Shipping benefits from globalization more than almost any other sector. But this has also made it more vulnerable to the global economic crisis.
Freight and charter rates have plunged, jobs at shipping companies are being cut and many ships are being parked for months at a time. The anxiety began in the summer, when the long lines disappeared: the kilometer-long lines of trucks waiting to get into the container terminals outside Los Angeles, one of the most critical bottlenecks of globalization in recent years, or the long queues container ships jostling for spots at the entrance to Hong Kong harbor, often waiting for days for a berth. Instead, what is backed up today is the once hotly sought-after merchandise, as electronic goods and textiles pile up in Chinese factories, now that consumption has declined, first among Americans and now in Europe. Iron ore and other minerals are piling up in South American mines, because the Chinese no longer need as much of the natural resources to produce goods. Many ships are now sailing half-empty, if they are sailing at all. In fact, shipping companies are pulling more and more ships out of circulation, due to a lack of demand, and placing them at anchor indefinitely. Experts estimate that one-fourth of all ships used to transport raw materials in the Pacific are now idle. Until recently, shipping was plainly globalization's booming industry, its hammering pulse, pumping more and more goods around the world at an ever-increasing pace. But the financial crisis has brought this activity to an unexpected halt. Although the pulse is still beating, it is no longer the fast and powerful pulse of a sprinter, instead it resembles that of a coma patient.
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Sunday, December 7, 2008
SBM Offshore-owned FSO to be converted into FPSO for Australian oil development project
FSO 'Okha' will be converted into an FPSO, and will replace the current FPSO 'Cossack Pioneer'
An FSO owned by SBM Offshore will be converted into a FPSO with a disconnectable turret. The full scope of this turnkey supply contract for the joint venture between Woodside Energy and Cossack Wanaea Lambert Hermes (SWLH) has been signed. The CWLH project is one of Australia's most productive oil developments and is located 135km northwest of Karratha in Western Australia. The converted FPSO will replace the currently operating FPSO ‘Cossack Pioneer’ in the fourth quarter of 2010. The SBM Offshore-owned ‘Okha’ FSO will be used for conversion into an FPSO with a disconnectable turret. The ‘Okha’ is currently under contract with SEIC for operation in Sakhalin until December this year. It will sail to Keppel shipyard in Singapore for conversion and integration of the process modules and turret.
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An FSO owned by SBM Offshore will be converted into a FPSO with a disconnectable turret. The full scope of this turnkey supply contract for the joint venture between Woodside Energy and Cossack Wanaea Lambert Hermes (SWLH) has been signed. The CWLH project is one of Australia's most productive oil developments and is located 135km northwest of Karratha in Western Australia. The converted FPSO will replace the currently operating FPSO ‘Cossack Pioneer’ in the fourth quarter of 2010. The SBM Offshore-owned ‘Okha’ FSO will be used for conversion into an FPSO with a disconnectable turret. The ‘Okha’ is currently under contract with SEIC for operation in Sakhalin until December this year. It will sail to Keppel shipyard in Singapore for conversion and integration of the process modules and turret.
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China mills seek early end to high-priced iron ore contract
Shanghai: The major iron ore producers could lose a significant chunk of their 2008-09 sales revenues if the China Iron & Steel Association (CISA) is successful in efforts to shift the start of the 2009 benchmark contract period to 1 January from 1 April, writes Steel Business Briefing (SBB).
The commodity newswire has learnt from sources in China that CISA has summoned Vale, BHP Billiton and Rio Tinto to Beijing and told them it wants to terminate the 2008 contract period three months ahead of time. The buyers are paying Vale 65-71% more than last year, and the Australian miners 85% more than last year for their iron ore. A source close to CISA would not explicitly confirm or deny that the association wanted to bring forward the 2009 start date but said “they [the miners] broke the contract first.” “Chinese mills simply can’t afford to take shipments in the first quarter of 2009 under the benchmark price of 2008,” he told SBB. He said there had been “some progress in the negotiations.” A Melbourne-based analyst told SBB that if the 2009 contract price falls by up to 25%, as many anticipate, “it would take a fair slice off their earnings.” “It would result in a very material volume and revenue loss for the big iron ore producers,” he said. A Shanghai-based analyst believed that CISA was “taking its chance” while the market favoured China. “Who knows what might happen in Q1 of 2009? The price might come right back,” he told SBB. Both BHP Billiton and Rio declined to comment on the negotiations.
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The commodity newswire has learnt from sources in China that CISA has summoned Vale, BHP Billiton and Rio Tinto to Beijing and told them it wants to terminate the 2008 contract period three months ahead of time. The buyers are paying Vale 65-71% more than last year, and the Australian miners 85% more than last year for their iron ore. A source close to CISA would not explicitly confirm or deny that the association wanted to bring forward the 2009 start date but said “they [the miners] broke the contract first.” “Chinese mills simply can’t afford to take shipments in the first quarter of 2009 under the benchmark price of 2008,” he told SBB. He said there had been “some progress in the negotiations.” A Melbourne-based analyst told SBB that if the 2009 contract price falls by up to 25%, as many anticipate, “it would take a fair slice off their earnings.” “It would result in a very material volume and revenue loss for the big iron ore producers,” he said. A Shanghai-based analyst believed that CISA was “taking its chance” while the market favoured China. “Who knows what might happen in Q1 of 2009? The price might come right back,” he told SBB. Both BHP Billiton and Rio declined to comment on the negotiations.
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Chevron bit bites at Frade
US supermajor Chevron has kicked off a six-well drilling campaign at the Frade field, in the Campos basin, Brazil's hydrocarbons regulator ANP said.
The dynamically-positioned drillship Noble Leo Segerius will drill the wells, which all have target depths of between 2642 metres and 3799 metres. Operator Chevron hopes to pump first oil from Frade, which has estimated reserves of between 200 million to 300 million barrels of oil equivalent, in the second quarter of 2009. Chevron has a 51.7% stake in the field, with partners Petrobras Petrobras (30%) and independent player Frade Japao (18.3%).
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The dynamically-positioned drillship Noble Leo Segerius will drill the wells, which all have target depths of between 2642 metres and 3799 metres. Operator Chevron hopes to pump first oil from Frade, which has estimated reserves of between 200 million to 300 million barrels of oil equivalent, in the second quarter of 2009. Chevron has a 51.7% stake in the field, with partners Petrobras Petrobras (30%) and independent player Frade Japao (18.3%).
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Saturday, December 6, 2008
StatoilHydro delineates Nucula discovery
Norway: StatoilHydro completed the drilling of an exploration well on the Nucula discovery in the Barents Sea offshore Norway.
The well confirmed a small oil column in sandstone of the Triassic age. The oil-bearing layers were thin, but showed good production properties. The exploration well was not formation tested, but data has been gathered to be able to evaluate the size and extent of the find. StatoilHydro said that it is too early to reach a conclusion on the size of Nucula. Preliminary calculations would suggest that the resource basis lies in the lower region of the original estimation, which was 211.88 MMcfe to 423.76 MMcfe. "We will now evaluate the size of the find and further development opportunities for Nucula," said StatoilHydro's Head of exploration activities in the far north Geir Richardsen. Transocean semisubmersible Polar Pioneer drilled the exploration well, 7125/4-2, in StatoilHydro-operated production license (PL) 393 approximately 68 miles (110 km) east-northeast of the Goliat discovery in the Barents Sea. Drilled in 965 feet (294 m) of water, the well was concluded in early Triassic rocks at a vertical depth of 5,666 feet (1,727 m). The well has been permanently plugged and abandoned. This is the second well in PL 393, which was awarded in the 19th licensing round in 2006.
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The well confirmed a small oil column in sandstone of the Triassic age. The oil-bearing layers were thin, but showed good production properties. The exploration well was not formation tested, but data has been gathered to be able to evaluate the size and extent of the find. StatoilHydro said that it is too early to reach a conclusion on the size of Nucula. Preliminary calculations would suggest that the resource basis lies in the lower region of the original estimation, which was 211.88 MMcfe to 423.76 MMcfe. "We will now evaluate the size of the find and further development opportunities for Nucula," said StatoilHydro's Head of exploration activities in the far north Geir Richardsen. Transocean semisubmersible Polar Pioneer drilled the exploration well, 7125/4-2, in StatoilHydro-operated production license (PL) 393 approximately 68 miles (110 km) east-northeast of the Goliat discovery in the Barents Sea. Drilled in 965 feet (294 m) of water, the well was concluded in early Triassic rocks at a vertical depth of 5,666 feet (1,727 m). The well has been permanently plugged and abandoned. This is the second well in PL 393, which was awarded in the 19th licensing round in 2006.
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Drydocks may invest in more rigs, vessels
Drydocks World may consider investing in more rigs and vessels on order from its shipyards in Singapore and Indonesia in anticipation of an upswing in newbuild demand after the current economic downturn.
Drydocks' Graha yard in Batam, Indonesia, is planning to build two jackup rigs on speculative orders. The shipbuilder has ordered the drilling equipment and expects to start work on the new units in next March and June. Deliveries are scheduled for the end of 2010 and the first quarter of 2011, according to Managing Director of Drydocks - Graha and Nanindah Mark Biggs. Biggs said the yards have received expressions of interest for newbuild jackups from clients based in Mexico, northern Europe and the Middle East. The final contracts however, may have been slow in materializing due to the current financial crisis. Prior to the investment in these jackup rigs, Drydocks has also invested directly or indirectly in offshore support vessels, according to Biggs. Drydocks holds stakes in Polarcus' seismic vessels now undergoing construction at its Dubai facility. The shipbuilder also owns indirect interests in two 260-man jackup accommodation units under construction at its Graha facility through equity holding in Norwegian Master Marine ASA.
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Drydocks' Graha yard in Batam, Indonesia, is planning to build two jackup rigs on speculative orders. The shipbuilder has ordered the drilling equipment and expects to start work on the new units in next March and June. Deliveries are scheduled for the end of 2010 and the first quarter of 2011, according to Managing Director of Drydocks - Graha and Nanindah Mark Biggs. Biggs said the yards have received expressions of interest for newbuild jackups from clients based in Mexico, northern Europe and the Middle East. The final contracts however, may have been slow in materializing due to the current financial crisis. Prior to the investment in these jackup rigs, Drydocks has also invested directly or indirectly in offshore support vessels, according to Biggs. Drydocks holds stakes in Polarcus' seismic vessels now undergoing construction at its Dubai facility. The shipbuilder also owns indirect interests in two 260-man jackup accommodation units under construction at its Graha facility through equity holding in Norwegian Master Marine ASA.
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Fortescue Metals axes long-term shipping contracts
Sydney: Fortescue Metals is suspending all its long term ore shipments to switch to contracts that require the buyer to freight the product.
The Pilbara-based miner said the change in contracts was because of “unforeseen circumstances”. Shares in Fortescue dropped 11.4 per cent in the first 15 minutes of trading this morning, to $2.18 in an Australian market down 1.2 per cent. Fortescue’s stock had surged as much as 42 per cent earlier in the week on speculation of a takeover play by BHP or a deal with Chinese investors. In a statement to the Australian Securities Exchange, the iron ore miner said the changed arrangements as a result of the suspensions should not affect its marketing program in regards to volumes of product shipped. Fortescue said the only change would be the split between CFR, or cost including freight, and FOB, free on board, contracts.
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The Pilbara-based miner said the change in contracts was because of “unforeseen circumstances”. Shares in Fortescue dropped 11.4 per cent in the first 15 minutes of trading this morning, to $2.18 in an Australian market down 1.2 per cent. Fortescue’s stock had surged as much as 42 per cent earlier in the week on speculation of a takeover play by BHP or a deal with Chinese investors. In a statement to the Australian Securities Exchange, the iron ore miner said the changed arrangements as a result of the suspensions should not affect its marketing program in regards to volumes of product shipped. Fortescue said the only change would be the split between CFR, or cost including freight, and FOB, free on board, contracts.
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