Ship Finance International adjusts long-term chartering agreements with Frontline Ltd.

In International Shipping News 29/05/2015

Ship Finance International Limited, today announced that it has entered into a heads of agreement to amend the long-term chartering agreements with Frontline Ltd. (“Frontline”).

The Company currently has 17 vessels on charter to subsidiaries of Frontline, with an average remaining charter term of nearly 8 years. The new agreement will take effect from July 1, 2015 and will be a combination of reduced long-term base rates, increased profit split and an ownership share in Frontline. The operating expenses, including dry-docking, payable to a subsidiary of Frontline will also be adjusted to current market level.

New time charter rate for VLCCs: $20 000/day

New time charter rate for Suezmaxes: $15 000/day

New opex for all vessels: $9,000/day

New profit split: 50% above new time charter rates

55 million Frontline shares will be issued to Ship Finance

Ship Finance will continue chartering the vessels to a subsidiary of Frontline, and in exchange for releasing Frontline from their current guarantee obligation on the charters, a cash buffer of $34 million ($2 million per vessel) will be built up in the chartering company.

Accrued cash sweep from January through June 2015 based on the existing agreement, estimated to approximately $20 million, will be paid in cash to Ship Finance.

Under the current agreement, Ship Finance is entitled to a 25% profit split above approximately $26,700/day for the VLCCs and $21,100/day for the Suezmaxes, calculated and payable on an annual basis. Frontline prepaid $50 million of this profit split in December 2011, and no additional profit split has so far accumulated in excess of this amount.

The new profit split agreement will start accruing from July 1, 2015 and will now be calculated and paid on a quarterly basis. Going forward, profit split payments will not be subject to the previous $50 million threshold.

Based on closing shareprice on May 28, 2015, of $3.06 per share, the market value of the Frontline shares to be issued to the Company is approximately $168 million, and based on the volume-weighted shareprice last 3 months of $2.64 per share, the value is approximately $145 million.

When issued, the shares will represent approximately 27.7% of the total shares in Frontline on a diluted basis. Following customary filing requirements, the shares received may be distributed to our shareholders as a special dividend or sold at a later stage. In addition, Ship Finance owns approximately $117 million of senior unsecured amortizing notes in Frontline, which will remain unchanged and serviced by Frontline like before.

The release of the charter guarantee relating to our charters is seen as an important feature to facilitate strategic transactions in Frontline, including potential mergers and/or acquisitions going forward.

CEO of Ship Finance Management AS, Ole B. Hjertaker said in a comment: “We are currently enjoying a very strong tanker market, and the new and higher profit share arrangement is likely to generate higher net cash flows from the vessels in the near term. Lower base rates will also ensure a more sustainable long term structure, with a cash buffer to mitigate potential fluctuations in the charter market.

Since the establishment of Ship Finance in 2004, we have received more than $600 million in cash sweep and profit sharing from Frontline. It has enabled the Company to grow and diversify the asset base much faster than originally anticipated with corresponding higher dividend capacity. Changing the calculation of the profit split to quarterly basis and starting from a lower level adds interesting optionality for us going forward, with the potential for increased long term quarterly distribution capacity.”

Source: Ship Finance International Limited

Engie Plans to Boost Gas Shipments With U.S. Shale, Asian Plants

In Freight News 29/05/2015

Engie, the French utility giant formerly known as GDF Suez SA, plans to raise sales of liquefied natural gas by about a fifth in five years, partly through exports of U.S. shale gas.

“Prospects for gas globally are very favorable,” Chief Executive Officer Gerard Mestrallet told reporters Wednesday at a press conference in Mareil-le-Guyon, France.

The utility plans to add shipments from the Cameron LNG export terminal in Louisiana, and possibly from future projects in Indonesia and the Philippines, to its existing supply contracts.

The operator of Europe’s largest natural-gas network is seeking to expand sales of the fossil fuel, as well as electricity, in faster-growing markets such as Asia and the Middle East.

Gas production is expected to grow in almost all regions except Europe by 2040, the International Energy Agency said in November. LNG exports will almost double, taking market share from pipelines, according to the Paris-based adviser to 29 developed countries.

Engie is looking to raise its annual sales of super-cooled gas shipped by tanker to 20 million metric tons by 2020, from 16.4 million currently, according to a presentation by the company. The utility has 14 tankers and sold 142 cargoes in 2014, making it Europe’s biggest LNG importer and second-biggest terminal operator.

“Liquefied shale from the U.S. will help supply Asia and maybe even Europe one day,” Mestrallet said. The first commercial cargo from Cameron LNG, in which Engie has a 16.6 percent stake, is expected in 2018.

Engie is planning to start producing gas from the Cygnus project offshore U.K. at the end of 2015 and from Touat in Algeria and Jangkrik in Indonesia in 2017, according to the presentation.

Source: Bloomberg

Lifting of U.S. crude oil export ban possible within year -analysts

In Freight News 29/05/2015

The U.S. Congress could lift the 40-year old ban on domestic crude oil exports within a year as a drop in gasoline prices and the potential return of Iranian oil to global markets makes it an easier measure for politicians to support, Bank of America Merrill Lynch analysts said.

U.S. gasoline prices have dropped since last year along with global crude prices, thanks to strong crude output from the United States, Saudi Arabia and Iraq. On Thursday, the U.S. average for regular gasoline at the pump was nearly $2.74 a gallon, down from $3.65 a year ago, according to the AAA motorist club.

If that remains the case, it has the potential to allay politicians’ fears that they could be blamed any rise in gasoline prices if the crude oil export ban was lifted. If talks between six global powers and Tehran on Iran’s nuclear program reach a deal on June 30, sanctions on Iran’s oil exports could be removed soon after. That could also put pressure on global oil and U.S. gasoline prices.

The analysts found “a surprising amount of support to remove the ban across members of the House and Senate,” at a meeting they held with lawmakers, they said in a BofA Merrill Lynch Global Research report.

Backers of removing the ban in Congress said they had not come across any fellow members that were “intellectually opposed” to lifting it, even among Democrats, the analysts said.

Still, two key Democrats in the Senate, Ed Markey and Robert Menendez, are opposed to lifting the restriction. And supporters of lifting the ban have a long way to go to get the 60 votes that will likely be necessary to pass a bill.

Senator Lisa Murkowski, a Republican and chair of the energy committee, has introduced legislation to lift the trade restriction. She has 13 co-sponsors on the measure, including one Democrat in the 100-member chamber.

Source: Reuters (Reporting by Timothy Gardner; Editing by Marguerita Choy)

Australia: Choppy Waters: More Changes To The Coastal Shipping Regime In Australia

In Shipping Law News 29/05/2015

The Australian Government has announced that a new permit system for coastal shipping will be introduced. The latest round of changes will include the replacement of the tiered licence system with a single permit system, relaxation of importation rules for certain vessels and new maritime labour requirements.

This week, Australia’s Deputy Prime Minister for Infrastructure and Regional Development, the Hon Warren Truss MP, announced major changes to the coastal shipping regime in Australia.

In recognition of the abject failure of The Coastal Trading (Revitalising Australian Shipping Act) 2012 (Cth) as introduced by the previous Labour Government, the legislation will be significantly amended in an effort to encourage and seek to rejuvenate coastal shipping in Australia.

The new regime is intended to deregulate the coastal shipping permit system while at the same time preserve the application of Australian labour laws, maritime safety standards and environmental provisions.

Stemming the decline

The proposed amendments come in response to the dramatic decline in coastal shipping in Australia. As a percentage of overall freight in Australia, coastal shipping has been in decline even though total freight has been increasing. By 2030, Australia’s overall freight task is expected to grow by 80%, but coastal shipping was only forecast to increase by 15% on the current model. Currently only 15 Australian trading vessels continue to operate a general licence and only eight operate with a transitional licence.

Recognising that Australian maritime exports account for 99% of exports and Australian ports manage more than AUD 400 billion worth of international cargo, the Deputy MP emphasised that “coastal voyages by international and domestic ships should be growing” and the current system, which imposes a number of unnecessary and costly reporting requirements, must be overhauled.

The new system

Under the new system, the Government will introduce a single permit system for coastal shipping, replacing the existing tiered licence system. A “Coastal Shipping Permit” will provide unrestricted access to coastal shipping for all vessels (Australian and foreign) for up to 12 months.

Vessel owners, or those responsible for the “management” of the vessel, will be eligible to apply for a shipping permit for their vessel. Applications must include details evidencing proof of ownership or responsibility, a copy of the vessel’s registration certificate and an application fee. Once granted, a permit holder will be allowed to transfer the permit if the ownership or management of the vessel changes during a 12 month permit period.

Under the new regime, reporting obligations will be less onerous with only two reports required each year, one after each six month period. There will be no need to seek variations to cargo types, volumes carried, or travel dates anticipated for each voyage.

This compares with the current regime which requires owners to apply for a permit for each voyage that is likely to happen, report on what they anticipate doing and then again report on what actually happened.

The amendments will also encourage vessels being dry-docked in Australia. Permit holders will not be subject to the importation regime under the Customs Act 1901 (Cth) and will therefore have greater flexibility to undergo maintenance in Australia. Vessels undertaking the movement of liquid fuel products from offshore various installations like FPSOs and FSUs, including from offshore platforms, will also benefit from these changes and will not require importation.

Maritime labour requirements

One of the most controversial elements of the new proposal is the wage arrangements that will apply.

Permit holders on vessels undertaking more than 183 days of coastal trading (to be defined) in a permit period will be required to have two senior Australian crew on board and to pay all crew an Australian wage. However, foreign vessels trading for less than 183 days, will be subject to existing international on board arrangements.

Already this aspect of the proposal has faced criticism from trade unions, who claim that the new regime will discourage shipowners from basing their ships in Australia in order for them to take advantage of lower pay levels and less stringent regulations around working conditions.

Despite these objections the Government continues to assert that the amendments will decrease regulatory costs, increase the volume of Australian coastal shipping, decrease congestion of road and rail infrastructure, and inevitably increase jobs and enhance the competitiveness of the Australian maritime sector.

Next steps

The new Coastal Shipping Bill is expected to be introduced into the Australian Parliament later this year and the Government has stated its commitment to implement the new regime as soon as practicable after the legislation is passed.

A transition period is anticipated whereby application for permits can be made prior to the commencement of the permit system and voyages that have already commenced under a licence issued under the current system will continue until the voyage is completed.

The Government’s initiative is to be applauded but the “devil is in the detail” and it will be necessary to closely review the eventual Bill to ascertain any wider implications, for example, the myriad possible implications to the offshore oil and gas sector.

We will continue to closely monitor these positive developments and provide future updates in due course.

Source: Clyde&Co

China’s Changing Role In Oil Products Trade

In International Shipping News 29/05/2015

Most of China’s oil products trade is on short-haul routes with other countries in Asia, even if some longhaul volumes also play a role. However, there have been shifts in trends in China’s seaborne imports and exports of oil products in recent years. China has traditionally been a net importer of oil products, but today China’s imports are falling whilst its exports are on the rise.

Declining Imports

Following a period of firm growth in seaborne oil products imports into China prior to 2011, volumes fell slightly in 2012. Since then imports have continued 

to fall and in 2014 registered a 24% y-o-y decline to total 29.2mt. This was the lowest volume imported since 2004. This trend has continued into 2015, with imports in Q1 down 7% y-o-y, totalling 7.8mt.

Impact of Refinery Capacity

Gasoline, diesel and kerosene combined (defined here as ‘key products’) accounted for much of the decline in Chinese products imports. Imports of these products are mostly sourced from other Asian countries and in 2010-14, fell 20% p.a. to 4.7mt, partly reflecting increased capacity in the country’s oil refinery sector. At the end of 2014, China’s refinery capacity reportedly stood at around 670mtpa, having seen growth of almost 7% p.a. since 2010. In line with this expansion, refinery output of these products rose 26% in the period to 317mt. Growth in China’s ‘key products’ consumption also slowed, further contributing to the decline in imports. Imports of fuel oil have not fallen to the same extent, but softened by 3% p.a. in 2010-14 to 17.1mt, partly as some private refineries were refining more crude oil and less fuel oil. Most of the drop was accounted for by falling imports from Russia; imports from other major suppliers remained fairly steady.

Rising Exports

In contrast to imports, Chinese seaborne oil products exports have risen since 2012. Exports totalled 18.7mt in 2014, up from 14.3mt in 2012, and gasoline, diesel and kerosene combined account for the majority of shipments. Around 90% of China’s exports of these products are on short-haul intra-Asian routes. Growth in exports has largely been driven by domestic oversupply of products as a result of increased capacity in the refinery sector, as well as weaker domestic demand.

Emerging As A Net Exporter?

Robust growth in gasoline, diesel and kerosene exports has led China to emerge as a net exporter of these ‘key products’. Moreover, during some months in 2014, China was a net exporter of all products. Overall, however, shifts in trends in Chinese products imports and exports combined have led to a fall in China’s seaborne products trade from 56.0mt in 2010 to 47.9mt in 2014.

So, China’s role in oil products trade is changing, with falling volumes notable on short-haul import routes (the recent trade agreement between PetroChina and Venezuela may protect some long-haul trade, which could moderate the impact on vessel demand). Despite the clear upwards trend in Chinese exports, the declining import trend looks likely to be enough to lead total Chinese products trade to continue to drop in the short-term at least.

Source: Clarksons

Dry bulk market is the victim of a shift in demand

In Hellenic Shipping News 29/05/2015

The fall in dry bulk freight rates is attributed, in large part, to the substantial decrease of China’s thermal coal imports, a major commodity trade in the past, combined with the large supply base of dry bulk carriers, in need of employment. At the same time, as shipbroker Allied Shipbroking pointed out in its latest weekly analysis, the rise of new markets for coal, such as India, isn’t happening as fast as the market needs to recover.

Allied noted that thermal coal was plagued “by an increasing amount of strict environmental policies on a global scale and a rapid drop in prices of competing fuels, in effect seeing its seaborne trade sag ever since mid-2013. The main country which has influenced this drop in demand has been China, which has taken a strict approach on curbing its consumption, in an effort to overturn the level of air pollution in its major cities. Yet as things looked to be in their most dire, we have started to see a new giant emerge amongst the major thermal coal imports. India has rapidly taken up the role of bringing up the market, wishing to take advantage of this excess supply that has become available in the market and at the same time feeding its growth needs with this relatively cheap energy source”.

George Lazaridis, Head of Market Research & Asset Valuations with Allied Shipbroking noted that “as things stand now, India is set to see an 11% increase in its imports, rising from 180 million tonnes in 2014 up to a forecast of around 200 million tonnes for 2015 according to statements by consultancy group Venerable Energy Solutions. Things look even more optimistic as expectations are now for a rise in India’s imports of thermal coal of up to 250 million tonnes within the next 3-4 years based on the current domestic supply situation as well as its growing consumption levels. This is an equivalent of an increase of around 39% from its 2014 levels, something which would not only make it the world’s largest importer of thermal coal but a main driver in demand for thermal coal’s seaborne trade. This is not even the most bullish of estimations being thrown around in the market, with commodities trader Glencore having put a forecast for India’s thermal coal imports to rise up to 300m tonnes by 2020. While some may see these as fairly optimistic forecasts, especially as rumours circulate of an enhanced availability of domestically sourced coal and a gradual cutting back of India’s reliance on thermal coal as well, there might be some truth in the more imminent market prospects as its demand will certainly dictate a strong growth rate up until 2017″, he noted in his analysis.

Meanwhile, “at the other end of the spectrum you have China, a country which has already cut back on in its imports since 2013, making an immediate effect with its absence which was especially well noted via dry bulk freight rate conditions in the Pacific basin. This trend has shown to continue at an equal magnitude this year, with Chinese imports already set to close at an annual decline of over 23% (or equivalent to 52 million tonnes from the 229 million tonnes imported in 2014 according to the International Energy Agency). This still leaves a market wanting, as the math still indicates to a combined import volume that is notably weaker than that of 2014. At the same time, and although India’s demand is set to strengthen, China’s demand for thermal coal imports is expected to continue its sharp drop over the coming years, leaving the market with an ever increasing gap to fill”, Lazaridis said.

He concluded his argument by noting that “the positive side to see is that China’s retreat on some of the major trading dry bulk commodities is already starting to be countered by the new and upcoming behemoths of economic growth. On the negative side, the transition is not happening nearly as fast as would be needed to keep the freight market buoyant and although new trade matrices might benefit the overall tonne-mile demand, all indications continue to point to a slower pace in growth in demand for these major dry bulk commodities”.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Dry Bulk freight market takes to the pool to stay afloat

In Dry Bulk Market,International Shipping News 28/05/2015

A prolonged period of paltry returns and overcapacity in the dry bulk freight market has resulted in the creation of new shipping pools by shipowners to help stay afloat.

With rates at rock bottom and historically low earnings for shipowners, at least two shipping pools in the dry bulk segment have been launched since the beginning of the year.

The first pool venture of the year — The Sapphire Pool — consisting of Supramax vessels was set up by shipowner Clipper and was followed by the Capesize Chartering Ltd pool, launched by Bocimar International, C Transport Maritime, Golden Union Shipping Co, and Star Bulk Carrier Corp.

The latest to jump on the pool bandwagon is tanker operator Heidmar through an alliance with TBS Ocean Logistics that will mainly trade geared Supramaxes.

A shipping pool is a collection of similar types of vessels from various owners placed under the control of a commercial entity.

The entity trades the vessels as a single, cohesive fleet and collects or “pools” the earnings, which are then distributed to owners.

Although vessels trading in dry bulk shipping pools make up less than 10% of the total tonnage, the teaming up of dry bulk shipowners to form a new shipping pools has met with a mixed reaction from market participants.

While many see the move benefiting the dry bulk freight market, they add that the move may not ultimately have a big impact in pushing up rates in a chronically oversupplied market consisting of Capesize, Panamax, Supramax, Ultramax, Handysize and Handymax vessels.

“I absolutely agree that consolidation in the dry bulk market, in the form of pools, would better allocate ships to cargoes, on similar lines to the tanker, and [container] liner industry,” TBS Ocean Logistics’ India Pacific vice-president for commercial Rishi Nyati said.

Shipping pools have their strengths as well as weaknesses, market participants said. Some of the benefits are in the form of having the wherewithal to take on large contract of affreightment programs by having a sizable fleet.

POOLING RESOURCES

Pools are able to help with triangulation strategies such as higher load factors, reduced ballast legs and idle time.

On the downside, the head-owner losses the control over the tonnage once it has entered a pool.

Also, at times, owners could become embroiled in accounting differences based on technical specifications and other commercial aspects.

“You can’t stop people from finding other ways of making money when the market is so bad and forming a pool is one of them.

There is potential for the Capesize market [in the creation of pools] but its limited for smaller sizes due to the extremely fragmented ownership,” a Supramax shipowning source said.

“It may work for tankers, where the [number of] owners are still somewhat limited. But in the dry bulk, I find that very challenging. I have my skepticism of people wanting to form pools.”

Many market sources said the creation of pools helps shipowners who have a small fleet, tight cash flow and lack the commercial expertise to trade vessels on their own.

“Forming pools is better. Bigger companies can better bear the brunt of a low market. It is also good for head-owners since the vessel is kept running and has access to cargoes as well as getting paid in accordance with the market,” a chartering source with a coal trading house said, adding that logically pools were a good way to do business for the owner.

“The market is very fragmented in the dry bulk segment. To some extent will be good for owners if larger pools are formed.”

Some said they believe the fact that the dry bulk market is much larger than the tanker market and at the same time being highly fragmented, the pools for bulkers may have a limited impact.

“The larger capital costs place a natural barrier on small entrants [in the Capesize segment],” said a dry bulk shipping market researcher, adding that there were fewer owners in the Capesize market than in the Handysize segment.

“So from that point of view, there would probably be more benefit for the smaller players to gang up together. But it is difficult for owners, who by nature think they know better than the next guy, to let their assets be managed by a third party.”

Another market watcher said pools didn’t necessarily have the best interests of the shipowner at heart.

“Pool always works best for the pool company. They always earn [irrespective of the market being weak or strong]. The banks force shipowners to enter pools. It does not make sense for shipowners. You don’t buy a car and give it to someone asking them to drive it around and pay for that,” the source said.

Source: Platts

Shippers’ Council embarks on enlightenment campaign to boost shipping sector

In International Shipping News 28/05/2015

In an effort to improve shipping business in the country and reduce losses incurred by local shippers, the Nigerian Shippers’ Council (NSC) has announced plans to embark on an enlightenment campaign to educate shippers-importers, exporters and other stakeholders in the South-East region of the country.

Christian Chimezie, coordinator, NSC, South-East zone, who revealed this, during a courtesy call on the management of the Nigerian Television Authority (NTA), Aba, affirmed that local shippers would no longer incur losses if they have full knowledge of shipping guidelines.

Chimezie, who took over from Ada Okam, now at the Council’s Lagos office, said the NSC was poised to transform the Nigerian ports sector for better performance, in line with global industry standards.

According to him, with the new status as ports economic regulator, the NSC will ensure efficiency at the ports, reduction in cargo dwell time, reduction in the cost of doing business, entrenching healthy competition for the benefit of all stakeholders.

He also said the Council would improve in vessel turnaround time and increase in cargo throughput, which would invariably lead to increase in revenue to both government and the private investors.

In his words: “Federal Government’s decision to strengthen the Council is not only in line with international best practices in port concession, but also in accordance with the provisions of the concession agreements that brought private operators into the sector.

“The Federal Government, realising that Nigerian Shippers’ Council is the only government agency performing most aspects of economic regulatory roles in the ports sector, but without sufficient power of enforcement, decided to strengthen it to fill the disturbing vacuum created by the absence of an economic regulator, “ he said.

As an economic regulator, Chimezie also promised that the NSC would ensure that a level playing field was provided for all stakeholders in the sector, tariff in the ports sector were cost-reflective and fair to both service providers and users.

He stated that the NSC would also ensure that service providers, provide the contracted level of service and at agreed prices and ensure that service levels are consistent with bench-marked levels as well as ensure that disputes are resolved amicably and without prejudice.

Lola Ebueku, general manger, NTA Aba , in her response, expressed readiness of her organisation to collaborate with NSC, to publicise its activities to stakeholders and other publics in the South-East region of the country.

Ebueku, observed that the Council has an important role to play in the diversification of the country’s economy, stressing that NTA is willing and ready to assist it and other agencies- government and private sectors to boost the country’s economy.

Austina Ogbonna, public relation officer, NSC, who expressed joy over NTA’s willingness to partner her organisation, promised that the Council would do everything possible to sustain the relationship. According to her, “We are going to be good collaborators to make sure that the Council renders worthy service to the importers and exporters, as it will help reduce the cost of goods and services.

Source: Business Day Online

Iraq to increase oil export to new record high, price war intensifies – media

In Freight News 28/05/2015

Iraq is ready to increase its crude exports to a record 3.75 million barrels per day in June, continuing OPEC’s strategy of ousting US shale producers from the market.

The extra oil from Iraq comes to about 800,000 barrels per day, more than from another OPEC member, Qatar, said Bloomberg, referring to Iraq’s oil shipments schedule.

OPEC countries are increasing crude output to protect their market share and decrease oil prices, in an attempt to divert investors from expensive oil, including US shale, heavy oils and deep offshore.

OPEC nations are scheduled to meet on June 5 and are expected to confirm current output levels – about 30 million barrels per day. Thirty-three out of 34 analysts and traders surveyed by Bloomberg agreed that OPEC will maintain its daily production.

Officials from OPEC countries have already said the oil output is unlikely to be cut in the nearest future.

“Lowering OPEC’s production ceiling requires consensus between all members … under current conditions it seems unlikely that the OPEC production ceiling will change,” said Iran’s Oil Minister Bijan on Sunday.

Iraq is increasing oil exports in two directions. The first is in the Shiite south, where companies such as BP and Royal Dutch Shell work. The second is Nothern Iraqi Kurdistan, whose government last year received Baghdad’s consent to independent oil deliveries.

In April, Iraq exported almost 3.1 million barrels of oil per day, which is a record.

The same month, Saudi Arabia increased crude output by 13,700 barrels per day to 10.308 million, reporting its highest oil production in more than three decades.

Many non-OPEC players in the region are dissatisfied with the situation on the market, which is flooded with cheap oil.

Oil prices dropped by about 50 percent in the second half of 2014, but have gone up to $60-65 per barrel since the beginning of 2015.

The current situation on the oil market and the price is not sustainable for Oman, said the country’s Oil and Gas Minister Mohammed Rumhy, adding that his country is ready to unilaterally cut oil output.Oman is the biggest Middle Eastern oil producer outside Saudi-led OPEC,

At the last OPEC meeting in November, the organization decidednot to cut production despite falling prices and a major oversupply.

Source: Russia Today

Shipping through Beirut port down by 4.5 per cent in April

In Port News 28/05/2015

The volume of inbound and outbound shipping through the Port of Beirut in the first four months of the current year dropped by 13.66 per cent to 2.455 million tones, compared with 2.843m tonnes in the same period of last year.

In April, shipping through the port edged down by 4.52 per cent in April to 643,700 tonnes, compared with 674,200 tonnes in March, according to the data published by Almustaqbal.

In the January-April period, the number of ships docking at the port dipped by 16.1 per cent to 565 ships, compared with 674 ships in the same period last year.

The number of containers showed a decline of 8.6 per cent to 347,185 containers in the four-month period.

The number of imported vehicles decreased by 245 vehicles to 31,133 vehicles, compared with 31,387 in the same period of 2014.

Interestingly, despite the downturn in volumes and numbers, the total revenues of the port edged up by 5.9 per cent in the first four months of this year to $72.1m.

It is also noteworthy that shipping through the Port of Beirut and other Lebanese ports could increase as the Lebanese government has been mulling options to open alternative maritime export routes following the closure of a vital land port that crosses Jordan and Syria, through which Lebanese products travel to regional countries.

Source: AME Info

Bunker prices higher, but way below where they were a year back

In Hellenic Shipping News 28/05/2015

The shipping industry has benefited massively from the fall of oil prices, both in terms of higher demand for hiring of oil tankers, but also in terms of lower bunker costs, which equaters to a large part of a ship’s operating expenses. This has become the biggest “pillow” so far for dry bulk owners, bracing the freight market’s latest “fall from grace”. So, how will a potential oil market rebound influence the market?

According to an earlier examination of the effects of lower oil prices, undertaken by shipbroker Intermodal, “low oil prices have inevitably reduced oil rig utilization and eventually stirred things up a little as far as remaining projects are concerned. Based on data from the American Oil and Gas Reporter, in the US alone, the onshore rigs suffered a utilization reduction of 51%, which resulted in a massive shutdown of 926 rigs in just 5 months. On the offshore sector and looking at the numbers on a global scale, the utilization capacity decreased by 96 rigs (14%) in 6 months”, said the shipbroker.

Intermodal’s SnP broker, Mr. Timos Papadimitriou, added that “so, after thousands of jobs and billions of dollars are lost, where do we stand? The barrel price as of last week has reached USD 65 per barrel. Although prices have been rising during the last couple of months, there is still a lot of uncertainty as to where we are heading. Will the price continue to rise as it usually does during the summer because of the seasonal refinery demand, or it will drop back down influenced by a stronger Dollar or by the possibility that capacity is still in excess of demand. There has being a lot of speculation in regards to whether the industry is on its way to a recovery or not. Prices are often known to rise purely on speculation”.

He went to note that “the speculation in this case revolves around the fact that the prices now are in some ways favorable and promising enough to start investing – storage projects are a representative example of that. Furthermore, Asian demand increases, with China importing record quantities in April and on top of that the US driving season is near, which as usual increases the demand for fuel. So it seems that the sings for a recovery in the price of oil are there, but it is still too early to speak for a recovery, even a slow one”.

Papadimitriou then raises the various questions surrounding these developments with relation to the maritime industry, in the event of a potential increase in prices. “How will bunker prices adjust? Will the offshore industry rebound? Will tanker rates be affected or not? Bunker prices, have since February risen steadily but they are nowhere close to where they were about a year ago. If oil prices increase but keep moving within a specific range, there is no reason to expect bunker prices to increase a lot more, which is translated to fairly good news especially for the bulk sector”.

He added that “the offshore industry has suffered a significant blow during the last ten months. FPSO projects were halted and rigs were left unutilized. Nowadays we slowly see a few fixtures materialize, which could be perceived as a sign that maybe better days are ahead. But there is still a long way to go in order to see rigs being fixed to long term employment.

On the other hand, tankers have being enjoying fantastic rates since last year. These rates, which have been on an upward trend for more than a year, were initially driven by the increased cargo demand from emerging and developing countries coupled with manageable fleet sizes in the sector, and eventually boosted by the decline of oil prices. Currently, it seems that even with a further moderate recovery in the price of oil, demand seems to have enough momentum to keep rates at healthy levels thus not really weighing on wet market prospects for the short to medium term. All in all oil does impact the world trade to a big degree but the straightforward effect of its price performance might not be that straightforward after all”, he concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

CCS seeks public feedback on extension of Block Exemption Order for liner shipping agreements

In International Shipping News 27/05/2015

The Competition Commission of Singapore (CCS) is seeking public feedback on the extension of the Competition (Block Exemption for Liner Shipping Agreements) Order (BEO) in its current form, for another five years until the end of 2020.

The BEO, first issued in July 2006, exempts a category of liner shipping agreements from prohibitions against anti-competitive agreements in Singapore.

It was extended in 2010, and will expire at the end of this year.

Liner shipping agreements enable the connectivity of Singapore’s container port with consequent broader benefits to the Singapore economy, and facilitate cost savings for the liners from economies of scale.

These economic benefits are likely to be significant enough to outweigh any anti-competitive effects of liner shipping agreements, the CCS said in a statement today.

Its proposal to recommend an extension of the BEO takes into consideration the findings of a CCS-commissioned consultancy study, which was based on both quantitative and qualitative information provided by industry stakeholders, as well as feedback from key industry stakeholders.

The CCS said it has considered all views carefully before arriving at the proposed recommendation, adding that it has been monitoring developments in the industry and regulatory developments overseas.

The public consultation seeks views on the possible impact of the proposal on the Singapore economy, in particular on players in the maritime industry such as shippers, port operators, liners, and logistics service providers.

The CCS will make a recommendation to the Minister for Trade and Industry after it has considered written submissions received during the public consultation.

The consultation document and a copy of the current BEO can be downloaded from the CCS website at www.ccs.gov.sg under the section “Public Consultation”. The closing date for submission is at noon on June 15.

Source: Asia One

Seafarers UK Announces Major Centenary Investment in Veteran Seafarers Welfare

In International Shipping News 26/05/2015

The leading maritime charity, Seafarers UK, is to provide £1.17m in funding towards the building of a major new extension to the Trinity House Hub retirement home for ex-seafarers at Mariners’ Park in Wallasey, Merseyside. The announcement was made by HRH The Earl of Wessex, President of Seafarers UK, to more than 150 of the charity’s supporters and beneficiaries at its Annual Meeting at Mansion House in London on Tuesday 19 May.

The new Seafarers UK Centenary Wing will provide 22 single and double occupancy apartments for retired and elderly Merchant Navy and Royal Navy seafarers, and their dependants, and is due to open by the late Spring of 2017, during the charity’s Centenary year. The additional apartments will meet a real need for high quality housing and with a 24 hour care staff team on site will be able to support ‘a balanced community’ of those with low, medium and high needs.

Mick Howarth from the Nautilus Welfare Fund shows the design for the proposed Seafarers UK Centenary Wing at Mariners’ Park to HRH The Earl of Wessex, President of Seafarers UK, and Seafarers UK Chairman Peter Wilkinson.

Speaking at the event, HRH The Earl of Wessex described the founding of ‘The King George V Fund for Sailors’ (now Seafarers UK) in response to WWI losses as being ‘The Help for Heroes of 1917’. He strongly emphasised the continuing need for the charity’s vital coordination and support of welfare services and ongoing campaigning to raise public awareness of seafarers. The Earl of Wessex described the charity’s upcoming Centenary as being very much ‘about the future’ and highlighted his pleasure in ‘lighting the fuse’ by announcing the first of several major fundraising projects for Seafarers UK. He said: ‘I hope the Centenary in 2017 is a huge success for everyone involved in it.’

Commodore Barry Bryant, Director General of Seafarers UK said: ‘Seafarers UK has always been focused on helping those in need across the entire maritime community, but in particular the UK’s older, retired and veteran seafarers, and their dependants. Over the next few years, and as we lead up to our Centenary, we want to do even more to highlight the extraordinary contribution to this island nation of our seafarers both past and present. And just as importantly, we intend to promote the opportunities that exist for the young seafarers of tomorrow.’

The capital project grant – to be provided over three years (2015-2017) – will provide the Nautilus Welfare Fund, which operates the Mariners’ Park estate, with the majority of the funding it needs for the design and building work. The remainder of the funds will then be raised by the Nautilus Welfare Fund, as well as through further fundraising by Seafarers UK. The Seafarers UK Centenary Wing is one of three legacy projects that Seafarers UK will be fundraising for as part of its Centenary Appeal, which will focus on supporting the seafarers of the past, present and future and is to be formerly launched later this year.

At the Annual Meeting, Seafarers UK also launched its 2014/15 Impact Report, highlighting that last year the charity awarded £2.48m in funding, helping over 170,000 people. It achieved this by providing 93 grants to 70 key maritime projects and organisations in the UK and overseas, which in turn provided welfare and education services to those serving and ex-seafarers most in need, and their dependants.

Source: Seafarers UK

VLGC rates to stay firm this year, falls seen in 2016 with jump in new ships

In International Shipping News 27/05/2015

Rates for very large gas carriers are expected to stay volatile and strong through 2015 even though up to 37 ships are slated for delivery this year, as a surge in long-haul US LPG exports and persistent congestion at Indian ports absorb the new vessels, ship brokers said.

More than 40 VLGCs are expected in 2016, when freight rates may start to ease by the first half, they said.

“In the first four months of 2015 we have seen increased volatility in the LPG spot market continuing, including a short recovery in late February,” shipping brokerage Banchero Costa Research said in a recent report.

VLGC rates on the key Persian Gulf-to-Japan route have continued to rise to around $110/mt in recent days. The shortage of vessels had sent the Baltic index to a record of $143/mt in July 2014, while rates in the first four months of this year have averaged $88/mt, versus $73/mt in the same period last year.

“Timecharter rates of VLGCs have continued to increase, reflecting the improving market. On the other hand, timecharter rates for smaller units have remained under pressure,” it added.

The brokerage said that 23 vessels of all sizes were delivered in the first four months of 2015, for a total of 800,000 cubic meters, including seven VLGCs, or vessels of more than 70,000 cu m.

Banchero Costa expects 37 VLGCs — or a total capacity of 3.1 million cu m — to be delivered this year, leading to a 23% fleet growth in capacity terms.

Another 45 VLGCs, or 3.8 million cu m, are expected next year for an additional 22% fleet growth. As of May 2015, the brokerage estimated 170 VLGCs aged from up to four years to 30 years serving the market.

Another shipping broker said that out of the seven VLGCs due for delivery in the first four months, one vessel — the 53,800-dwt Monsoon built at China’s Jiangnan Changxing shipyard and owned by Frontline Ltd. — is now expected by end-June.

The second broker estimated the number of VLGCs due for delivery this year to be in the high 20s, rather than 37, due to potential delays.

Deliveries for 2016 are expected in the high 40s, and potentially another 15-18 in 2017, he said.

“I think this year it [rates] will stay high on the volatile side. It will start to be interesting in Q1/Q2 2016,” he said.

“More US cargoes are expected from the fourth quarter hitting the market. And some ships are delayed from the yard. It takes some time before all the ships actually enter the market.”

SURGE IN US LPG EXPORTS IN 2015

Traders and shipping sources said that arbitrage LPG flows from the US Gulf and Atlantic Basin to Asia in June are estimated above 850,000 mt, or almost 20 cargoes, up from around 600,000 mt in June last year.

About 433,000 b/d of new export terminal capacity is expected to come on stream in the US by the end of this year and 2016, including Enterprise Products Partners’ 233,000 b/d expansion three project in Texas, Sunoco Logistics’ 40,000 b/d expansion one project and the 160,000 b/d expansion two project, both at Marcus Hook, Pennsylvania.

Overall, almost 1.5 million b/d of export terminal capacity is expected in the US by 2018, though the volume of exports are estimated around 900,000 b/d, according to Bentek Energy, a Platts unit.

“We believe another 10 cargoes could be expected per month for export from Enterprise,” the broker said.

“About 7 million mt of extra volumes per year can be expected from Enterprise. It’s massive.”

Shipping sources said that while long-haul trips would tie up vessels, congestion at Indian ports are also exacerbated by increased term imports from the Middle East by state-owned companies due to recent falls in LPG prices.

Indian companies plan to import up to 8.9 million mt of LPG in fiscal 2015-2016 (April-March), an 11% rise from the previous fiscal year, sources familiar with the matter said.

In the first four months this year, India’s LPG demand rose 8.2% from the year-ago period to 6.22 million mt, government data showed.

Banchero Costa said overall deliveries of all LPG vessel types are expected to reach 4.0 million cu m this year, a modest 5% fleet growth in capacity.

But it expects about 5.5 million cu m of deliveries in 2016, or a fleet growth of 16%.

It noted that ordering has slowed down.

In the first four months of this year, there were 13 orders placed for a total 700,000 cu m of all vessel types, compared to 2.6 million cu m in the same period last year.

Source: Platts