By Reuters

Oil markets are beginning to recover but the scale of global oversupply means prices may rise only slowly, the chief executive of Royal Dutch Shell Plc said on Tuesday.

“I see the first mixed signs for recovery of oil prices,” Ben van Beurden told an oil industry conference in London.

“But with U.S. shale oil being more resilient than we originally thought and a lot of oil still in stock, it will take some more time to rebalance demand and supply,” he added.

Oil prices have collapsed over the last year in the face of heavy oversupply, with benchmark Brent crude falling to below $50 a barrel from a high above $115 in June 2014.

The Organization of the Petroleum Exporting Countries led by Saudi Arabia has increased production in an attempt to build market share, leaving some other producers, including shale companies in North America, operating below break-even costs.

Van Beurden said many U.S. oil producers would struggle to refinance while prices remained so low, leading to lower output in the future: “Producers are now looking for new cash to survive and they will probably struggle to get it.”

Longer-term, there was a risk that low levels of global production could bring a spike in oil prices, he said.

If prices remained low for a long time and oil production outside OPEC and the United States declined due to cuts to capital expenditure, there was not likely to be any significant spare capacity left in the system, he said.

“This could cause prices to spike upwards, starting a new cycle of strong production growth in U.S. shale oil and subsequent volatility,” van Beurden said.

By MarEx 2015-10-07 11:41:55

Despite its 4,300-mile coastline, India’s coastal shipping sector is considered to be still be its infancy. Inida is now investing in modernizing its major ports and its shipping ministry unveiled a five-year $10.7 billion plan as part of the nation’s Sagar Mala project.

The program intends to modernize ports to increase connectivity for industrial and coastal development. The plan will develop the country’s waterways and ports.

India’s ports have struggled to increase trade because of the lack of port and terminal facilities, which often increase vessels port time calls and forcing them to wait for docks. As a short-term solution, the government will expedited berthing procedures move ships through faster.

The average wait time for vessels calling Indian ports can be as long as  four days compared to just an average of four hours in Singapore and other major ports in the world. India cannot accommodate large and mega-box ships either. And, in most cases, feeder ship services are required to move cargoes.

India wants to build its economy and intends to focus on expanding its transportation assets including roads, inland waterways and coastal routes.

Additionally, India’s Merchant Shipping Act requires Indian-flagged ships to be manned by Indian crews, and there is currently a shortage of trained personnel. In July, government announced plans to open a maritime training college in Bihar State.  

By MarEx

Sixty-one passengers on board the Star Princess cruise ship have fallen ill due to norovirus. The Princess Cruises-operated vessel completed a 15-day Hawaiian cruise on October 4 and is currently docked at its homeport in Vancouver.

Reports say that two passengers were transported from the dock to the hospital via an ambulance. Another norovirus-stricken passenger fell so ill he decided to fly home instead of re-boarding the ship in Hawaii.

Norovirus is generally not deadly, but causes vomiting, diarrhea and abdominal pain and is transmitted through contaminated food, water or by person-to-person contact.

Star Princess had 2,590 passengers on board at the time, and the crew tried to slow the spread of sickness by conducting a sanitation cleaning and campaign throughout the vessel. Passengers who contracted the virus were urged to remain in their staterooms until symptoms subsided. 

Any outbreak of norovirus exceeding three percent of passengers requires special protocol and disinfection of a vessel. Princess Cruises says the number of people on the Star Princess was fewer than three percent.

In May, a larger outbreak saw 135 passengers on board the Star Princess suffer with the virus.

By MarEx

The U.S. Department of Justice (DOJ) has finalized a settlement of more than $20 billion with BP PLC arising from 2010’s Deepwater Horizon oil spill.  The settlement resolves all federal and state claims against BP for the accident. Louisiana, Mississippi, Alabama, Texas and Florida will be the settlement’s primary recipients and will use the funds for environmental remediation and economic development.   

The Deepwater disaster, the largest oil spill in U.S. waters, killed 11 crew members and leaked millions of barrels of crude into the gulf, coating hundreds of miles of shoreline with oil. DOJ announced tentative terms of the deal in July.

The $20.8 billion settlement comes in addition to the $44 billion BP has already incurred in legal fees and cleanup costs.

Deepwater Horizon exploded on April 20, 2010 after gas seeped into the well the rig was drilling. The leak caused an eruption on the deck and the rig sank soon after. Plugging the leak took several months.

BP’s payments will reportedly make payments of about $1.1 billion per year over the next 18 years.

In addition, BP has also committed to paying about $500 million over 10 years to support independent research through the Gulf of Mexico Research Initiative.

The Gulf of Mexico Research Initiative had awarded approximately $315 million in grants as at the end of 2014. Grant recipients are investigating topics including the fate of oil released, the ecological and human health impact of spills and the development of new technology for future spill response, mitigation and restoration.

The Gulf of Mexico Research Initiative was created following the spill through an agreement between BP and the Gulf of Mexico Alliance, a non-profit partnership formed by the states of Alabama, Florida, Louisiana, Mississippi and Texas.

Deepwater Horizon Gulf Restoration Plans Announced

NOAA and the other Deepwater Horizon Natural Resource Trustees have released a 15-year environmental ecosystem restoration plan for the Gulf of Mexico.

The Draft Deepwater Horizon Oil Spill Draft Programmatic Damage Assessment and Restoration Plan and Draft Programmatic Environmental Impact Statement allocates monies that are part of a comprehensive settlement agreement in principle  among BP and the U.S. Department of Justice on behalf of federal agencies and the five affected Gulf States announced on July 2, 2015. 

In the draft plan, the Trustees detail impacts from the Deepwater Horizon oil spill to wildlife, habitats and recreational potential. They determined that “overall, the ecological scope of impacts from the Deepwater Horizon spill was unprecedented, with injuries affecting a wide array of linked resources across the northern Gulf ecosystem.” 

The Trustees are proposing to accept a settlement, which includes, among other components, an amount to address natural resource damages of $8.1 billion for restoration and up to $700 million for addressing unknown impacts or for adaptive management. These amounts include the $1 billion in early restoration funds which BP has already committed. 

“NOAA scientists were on the scene from day one as the Deepwater spill and its impacts unfolded. NOAA and the Trustees have gathered thousands of samples and conducted millions of analyses to understand the impacts of this spill,” said Dr Kathryn D. Sullivan, undersecretary of commerce for oceans and atmosphere and NOAA administrator. “The scientific assessment concluded that there was grave injury to a wide range of natural resources and loss of the benefits they provide. Restoring the environment and compensating for the lost use of those resources is best achieved by a broad-based ecosystem approach to restore this vitally important part of our nation’s environmental, cultural and economic heritage.”

NOAA led the development of the 1,400 page draft damage assessment and restoration plan, with accompanying environmental impact statement, in coordination with all of the natural resource Trustees. Specific projects are not identified in this plan, but will be proposed in future project-specific restoration proposals. 

The draft plan has an array of restoration types that address a broad range of impacts at both regional and local scales. It allocates funds to meet five restoration goals, and 13 restoration types designed to meet these goals.

The 13 proposed restoration activities cover:

•  Restoration of wetlands, coastal and nearshore habitats •    Habitat projects on federally managed lands •    Nutrient reduction •    Water quality •    Fish and water column invertebrates •    Sturgeon •    Submerged aquatic vegetation •    Oysters •    Sea turtles •    Marine mammals •    Birds •    Low-light and deep seafloor communities •    Provide and enhance recreational opportunities

The draft plan is available for 60 days of public comment. Public comments on the draft plan will be accepted at eight public meetings to be held between October 19 and November 18 in each of the impacted states and in Washington, DC.

Comments will also be accepted online and by mail sent to: U.S. Fish and Wildlife Service, P.O. Box 49567, Atlanta, GA 30345. The public comment period will end on December 4, 2015.

The plan is available here.

Timeline of Events

April 20, 2010, RIG EXPLODES: An explosion on the Deepwater Horizon oil rig at the Macondo exploration well kills 11 workers and releases millions of barrels of crude oil into the Gulf of Mexico. The well is capped in mid-July. BP ultimately sets aside $42 billion to pay for cleanup costs, damages and penalties.

November 2012, CRIMINAL CASE SETTLED: BP agrees to pay $4.5 billion in fines and other penalties and pleads guilty to 14 criminal charges. The U.S. government bans BP from new federal contracts, imperiling the company’s role as a top U.S. offshore oil producer and No. 1 military fuel supplier. Separately, the U.S. Department of Justice files criminal charges against three BP employees in connection with the accident.

December 2012, CLASS ACTION SETTLED: U.S. District Judge Carl Barbier gives final approval to BP’s settlement with individuals and businesses claiming to have lost money and property because of the spill. BP initially estimates it will pay $7.8 billion to settle more than 100,000 claims, but the dollar amount is not capped. The company later says the payout may grow substantially, in part because of payouts to many claimants who suffered no harm, and files numerous legal challenges to the agreement.

February 2013, CIVIL TRIAL BEGINS: Officials from the federal government and several U.S. states begin facing BP in court at a three-phase civil trial over how blame should be apportioned between BP, Transocean Ltd, which owned the drilling rig, and Halliburton Co, which did cement work. Government lawyers urge Barbier to find BP grossly negligent, which could roughly quadruple the amount of fines under the U.S. Clean Water Act.

September 30, 2013, SECOND PHASE OF TRIAL BEGINS: The second phase begins to determine how much oil was spilled.

September 4, 2014, JUDGE FINDS BP BEARS MOST OF THE BLAME: Barbier finds BP “grossly negligent” for its role in the oil spill. He assigns 67 percent of the fault to BP, 30 percent to Transocean and 3 percent to Halliburton. BP pledges to appeal.

January 15, 2015, SIZE RULING: Barbier determines that 3.19 million barrels of oil spilled. The amount would be used to calculate damages.

Feb. 24, 2015, SIZE APPEAL: BP appeals judge’s ruling on size of the oil spill.

July 2, 2015, SETTLEMENT REACHED: BP agreed to pay about $18.7 billion in damages for water pollution caused by the spill, settling claims with the U.S. government and Louisiana, Mississippi, Alabama, Texas and Florida.

By MarEx

Shell Nigeria Exploration and Production Company (SNEPCo) has started production at the Bonga Phase 3 project offshore Nigeria.

Bonga Phase 3 is an expansion of the Bonga Main development, with peak production expected to be about 50,000 barrels of oil equivalent per day (boepd). The oil will be transported through existing pipelines to the Bonga floating production storage and offloading facility, which has the capacity to produce more than 200,000 boepd and 150 million standard cubic feet of gas per day.

Production began at the Bonga field in 2005. The Bonga field was Nigeria’s first deepwater development, with a water depth of more than 1,000 meters.

The Bonga project is operated by SNEPCo as a contractor under a production sharing contract with the Nigerian National Petroleum Company, which holds the lease for OML 118, in which the Bonga field is located.

SNEPCo holds a 55 percent interest in OML 118. The other co-venturers are Esso Exploration & Production Nigeria Ltd (20 percent), Total E&P Nigeria Ltd (12.5 percent) and Nigerian Agip Exploration Ltd (12.5 percent). 

By MarEx 2015-09-16 11:34:17

EU Navfor, BIMCO and NATO were unanimous in their opinion that piracy in the Indian Ocean is suppressed but not eradicated.  The combination of measures – Best Management Practice 4 (BMP4), Armed Security Teams and a heightened naval presence – are proving effective at ensuring the pirate investors regard the risk to reward ratio as not in their favour.

They were keen to emphasize however, that the measures work in unison, and that any relaxation of armed guarding, BMP4 or the naval patrols may result in a return to piracy by the Somalis. The military believe probing attacks are being conducted to test defenses and these are occurring mainly in the Gulf of Aden. The conditions ashore have not changed and capacity building has, so far, been totally ineffective. Illegal fishing has re-emerged as a significant challenge and two Iranian fishing dhows have been hijacked in last three months.  Gerry Northwood OBE, COO of leading maritime security firm MAST, said in a statement earlier this week that “the current security framework is working, but it remains extremely fragile and dependent on international navies maintaining a presence in the Indian Ocean, BMP4 being diligently applied, and for at least the majority of vessels to be protected by armed guards.” He warned that there is an increased risk with convicted pirates being released and returning to their homes in Somalia, reportedly seeking work as armed guards in ocean going fishing vessels. “This is a potentially risky situation. It is not a big step from providing security on a fishing vessel to taking the vessel hostage and using it as a pirate mothership,” he said.   South East Asia With the recent increase in piracy activity in SE Asian waters, the Malaysian authorities are keen to demonstrate they are taking pro-active measures to prevent it.  Armed guards were discussed as a potential solution but given the legal complexities, with vessels passing through different states territorial waters, to be effective, an agreement would need to include the Indonesians and Singaporeans. A modified version of Best Management Practices (BMP) tailored to SE Asia is due out soon. Northwood said: “It can take time before armed guards on ships in SE Asia become an effective measure, but this is a move in the right direction. Our advice is that all vessels should be putting in place the appropriate risk assessed security measures.” He added: “When making the risk assessment, factors to be taken into account include the physical attributes of the vessel (speed, freeboard, access points etc.), cargo and routing. Ideally the measures to be put in place should be from a menu of options, including crew training, access to a citadel, and other BMP4 passive measures where possible.”  

Gulf of Guinea The Maritime Trade Information Sharing Centre, Gulf of Guinea (MTISC-GoG) has been established in Ghana as the equivalent of the Indian Ocean’s UKMTO. Under reporting is a significant issue in the Gulf of Guinea as the authorities are not keen on the publicity it generates.

By MarEx 2015-09-16 20:20:47

Australia’s competition watchdog flagged concerns on Thursday that Royal Dutch Shell’s proposed $70 billion takeover of BG Group may lessen gas supply competition in eastern Australia and delayed a final decision on the bid to November.

The Australian Competition and Consumer Commission (ACCC) said a large number of market participants had expressed concerns that the proposed takeover may lead Shell’s Arrow Energy to sell its gas into BG’s Queensland Curtis liquefied natural gas plant (QCLNG) for export.

Queensland Curtis LNG is one of Australia’s largest capital infrastructure projects, involving US$20.4 billion of investment from 2010-14.

“If the proposed acquisition resulted in less supply of gas to the domestic market, therefore, this could substantially lessen competition to supply domestic gas users and lead to higher domestic prices and more restrictive contractual terms,” ACCC Chairman Rod Sims said in a statement.

The commission said it now planned to issue a final decision on November 12.

In response to the regulator’s concern about gas sales by Arrow Energy, which is 50-50 owned by Shell and PetroChina, Shell said BG already had enough gas to meet all its commitments.

“Arrow and QCLNG collaboration could assist the development of Arrow’s undeveloped resources to potentially accelerate additional gas supplies into both the domestic and export market,” Shell said in an emailed statement.

The takeover has already been cleared by U.S. and Brazilian anti-trust authorities. It still needs approvals from Australia’s Foreign Investment Review Board and China to go ahead.

Shell said it remained confident the deal would be completed in early 2016.

Some of Australia’s biggest manufacturers fear Shell’s takeover of BG could worsen what they see as a lack of competition in the country’s eastern gas market, spurred by three new LNG export plants, including BG’s, in Queensland.

“This burst in demand for gas over a very short timeframe for the LNG industry is effectively upending the east coast gas market,” Sims said in a speech at a gas conference on Thursday, outlining the commission’s preliminary impressions on a review of the east coast gas market due in April 2016.

He said the commission had evidence that after the LNG projects were approved, many Australian industrial gas users went from a market where they received three to five offers of supply on negotiable terms, to a market where they received no offers or only one true offer on inflexible terms.

The Captain Elias camp on the island of Kos, Greece, a makeshift building where authorities have been directing refugees to stay while awaiting registration papers, was closed on September 10.

Médecins Sans Frontières/Doctors Without Borders (MSF), used the building for medical consultations, and is seriously concerned there is now no provision of accommodation of any sort for new arrivals.

Since March, an MSF team has worked inside the Captain Elias structure and around Kos, conducting more than 4,450 medical consultations, treating patients mainly for chronic diseases that need medical follow-up, upper respiratory tract infections, skin infections, muscle pain and gastro-intestinal diseases.

“It is unacceptable that this closure was not accompanied by any decision from the authorities to provide other facilities for refugees arriving in Kos,” said Elisa Galli, MSF field coordinator in Kos.

“Captain Elias was far from ideal, but now people have absolutely nowhere to go. There is no clarity on what will happen next, and authorities are not assuming their responsibilities about the well-being of these vulnerable people.

“As we have said repeatedly, the authorities need to ensure that adequate reception facilities are provided.”

The building housed several hundred people at a time.

While living conditions were sub-standard it was the only place where new arrivals could seek free shelter and have access to water, toilets and showers.

Three thousand people are currently scattered around Kos town waiting for permission to leave the island, which usually takes an average of eight days.

“Without any shelter the refugees are exposed to weather conditions that soon will get worse, and they have little or no access to water and sanitation.” said Galli.

“Furthermore they are exposed to potential attacks by unidentified groups that have targeted migrants in the city of Kos in the last few weeks.

“It is simply not safe to be a refugee and stay in the streets.”

To improve conditions in the Captain Elias site and in the absence of any management from the authorities, MSF has installed water points and latrines and has been cleaning the building every day.

MSF has also distributed essential relief items such as blankets, hygiene kits and energy bars.

Germany Struggling

Meanwhile, Germany re-imposed border controls on Sunday after Europe’s most powerful nation acknowledged it could scarcely cope with thousands of asylum seekers arriving every day.

A day before deeply divided European Union ministers tackle the migrant crisis, the U.N. refugee agency also called on every member state to take in a share of asylum-seekers under a Brussels plan which some countries are fiercely resisting.

Berlin announced that the temporary measure would be taken first on the southern frontier with Austria, where migrant arrivals have soared since Chancellor Angela Merkel effectively opened German borders to refugees a week ago.

“The aim of these measures is to limit the current inflows to Germany and to return to orderly procedures when people enter the country,” said German Interior Minister Thomas de Maiziere.

Open borders among the European countries which signed the Schengen Treaty are a crucial part of the E.U. project, but controls can be re-introduced, provided they are only temporary.

“The free movement of people under Schengen is a unique symbol of European integration,” the E.U.’s executive Commission said in a statement. “However, the other side of the coin is a better joint management of our external borders and more solidarity in coping with the refugee crisis.”

Emergency Meeting

At an emergency meeting on Monday, interior ministers from the E.U.’s 28 member states will discuss Commission proposals to redistribute about 160,000 asylum seekers across the bloc.

“We need swift progress on the Commission’s proposals now,” the Commission said in a statement issued as tens of thousands of people fleeing war and poverty in Syria and other parts of the Middle East, Asia and Africa made their way north.

EU envoys meeting on Sunday evening in Brussels failed to break the deadlock, with some eastern states still refusing to accept binding quotas of refugees. They argue the plan will draw more people to Europe and disrupt their homogeneous societies.

More Lives Lost

Amid the political bickering among European governments, the crisis claimed yet more lives. On Sunday 34 refugees, almost half of them babies and children, drowned off a Greek island when their boat sank, the coastguard said.

Four babies, six boys and five girls died when the wooden vessel carrying them overturned on Sunday morning, about three miles (5 km) east of the small island of Farmakonisi, close to Turkey’s coast, the service added.

Tens of thousands of mainly Syrian refugees have braved rough seas this year to make the short but precarious journey from Turkey to Greece’s eastern islands, mainly in flimsy and overcrowded inflatable dinghies.

Maitland, head of International Registries Inc.

By MarEx 2015-09-12 20:38:41

Clay Maitland, head of International Registries Inc. and keynote speaker at London International Shipping Week’s inaugural “Big Maritime Welfare Debate” last week, opened proceedings by calling for a Seafarers Standing Committee at the IMO, as well as better access to data by flag states on rates of illness, suicide and deaths on board. 

He also called for the U.K. government in particular to take a lead role in determining how best to protect seafarers’ rights.

“When it comes to seafarers’ rights, flag states are in a darkened room,” said Maitland. International Registries Inc. runs the world’s third largest ship registry, the Marshall Islands flag. “There is no database to refer to in advocating for the seafarer, but if that information was out there the political pressure would then be there to support the seafarer.”

The successful event was a collaborative effort by four maritime welfare charities – Seafarers UK, Mission to Seafarers, Sailors’ Society and Apostleship of the Sea – and was hosted at the Willis Building auditorium with 150 in attendance. 

Maitland went on to say that the Maritime Labour Convention (MLC) was already out of date, that connectivity at sea needed to be addressed and that action on seafarer rights was unlikely until the abuse of many of the world’s crews was highlighted more effectively. 

He then joined a panel discussion chaired by Barry Bryant, Director General of Seafarers UK, and including Per Gullestrup of Clipper Group, Grahaeme Henderson of Shell and David Hammond of Human Rights at Sea that debated whether the industry was yet going far enough to ensure the physical and psychological health of our seafarers.

Three other panel discussions took place during the afternoon. The Mission to Seafarers’ the Revd. Canon Ken Peters chaired a debate on whether there was such a thing as fair treatment for seafarers. Martin Foley of the Apostleship of the Sea chaired a discussion on the MLC and the reality of its impact on the welfare of seafarers. A panel, chaired by Stuart Rivers of the Sailors’ Society, then looked at the impact of technology on the future provision of welfare services to seafarers.

By MarEx 2015-09-12 21:01:59

New work from an international team including Carnegie Institution for Science’s Ken Caldeira demonstrates that the Earth’s remaining fossil fuel resources would be sufficient to melt nearly all of Antarctica if burned, leading to a 50- or 60-meter (160- to 200-foot) rise in sea level. 

Because so many major cities are at or near sea level, this would put many highly populated areas where more than a billion people live under water, including New York City and Washington, DC, sates the report published in Science Advances.

“Our findings show that if we do not want to melt Antarctica, we can’t keep taking fossil fuel carbon out of the ground and just dumping it into the atmosphere as CO2 like we’ve been doing,” Caldeira said.  “Most previous studies of Antarctic have focused on loss of the West Antarctic Ice Sheet. Our study demonstrates that burning coal, oil and gas also risks loss of the much larger East Antarctic Ice Sheet.”

Caldeira initiated the project with lead author Ricarda Winkelmann while she was a Visiting Investigator at the Carnegie Institution for Science. Winkelmann and co-author Anders Levermann are at the Postdam Institute for Climate Impact Research; co-author Andy Ridgwell is at the University of California Riverside.

Although Antarctica has already begun to lose ice, a complex array of factors will determine the ice sheet’s future, including greenhouse gas-caused atmospheric warming, additional oceanic warming perpetuated by the atmospheric warming and the possible counteracting effects of additional snowfall.

“It is much easier to predict that an ice cube in a warming room is going to melt eventually than it is to say precisely how quickly it will vanish,” Winkelmann said, explaining all the contributing factors for which the team’s models had to account.

The team used modeling to study the ice sheet’s evolution over the next 10,000 years, because carbon persists in the atmosphere millennia after it is released. They found that the West Antarctic ice sheet becomes unstable if carbon emissions continue at current levels for 60 to 80 years, representing only six to eight percent of the 10,000 billion tons of carbon that could be released if we use all accessible fossil fuels.

“The West Antarctic ice sheet may already have tipped into a state of unstoppable ice loss, whether as a result of human activity or not. But if we want to pass on cities like Tokyo, Hong Kong, Shanghai, Calcutta, Hamburg and New York as our future heritage, we need to avoid a tipping in East Antarctica,” Levermann said.

The team found that if global warming did not exceed the two degree Celsius target often cited by climate policymakers, Antarctic melting would cause sea levels to rise only a few meters and remain manageable. But greater warming could reshape the East and West ice sheets irreparably, with every additional tenth of a degree increasing the risk of total and irreversible Antarctic ice loss.

This is the first study to model the effects of unrestrained fossil-fuel burning on the entirety of the Antarctic ice sheet. The study does not predict greatly increased rates of ice loss for this century, but found that average rates of sea level rise over the next 1,000 years could be about  three centimeters per year (more than one inch per year) leading to about 30 meters (100 feet) of sea level rise by the end of this millennium. Over several thousand years, total sea level rise from all sources could reach up to 60 meters (200 feet).

“If we don’t stop dumping our waste CO2 into the sky, land that is now home to more than a billion people will one day be underwater,” Caldeira said.

This chart shows how Antarctic ice would be affected by different emissions scenarios. (GtC stands for gigatons of carbon.) It is provided courtesy of Ken Caldeira and Ricarda Winkelmann.