Post by Sol P on Jun 17, 2005 20:57:34 GMT -5
Orignially posted by Tony on june 17
Some of the following points to the oil tanker business tightening up. There will be less and less ships available that will be allowed to carry oil for the major companies.
Also, another piracy story.
New crude futures for Dubai based contract.
Headlines:
BP Shipping Raises The Bar On Safety
CAO Officials Charged
Pirates Attack Thai Tanker
Russia Cuts China Rail Tariff
Nymex, Dubai Exchange Announce Joint Venture, to Start Trading Early 2006.
BP's Fleet Moves Aimed at Reducing Risk of Spills / Oil Giant Says Cost of Accidents Simply Too Great
BP, Tanker Companies Grapple With Image Troubles
AWSJ Update: Five Charged in CAO Singapore Scandal
Nymex Seat Sells for $2.5 Million
Calpine CEO: Energy-Trading Joint Venture a Done Deal
BP Shipping's Malone Comments On Oil Price, Shipping Strategy
Stories:
BP Shipping Raises The Bar On Safety
By Tony Gray
Lloyd's List, June 10, 2005
A leading oil major is raising the safety and environmental standards it expects from the tanker industry to an even higher level.
Bob Malone, chief executive of BP Shipping, told the Nor-Shipping conference: 'We are raising the bar on our expectations from all of you (tanker operators) and ourselves.'
He said BP had invited chief executives from all the companies from which the oil major time charters tankers to a meeting in London to discuss safety and integrity.
However, the meeting was designed to be a two-way street with BP learning from tanker operators as well as the other way round.
Ironically, this latest bid to ratchet up safety standards appears to have been prompted by concerns about BP's internal operations.
In recent years, BP has undertaken a $6bn newbuilding investment programme which will lift the group's controlled fleet owned, operated, and time charters of more than one year to about 50% of its total tonnage.
Mr Malone said that since an oil spill was identified as the group's single biggest risk several years ago, BP's owned and operated tonnage had outperformed time charter vessels in terms of both personnel and integrity accidents.
Time charter vessels had, in turn, performed to a higher level than spot tankers.
However, Mr Malone said that recently BP's operating integrity had under-performed the time charter market. 'The good news is that all of you continue to improve,' he observed. 'The bad news is that my company might have become complacent.'
BP's desire to eliminate any weaknesses in its shipping businesses takes on a particular urgency as the tonnage of oil products the group transports is expected to increase four-fold by 2010.
Mr Malone said BP was seeking a 'different kind of relationship' with tanker operators and would set the new standards when entering the market 'to look for our partners.'
Bjorn Moller, chief executive of Teekay Shipping, had earlier acknowledged that the tanker industry's standards 'still remain the biggest and most immediate concern of our customers.'
He said the major charterers now had an 'unofficial top category' of tanker operators, which he described as 'like minded' those companies which operated their vessels to the level of the oil companies' own standards and did not require policing.
Meanwhile, the Norwegian Minister for Trade and Industry Borge Brende confirmed the government's intention to continue improving the tax environment for shipowners in Norway.
He said the aim was to halve the wealth tax within two years and then to work on abolishing it altogether.
A review on further improvements to the tonnage tax was due to be on the minister of finance's desk this coming December.
Copyright (c) 2005 Informa UK Ltd.
CAO Officials Charged
International Oil Daily, June 10, 2005
The suspended CEO of China Aviation Oil (Singapore) and four other top officials were charged with fraud and dishonesty in a Singapore court on Thursday, Reuters reported.
The charges came a day after creditors voted for a bailout plan to revive the firm (IOD June.9,p1).
CAO Chief Executive Chen Jiulin faced 15 charges, including forging documents and making misleading statements about the company before its November implosion from $550 million trading losses.
Thirteen of the charges carry a maximum sentence of seven years' imprisonment. Bail was set at $2 million, according to local media reports.
The highest-ranking official to be charged was Jia Changbin, head of China's state-owned CAOHC, the majority shareholder in CAO.
Jia, the non-executive chairman of CAO, was accused of three offences, including an insider trading charge related to the sale of a 15% stake in the company. That sale took place on October. 20 -- just a month before CAO sought court protection from its creditors.
Two of the charges Jia faces carry a maximum penalty of seven years' jail.
Two other prominent defendants are CAO finance chief Peter Lim, who faces five charges of cheating and fraud, and the head of its debt restructuring team, Gu Yanfei, who faces two charges.
Copyright 2005 Energy Intelligence Group Inc.
Pirates Attack Thai Tanker
International Oil Daily, June 10, 2005
Two crew members from a Thai-registered fuel oil tanker were kidnapped by pirates in the Malacca Strait last week, Reuters reported.
Pirates boarded the tanker offshore Pangkor Island, kidnapped the master and chief deck hand, and escaped, according to the report. The International Maritime Bureau reports five other hijackings in the past three months in the strait, two of them involving oil tankers.
Piracy in the Malacca Strait dropped off in the wake of the tsunami that hit Indonesia's island of Sumatra late last year, but has picked up again in recent months (IOD February.18,p5). The Malacca Strait is one of the world's piracy hot spots, as regional shipping traffic must slow to a virtual crawl to navigate safely through the narrow stretch.
Japan recently sent an armed patrol boat to assist in policing the strait. Singapore has in the past recommended that the US Navy be included in joint patrols, angering Malaysia and Indonesia.
Copyright 2005 Energy Intelligence Group Inc.
Russia Cuts China Rail Tariff
International Oil Daily, June 10, 2005
State-run Russian Railways and oil major Rosneft have agreed on lower tariffs for crude rail shipments to China.
According to Russian Railways President Gennady Fadeyev, the tariff will come down gradually once rail crude deliveries by Rosneft to China reach 5 million metric tons (100,000 b/d). "Each subsequent ton will be cheaper," Fadeyev was quoted as saying.
Under the accord, the transportation fee will come down gradually from $72/ton ($9.82/bbl) currently and reach a floor of $24/ton ($3.27/bbl) once Rosneft delivers 30 million tons from Angarsk, the end point of the pipeline network in East Siberia, to Zabaikalsk on the Chinese border. The profitability of crude transportation will be maintained, Fadeyev said.
Rosneft, which replaced Yukos as a main exporter to China this year, plans to rail 4 million tons (80,000 b/d) of crude to China in 2005, while Yukos and Lukoil are expected to ship 3 million tons (60,000 b/d) each.
Under an accord with Russia, China is to increase its imports to 200,000 b/d this year and 300,000 b/d in 2006. The rail company plans to invest around $85 million to modernize and expand its crude transportation facilities in East Siberia in 2005-08 to facilitate the increased shipments to China (IOD May16,p7).
Copyright 2005 Energy Intelligence Group Inc.
Nymex, Dubai Exchange Announce Joint Venture, to Start Trading Early 2006.
Platts Commodity News, June 10, 2005
The New York Mercantile Exchange said Friday it agreed to set up the Middle East's first energy futures exchange in a joint venture with government-owned Dubai Holding. The exchange is expected to initially trade sour crude and fuel oil on both open outcry and electronic trading platforms from early 2006, NYMEX said. NYMEX said it will contribute software and systems to run the trading operations, including trade entry and risk management systems. Both NYMEX and Dubai Holding will each contribute capital and services towards establishing the DME. Trades on the DME will be cleared through the NYMEX clearinghouse in New York. NYMEX has been in talks with the Dubai Monetary Authority for months, negotiating a joint venture that would establish both a presence for the New York exchange in the Middle East and a benchmark grade of crude from that region of the world.
"Dubai presents a unique opportunity for the global energy futures industry to fill a time zone gap in trading between Europe and Asia," the NYMEX said in a statement.
"The contracts traded on the DME will be tailored to the needs of the marketplace and may include physical delivery alternatives that represent the physical trade flows," said NYMEX President James Newsome said in the statement. The exchange will be based in the Dubai International Financial Centre (DIFC), a financial free zone designed to promote financial services within the UAE. The DME will also be regulated by the Dubai Financial Services Authority, a regulatory body established within the DIFC. NYMEX said the opening of DME inside the DIFC is subject to regulatory approval from the Dubai Financial Services Authority. It said all clearing and settlement services to be provided by the NYMEX to DME are subject to the NYMEX becoming recognised by the DFSA to operate a remote clearing house in the DIFC and subject to the review and/or approval of the Commodity Futures Trading Commission.
Copyright 2005 Platts
BP's Fleet Moves Aimed at Reducing Risk of Spills / Oil Giant Says Cost of Accidents Simply Too Great
Petter Narvestad, Bloomberg News
Houston Chronicle, June 9, 2005
BP is urging shipowners to meet tougher health and safety standards for their tankers, seeking to minimize the risk of an oil spill.
"The BP board has identified an oil spill as the single biggest threat to the finances and reputation of BP," Bob Malone, chief executive of BP Shipping, told a conference in Lillestroem, Norway, on Wednesday. "We are going to raise the bar for the shipowners we use. We will do everything we can to push out the substandard shipping that exists today."
Malone is overseeing a six-year, $6 billion fleet renewal program. By 2008, the program will replace old ships and double BP's fleet of tankers hauling crude, refined products and gases to about 100 vessels. About half of the company's fuel shipments eventually will be made on ships either owned by BP or controlled on leases lasting more than a year, compared with 42 percent today, Malone said.
The company is preparing for increased imports of oil from the Middle East, West Africa and Russia as reserves in the U.S., Europe and the Far East decline. The company's own movements of oil products may rise fivefold by 2010, Malone said. The company will continue to lease ships and make bookings in the spot market, he said.
"We can find tonnage to protect BP," Malone said. Still, "every time there is a spill around the world, BP pays. We pay for pollution, we pay for higher taxes, and we pay for new legislation."
Photo: NEW FRONTIER: A tug escorts the Alaskan Frontier, the first of four double-hulled oil tankers for BP Alaska, through the Valdez Narrows in September. BP is in the midst of a six-year, $6 billion fleet renewal program and is urging shipowners to make more effort to minimize the risk of oil spills.
Copyright 2005 Houston Chronicle
BP, Tanker Companies Grapple With Image Troubles
By Leia Parker
Dow Jones International News, June 9, 2005
Oslo -- The right sort of advertising campaign can boost the image of energy shippers and help protect them from too much harm even if an accident should occur, BP Shipping Chief Executive Bob Malone told colleagues in the industry Wednesday.
After the March explosion at parent company BP's Texas City refinery that killed 15 people, BP found that a multimillion-dollar advertising campaign about its environmental and safety efforts had helped limit the damage, he said.
Malone made the comment at the Nor-Shipping exhibition in Lillestrom, Norway, where tanker companies anguished over the challenge of overcoming negative images of tanker spills and ships breaking up at sea in order to draw investment and boost their shares' value.
BP Shipping's parent company BP hasn't advertised its tankers the way Royal Dutch/Shell Group has, with positive TV ads explaining the operation of a liquefied natural gas carrier.
But "we literally spent hundreds of millions of dollars on the oil side," Malone told the audience, when asked how much of its earnings BP spent last year on advertising. "It helped keep the focus on the lives that were lost (in Texas City)."
Since the refinery explosion, BP has "looked to be very transparent and publicly state what the investigation found," Malone told Dow Jones Newswires.
The Associated Press reported Wednesday that BP is close to settling many of the civil lawsuits spawned by the explosion. Attorneys wouldn't disclose the size of the potential settlements but described them as substantial, the AP report said.
In addition to claiming 15 lives, the refinery explosion injured more than 170, making it one of the worst industrial accidents in the history of U.S. refining.
Malone stressed that BP hadn't spent money on advertising with the intention of limiting damage to its reputation from such a tragic incident. But the word had filtered back to Malone in London from people in Texas that this had indeed been a consequence of BP's work on communicating with the public about its efforts.
BP's recognition that safety and environmental protection are of paramount importance starts at the top, Malone said. Chief Executive John Browne tells his company that a barrel of oil in a tanker may be worth $50, but each barrel of oil spilled into the sea could cost the company some $50,000, he said.
BP Shipping is in the middle of a $6 billion expansion project that will bring the number of ships it owns or charters for a year or more to 120 by 2008.
For it and other companies operating large tanker fleets, public perceptions are critical. Gone are the days when shipping was perceived as a glamorous industry that created global empires and legendary figures like Aristotle Onassis, said Andreas Sohmen-Pao, managing director of World-Wide Shipping and deputy chairman of Bergesen d.y. ASA.
Sohmen-Pao urged the industry to focus its energy on solutions, rather than "complaining about how unloved we are." He emphasized the need for proactive public relations and burnishing the sector's image through targeted marketing, even though such efforts can be costly.
Based in Oslo, Bergesen transports energy products and is one of the world's largest shipping companies. The company de-listed from the London Stock Exchange in 2003, after World Nordic ApS became sole owner of all the shares, according to its Web site. World-Wide Shipping has a tanker and dry-bulk fleet.
Sohmen-Pao urged the maritime sector to target the young while they're still forming impressions.
Despite his own role in shipping, Sohmen-Pao said his young son has toy airplanes, trains and cars - before he's even old enough to hold them properly - but there is "not a ship in sight because I can't find them in the shops."
Teekay Shipping Corp. President and Chief Executive Bjorn Moller suggested his company's image shouldn't be sullied by the industry's oil spills in years past. Last year, he said, Teekay shipped 2 billion barrels of oil and gas with zero spills attributable to the company.
Intertanko Chairman Stephen Van Dyck said the entire tanker sector has dramatically reduced incidents and spills since the late 1970s. Tanker incidents including collisions, groundings, war-related incidents, hull and machinery trouble and fires and explosions dropped to less than 200 in this decade from more than 1,000 in 1979.
Intertanko is a trade group of independent tanker owners.
"We use the term 'not one drop,'" Van Dyck said. "The goal is zero."
(c) 2005 Dow Jones & Company, Inc.
Nymex Seat Sells for $2.5 Million
Calgary Herald, June 9, 2005
A seat on the New York Mercantile Exchange, which is contemplating an IPO at a time of strong oil and gas prices and record trading volumes, sold Wednesday for a record $2.485 million, up more than 24 per cent from the last record hit in October 2004.
High oil prices have boosted prices for energy futures and, in turn, seats for the right to trade futures at the NYMEX. Oil futures jumped to a record above $58 a barrel in April, and have traded at well over $53 this month on worries about supplies next winter.
"The owner of a seat gets to see exactly who makes the bids and offers," said Tom Mooney, who writes a daily report for Southeast Energy, Inc. "The rest of the (trading) world who doesn't own seats is at a huge disadvantage."
NYMEX hit record trading volumes in the previous two years. It is set to hit another record this year, based on its level of 62 million contracts through April.
Copyright Copyright 2005 Calgary Herald
Calpine CEO: Energy-Trading Joint Venture a Done Deal
-By Mark Golden, Dow Jones Newswires; 415-765-6118; Mark.Golden@dowjones.com
Dow Jones Energy Service, June 9, 2005
SAN FRANCISCO (Dow Jones)--Calpine Corp.'s (CPN) proposed partnership of its energy-trading operations with a major U.S. financial institution is a done deal with details to be announced in about a week, according to the company's chairman and chief executive, Peter Cartwright.
As part of a broad financial reorganization the company announced two weeks ago, Calpine said it was in discussions to combine its marketing and trading operation, Calpine Energy Services, with the credit support of a major financial institution. The investment-grade partnership would result in hundreds of millions of dollars in collateral being returned to the parent corporation, and allow more trading. Calpine's low credit rating has greatly limited its ability to trade electricity and natural gas the past few years.
"There really was no pertinent negotiation at the time we made the announcement. It's just at the point of getting approvals," Cartwright said in an interview.
Calpine's head of development, Robert Fishman, added that "the deal was already baked" at the time of the announcement.
The company isn't really giving up much in the deal, Cartwright said. Though it will have to share the profits, those profits should expand considerably as the entity will be able to trade more. All the people and systems now employed by Calpine Energy Services will remain in place, he said.
But, he added, the company won't be getting cash from the partnership up front by contributing profitable long-term contracts, as some Wall Street analysts had speculated might happen.
Cartwright first said the company had to create an investment-grade trading operation back in February 2002, and it has since looked at a half-dozen deals. Past proposals were rejected in some cases, he says now, because potential partners demanded control of the venture, which Calpine wasn't willing to give.
Beyond that, Cartwright declined to give any further details until an official announcement he expects very soon.
Bear-Stearns Seen As Partner
Investment bank Bear Stearns Companies Inc. (BSC) is the financial institution involved, according to Peter Fusaro, head of energy consultancy Global Change Associates in New York.
Other knowledgeable sources confirmed that it's Bear Stearns.
Both Calpine and Bear Stearns declined to comment on the identity of the financial partner.
Bear Stearns has taken a small role in North American energy trading, Fusaro said. It bought a long-term power contract from El Paso Corp. (EP) early last year, for example.
"I think this benefits Bear Stearns more," Fusaro said. "It gets them into illiquid markets, into price discover and further down the learning curve for the power sector."
For Calpine, Fusaro said, the ability to trade won't solve Calpine's major problems. A new-found ability to purchase natural gas under long-term contracts doesn't change the fact that gas-fired power plants aren't profitable in much of the country where Calpine has plants, he said.
For the entity to have get an investment-grade credit rating and trade on the size proportionate to Calpine's fleet of power plants, the venture would need a capital commitment from Bear Stearns approaching $2 billion, according to some estimates.
The deal, however, hasn't been submitted to the major credit-rating agencies, sources said.
Major energy-trading joint ventures in the recent past, like Entery-Koch and Duke-Louis Dreyfus, ended either through dissolution or buy-out despite apparent profitability.
Copyright 2005 Dow Jones & Company, Inc.
BP Shipping's Malone Comments On Oil Price, Shipping Strategy
By Petter Narvestad
Bloomberg News Service, June 8, 2005
Bob Malone, chief executive officer of BP Shipping, comments on oil demand, shipping strategy and safety among tanker companies.
Malone, who heads the transport unit of Europe's biggest oil company, spoke at the bi-annual Nor-Shipping Conference in Lillestroem, Norway.
On Demand And Oil Price:
"There is no physical shortage of oil. The reason for the price rising is demand. China has added 1.6 million barrels in two years. This reduced the spare production capacity from a historic level of about 3 million barrels a day to 1 million barrels.
"I think we will see downward pressure on prices. We will see a slight easing in Chinese demand. World oil consumption is about 83 million barrels a day and world production is about 86 million. So we are back at the 3 million barrels-a-day cushion."
On Shipping Strategy:
"We will continue to see continued imports of oil to the U.S., Europe and China. Some four out of five barrels will come from the Middle East, West Africa and Russia.
"We expect our movements of oil products to rise fivefold by 2010. The BP board has identified an oil spill as the single biggest threat to the finances and reputation of BP.
"We will put an increased number of what we move on controlled vessels. Those are ships we own or have on timecharter contracts lasting more than 12 months. Today that number is 42 percent. We are moving towards 50 percent.
"We have a $6 billion fleet expansion program, still we will timecharter a lot of ships and book in the spot market. We are going to raise the bar for the shipowners we use. We believe we can find tonnage to protect BP. We will do everything we can to push out substandard shipping that exists today.
"Every time there is spill around the world BP pays. We pay for pollution, we pay for higher taxes and we pay for new legislation."
Copyright (c) 2005 Bloomberg L.P. All Rights Reserved.
Some of the following points to the oil tanker business tightening up. There will be less and less ships available that will be allowed to carry oil for the major companies.
Also, another piracy story.
New crude futures for Dubai based contract.
Headlines:
BP Shipping Raises The Bar On Safety
CAO Officials Charged
Pirates Attack Thai Tanker
Russia Cuts China Rail Tariff
Nymex, Dubai Exchange Announce Joint Venture, to Start Trading Early 2006.
BP's Fleet Moves Aimed at Reducing Risk of Spills / Oil Giant Says Cost of Accidents Simply Too Great
BP, Tanker Companies Grapple With Image Troubles
AWSJ Update: Five Charged in CAO Singapore Scandal
Nymex Seat Sells for $2.5 Million
Calpine CEO: Energy-Trading Joint Venture a Done Deal
BP Shipping's Malone Comments On Oil Price, Shipping Strategy
Stories:
BP Shipping Raises The Bar On Safety
By Tony Gray
Lloyd's List, June 10, 2005
A leading oil major is raising the safety and environmental standards it expects from the tanker industry to an even higher level.
Bob Malone, chief executive of BP Shipping, told the Nor-Shipping conference: 'We are raising the bar on our expectations from all of you (tanker operators) and ourselves.'
He said BP had invited chief executives from all the companies from which the oil major time charters tankers to a meeting in London to discuss safety and integrity.
However, the meeting was designed to be a two-way street with BP learning from tanker operators as well as the other way round.
Ironically, this latest bid to ratchet up safety standards appears to have been prompted by concerns about BP's internal operations.
In recent years, BP has undertaken a $6bn newbuilding investment programme which will lift the group's controlled fleet owned, operated, and time charters of more than one year to about 50% of its total tonnage.
Mr Malone said that since an oil spill was identified as the group's single biggest risk several years ago, BP's owned and operated tonnage had outperformed time charter vessels in terms of both personnel and integrity accidents.
Time charter vessels had, in turn, performed to a higher level than spot tankers.
However, Mr Malone said that recently BP's operating integrity had under-performed the time charter market. 'The good news is that all of you continue to improve,' he observed. 'The bad news is that my company might have become complacent.'
BP's desire to eliminate any weaknesses in its shipping businesses takes on a particular urgency as the tonnage of oil products the group transports is expected to increase four-fold by 2010.
Mr Malone said BP was seeking a 'different kind of relationship' with tanker operators and would set the new standards when entering the market 'to look for our partners.'
Bjorn Moller, chief executive of Teekay Shipping, had earlier acknowledged that the tanker industry's standards 'still remain the biggest and most immediate concern of our customers.'
He said the major charterers now had an 'unofficial top category' of tanker operators, which he described as 'like minded' those companies which operated their vessels to the level of the oil companies' own standards and did not require policing.
Meanwhile, the Norwegian Minister for Trade and Industry Borge Brende confirmed the government's intention to continue improving the tax environment for shipowners in Norway.
He said the aim was to halve the wealth tax within two years and then to work on abolishing it altogether.
A review on further improvements to the tonnage tax was due to be on the minister of finance's desk this coming December.
Copyright (c) 2005 Informa UK Ltd.
CAO Officials Charged
International Oil Daily, June 10, 2005
The suspended CEO of China Aviation Oil (Singapore) and four other top officials were charged with fraud and dishonesty in a Singapore court on Thursday, Reuters reported.
The charges came a day after creditors voted for a bailout plan to revive the firm (IOD June.9,p1).
CAO Chief Executive Chen Jiulin faced 15 charges, including forging documents and making misleading statements about the company before its November implosion from $550 million trading losses.
Thirteen of the charges carry a maximum sentence of seven years' imprisonment. Bail was set at $2 million, according to local media reports.
The highest-ranking official to be charged was Jia Changbin, head of China's state-owned CAOHC, the majority shareholder in CAO.
Jia, the non-executive chairman of CAO, was accused of three offences, including an insider trading charge related to the sale of a 15% stake in the company. That sale took place on October. 20 -- just a month before CAO sought court protection from its creditors.
Two of the charges Jia faces carry a maximum penalty of seven years' jail.
Two other prominent defendants are CAO finance chief Peter Lim, who faces five charges of cheating and fraud, and the head of its debt restructuring team, Gu Yanfei, who faces two charges.
Copyright 2005 Energy Intelligence Group Inc.
Pirates Attack Thai Tanker
International Oil Daily, June 10, 2005
Two crew members from a Thai-registered fuel oil tanker were kidnapped by pirates in the Malacca Strait last week, Reuters reported.
Pirates boarded the tanker offshore Pangkor Island, kidnapped the master and chief deck hand, and escaped, according to the report. The International Maritime Bureau reports five other hijackings in the past three months in the strait, two of them involving oil tankers.
Piracy in the Malacca Strait dropped off in the wake of the tsunami that hit Indonesia's island of Sumatra late last year, but has picked up again in recent months (IOD February.18,p5). The Malacca Strait is one of the world's piracy hot spots, as regional shipping traffic must slow to a virtual crawl to navigate safely through the narrow stretch.
Japan recently sent an armed patrol boat to assist in policing the strait. Singapore has in the past recommended that the US Navy be included in joint patrols, angering Malaysia and Indonesia.
Copyright 2005 Energy Intelligence Group Inc.
Russia Cuts China Rail Tariff
International Oil Daily, June 10, 2005
State-run Russian Railways and oil major Rosneft have agreed on lower tariffs for crude rail shipments to China.
According to Russian Railways President Gennady Fadeyev, the tariff will come down gradually once rail crude deliveries by Rosneft to China reach 5 million metric tons (100,000 b/d). "Each subsequent ton will be cheaper," Fadeyev was quoted as saying.
Under the accord, the transportation fee will come down gradually from $72/ton ($9.82/bbl) currently and reach a floor of $24/ton ($3.27/bbl) once Rosneft delivers 30 million tons from Angarsk, the end point of the pipeline network in East Siberia, to Zabaikalsk on the Chinese border. The profitability of crude transportation will be maintained, Fadeyev said.
Rosneft, which replaced Yukos as a main exporter to China this year, plans to rail 4 million tons (80,000 b/d) of crude to China in 2005, while Yukos and Lukoil are expected to ship 3 million tons (60,000 b/d) each.
Under an accord with Russia, China is to increase its imports to 200,000 b/d this year and 300,000 b/d in 2006. The rail company plans to invest around $85 million to modernize and expand its crude transportation facilities in East Siberia in 2005-08 to facilitate the increased shipments to China (IOD May16,p7).
Copyright 2005 Energy Intelligence Group Inc.
Nymex, Dubai Exchange Announce Joint Venture, to Start Trading Early 2006.
Platts Commodity News, June 10, 2005
The New York Mercantile Exchange said Friday it agreed to set up the Middle East's first energy futures exchange in a joint venture with government-owned Dubai Holding. The exchange is expected to initially trade sour crude and fuel oil on both open outcry and electronic trading platforms from early 2006, NYMEX said. NYMEX said it will contribute software and systems to run the trading operations, including trade entry and risk management systems. Both NYMEX and Dubai Holding will each contribute capital and services towards establishing the DME. Trades on the DME will be cleared through the NYMEX clearinghouse in New York. NYMEX has been in talks with the Dubai Monetary Authority for months, negotiating a joint venture that would establish both a presence for the New York exchange in the Middle East and a benchmark grade of crude from that region of the world.
"Dubai presents a unique opportunity for the global energy futures industry to fill a time zone gap in trading between Europe and Asia," the NYMEX said in a statement.
"The contracts traded on the DME will be tailored to the needs of the marketplace and may include physical delivery alternatives that represent the physical trade flows," said NYMEX President James Newsome said in the statement. The exchange will be based in the Dubai International Financial Centre (DIFC), a financial free zone designed to promote financial services within the UAE. The DME will also be regulated by the Dubai Financial Services Authority, a regulatory body established within the DIFC. NYMEX said the opening of DME inside the DIFC is subject to regulatory approval from the Dubai Financial Services Authority. It said all clearing and settlement services to be provided by the NYMEX to DME are subject to the NYMEX becoming recognised by the DFSA to operate a remote clearing house in the DIFC and subject to the review and/or approval of the Commodity Futures Trading Commission.
Copyright 2005 Platts
BP's Fleet Moves Aimed at Reducing Risk of Spills / Oil Giant Says Cost of Accidents Simply Too Great
Petter Narvestad, Bloomberg News
Houston Chronicle, June 9, 2005
BP is urging shipowners to meet tougher health and safety standards for their tankers, seeking to minimize the risk of an oil spill.
"The BP board has identified an oil spill as the single biggest threat to the finances and reputation of BP," Bob Malone, chief executive of BP Shipping, told a conference in Lillestroem, Norway, on Wednesday. "We are going to raise the bar for the shipowners we use. We will do everything we can to push out the substandard shipping that exists today."
Malone is overseeing a six-year, $6 billion fleet renewal program. By 2008, the program will replace old ships and double BP's fleet of tankers hauling crude, refined products and gases to about 100 vessels. About half of the company's fuel shipments eventually will be made on ships either owned by BP or controlled on leases lasting more than a year, compared with 42 percent today, Malone said.
The company is preparing for increased imports of oil from the Middle East, West Africa and Russia as reserves in the U.S., Europe and the Far East decline. The company's own movements of oil products may rise fivefold by 2010, Malone said. The company will continue to lease ships and make bookings in the spot market, he said.
"We can find tonnage to protect BP," Malone said. Still, "every time there is a spill around the world, BP pays. We pay for pollution, we pay for higher taxes, and we pay for new legislation."
Photo: NEW FRONTIER: A tug escorts the Alaskan Frontier, the first of four double-hulled oil tankers for BP Alaska, through the Valdez Narrows in September. BP is in the midst of a six-year, $6 billion fleet renewal program and is urging shipowners to make more effort to minimize the risk of oil spills.
Copyright 2005 Houston Chronicle
BP, Tanker Companies Grapple With Image Troubles
By Leia Parker
Dow Jones International News, June 9, 2005
Oslo -- The right sort of advertising campaign can boost the image of energy shippers and help protect them from too much harm even if an accident should occur, BP Shipping Chief Executive Bob Malone told colleagues in the industry Wednesday.
After the March explosion at parent company BP's Texas City refinery that killed 15 people, BP found that a multimillion-dollar advertising campaign about its environmental and safety efforts had helped limit the damage, he said.
Malone made the comment at the Nor-Shipping exhibition in Lillestrom, Norway, where tanker companies anguished over the challenge of overcoming negative images of tanker spills and ships breaking up at sea in order to draw investment and boost their shares' value.
BP Shipping's parent company BP hasn't advertised its tankers the way Royal Dutch/Shell Group has, with positive TV ads explaining the operation of a liquefied natural gas carrier.
But "we literally spent hundreds of millions of dollars on the oil side," Malone told the audience, when asked how much of its earnings BP spent last year on advertising. "It helped keep the focus on the lives that were lost (in Texas City)."
Since the refinery explosion, BP has "looked to be very transparent and publicly state what the investigation found," Malone told Dow Jones Newswires.
The Associated Press reported Wednesday that BP is close to settling many of the civil lawsuits spawned by the explosion. Attorneys wouldn't disclose the size of the potential settlements but described them as substantial, the AP report said.
In addition to claiming 15 lives, the refinery explosion injured more than 170, making it one of the worst industrial accidents in the history of U.S. refining.
Malone stressed that BP hadn't spent money on advertising with the intention of limiting damage to its reputation from such a tragic incident. But the word had filtered back to Malone in London from people in Texas that this had indeed been a consequence of BP's work on communicating with the public about its efforts.
BP's recognition that safety and environmental protection are of paramount importance starts at the top, Malone said. Chief Executive John Browne tells his company that a barrel of oil in a tanker may be worth $50, but each barrel of oil spilled into the sea could cost the company some $50,000, he said.
BP Shipping is in the middle of a $6 billion expansion project that will bring the number of ships it owns or charters for a year or more to 120 by 2008.
For it and other companies operating large tanker fleets, public perceptions are critical. Gone are the days when shipping was perceived as a glamorous industry that created global empires and legendary figures like Aristotle Onassis, said Andreas Sohmen-Pao, managing director of World-Wide Shipping and deputy chairman of Bergesen d.y. ASA.
Sohmen-Pao urged the industry to focus its energy on solutions, rather than "complaining about how unloved we are." He emphasized the need for proactive public relations and burnishing the sector's image through targeted marketing, even though such efforts can be costly.
Based in Oslo, Bergesen transports energy products and is one of the world's largest shipping companies. The company de-listed from the London Stock Exchange in 2003, after World Nordic ApS became sole owner of all the shares, according to its Web site. World-Wide Shipping has a tanker and dry-bulk fleet.
Sohmen-Pao urged the maritime sector to target the young while they're still forming impressions.
Despite his own role in shipping, Sohmen-Pao said his young son has toy airplanes, trains and cars - before he's even old enough to hold them properly - but there is "not a ship in sight because I can't find them in the shops."
Teekay Shipping Corp. President and Chief Executive Bjorn Moller suggested his company's image shouldn't be sullied by the industry's oil spills in years past. Last year, he said, Teekay shipped 2 billion barrels of oil and gas with zero spills attributable to the company.
Intertanko Chairman Stephen Van Dyck said the entire tanker sector has dramatically reduced incidents and spills since the late 1970s. Tanker incidents including collisions, groundings, war-related incidents, hull and machinery trouble and fires and explosions dropped to less than 200 in this decade from more than 1,000 in 1979.
Intertanko is a trade group of independent tanker owners.
"We use the term 'not one drop,'" Van Dyck said. "The goal is zero."
(c) 2005 Dow Jones & Company, Inc.
Nymex Seat Sells for $2.5 Million
Calgary Herald, June 9, 2005
A seat on the New York Mercantile Exchange, which is contemplating an IPO at a time of strong oil and gas prices and record trading volumes, sold Wednesday for a record $2.485 million, up more than 24 per cent from the last record hit in October 2004.
High oil prices have boosted prices for energy futures and, in turn, seats for the right to trade futures at the NYMEX. Oil futures jumped to a record above $58 a barrel in April, and have traded at well over $53 this month on worries about supplies next winter.
"The owner of a seat gets to see exactly who makes the bids and offers," said Tom Mooney, who writes a daily report for Southeast Energy, Inc. "The rest of the (trading) world who doesn't own seats is at a huge disadvantage."
NYMEX hit record trading volumes in the previous two years. It is set to hit another record this year, based on its level of 62 million contracts through April.
Copyright Copyright 2005 Calgary Herald
Calpine CEO: Energy-Trading Joint Venture a Done Deal
-By Mark Golden, Dow Jones Newswires; 415-765-6118; Mark.Golden@dowjones.com
Dow Jones Energy Service, June 9, 2005
SAN FRANCISCO (Dow Jones)--Calpine Corp.'s (CPN) proposed partnership of its energy-trading operations with a major U.S. financial institution is a done deal with details to be announced in about a week, according to the company's chairman and chief executive, Peter Cartwright.
As part of a broad financial reorganization the company announced two weeks ago, Calpine said it was in discussions to combine its marketing and trading operation, Calpine Energy Services, with the credit support of a major financial institution. The investment-grade partnership would result in hundreds of millions of dollars in collateral being returned to the parent corporation, and allow more trading. Calpine's low credit rating has greatly limited its ability to trade electricity and natural gas the past few years.
"There really was no pertinent negotiation at the time we made the announcement. It's just at the point of getting approvals," Cartwright said in an interview.
Calpine's head of development, Robert Fishman, added that "the deal was already baked" at the time of the announcement.
The company isn't really giving up much in the deal, Cartwright said. Though it will have to share the profits, those profits should expand considerably as the entity will be able to trade more. All the people and systems now employed by Calpine Energy Services will remain in place, he said.
But, he added, the company won't be getting cash from the partnership up front by contributing profitable long-term contracts, as some Wall Street analysts had speculated might happen.
Cartwright first said the company had to create an investment-grade trading operation back in February 2002, and it has since looked at a half-dozen deals. Past proposals were rejected in some cases, he says now, because potential partners demanded control of the venture, which Calpine wasn't willing to give.
Beyond that, Cartwright declined to give any further details until an official announcement he expects very soon.
Bear-Stearns Seen As Partner
Investment bank Bear Stearns Companies Inc. (BSC) is the financial institution involved, according to Peter Fusaro, head of energy consultancy Global Change Associates in New York.
Other knowledgeable sources confirmed that it's Bear Stearns.
Both Calpine and Bear Stearns declined to comment on the identity of the financial partner.
Bear Stearns has taken a small role in North American energy trading, Fusaro said. It bought a long-term power contract from El Paso Corp. (EP) early last year, for example.
"I think this benefits Bear Stearns more," Fusaro said. "It gets them into illiquid markets, into price discover and further down the learning curve for the power sector."
For Calpine, Fusaro said, the ability to trade won't solve Calpine's major problems. A new-found ability to purchase natural gas under long-term contracts doesn't change the fact that gas-fired power plants aren't profitable in much of the country where Calpine has plants, he said.
For the entity to have get an investment-grade credit rating and trade on the size proportionate to Calpine's fleet of power plants, the venture would need a capital commitment from Bear Stearns approaching $2 billion, according to some estimates.
The deal, however, hasn't been submitted to the major credit-rating agencies, sources said.
Major energy-trading joint ventures in the recent past, like Entery-Koch and Duke-Louis Dreyfus, ended either through dissolution or buy-out despite apparent profitability.
Copyright 2005 Dow Jones & Company, Inc.
BP Shipping's Malone Comments On Oil Price, Shipping Strategy
By Petter Narvestad
Bloomberg News Service, June 8, 2005
Bob Malone, chief executive officer of BP Shipping, comments on oil demand, shipping strategy and safety among tanker companies.
Malone, who heads the transport unit of Europe's biggest oil company, spoke at the bi-annual Nor-Shipping Conference in Lillestroem, Norway.
On Demand And Oil Price:
"There is no physical shortage of oil. The reason for the price rising is demand. China has added 1.6 million barrels in two years. This reduced the spare production capacity from a historic level of about 3 million barrels a day to 1 million barrels.
"I think we will see downward pressure on prices. We will see a slight easing in Chinese demand. World oil consumption is about 83 million barrels a day and world production is about 86 million. So we are back at the 3 million barrels-a-day cushion."
On Shipping Strategy:
"We will continue to see continued imports of oil to the U.S., Europe and China. Some four out of five barrels will come from the Middle East, West Africa and Russia.
"We expect our movements of oil products to rise fivefold by 2010. The BP board has identified an oil spill as the single biggest threat to the finances and reputation of BP.
"We will put an increased number of what we move on controlled vessels. Those are ships we own or have on timecharter contracts lasting more than 12 months. Today that number is 42 percent. We are moving towards 50 percent.
"We have a $6 billion fleet expansion program, still we will timecharter a lot of ships and book in the spot market. We are going to raise the bar for the shipowners we use. We believe we can find tonnage to protect BP. We will do everything we can to push out substandard shipping that exists today.
"Every time there is spill around the world BP pays. We pay for pollution, we pay for higher taxes and we pay for new legislation."
Copyright (c) 2005 Bloomberg L.P. All Rights Reserved.