia at a time of heightened tension between the two countries. Senate Democratic leader Chuck Schumer called Tillerson and several other Trump nominees “troublesome.”

Tillerson stepped down as Exxon chairman and CEO on Jan. 1 and was succeeded by refining chief Darren Woods. The company typically retains the services of ex-CEOs post-retirement to benefit from their long-standing relationships with foreign oil ministers, political leaders and dignitaries.

By cutting ties with Exxon, Tillerson is also eschewing post-employment perks such as a private office and administrative support enjoyed by his predecessor and mentor, Lee Raymond.

Exxon Shares

Tillerson directly owns 611,087 shares of Exxon, worth about $55 million according to Bloomberg calculations based on Wednesday’s close in New York. He has an additional 2.026 million restricted shares, worth $182 million.

Tillerson’s 38-page financial disclosure reveals he has a varied portfolio of investments in companies based in more than a dozen countries, including China, Japan, Germany, Taiwan, India and Brazil. He also disclosed income of at least $20.5 million in 2016, including the $10.3 million he received in salary, bonus and other compensation from Exxon.

In cashing out his global holdings, Tillerson could apply for a “certificate of divestiture,” which would allow him to defer capital-gains taxes on certain assets he liquidated to comply with ethics requirements. To qualify for deferral, which is available to eligible appointees, his wealth would have to be reinvested in certain approved investments, such as mutual funds.

It’s unclear how the roughly $180 million cash payment for the restricted stock units might be treated for tax purposes, according to specialists in executive compensation, accounting and government ethics. The trustee who will manage that money will make payments to Tillerson on a schedule “closely approximating” the timing Exxon would have followed in letting the restricted units vest, according to Tillerson’s filing.

Tillerson also will sell more than 600,000 shares he already owns in North America’s largest oil explorer, abandon $4.1 million in cash bonuses he would have been paid over the next three years and take a $3 million haircut on the restricted stock payout, the company said in a statement dated Tuesday.

His severing of his relationship with Exxon isn’t unique — nor is it the largest such separation in recent history. In 2006, before his confirmation as U.S. Treasury Secretary, former Goldman Sachs Group Inc. CEO Hank Paulson agreed to sell his $485 million stake in the investment firm.

Shale drillers to move cautiously as oil prices rise

http://fuelfix.com/blog/2016/12/29/shale-drillers-to-move-cautiously-as-oil-prices-rise/

Shale oil companies are ready to play chicken with supply and demand again.

Roiled by a year that began with crude at a 12-year low and ended with a surprise OPEC agreement boosting prices, U.S. producers including Continental Resources Inc. and Pioneer Natural Resources Co. are promising not to overreact — or overspend.

The temptation will be strong: a recovery in prices has already spurred drilling activity in the U.S. to the highest since January. If oil passes $70 a barrel, the U.S. could start pumping out an extra million barrels a day, offsetting much of the planned cut from the Organization of Petroleum Exporting Countries, according to a Citigroup Inc. analysis. With President-elect Donald Trump promising to ease industry regulations and analysts predicting better earnings for 2017, shale drillers are gearing up for growth.

“There’s a real concern by industry that we could be in for another one of these price adjustments, if we get carried away with development,” Harold Hamm, chief executive officer of Oklahoma-based Continental, said in an interview in New York. “They’re going to be disciplined going forward.”

The U.S. now produces 8.8 million barrels a day, about half from shale. West Texas Intermediate oil, a U.S. benchmark, has averaged almost $52 a barrel since OPEC’s announced cut last month. A climb to $60 could generate a 500,000 barrel surge in U.S. production and $70 would double that, Citigroup wrote in a report this month. WTI traded at $53.81 at 12:32 p.m. Singapore time Thursday.

While dozens of shale companies and oilfield servicers went bankrupt in the aftermath of the price collapse, investors have rewarded survivors who emerged leaner and more efficient. Hamm’s Continental, holder of the largest net acreage in North Dakota’s Bakken Shale region, has more than doubled in value this year. Hamm himself, who owns the majority of the company’s shares, had the third-largest personal gain among billionaires in 2016.

A Bloomberg Intelligence index of 57 independent oil and gas drillers in North America has gained 72 percent this year, with all but 10 of the stocks posting an increase for the year. On average, members of the index are expected to lose $1.48 a share in 2016, according to analysts’ estimates. That will improve to a 35-cent average loss next year. The five largest companies are expected to swing to a full-year profit in 2017 on a per-share basis.

Also buttressing cash flow, U.S. producers have been buying hedging contracts that lock in higher prices for 2017, giving them further financial flexibility to grow, Macquarie Research analysts Vikas Dwivedi and Walt Chancellor noted in a Dec. 12 report to clients.

‘Shale’s Reflexes’

The issue for the global industry now isn’t whether U.S. drillers will expand their operations, but rather “how quickly does shale come on to tap those higher prices, and then how quickly they push them back down,” said Peter Pulikkan, a Bloomberg Intelligence analyst in New York. “2017 is the year where you are going to see shale’s reflexes tested.”

Producers are waiting to see whether OPEC delivers on its promised cuts before increasing their own development budgets, according to Pulikkan. It may be the second quarter before enough market data is in to reach a conclusion, he said.

Pioneer Natural Resources can go from starting a well to producing oil for sale in three to four months, Chief Operating Officer Tim Dove told Bloomberg Television in a Dec. 13 interview. The Irving, Texas-based company was already planning to boost production by 15 percent and add rigs next year in West Texas’ Permian shale basin. It’s taking a wait-and-see approach on any further expansion, he said.

“We’re going to stay on our trajectory regardless of what OPEC does,” Dove said.

 

‘Modest Increase’

Expansion may be steady but slow, said John England, vice-chairman for U.S. energy at Deloitte LLP. He expects just a “modest increase” from shale drillers in 2017.

“We see 2017 as the slow road back,” England said in a telephone interview. “Nobody wants to get overextended, nobody wants to get into the debt levels you’ve seen in the past.”

In the meantime, another wild card for oil markets will hit Washington. Trump is considering a tariff on imports, CNN reported on Dec. 21, citing unidentified sources, and House Republicans have proposed a “border adjustment” that would tax imported goods but not exports, including oil and gas. Either move could spur U.S. production.

Adam Anderson, chief executive officer of oilfield equipment company Innovex Downhole Solutions Inc., remains skeptical he’ll ever see business boom the way it did when almost 2,000 oil and gas rigs were drilling in 2014.

After years of turmoil, “clearly we’re past the worst of it,” Anderson said in an interview. “But it is not back, nor do I think it ever will get back, to the heights.”

Saudi Arabia is pulling off a rare feat for a major oil producer

 

 Saudi Arabia's Energy Minister al-Falih talks to journalists before a meeting of OPEC oil ministers in Vienna.

 

http://www.businessinsider.com/opec-quota-versus-actual-production-2017-1?r=UK&IR=T

Saudi Arabia is reportedly abiding by its agreement to cut oil production. 

OPEC and key non-OPEC members agreed in November to cut production by 1.2 million barrels per day to reduce the global oversupply. According to The Wall Street Journal, the kingdom has cut its production by at least 486,000 barrels per day to 10.058 million. 

History shows that this kind of compliance rarely lasts. 

"Ninety percent plus of the time, OPEC produces above their quota," said Larry Adam, the chief investment officer for the Americas at Deutsche Bank Wealth Management, at a press event on Wednesday. 

 

Adam sees West Texas Intermediate crude oil — the US benchmark of prices — rising only to as high as $58 per barrel this year. The OPEC members who agreed to reduce production for the first time in eight years would probably want oil higher than that. However, they would need to have fewer cheat days this time, as the chart below shows: Deutsche Bank

"That deal was consummated in the historically weak demand period for energy," Adam said. "Let's see what happens when all of a sudden you get to the spring, when driving starts to take place in the United States ... let's see how closely they abide by this agreement."  

Adam noted that the deal is not indefinite; it's valid for six months, after which an extension will be discussed.  

Even if OPEC abides by its agreement and keeps output low, US shale producers may keep global oil inventories high.  

"The US has truly become a swing producer of oil, and I think that's going to keep oil from going significantly higher than that $50 per barrel level," Adam said. He estimated that the break even oil price for US producers — at which they earn zero profits and it's still financially viable to produce — has fallen from around $70 to $45 per barrel.  

On Thursday, West Texas Intermediate crude oil futures settled at $53.76 per barrel. On Tuesday, WTI hit the highest level in 18 months near $55.24 per barrel. 

New CEO of ExxonMobil Darren W. Woods

Darren W. Woods

http://corporate.exxonmobil.com/en/company/about-us/management/darren-w-woods?parentId=663fb338-1f34-4a5a-ac09-26e2cfc2d5ad

Born in Wichita, Kansas, Darren Woods is a graduate of Texas A&M University, where he earned a Bachelor of Science degree in electrical engineering. He also holds a Master of Business Administration degree from Northwestern's Kellogg School of Management in Evanston, Illinois.

Mr. Woods first joined Exxon Company International in 1992 as a planning analyst in Florham Park, New Jersey. He progressed through a number of domestic and international assignments for Exxon Company International, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company. 

In 2005, Mr. Woods was appointed vice president of ExxonMobil Chemical Company in Houston, Texas, where he managed global specialty-chemical businesses. In 2008, he moved to Brussels, Belgium, to work as ExxonMobil Refining and Supply Company director of refining for Europe, Africa, and the Middle East. In 2010, he was appointed vice president of supply and transportation and moved to Fairfax, Virginia. 

Mr. Woods was appointed president of ExxonMobil Refining and Supply Company and vice president of Exxon Mobil Corporation in 2012. In this role, he had primary responsibility for ExxonMobil’s global refining, supply, and transportation activities. 

In 2014, Mr. Woods was elected senior vice president of Exxon Mobil Corporation. 

In 2015, Mr. Woods was elected as a Member of the Board of the U.S.-China Business Council and the Texas A&M University Engineering Advisory Council.

Effective January 1, 2016, Mr. Woods was elected president of Exxon Mobil Corporation and a member of the board of directors.

Tillerson and Exxon part ways; $180M retirement package

http://www.mysanantonio.com/news/texas/article/Tillerson-and-Exxon-part-ways-180M-retirement-10834168.php

Rex Tillerson, the nominee of President-elect Donald Trump for secretary of state, is severing ties with Exxon Mobil through a $180 million retirement package one week before his Senate confirmation hearing begins.

Tillerson will surrender, if confirmed, all unpaid stock that was part of his pay package, more than 2 million shares. In exchange, the company will make a cash payment equal to the value of those shares to a trust to be overseen by a third party, according to a regulatory filing Wednesday with the Securities and Exchange Commission.

Because of the way the compensation is being dispensed, Tillerson will give up about $7 million, compared with what he would have been paid had he retired in March as he had planned to do before the nomination.

Tillerson, who worked for Exxon for more than 40 years, would have reached the company's mandatory retirement age of 65 by March, after which he would have received the payout from Exxon over a period of 10 years.

If Tillerson returns to the oil and gas industry within 10 years, the money in the trust would be paid out to charities of the controlling trustee's choosing.

With the appointment of Tillerson as secretary of state comes a host of thorny conflict-of-interest issues. The placing of the funds into a trust is intended to allay concerns that decisions made by Tillerson as a member of the Trump cabinet could help him or his former associates.

Darren Woods, a 25-year Exxon veteran who had served as the company's president, took over as CEO of Exxon Mobil at the start of the new year.

Tillerson began his career at Exxon as a production engineer straight out of the University of Texas at Austin in 1975. He replaced longtime CEO Lee Raymond in 2006 and led the company during one of the most turbulent periods in its history, which included the 2008 financial crisis and a collapse in oil prices since mid-2014 that has sharply diluted Exxon's profits.

The Year 2016 Ends On A Good Note For Crude Oil

http://www.forbes.com/sites/greatspeculations/2016/12/30/the-year-2016-ends-on-a-good-note-for-crude-oil/#4b4053475a77

Commodity markets have been on a roller roaster ride throughout 2016. The year began on a disappointing note with crude oil prices plummeting to multi-year lows of close to $25 per barrel due to the consistent demand and supply mismatch of crude oil markets worldwide. As a result, the markets witnessed a severe sell-off of oil and gas stocks, as the investors became wary of the recovery in the industry. What followed was a series of bankruptcies and poor financial results by some of the largest oil and gas players in the US in the first quarter, painting a gloomy picture for the year ahead. This forced most of the oil and gas majors to curtail their exploration and drilling activities by cutting back their capital expenditures drastically for the year. For instance, Petroleo Brasileiro Petrobras reduced its capital spending budget for the next four years to $74.1 billion, as opposed to $98.4 billion previously decided by the company.

The lack of demand for drilling and exploration activities led to a gradual, yet sharp, drop in the demand for rigs across the globe. This was evident in the decline in the global oil and gas rig count in the first half of 2016. The rig count, which stood at close to 1,900 units in January, fell to roughly 1,400 units in May, representing a plunge of more than 25% in just five months. This, further increased the anxiety among investors, deteriorating the valuation of a majority of oil and gas companies worldwide.

Source: US Energy Information Administration; Baker Hughes Rig Count

However, some of these companies managed to rebound in the subsequent quarters as commodity markets showed initial signs of recovery. A series of unforeseen and unexpected events occurred which caused commodity prices, particularly crude oil prices, to recover steeply. The unfortunate wildfire in Canada, along with economic instability in Venezuela, and geo-political disturbances in Nigeria and Ghana, changed the dynamics of the supply of oil, resulting in a sharp rise in oil prices in the second quarter. This came as a relief to a lot of oil and gas companies and their performance improved in the June quarter. But, the fluctuations in the US oil inventory kept the companies on their toes to sustain their performance and investors worried about the stability of their investments.

However, with the softness in the oil markets creating pressure on the finances of the Middle East countries, the Organization of Petroleum Exporting Countries members decided to hold an unplanned meeting in September to revisit their stance on their rising oil production. To everyone’s surprise, the cartel announced its plans to put a ceiling of their cumulative production to reverse the decline in oil prices. This sent a wave of cheer across the industry, with a number of oil and gas stocks recovering some portion of their lost valuation.

The final terms of the OPEC arrangement were announced on the 30th November, where the members decided to reduce their cumulative oil output by 1.2 million barrels of oil per day (Mbpd) over the coming months. In addition to this, the Non-OPEC members, such as Russia, also supported the OPEC’s move by offering to bring down their production by roughly 600,000 barrels of oil per day. In response to the news, crude oil prices have shot up by almost 20% over the last one month, reinforcing to investors that the commodity markets are on the path of recovery. In fact, in anticipation of this news, a few of the oil and gas producers had increased their capital spending budget for 2016. For instance, Anadarko Petroleum upwardly revised its capital expenditure for the year from $2.7 billion to $2.9 billion in the their third quarter results. Similarly, EOG Resources had hiked its capital spending budget from $2.5 billion to $2.7 billion in order to expand their operations.

While the trajectory of recovery of the commodity markets is still uncertain, the optimistic outlook for the industry is likely to help these companies mitigate their losses to a certain extent and recover back their lost value in the coming quarter. Thus, despite the ups and downs in the commodity markets, the year 2016 ended on a good note and the oil and gas industry is entering 2017 on a strong note.

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