Sunday, April 29, 2007

Record Gasoline Price

I'll be the first to report this (before it happens).

Gasoline for May delivery was at $2.3709 a gallon in after- hours trading after surging 3.1 percent to $2.3613 on April 27. The contract expires today. The more actively traded June contract was at $2.2671 a gallon today. -Bloomberg

Another ten cents and we should have a record for May, if we don't already.

King Abdullah of Saudi Arabia

From the NYT

The cause of the latest friction in the American-Saudi relationship began in 2003, before the invasion of Iraq. The Saudis agreed with the Bush view of Saddam Hussein as a threat, but voiced concern about post-invasion contingencies and the fate of the Sunni minority. When it became clear that the administration was committed to invading Iraq, Prince Bandar took a lead role in negotiations between the Bush administration and Saudi officials over securing bases and staging grounds.

But Saudi frustration has mounted over the past four years, as the situation in Iraq has deteriorated. King Abdullah was angry that the Bush administration ignored his advice against de-Baathification and the disbanding of the Iraqi military. He became more frustrated as America’s image in the Muslim world deteriorated, because Saudi Arabia is viewed as a close American ally.


A Saudi Prince Tied to Bush Is Sounding Off-Key

From the New York Times

Tensions between King Abdullah and top Bush officials escalated further when Mr. Bush announced a new energy initiative to reduce the nation’s dependence on foreign oil during his 2006 State of the Union address, and announced new initiatives in that direction this year.

Bandar Bush


Saturday, April 28, 2007

IEA Tanker Rates March OMR

From the April 2007 Oil Market Report

Million-barrel crude tanker rates in the Mediterranean hit 15-month peaks at the end of March following a strike at Fos, a key European oil import hub in France. Regional vessel availability was reduced sharply as almost 40 tankers were left stranded offshore, unable to discharge their cargo. In the Middle East Gulf, increased vessel demand pushed VLCC rates towards six-month highs in late March, as US refiners sought transportation for crude to arrive ahead of peak summer demand. Clean product tanker rates in the Atlantic rose to the top of five-year ranges in March, supported by strongregional competition for vessels.xxx

On 14 March, port workers at Fos began a strike which lasted 17 days. This left almost 40 tankers stranded, unable to discharge oil into the Marseille refining complex or into pipelines which feed inland refineries and other European countries. The consequent erosion of regional vessel availability pushed cross-Med Suezmax rates up from under $4/tonne to almost $11/tonne on 31 March when the strike finished, a 15-month high. Slim vessel supply also raised West African Suezmax rates from under $10/tonne to nearly $18/tonne over the same period, for trades to the US Gulf. North Sea Suezmax rates were not significantly affected and remained at seasonal norms of $9/tonne for exports to the US Atlantic coast. Aframax rates in the Mediterranean were also boosted substantially by the strike but fell sharply, alongside other regional rates, at the start of April, as the action ended and vessels were offloaded. xxx


Competition for tankers in the Middle East Gulf tightened vessel supply considerably in March, boosting VLCC charter rates. US refiners actively sought transportation to move crude for arrival after the maintenance season, as peak summer demand approaches. Further competition for vessels for late March and first half April loading came from Eastern refiners, notably Korean, despiteapproaching refinery turnarounds. VLCC rates to Japan rose from around $10/tonne to almost $15/tonne in the first three weeks of March. Corresponding rates to the US Gulf rose from $16/tonne to over $24/tonne during the same period. Middle East Gulf Suezmax rates were also supported in March as thin vessel availability prompted charterers to consider splitting cargoes on to smaller vessels. Tanker movement reports confirmed that, as chartering activity implied, Middle East sailings increased in late March and April. East- and westbound VLCC rates eased at the end of the month as vessel supply increased. xxx

US refinery maintenance reduced demand for short-haul crude imports, causing dirty Aframax rates in the Caribbean to sink from $14/tonne to $10/tonne in March, continuing the downward trend seen in February. Conversely, the need for product imports was one factor which supported clean rates to the US from the Caribbean and North Europe. Charter rates for 33,000-tonne clean vessels on the latter route rose from $24/tonne to $28/tonne in March. Although US gasoline imports were actually no higher than average seasonal levels, Atlantic Basin clean rates were supported by continued competition for European gasoline from West African refiners. East of Suez clean tanker rates were flat or slightly weaker, despite firm Asian naphtha demand. Maintenance at certain Middle East Gulf product export terminals reduced available cargoes. xxx
I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/

ASPO-USA

http://aspo-usa.com/

Energy Briefs

OPEC softened its policy to withhold oil from the market last week, saying it would supply more if necessary. President al-Hamli reiterated: ”Oil supply is adequate. The market is well-supplied.” But he added: ”We are ready to supply more if the market needs more.”

Kuwait may abandon plans to build a new oil refinery if a second round of bidding fails to cut high costs. The state has earmarked $6.3bn for the refinery, but international companies have estimated the cost in their bids at $15bn.

Saudi Aramco said a shortage of refining capacity to process so-called heavy-sour crudes will persist because of rising construction costs.

Tuesday, April 24, 2007

IEA Tanker Rates

From IEA Oil Market report February 2007

Freight rates for large tankers from the Middle East Gulf plunged to nominal three-year lows in mid-January before rising later in the month. Colder temperatures supported spot vessel demand in the Atlantic basin, boosting dirty rates in the second half of January. Comfortable Asian product stocks continued to undermine clean product tanker rates for east of Suez trading in January.


From IEA Oil Market report January 2007

Freight rates for VLCCs, the two million-barrel crude carriers, continue to be undermined by OPEC output cuts and mild winter temperatures in consumer regions. In contrast, typical seasonal delays in the Turkish Straits in mid-December caused shipping rates for medium-sized crude cargoes to spike in the Mediterranean and further afield. Clean product shipping costs firmed in December, boosted by higher demand for product imports in Asia and sustained above-average gasoline imports into the US.
yyy

Reduced OPEC exports continue to weigh on VLCC rates from the Middle East Gulf. Eastbound
vessel demand was dented on 11 December when Saudi Arabia notified certain Asian customers that crude cargoes would be reduced by 8-9% below term-contract volumes in January. Japan-bound VLCC rates remained around $9/tonne in December, approximately half the December 2005 average. Reports of deeper Saudi cuts to Asian cargoes in February add downside risk to eastbound rates.
yyy

Tanker movement reports suggested that there was a slight increase in crude moving to Western markets towards the end of December. Nevertheless, rates have faced downward pressure from reduced demand following mild temperatures and lower oil-on-water. VLCC rates for ships heading for the US Gulf were down to $14/tonne at end-2006, dramatically lower than the end-2005 value of $25/tonne.
yyy

Mediterranean Aframax rates more than doubled in mid-December as transit delays through the Turkish Straits stretched regional vessel availability. Delays of six to seven days in both directions during a busy trading period pushed Black Sea to Mediterranean Aframax rates (for approx. 600 kb cargoes) from $10/tonne on 8 December to over $22/tonne on 15 December. Increased Balticexport activity in December added further constraints to the Aframax fleet. The sentiment of vessel tightness spread across the Atlantic to the Caribbean and worsened when fog also caused mid-December closures to major shipping channels feeding US Gulf refineries. Caribbean to US GulfAframax rates gained over $5/tonne to top $15/tonne mid-month. Demand for million-barrelSuezmaxes in the Mediterranean and West Africa was also boosted by the reductions to Aframax supply. West Africa to US Atlantic Coast Suezmax rates rose from under $13/tonne to almost $20/tonne in the middle of December. However, as delays cleared towards end-year, most Aframax and Suezmax routes lost the majority of their mid-month gains, returning to unseasonably low levels.
yyy

Clean tanker rates returned to usual winter levels in December after an unseasonably weak November. Most notably, Asian rates rose as winter product trade supported regional vessel demand. Naphtha trade from the Middle East Gulf to Japan was boosted by Asian petrochemical plants restarting after maintenance and the diversion of competing Indian naphtha exports to domestic fertiliser production. 75,000-tonne rates for this trade rose from $21.50/tonne at the start of December to $32/tonne in early January. In the west, US demand for gasoline imports remained firm in December as low stocks kept upward pressure on transatlantic clean rates. Clean rates corrected downwards in January, especially in Europe, following the build-up of a surplus of tonnage available for charter.



From IEA Oil Market report December 2006

Reduced OPEC exports prompted further counter-seasonal declines in crude freight rates from the Middle East Gulf in November. VLCC spot charter rates to Japan are now at a quarter of last year’s rates and corresponding front-quarter freight futures recently hit a four-year low. In a depressed dirty sector, only Suezmax rates in the Atlantic basin showed any firmness, temporarily buoyed by protracted US refinery maintenance which boosted demand for vessels to import light, sweet crudes. Clean tanker rates lost ground in November until some Asian product trade activity spurred an endmonth rebound.
yyy

A November slump in Middle East Gulf crude rates suggested slackening export activity as OPEC supply cuts took effect. Tanker movements reports confirmed this, showing steep declines in sailings from the region in November and significantly reduced volumes of oil in transit. The resultant surplus of vessels for hire in the region dragged November VLCC rates to Japan down by $2/tonne to finish around $8/tonne. Corresponding rates to the US Gulf lost slightly less than $2/tonne and ended the month around $16/tonne.
yyy

Declining VLCC rates in November are unusual. Even ignoring the exceptional fourth quarters in
2004 and 2005, dirty shipping rates normally rise as refiners build crude stocks ahead of winter. This year, busy summer flows left third-quarter OECD crude stocks high, which has helped undermine crude vessel demand in the fourth quarter. Nonetheless, OECD product stocks dropped to seasonal levels in October and preliminary November data showed further draws in the US. A cold snap in consumer regions would not only push refiners to raise utilisation rates but would also increase competition for spot crude cargoes. This could have trade implications which support crude freight rates especially if long-haul arbitrage windows are forced open.
yyy

A slow restart after US refinery maintenance lent some late-November support to dirty freight rates in the Atlantic basin. Upgrading units were particularly slow to return, boosting interest in
transportation for million-barrel cargoes of distillate-rich Atlantic crudes. West Africa to US Atlantic Suezmax rates rose by $4/tonne in the second half of November to $14/tonne but lost most of thesegains in early December. Caribbean Aframax rates weakened throughout November and briefly fell below $10/tonne in the first week of December after highs of over $14/tonne in October. Heavy maintenance to complex refinery units in the US Gulf deflated demand for transportation for low quality crude from Mexico and Venezuela. Mediterranean rates fared little better.
yyy

Clean tanker rates rebounded at the end of November after falling to multi-month lows in the first half of the month. Maintenance at exporting refineries and importing petrochemical plants had stemmed product flows in Asia, reducing clean tanker demand. Rising Indian naphtha exports have also diluted large product tanker rates from the Middle East by offering an alternative naphtha supply option but exporting in smaller product vessels. Transatlantic product trade was tempered by mild weather, despite heavy refinery maintenance. However, forecasts of colder US temperatures, a couple of trans-Pacific charters, diversions of Indian naphtha to the domestic power sector and draws in Japanese kerosene stocks all combined to prop up clean rates as November ended. Singapore to Japan rates for 30,000-tonne clean cargoes, which reached $24/tonne in August, hit a low of $11.50/tonne mid-November before rebounding back over $20/tonne at the start of December.



From IEA Oil Market report November 2006




From IEA Oil Market report October 2006

Wednesday, April 18, 2007

Persian Gulf Oil-Tanker Glut

Persian Gulf Oil-Tanker Rates May Extend Decline on Vessel Glut
By Alaric Nightingale
April 18 (Bloomberg)


The cost of transporting 2-million barrel consignments of crude oil from Middle East ports on supertankers may extend a three-week decline because there are too many ships available for hire.

About 104 tankers can reach Persian Gulf ports by May 18, according to a report today from Paris-based shipbroker Barry Rogliano Salles. That's already enough to cover the entire month's demand, based on April shipments. More vessels will become available later in the month, increasing the glut.

``There is still plenty of tonnage,'' Nikos Varvaropoulos, an oil-tanker broker from Optima Shipbrokers in Athens, said in an e-mailed note.

Kuwait Petroleum Corp., the state-owned oil company, booked the tanker Smiti to ship crude to the U.S. yesterday at a 21 percent discount to London-based Baltic Exchange's benchmark rate. The owners of Smiti, India's Essar Shipping Ltd., didn't try to negotiate over the rate, Varvaropoulos said.

Haggling over rates can last several days when owners believe prices will rise or if they think there may be a shortage of ships competing to haul the cargo. After offering to lease its tanker at 60 Worldscale points, Essar accepted Kuwait Petroleum's counter-offer at 40 points without further bartering, Varvarpoulos said.

Asian refineries account for about 70 percent of demand for Middle East crude. Rates for tankers plowing that voyage slumped to 53.44 points yesterday, a drop of 46 percent since March 26. Rates to the U.S. have declined 39 percent to 46.92 points since March 27.

Asian Demand

At 53.44 Worldscale points, VLCCs, can earn about $28,026 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

At 46.92 Worldscale points, VLCCs, can earn about $21,650 a day on a 64-day round trip from Saudi Arabia to the Louisiana Offshore Oil Port in the Gulf of Mexico, based the same formula.

Daily returns from voyages to the U.S. are normally lower because the journey-lengths are longer, meaning owners can guarantee employment for their ships for a longer period.

At those rates, Frontline Ltd., the world's biggest carrier by capacity, may be losing money. The shipping line said Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs.

Ship-fuel prices at Fujairah in the United Arab Emirates fell $7 to $346.50 a ton on April 17, their highest price in eight months, according to Bloomberg data.

I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/

Caribbean Oil-Tanker Rates Rise

Caribbean Oil-Tanker Rates Rise on Short Supply, Bad Weather
By Todd Zeranski
April 18 (Bloomberg)

Rates to transport crude oil in the Caribbean basin rose on storms in the U.S. Gulf of Mexico and a shortage of ships to transport cargo slated for May delivery.

Five Aframax tankers, which can transport about 600,000 barrels of oil each, were hired today to the U.S. for a rate in the industry standard Worldscale measure of WS 183, according to a daily report from Lone Star, R.S. Platou in Houston.

That's an increase of 24 percent from the rate of WS 148 yesterday, according to data from Lone Star. The availability of ships to carry goods slated for May delivery is now ``scarce,'' driving up rates, according to a report from Fearnleys, an Oslo-based shipbroker.

WS 183 is equivalent to about $32,878 per day after expenses such as fuel and port fees, according to New York-based broker Poten & Partners. xxx

Three tankers were hired to move oil from the eastern coast of Mexico to the U.S. Gulf Coast by Citgo Petroleum Corp. and Royal Dutch Shell Plc.

Another was hired by Valero Energy Corp. to travel from the Dutch Antilles to the U.S. East Coast. Petroleo Brasileiro SA hired a tanker to transport crude between the Carribean and the U.S. Gulf Coast, according to the Lone Star report.

General Maritime Corp., the third-largest U.S. tanker owner, has a break-even rate of about $12,000 a day. The New York-based company operates many of its vessels in the Caribbean.

Overseas Shipholding Group and OMI Corp. are the largest U.S.-based oil-tanker owners.

Iraq Output Could Double To 4mbpd In 5 Yrs

Iraq Oil Output Could Double To 4M Barrels A Day In 5 Yrs - IHS

by Lananh Nguyen
Apr 18, 2007
LONDONxxx

Iraq's oil production could double to 4 million barrels a day in the next five years if the security situation stabilizes in key producing regions, data provider IHS Inc. (IHS) said Wednesday. xxx

"There is a very straightforward path to improving production capacity (in Iraq)," said Ron Mobed, president and chief operating officer of IHS's energy segment. xxx

Mobed said that pipeline repairs, better reservoir management and infrastructure investment could allow the country to double its oil and gas output, unless violent conflict there escalates further. xxx

"As for the investment required, the Iraqi Ministry has estimated that it could take $20 (billion)-$25 billion depending on the level of repair and modernization needed to double current production levels," Ed Mattix, IHS vice president of corporate communications, said in an e-mailed statement. xxx

In its new study of Iraq's oil reserves, IHS estimated that the country has 116 billion barrels of proven and probable oil reserves, the third highest in the world. Iraq's western desert potentially held an additional 100 billion barrels of oil reserves, IHS added. xxx Aside from the political and security risks, investment in Iraqi oil was appealing due to the country's geology and its commercial terms, Mobed said. xxx

This year, the Iraqi government is expected to launch a bid round for 65 exploration blocks, and 78 fields are also to be offered for development, according to IHS. xxx

Mohammed Zine, IHS regional manager for the Middle East, said: "The cost to produce oil in some Iraq fields is less than $2 per barrel according to our estimates and investments involved in developing the fields are minimal." xxx

Prior to Iraq's war with Iran in 1980, the country had a production capacity of 3.6 million barrels of oil a day. It was 3.2 million barrels a day before the first Gulf War in 1990 and 2.7 million barrels per day before the start of the most recent conflict. xxx

© 2007 Dow Jones Newswires.

Tuesday, April 17, 2007

Asian Aframax Tanker Rates Drop

By Katherine Espina
April 18 (Bloomberg)


The rate to ship 80,000 tons of crude oil on Asian routes fell for a second day as refinery maintenance work cut oil demand, increasing ship supply.

The cost of shipping crude oil on so-called Aframax tankers to Singapore from Kuwait fell 1.1 percent to Worldscale 167.12, according to the London-based Baltic Exchange.

``In Asia, with refinery maintenance upcoming, cargo demand tailed off,'' said U.K-based shipbroker Simpson Spence & Young Ltd. in its latest weekly tanker report.

Refiners Nippon Oil Corp. and Royal Dutch Shell Plc. are shutting down plants in Asia next month for scheduled maintenance work. In addition, Aframax rates may be tracking the recent fall in the Very Large Crude Carrier market brokers said. VLCCs can transport more than 2 million barrels of oil.

``For the VLCC market, rates last week continued to decline with an ample supply of double-hull tonnage available, few April cargoes left to fix and the market awaiting May cargo stems,'' according to the weekly report by Simpson Spence & Young, the world's largest closely held shipbroker. Refinery maintenance pushed Aframax rates for 80,000 tons of crude oil to Japan from Indonesia lower by 25 points to Worldscale 165, according to the shipbroker.

Teekay to Buy Tanker Owner OMI for $2 Billion

By Matthew Leising
April 17 (Bloomberg)


Teekay Shipping Corp. and Denmark's D/S Torm A/S agreed to buy OMI Corp., the second-largest U.S. oil-tanker owner, for $1.98 billion to expand their fleets.

OMI shareholders will receive $29.25 in cash for each share, the companies said today in a statement. That's 5.4 percent above today's closing price for OMI. Teekay and Torm will split the cost of the acquisition, which is $2.2 billion including debt, the companies said.

Prices for new ships have skyrocketed because of shipyard backlogs, so OMI's fleet of Suezmax crude oil tankers and vessels that carry refined oil products is an attractive way for the buyers to expand. Prices for a new Suezmax jumped more than 75 percent since January 2003, while used ships rose more than 90 percent, according to Cantor Fitzgerald.

``Torm gets to build on its fat product fleet, and Teekay gets to bolster its Suezmax fleet,'' said Omar Nokta, an analyst with Dahlman Rose & Co., an investment bank in New York. ``This transaction makes sense.''

Nokta, who rates OMI shares ``buy,'' predicted in a note to clients last month that Torm was looking to acquire a stake in OMI. Hellerup, Denmark-based Torm sold a $700 million stake in a rival Danish commodities shipping line to fund a bid for the U.S. oil-tanker company, Nokta said in the March 28 note. Nokta calculated that OMI's ships were worth about $2 billion. OMI said in March that it was exploring a possible sale of the company.

Young Fleet

Teekay, the world's largest tanker owner, will acquire the nine Suezmax tankers OMI owns or operates and eight tankers that carry refined oil products such as gasoline. Suezmaxes can each carry 1 million barrels of crude. Torm, an oil- and commodities- shipping company, will buy OMI's remaining 26 oil-product tankers, the statement said.

Stamford, Connecticut-based OMI has one of the youngest fleets among publicly traded tanker companies, averaging 3.3 years at the end of 2006.

Competitors such as Overseas Shipholding Group, the largest U.S.-based tanker owner, had expressed interest in OMI. Overseas Shipholding Chief Executive Officer Morten Arntzen said in March that he would look at OMI.

The purchase will add to the 15 Suezmax tankers that are already owned or operated by Teekay, which is based in the Bahamas and has its main offices in Vancouver. Torm operates a fleet of 100 vessels, including tankers that carry refined fuels such as gasoil and jet fuel, and dry-bulk vessels that carry commodities such as coal and iron ore.

In a separate statement, Teekay said it may file regulatory documents in the second half of 2007 for an initial public offering of its conventional tanker business.

(Teekay will hold a conference call on the acquisition tomorrow at 11 a.m. New York time. To listen, access the company's Web site at http://www.teekay.com/ .)

Thursday, April 12, 2007

Persian Gulf Tanker Rates May Snap 11-Day Decline

Persian Gulf Tanker Rates May Snap Eleven-Day Decline
By Grant Smith

April 12 (Bloomberg)

The cost of shipping Middle East crude oil to Asia may snap an 11-day slide as bookings by Exxon Mobil Corp. help reduce a surplus of vessels.

Exxon, the world's biggest publicly traded oil company, hired five tankers to collect cargoes in the last week of April, leaving 13 loads to pick up this month, according to an e-mailed report today from Paris-based shipbrokers Barry Rogliano Salles. There are about 18 so-called double-hulled tankers available to collect them, Athens-based Optima Shipbrokers said in an e-mail.

``There are plenty of ships to be honest but also plenty of cargoes,'' Mathieu Philippe, a broker for Barry Rogliano in Dubai, said in an e-mail. ``Some owners are ready to resist'' further discounts in freight rates.

Rates for Very Large Crude Carriers, or VLCCs, on the benchmark route to Japan fell an eleventh day yesterday to 58.6 Worldscale points, according to the London-based Baltic Exchange. One tanker, hired at a discount because it has only one layer around its cargo tanks, was booked at WS 52.5, Barry Rogliano said.

Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

At 58.6 Worldscale points, owners of modern Very Large Crude Carriers, or VLCCs, can earn about $33,015 a day on a 38- day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest oil-tanker company by capacity, said on Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs. It made $56,500 a day hiring out its double-hulled tankers, 50 percent more than for its single- hulled vessels.

Asian Fuel Tanker Rates Extend Drop

Asian Fuel Tanker Rates Extend Drop on Maintenance Shutdown
By Katherine Espina


April 12 (Bloomberg) -- Asian rates for shipping 55,000 tons of gasoline, jet fuel and other so-called clean petroleum products fell for a sixth day as maintenance shutdowns by refineries left less of the products available for shipment. xxx Shipment cost of products to Japan from the Middle East on so-called Long Range 1, or LR1 ships, dropped 0.8 percent to Worldscale 175.85, according to the London-based Baltic Exchange. The cost of carrying 30,000 tons of gasoline, naphtha and jet fuel from Singapore to Japan dropped 0.4 percent to Worldscale 169.79.

Oil tanker rates on Asian routes have been falling as oil refineries conduct maintenance work and demand slowed with the Easter holidays. The cost of hiring oil tankers may fall for the next two years because of the rush of vessels, New York-based consultant McQuilling Brokerage Partners Inc. said in February. Tankers carry more than 40 percent of the world's seaborne trade.

``There were few significant changes to report in the market east of Suez, perhaps because of the pause created by the recent Easter holidays,'' Oslo-based shipbroker Fearnleys AS said in its weekly report. The rate of shipping 55,000 tons of products to Japan from the Middle East was around Worldscale 175, down 5 Worldscale points from a week before, according to the report.

The rate of shipping 75,000 tons of oil products to Japan from the Middle East was unchanged for a second straight day at Worldscale 134.58.

Aframax Tankers

Shipment fee for 80,000 tons of crude oil on Asian routes fell for a fourth day in a row. The cost of shipping crude oil on so-called Aframax tankers to Singapore from Kuwait dropped 1.9 percent to Worldscale 173.08, based on data from the Baltic Exchange.

Aframax tanker rates on the route from Indonesia to Japan, were unchanged for a fourth day at Worldscale 170, according to Bloomberg data. It was last seen at this level in December.

Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

Tuesday, April 10, 2007

North Koreans Arm Ethiopians as U.S. Assents

By MICHAEL R. GORDON and MARK MAZZETTI
The New York Times
April 8, 2007

Three months after the United States successfully pressed the United Nations to impose strict sanctions on North Korea because of the country’s nuclear test, Bush administration officials allowed Ethiopia to complete a secret arms purchase from the North, in what appears to be a violation of the restrictions, according to senior American officials.
The United States allowed the arms delivery to go through in January in part because Ethiopia was in the midst of a military offensive against Islamic militias inside Somalia, a campaign that aided the American policy of combating religious extremists in the Horn of Africa[...]
It is also not the first time that the Bush administration has made an exception for allies in their dealings with North Korea. In 2002, Spain intercepted a ship carrying Scud missiles from North Korea to Yemen. At the time, Yemen was working with the United States to hunt members of Al Qaeda operating within its borders, and after its government protested, the United States asked that the freighter be released[...]
American intelligence agencies reported in late January that an Ethiopian cargo ship that was probably carrying tank parts and other military equipment had left a North Korean port.
The value of the shipment is unclear, but Ethiopia purchased $20 million worth of arms from North Korea in 2001, according to American estimates, a pattern that officials said had continued. The United States gives Ethiopia millions of dollars of foreign aid and some nonlethal military equipment.
After a brief debate in Washington, the decision was made not to block the arms deal and to press Ethiopia not to make future purchases.
John R. Bolton, who helped to push the resolution imposing sanctions on North Korea through the Security Council in October, before stepping down as United Nations ambassador, said that the Ethiopians had long known that Washington was concerned about their arms purchases from North Korea and that the Bush administration should not have tolerated the January shipment[...]
Ethiopia has an arsenal of T-55 tanks that it acquired years ago from the Soviet Union and Eastern European nations. For years, it has turned to North Korea for tank parts and other equipment to keep its military running[...]
In late January, the Central Intelligence Agency reported that an Ethiopian-flagged vessel had left a North Korean port and that its cargo probably included “tank parts,” among other military equipment.
American officials said that the ship, the Tekeze, a modern vessel bought from a company in Montenegro and named after an Ethiopian river, unloaded its cargo in Djibouti, a former French colony where the United States has based Special Operations troops and other military forces. From there, the cargo was transported overland to Ethiopia.
The Security Council resolution’s list of prohibited items included spare parts. Because the cargo was never inspected, some administration officials say the United States cannot say for certain that the shipment violated the resolution.
It is not clear if the United States ever reported the arms shipment to the Security Council. But because the intelligence reports indicated that the cargo was likely to have included tank parts, some Pentagon officials described the shipment as an unambiguous Security Council violation[...]
The timing of the shipment was extremely awkward, as the Ethiopian military was preoccupied with Somalia and also quietly cooperating with the United States. Ethiopia began an offensive in Somalia to drive back the Islamic forces and install the transitional government in Mogadishu late last year. The United States was providing it with detailed intelligence about the locations of the Islamic forces and was positioning Navy ships off Somalia’s coast to capture fighters trying to escape the battlefield by sea.
On Jan. 7, American AC-130 gunships launched two strikes on terrorist targets from an airstrip inside Ethiopia, though it did not appear that the casualties included any of the few top operatives of Al Qaeda American officials suspected were hiding in Somalia.
After some internal debate, the Bush administration decided not to make an issue of the cargo ship.

Monday, April 9, 2007

China’s Oil Tanker Boom

Lee Geng
Apr. 09, 2007
EnergyTribune.com

During the Ming Dynasty six hundred years ago,famed Chinesenavigator Zhengexplored the seas with his mighty fleet. Today, China is a manufacturing power, not a naval one. And that bothers the Chinese government. With oil imports of about 2.7 million barrels per day (nearly half of its total consumption), the government wants to double its fleet of supertankers by 2008.

At present, Chinese tankers only transport about 10 percent of the country’s oil imports. The government wants to increase that percentage to help ease concerns over energy security, avoid the possibility of shortages, and perhaps avert political frictions that could lead to delays or blocks on deliveries.

China currently has 23 300,000-deadweight tonnage (dwt) tankers, known as very large crude carriers, or VLCCs. Those VLCCs account for about 30 percent of China’s tanker tonnage and about 4 percent of the world’s fleet.

Most of the remaining tankers in China’s inventory are small and/or old, and thus better suited for the coastal trade than for international oil shipments. Chinese tankers on average are 30 percent older than their international counterparts and much smaller, averaging only 20,000 dwt (about one-fifteenth the size of a VLCC).

By 2010, China wants to have a VLCC fleet capable of shipping over 50 percent of its expected 4 million barrels per day of imports. By 2020, China plans a fleet of 70 VLCCs. Big Chinese shipping corporations are ordering VLCCs to achieve that target. China Merchants Group, with the country’s largest VLCC fleet, will add six before 2008, with China Ocean Shipping Corp. (COSCO) adding five. State-owned China Shipping Group (CSG) is operating three VLCCs and nine are on order for a total of 12 by 2010. This will allow it to boost its total annual capacity to over 100 million tons of oil.

COSCO operates eight VLCCs and has another seven under construction. One of China’s largest shipyards, Dalian Shipbuilding Industry Co., Ltd., has received more than 20 orders from both domestic and foreign companies for VLCCs, scheduled for delivery around 2009. Other players in the tanker business are ordering new vessels as well. Nanjing Tanker Corp. has plans to establish a fleet of 10 VLCCs. Hebei Ocean Shipping Co. has ordered three VLCCs and Nanjing Changjiang has ordered eight.

http://www.energytribune.com/articles.cfm?aid=445

I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/

Crude Oil Drops More Than $2.50 a Barrel

By Mark Shenk
April 9 (Bloomberg)

Crude oil plunged more than $2.50 a barrel in New York, the biggest decline in three months, on speculation that an Energy Department report will show U.S. inventories jumped last week as refiners unexpectedly shut units.

Crude-oil supplies in Cushing, Oklahoma, where oil traded in New York is delivered, surged 12 percent in the week ended March 30, Energy Department figures show. Fires and power outages have forced refiners to shut units, reducing crude-oil demand. Oil prices also fell because release of British naval personnel on April 5 eased concern of a supply disruption in the Persian Gulf.

``Crude oil is pulling everything lower,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``It looks like we will see record inventories in Cushing this week because of all of the refinery outages.''

Crude oil for May delivery fell $2.77, or 4.3 percent, to $61.51 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. The contract is heading for the biggest one-day decline since Jan. 4. Futures touched $68.09 a barrel on March 27, the highest since Sept. 6. Prices are down 8.7 percent from a year ago. Xxx

``The continuing spate of refinery outages and maintenance issues is pushing product prices higher and putting downward pressure on crude,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``Until you see an up-tick in refinery operations, crude oil will have a hard time rising.

Motiva Enterprises LLC, the refining joint venture between Europe's Royal Dutch Shell Plc and Saudi Arabia's state oil company, reported a malfunction that occurred yesterday at its plant in Port Arthur, Texas. The Port Arthur refinery has a daily processing capacity of 285,000 barrels.

The profit margin, or ``crack'' spread, for turning three barrels of crude oil into two barrels of gasoline and one of heating oil jumped 5.5 percent to $22.546, the highest since Sept. 29, 2005, based on closing futures prices in New York.

Refineries in Texas, California, Pennsylvania, Colorado, Ontario and Delaware have had to trim output over the past two months. The closure of Valero Energy Corp.'s McKee refinery near Sunray, Texas, has contributed to the increase in supplies in Cushing. Increasing stockpiles in this oil hub have depressed the price of oil in New York compared with Brent oil.

``Prices here are depressed because the tanks in Cushing are full as a result of refinery problems,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There's nowhere to put the oil. If someone could figure a way to ship the oil stuck in Cushing to the U.K. they would make a fortune.''

Uranium Enrichment

Iranian President Mahmoud Ahmadinejad said today that his country has begun enriching uranium on an industrial scale, stepping up defiance against the United Nations.

``Iran has succeeded in the nuclear-fuel-cycle development to attain production at an industrial level,'' Ahmadinejad said today at a ceremony at the Natanz uranium-enrichment site. He repeated that nuclear-fuel production was Iran's ``undeniable right'' and referred to ``a few powerful governments imposing their will on the rest,'' according to a broadcast of the speech.

The United Nations Security Council gave Iran 60 days from March 24 to suspend enrichment. The country already has ignored three UN deadlines to shut down production of the nuclear fuel. The UN demands were in response to allegations by the U.S. and some of its allies that Iran is using the development of nuclear power to disguise a weapons program. Iran denies that.

Tuesday, April 3, 2007

Sweden Land Of Freedom

Couple Fights to Name Baby 'Metallica' Apr 3

Metallica may be a cool name for a heavy metal band, but a Swedish couple is struggling to convince officials it is also suitable for a baby girl.
Michael and Karolina Tomaro are locked in a court battle with Swedish authorities, which rejected their application to name their six-month-old child after the legendary rock band.

"It suits her," Karolina Tomaro, 27, said Tuesday of the name. "She's decisive and she knows what she wants."

Although little Metallica has already been baptized, the Swedish National Tax Board refused to register the name, saying it was associated with both the rock group and the word "metal." Tomaro said the official handling the case also called the name "ugly."

The couple was backed by the County Administrative Court in Goteborg, which ruled on March 13 that there was no reason to block the name. It also noted that there already is a woman in Sweden with Metallica as a middle name.

The tax agency appealed to a higher court, frustrating the family's foreign travel plans."We've had to cancel trips and can't get anywhere because we can't get her a passport without an approved name," Tomaro said.

Hurricanes

Rigzone posted article today on Gray's 2007 Hurricane prediction.

by David Bird
NEW YORK Apr 03, 2007 (Dow Jones Newswires)


The 2007 Atlantic Basin hurricane season likely will be "very active," with 17 named storms, nine hurricanes, including five intense storms ranked as Category 3 or above, forecasters at Colorado State University said Tuesday.

Forecaster Phil Klotzbach said the season won't be as active as the 2004 or the 2005 season, which was noted for the landfall of Hurricanes Katrina and Rita.

In 2006, no hurricanes made landfall along the U.S. coastline.

The probability of a major hurricane making landfall along the U.S. coastline is 74% compared with the last-century average of 52%, Klotzbach said.

There is a 50% chance that a hurricane could make landfall on the East Coast, including the Florida peninsula, compared with a long-term average of 31%, the forecasters said.

There is a 49% chance of a major hurricane making landfall on the Gulf Coast, from the Florida Panhandle west to Brownsville, Texas, compared with a long-term average of 30%. The region houses a large portion of the U.S. oil refining industry and substantial offshore oil and gas production.

In 2006 the season included 10 named storms, five hurricanes and two intense hurricanes with sustained winds of 111 miles per hour or greater.

Long-term averages are for 9.6 named storms, 5.9 hurricanes and 2.3 intense hurricanes per year in the season that runs from June 1 to Nov. 30.

Forecasters predict that so-called tropical cyclone activity in 2007 will be 185% of the average season. By comparison the 2005 season recorded activity that was 275% of the average.

Klotzbach noted that the 2006 season was only the 12th year since 1945 that no hurricanes made landfall in the U.S. Since then, there have been only two consecutive-year periods when there were no hurricane landfalls, 1981-82 and 2000-01.

Forecasters also predicted above-average major hurricane landfall risk in the Caribbean region.

William Gray, a 24-year veteran of the Colorado State forecast, said continued warm tropical and north Atlantic sea-surface temperatures, which have been prevalent in most years since 1995, and neutral to weak La Nina conditions are "a recipe for greatly enhanced Atlantic basin hurricane activity." Gray said conditions are similar to those that existed in 1952, 1964, 1966, 1995 and 2003 seasons, which each recorded above-average activity.

Gray said there is "no reliable data" to indicate that global temperature change is causing increased hurricane intensity or frequency. "Meteorologists who study tropical cyclone basins have no valid physical theory as to why hurricane frequency or intensity would necessarily be altered significantly by small amounts of global mean temperature change."

The latest forecast calls for a more active season in 2007 than Colorado State projected in its Dec. 8, 2006 projections, when it called for 14 named storms, seven hurricanes and three intense hurricanes.

In pre-season 2006 forecasts, like the one issued this time last year, Colorado State joined other forecasters in calling for a very active 2006 season, with well-above average landfall probabilities.

But those forecasts were downgraded over time as drier tropical Atlantic air, due to high levels of atmospheric dust from West Africa, and warm equatorial Pacific Ocean temperatures due to the appearance of El Nino, altered the conditions that needed for an active hurricane season.

List of People You Should Listen To About Oil

List of People You Should Listen To About Oil

Category 1) Best Ever

1) Daniel Yergin
2) Rockefeller


Category 2) Current Affairs

1) Matthew Simmons
2) Kenneth Deffeyes
3) T.Boone Pickens
4) Tertzakian
5) Naimi

6) Michael Lynch

Category 2 - "B" List)

1) Chris Skrebowski
2) Rembrandt Koppelar


Category 3) Authors

1) Crude Oil
2) Oil
3) Roberts
4) The Color of Oil
5)
6)
7)
8)
9)
10) Oil on the Brain

Cat 4) Bloggers

1)
2)
3)
4)
5)
6)
7)
8)
9)
10)

Cat 5) "Industry"

1) CERA/IHS
2) Halliburton
3) Aramco/Bush-Cheney(Abdullah)
4) SAIC




Sunday, April 1, 2007

Robert Rapier on Peak Oil

"For the record, I believe there is a 90% chance of a production peak by 2015, and maybe a 10% chance that production has already peaked."