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Sept 9, 2023

Russia’s seaborne crude oil flows to international markets decreased last week, primarily due to maintenance work rather than output cuts. Crude shipments through Russian ports, especially in the Baltic region, witnessed a significant drop. However, this decline aligns with patterns observed in previous years and is expected to rebound in the following week.

The decrease in shipments from the Pacific region is also temporary, as exports from Pacific ports command higher prices and have shorter shipping times to key markets in China and India. Moscow’s output cuts were aimed at ports on the Baltic and Black Sea, but no significant drop in flows has been observed from Ust-Luga or Novorossiysk. Additionally, Russian refineries have raised crude processing rates, signaling the end of the nation’s downstream maintenance season. The recent activities of the private army known as the Wagner Group are unlikely to impact Russian crude flows as long as the situation remains stable.

The Bureau of Ocean Energy Management (BOEM) has introduced proposed changes to federal financial assurance requirements for offshore oil and gas companies. The goal is to safeguard taxpayers from incurring the costs of decommissioning unused offshore oil wells and infrastructure. Currently, the Department of the Interior holds insufficient funds to cover estimated decommissioning costs, leaving taxpayers at risk.

Corporate bankruptcies in the industry have highlighted the need for regulatory reform, as the government may be liable for decommissioning costs during bankruptcy. Delays in decommissioning can also pose environmental risks. The proposed changes aim to modernize evaluation and financial criteria, ensuring energy companies fulfill their clean-up and decommissioning responsibilities without burdening taxpayers. The rule would establish two metrics for evaluating risk and require additional financial assurance for companies without an investment-grade rating. The current value of proven oil and gas resources on a lease would also be considered when assessing financial risk.

Offshore engineering specialist Aquaterra Energy has been awarded a significant contract in collaboration with TPMC to support a decommissioning campaign for a major Abu Dhabi-based operator. The contract involves providing offshore riser equipment and services for the decommissioning of eight wells in Abu Dhabi’s offshore region by 2028. Aquaterra will deliver a comprehensive end-to-end managed service, offering engineering expertise, personnel, and other necessary resources. The company views the Middle East as a vital region for its global growth plan, and this contract marks another milestone in expanding its presence and revenue in the area. Aquaterra has already completed over 35 projects in the region, and this project further strengthens its position and reinforces its commitment to global expansion.

Finnish technology group Wärtsilä has secured a contract from Swedish ferry operator Stena Line to convert several vessels to operate on methanol fuel. The conversion process will involve modifying the fuel supply system, integrating new installations with existing systems, and making engine modifications. The conversion package includes various components such as fuel tank instrumentation, valves, transfer pumps, and automation systems. By converting the ferries to methanol fuel, Stena Line aims to comply with current and future regulations, including the Carbon Intensity Indicator, FuelEU Maritime, and IMO 2050 GHG reduction target. Stena Line plans to reduce CO2 emissions by 30% by 2030. The conversions are scheduled for 2025, with the exact number undisclosed. Ian Hampton of Stena Line expressed confidence in Wärtsilä’s capabilities based on their successful conversion of the Stena Germanica to operate on methanol fuel in 2015.

UK-based Hadley Shipping has sold its sole containership, leaving the company with a fleet consisting of bulk carriers, roros, and product carriers. The 2013-built, 1,728 teu Cerinthus was purchased by China’s Zheijiang Xiehai Group for $17 million and has been renamed XH Cherry. This acquisition marks Xiehai’s entry into the deepsea container shipping sector. Xiehai, primarily engaged in dry bulk shipping and coastal and river trades in China, expands its operations with the addition of the containership.

TechnipFMC and Technip Energies, subsidiaries of the former Technip S.A. group, will pay fines of nearly €210 million ($230 million) to resolve legal matters related to subsea projects undertaken between 2008 and 2012. Technip UK Limited and Technip Energies France SAS reached a settlement with France’s national financial prosecutor, Parquet National Financier (PNF), regarding the corruption of foreign public officials primarily in Africa.

The settlement, known as a convention judiciaire d’interet public (CJIP), is subject to final approval by the President of the Tribunal Judiciaire of Paris. It is important to note that the CJIP settlement does not imply an admission of guilt or liability. Under the terms of the settlement, Technip UK will pay a fine of €154.8 million, while Technip Energies France will pay €54.1 million, totaling €208.9 million. TechnipFMC is responsible for €179.45 million, to be paid in installments until July 2024, and Technip Energies will pay the remaining €29.45 million as per their separation agreement from January 2021. The Technip group merged with FMC Technologies in 2017 to form TechnipFMC and subsequently separated into two independent engineering companies in 2021.

Danaos Corporation, a major containership owner, has expressed serious concern over Eagle Bulk Shipping’s recent actions in a letter to the Board of Directors. Eagle Bulk announced its plan to repurchase Oaktree Capital’s entire stake in the company using debt financing, which Danaos questions in terms of fairness and shareholder value. The repurchase represents Oaktree’s 28% stake in Eagle Bulk, and the Board has also implemented a shareholder rights plan, commonly known as a “poison pill,” to prevent any attempts to gain control of the company. Danaos, now the largest shareholder after the deal, highlights its duty to protect the interests of all shareholders and raises questions about the repurchase price and the lack of shareholder approval for the poison pill. Eagle Bulk has yet to respond to the letter.

With Russia obstructing grain shipments in the Black Sea, Ukrainian officials are turning their attention to the Danube as a key outlet for exports. The Ukraine Sea Ports Authority states that the Danube will likely handle a significant portion of Ukrainian grain exports this summer. Recent interference from Russia has hindered Ukraine’s ability to move cargoes from its approved Black Sea ports, prompting the need for alternative routes. As a result, Kyiv aims to deepen the Bystre Canal on the Danube to accommodate larger vessels and facilitate increased transit.

CMA CGM and Evergreen, two major shipping companies, have placed substantial orders for container newbuilds, highlighting the industry’s ongoing expansion. CMA CGM has ordered ten LNG dual-fuel boxships with a capacity of 24,000 TEU each, while Evergreen has placed firm orders for twenty-four 16,000 TEU methanol dual-fuelled ships. These orders contribute to the record quantities of boxships ordered in recent years, pushing the global container fleet to reach 30 million TEU by the end of 2025.

Mitsui OSK Lines (MOL) and Petronas, in collaboration with Shanghai Merchant Ship Design & Research Institute, have unveiled their joint efforts to transport and store liquefied carbon dioxide (CO2). The project has achieved approval in principle for liquefied CO2 carriers, a floating storage and offloading (FSO) unit, and offshore storage solutions. MOL’s entry into the CO2 transport business aligns with its commitment to reducing greenhouse gas emissions. The company plans to explore further opportunities in the Asia Pacific and Oceania regions, including potential collaboration with Chevron for transporting CO2 to offshore storage facilities.

You can read the previous issue of ‘Currents’ here.

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