By Reuters 2015-09-13 19:28:10

Indonesia is reactivating its membership of the Organization of the Petroleum Exporting Countries in December, OPEC said last week, which would add almost three percent to the group’s oil output already close to a record high.

The Southeast Asian country would be the fourth-smallest producer in OPEC ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.

Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group at the start of 2009 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer.

In a statement, OPEC said Indonesia’s request to reactivate its full membership was circulated to OPEC members and following their feedback, OPEC’s next meeting on December 4 will include the formalities of reactivating its membership.

“Indonesia has contributed much to OPEC’s history,” the statement from the group’s Vienna headquarters said. “We welcome its return to the Organization.”

Indonesia’s Energy Minister, who OPEC said will be invited to December’s meeting, said the country would return as a full member.

The development is no great surprise as in OPEC terms Indonesia never really left. OPEC termed its departure a “suspension.” Ecuador, which rejoined in 2007, set a precedent for a return from suspension. OPEC sources made clear the door was always open.

Indonesia’s status as a net importer had raised the question of whether it would return as a full member given that OPEC’s Statute says any country with a “substantial net export of crude petroleum” may become a full member.

OPEC pumps more than a third of the world’s oil and is engaged in a defense of market share, having dropped its long-standing policy of cutting output to support prices in November 2014.

The addition of Indonesia’s output will boost OPEC’s production by about 2.6 percent based on July output figures towards 33 million barrels per day (bpd) – far in excess of OPEC’s 30 million bpd official target.

OPEC output has not been above 32 million bpd since 2008, before Indonesia’s exit.

Indonesia produced 840,000 bpd in July, according to the International Energy Agency, and OPEC pumped 31.88 million bpd in July according to a Reuters survey – the highest monthly rate on record from the current 12 members.

Stock Photo

By MarEx 2015-09-09 15:04:16

The Malaysian-flagged general cargo ship Sah Lian has been missing in the South China Sea since Saturday, September 5. The vessel left Kuching on September 2 and was transporting 500 tons of general cargo. It was reported missing when it did not arrive at the Port of Limbang on schedule Saturday. The Malaysian Maritime Enforcement Agency (MMEA) has launched a search for the vessel and its 14 crewmembers.

The Sah Lian’s owner was last in contact with the ship’s captain on September 3.

While it is too early to link the missing vessel to piracy, the South China Sea has experienced a marked increase in piracy and robbery this year. In July, the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) said that incidents of piracy and armed robbery had risen 18 percent in the first half of 2015 compared to the same time period in 2014. There were 106 incidents reported between January and June 2015 and just 90 last year.

The rise in Southeast Asian piracy has prompted the Association of Southeast Asian Nations (ASEAN) to establish a permanent security presence. Last weekend, pirates attacked six vessels in the Malacca and Singapore straits. Authorities believe the same group was involved in each incident.

In August, Malaysia and Indonesia formed a joint rapid deployment team to respond to the increasing number of incidents in the region. Southeast Asia has become a hotbed of maritime piracy in the past year.

By MarEx 2015-09-09 14:59:01

Just one week after saying a crack in one of the Panama Canal’s new lock chambers wouldn’t delay its April 2016 opening, the Panama Canal Authority (ACP) has backtracked and announced that, well, maybe it could.

In a statement released September 7, the ACP announced that it is awaiting a report from the contractor, Grupo Unidos por el Canal (GUPC), on the causes and solutions for the crack that appeared in the canal’s Cocoli Locks. The ACP will reassess the canal’s projected completion date after receiving the report.

Filling of the locks began on June 22, and the ACP announced in late August that the canal had sprung a leak. ACP and GUPC officials met on August 22 to discuss the steps that would be taken to repair the crack.

“At this time, ACP has designated two independent external structural engineers to conduct an objective evaluation of the reasons for this localized issue and to assess GUPC’s solution,” the Authority said in a statement. “While this important step takes place, the ACP is encouraged by the overall progress of the program, which has now reached 93 percent completion.”

The Panama Canal expansion was initially scheduled to be completed in 2014 to coincide with the 100-year anniversary of the opening of the existing canal, but cost overruns, work stoppages and delays have pushed the opening to April 2016.

Panama hopes the $5 billion expansion will stimulate its economy by increasing trade flows to and from the U.S. East and Gulf Coasts as well as Latin America. Upon completion, vessels up to 12,000 TEUs will be able to transit the canal.

By MarEx 2015-09-09 14:18:30

As part of President Joko Widodo’s ongoing plan to establish Indonesia as a global shipping hub, state-owned port operator Indonesia Port Corporations (IPC) has announced that it will build 22 ports in the next five years. According to officials, IPC is investing more than $3.5 billion in the project, which it is financing through a combination of internal cash flow and loans.

In May, IPC raised $1.6 billion, and the company also secured a $2.5 billion loan from several foreign banks. The company expects to raise another $1 billion before 2017 and to begin construction on the first eight ports, which will each have a capacity of 2.5 million TEUs, before the end of the year. The eight ports are expected to be operational by 2018.

On September 1, the Port of Rotterdam Authority signed a partnership agreement with IPC to begin development of the deepsea port Kuala Tanjung, which will be near the city of Medan on the Strait of Malacca.

The Malaccan Strait is one of the most important shipping routes in the world. President Widodo, who was elected in October 2014, has made strengthening the maritime sector a cornerstone of his policy to promote economic growth. Kuala Tanjung is one of the primary projects in Indonesia’s national maritime strategy.

By MarEx 2015-09-10 17:52:30
The Australian Maritime Safety Authority (AMSA) has detained the Panama flagged bulk carrier MV Apellis after an inspection revealed a number of deficiencies relating to the working conditions of the crew.
The MV Apellis is operated by Pyrsos Shipping Co Ltd and chartered by Hudson Shipping Lines.
AMSA inspected the vessel at Esperance grain jetty after receiving a complaint from the International Transport Workers Federation raising concerns about the welfare of the crew. Once on board, the AMSA surveyor discovered a number of deficiencies including:
• Seafarers not being repatriated as required by their employment agreements;
• Seafarers not being provided a monthly account of wages for the month of August;
• One crew member found to be working beyond medical restrictions;
• No working washing machine in crew laundry;
• Inadequate quality or nutritional value of food; and
• Seafarers not paid monthly as required by their employment agreements.
The vessel has been detained on the matter of non-payment of wages. The MV Apellis will remain under detention by AMSA until this deficiency is rectified.
The vessel is crewed by a mix of Indonesians and Ukrainians.
Safety Standards
AMSA’s General Manager of Ship Safety, Allan Schwartz, said that the proper treatment of seafarers is just as important as the proper maintenance of ships’ equipment – a failure in either system can lead to serious accidents.
“All ships in Australian waters need to comply with Australian standards,” Schwartz said. “Seafarers live difficult lives often spending many months at sea away from their families and friends. Any vessel which is found to be in breach of the MLC or other Australian standards will be detained by AMSA and repeat offenders risk being banned from Australian waters.”
Human Rights
“The AMSA detention of this vessel for breaches of the MLC is a clear statement to both the flag state and the owner to address the abuses occurring on board,” says David Hammond, CEO and Founder of Human Rights at Sea.
“Breaches of both labour rights and human rights appear to be common. Some of the reported issues include cruel, inhumane and degrading treatment of the crew. The question is, what will the flag state will do in this case?”
Complaints
The maritime union, ITF’s Assistant National Coordinator Matt Purcell said a volunteer ITF inspector boarded the ship to meet with the crew after receiving a complaint.

“The person we sent up the gangway was distressed by what he saw and said the crew were fearful of repercussions,” Purcell said.

“Food and water is being rationed, which as well as being an outright contravention of MLC, it’s also inhumane.

“We have one crewmember, the steward on $200-a-month, another the, chief engineer, claims he hasn’t received a single cent in eight months. The majority of the crew just want to go home to their families after their ordeal.

“There is also a concern that there is not enough stores to sustain the crew on their scheduled voyage to Indonesia.”

ITF President Paddy Crumlin said he was worried there would be an increase in these incidents of exploitation as Australia’s Abbott Government moved towards further relaxing shipping regulation through amendments to the Coastal Trading Act.

By Reuters 2015-09-10 21:08:00
CME Group said on Thursday it will begin development and clearing of a Japanese LNG contract later this year, as the world’s biggest importer of the fuel seeks to break a decade-long reliance on oil-linked pricing.
The contract aims to give importers, including power utilities and city-gas suppliers, an opportunity to hedge risks as Japan prepares to liberalize its power market next year, and could kickstart spot trading of the world’s fastest growing energy source.
The move could also deal a blow to Singapore’s ambitions to become a hub for LNG trading in the region. Already Asia’s main oil trading hub, Singapore is building LNG storage facilities, while the SGX Singapore stock exchange plans to launch LNG futures, but has given no timeframe.
Japan, which buys about a third of global LNG shipments, is trying to cut fuel costs and gain more control over prices after the shutdown of the country’s nuclear plants in the wake of the 2011 Fukushima disaster pushed demand for gas to record levels.
With a wave of new supply from Australia and the United States due to hit global markets in coming years, buyers have voiced concern that an oil-linked price doesn’t reflect LNG market fundamentals.
The contract was initially launched last year, but has failed to gain traction, as the fuel is usually bought on long-term contracts with restricted shipping terms, while the spot market is illiquid and lacks transparency.
The relaunch with the backing of CME Group is aimed at kickstarting interest in the contract by making it easier for global players to take part, boosting liquidity.
LNG supply contracts have traditionally spanned decades and are based on the price of oil.
CME Group, the world’s largest futures exchange operator, said it will work with Japan’s RIM Intelligence, a provider of energy price and information services, on the non-deliverable forward LNG contract.
It will be available for submission to clearing by CME via the Japan OTC Exchange (JOE) and through over-the-counter brokers by the end of the year, CME Group said.

By MarEx 2015-09-10 14:23:47

Nigeria has lifted a two-month ban on 113 tankers from operating in its sovereign waters.
In a statement, the state-owned Nigerian National Petroleum Corp. (NNPC) said: “The President has graciously approved the consideration of all incoming vessels into the Nigerian territorial waters subject to receipt of a Letter of Comfort from all terminal operators and off-takers of Nigerian oil and gas as a guarantee that nominated ships are free and will not be utilized for any illegal activity whatsoever.”
The NNPC imposed the ban on July 15 to curb alleged illegal shipping of crude out of the country. The tankers were prohibited from entering oil facilities and territorial waters.
Despite NNPC’s lifting the ban, the International Association of Independent Tanker Owners (INTERTANKO) continues to advise its members against taking any vessel on Nigeria’s list of banned tankers either into Nigeria or its 200-mile Exclusive Economic Zone.
In a statement, INTERTANKO said: “While some are interpreting this latest letter as a lifting of the ban, we continue to advise against trading to Nigeria any ship on the banned list. The penalties for any alleged contraventions of Nigerian law by these ships are draconian, including forfeiture of the ship and life imprisonment of the crew.”
INTERTANKO also added:
“This latest NNPC letter does represent something of a changeand may even suggest that all ships are now welcome in Nigeria provided a ‘letter of comfort’ is received. However, the language of the letter is vague and we do not believe it can be relied on by owners to clear the vessels on the banned list for trade to Nigeria.”

By Wendy Laursen

The European Parliament voted to adopt a regional EU regulation on the monitoring, reporting and verification of individual ship CO2 emissions on Tuesday. The move to do this, rather than to rely on the IMO’s agenda for shipping’s self-management of change, comes in part from politicians’ recognition of people power.

The International Chamber of Shipping, BIMCO and Intercargo naturally stated their disappointment, but there is a different, perhaps more powerful rally for people power underway that they might be more disappointed about. 

The Guardian has launched a campaign that could impact both the shipping and offshore industries. There is a petition to sign as part of its “Keep it in the ground” campaign addressed to Bill and Melinda Gates, founders of the Bill and Melinda Gates Foundation and Jeremy Farrar and Sir William Castell, director and chair of the Wellcome Trust:

“Your organisations have made a huge contribution to human progress and equality by supporting scientific research and development projects. Yet your investments in fossil fuels are putting this progress at great risk, by undermining your long term ambitions.

“Climate change poses a real threat to all of us, and it is morally and financially misguided to invest in companies dedicated to finding and burning more oil, gas and coal. Many philanthropic organisations are divesting their endowments from fossil fuels. We ask you to do the same: to commit now to divesting from the top 200 fossil fuel companies within five years and to immediately freeze any new investments in those companies.”

The Guardian indicated an element of collaboration against its cause, stating that the U.K. government granted far more meetings to the fossil fuel sector than renewable energy companies between 2010 and 2014.

The contract of the century Bob Dudley, BP’s Group chief executive, spoke of “great courage, great adventures and great leadership” as he traced the company’s progress at its 2015 Annual General meeting this month. He made the obvious point about what people around the world have gained from fossil fuels: “Our aim is always to achieve the best possible value for you, our shareholders. But at the same time we are a business with a wider purpose. The money you invest and the energy we deliver transform economies and transform millions of peoples’ lives.” Last year BP celebrated 50 years in the North Sea. “We were opening up a new world energy frontier at the time and a new era for Britain,” said Dudley. 

Last year also marked the anniversary of an agreement BP first signed in Azerbaijan 20 years ago. “That deal to produce oil became known as the Contract of the Century,” said Dudley. “It has brought new prosperity to the people of Azerbaijan.”   In their latest developments in the country, BP is opening up a new 3,500 kilometre corridor – the Southern Gas Corridor – that will bring a completely new supply of gas to Europe. This year the pipes are being laid in the ground.

“We are leading a flagship for the industry, demonstrating how BP’s major projects continue to move forward at pace. It shows how quickly things can happen when business and governments work well together,” says Dudley.

“Such projects will generate value for BP for many decades to come, and I am very proud to go to work knowing we make big differences to peoples’ lives in this way.”   Dudley acknowledged many people loyal to the company. “I know many of you have been loyal to BP over many decades. As a shareholder in BP, one of Britain’s great companies, one that is over a century old, you understand the value of investing in a business that can look a long way back as well as a long way forward.”

Uniting the power to change

These people, BP’s shareholders, reflect a different viewpoint to those the Guardian is expressing, but Statoil CEO Eldar Sætre, delivering a keynote speech in Houston last week, highlighted the need for unified, not divided, action.

He said that solving the challenge of achieving lower carbon emissions is not something that one company can do alone. “It calls for more engagement as an industry. That engagement requires transparency about our performance and how we conduct business, ongoing dialogue with our stakeholders, and holding ourselves responsible for setting the standards to effectively influence our operating environment.”  Sætre said: “The hard truth is that despite all our technical sophistication, the highest HSE standards, and priding ourselves on managing risk…Our industry is still perceived mostly as part of the problem and not seen as wanting to be part of the solution.”

Statoil acknowledges the scientific consensus on human-induced climate change and embraces the need to meet the two degree target. Limiting warming to no more than two degrees has become the de facto target for global climate change policy.

The UN’s COP 21 meeting on climate change is scheduled for Paris in December. “This means that now is the time to engage: with policy makers to enable the right kind of regulation and with civil society to create trust in our contributions. If we don’t, we risk becoming an industry that neither gets access nor acceptance,” says Sætre. 

So what can we as an industry do, he asks. “First of all, we can continue to replace coal with natural gas. It’s an immediate and highly effective way of cutting emissions. And both Asia and Europe should follow the U.S. on this journey.”

Statoil believes in a price on carbon that effectively stimulates the shift that is needed. “In Norway we have had a high CO2 tax for more than 20 years. Currently it’s at about $65 per ton. That has helped reduce emissions to less than half the global average.”

He calls for innovation and investment in new solutions. Statoil recently launched a technology cooperation with GE aimed at accelerating low carbon solutions.

“Working together we can go further and faster than alone. As an illustration, in the Bakken we are already capturing flared gas, through our CNG in a box solution, using it to fuel our drilling rigs, saving diesel and reducing emissions.” Statoil also recently launched the “End routine flaring” initiative together with the World Bank, UN and other industry partners. “The target, zero flaring by 2030, is one of the most important contributions our industry could make, and by achieving it 300 million tons of carbon emissions could be cut,” he says. “In general there is a lot of naivety when it comes to what it will actually take to transform the global energy systems and transition to a low carbon society. I see a strong role for oil and gas in the world’s future energy mix. Delivering all the oil and gas that a growing population needs, is a major challenge. Delivering it with low costs and low carbon, will require even more.”

Business impact

According to ICS, BIMCO and Intercargo, negotiations on additional measures to help reduce CO2 from shipping will continue at the MEPC in two weeks’ time. “It will be vital for EU Member States to explain how the new EU Regulation can be implemented in a way which is fully compatible with whatever might be agreed by IMO for global application, in the interests of avoiding the unhelpful complication of a separate regional regime,” said the organizations in a statement.

The shipping industry associations reiterate that the latest IMO Green House Gas Study, published in 2014, found that international shipping had reduced its total CO2 emissions by more than 10 percent between 2007 and 2012, despite an increase in maritime trade.

A simple solution

Will this be enough to satisfy people power? The Guardian has over 180,000 signatures for their “Keep it in the ground” petition. “Join us and more than 189,000 others in urging the world’s two biggest charitable funds to move their money out of fossil fuels,” says the Guardian on the front page of their campaign website. “Take a stand,” it urges. 

“Climate change can be tackled using a very simple idea – divestment. It means taking your money away from companies involved in extracting fossil fuels.”

Editor’s Note: The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive or Marigons.  

By Kathryn Stone

A recent study published in the American Chemical Society indicates that soybean lecithin, a common soy-based food additive, may have possible applications as a dispersant for crude oil spills.

The study published last month by Chemist Ram Gupta and colleagues tested how well soy lecithin in its lipid component form can break down oil in water. The results indicate that the substance worked as well or better than two commercially used dispersants. This is particularly noteworthy because soy lecithin is biodegradable and less toxic than traditional chemical dispersants. The researchers suggest that the substance may have the potential to replace traditional dispersants.

Chemical Dispersants

Currently, chemical dispersants are the most effective way to quickly remove oil from contaminated environments, but their usage has been heavily criticized. Dispersants do not reduce the amount of oil in an environment, instead they reduce the size of oil droplets so that marine animals and ecosystems will be less likely to be coated in oil. Many opponents claim that the addition of chemical dispersants may further contaminate marine environments already damaged by oil.

The Deepwater Horizon Spill in April of 2010 was notable for the amount of Corexit dispersant used to counteract the effect of oil on marine habitats. Over 1.84 million gallons of dispersants were used over the course of BP’s clean-up efforts. This usage came under heavy scrutiny at the time of the disaster resulting in EPA Administrator Lisa P. Jackson and then-Federal On-Scene Coordinator Rear Admiral Mary Landry directing BP to reduce dispersant usage by 75 percent from peak usage.

This month The National Wildlife Foundation released a five year report highlighting the aftermath of the Deepwater Horizon. Cited among the data are studies indicating that dispersants may have caused lesions in crustacean shells and may adversely affect coral larvae. Additionally, dispersant compounds have been found in the eggs of white pelicans as far north as Minnesota and Illinois

Image Courtesy of Princess Cruises

By Kathryn Stone

A CDC report released yesterday confirms that the illness reported aboard Princess Cruises Line’s Coral Princess is norovirus.

The Coral Princess was on a Panama Canal voyage, departing from Fort Lauderdale April 12 and arriving in Los Angeles April 27, when passengers started reporting symptoms of the sickness. In total, 99 passengers and 12 crew members reported being ill aboard the voyage.

The norovirus infection is highly contagious and causes gastrointestinal distress including vomiting and diarrhea. The virus is frequently found in closed conditions such as those aboard cruise ships and can be transmitted by infected people or contaminated food, water and surfaces.

This incident marks the sixth case of widespread sickness on a cruise ship in the US and the fifth confirmed norovirus outbreak on US passenger vessels in 2015. About two weeks prior to this incident, the Legend of the Seas was also hit by an outbreak of norovirus. In 2014 a Time Magazine article detailing the worst norovirus outbreaks cited the Coral Princess for a February 2009 outbreak that infected 271 people. 

Princess Cruises and the Coral Princess crew responded to this most recent outbreak by increasing cleaning and disinfection procedures and by keeping passengers updated on the outbreak status and preventative measures. On April 27, the CDC conducted an environmental health assessment and evaluated the Cruise Line’s response activities.