Subsea 7 awarded contract offshore Australia – OilVoice

Subsea 7 S.A. (Oslo Brs: SUBC, ADR: SUBCY) today announced the award of a sizeable(1) contract by Cooper Energy Ltd for the Sole Development Project, offshore Australia.

The Sole gas field is located in the eastern part of the Gippsland Basin, approximately 40km offshore Victoria, Australia. The contract scope consists of the subsea tie- back of the Sole well to the Orbost Gas Plant, including the fabrication and installation of 64km of pipeline, spool and manifold, along with installation of a 64km umbilical and the commissioning of the system. Project management and engineering will commence immediately from Subsea 7's office in Perth, Australia, with offshore operations scheduled to commence in 2018.

The material offshore operations are subject to the Sole Development Project final investment decision which is anticipated soon. Andy Woolgar, Managing Director, Australia and New Zealand, said: "We are delighted to have been awarded this key project from Cooper Energy Ltd.

This award draws upon Subsea 7's substantial experience of delivering projects in the Gippsland Basin over the last 40 years. We look forward to leveraging this established and proven record in pipeline fabrication and offshore installation to help Cooper Energy as it develops its offshore gas resources." (1) Subsea 7 defines a sizeable contract as being between USD 50 million and USD 150 million.

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Subsea 7 awarded contract offshore Australia - OilVoice

Estonia To Finance 1000 Megawatt Offshore Wind Farm At Hiiumaa – CleanTechnica

Published on February 27th, 2017 | by Susan Kraemer

February 27th, 2017 by Susan Kraemer

Dependence on Russianfossil energy is one weapon Putin has used to subvert democratic rule in neighboring nations. Like most of the worldspetro-states, Russia is anautocracy. But one nation having none of that is Estonia.

Gas dependence on Russia has negative consequences across the region. One is corruption, as the Kremlin and its proxies buy the political support of foreign leaders in order to maintain Russias predominant market position in their countries. In Ukraine, for example, a group of pro-Russian oligarchs grew rich off of gas deals as they subverted the effectiveness of Ukraines democracy.

This dependence has the effect of subverting youngdemocracies that depend on Russian gas.

Just the need for low, or at least affordable, energy prices encourages some central and Eastern European countries to follow the Kremlins line on foreign policy. In private, for example, Hungarian officials admit that a major factor behind the countrys pro-Russian statements and public declarations against sanctions on Russia is related to energy. Hungary hopes that its pro-Russian stance will win it lower gas prices, but the cost is to degrade the European Unions cohesion.

Hungary was for 20years a democracy. Now Hungaryhas reverted toautocracyunder strongman Viktor Orban.

But one of Russias border nations in the Baltic, Estonia, has taken a boldapproach. Estonia had beenimporting all of its natural gas for heating and hot water from Russia, but that ended last year.

In mid-2016, together with Lithuania, Estonia put a stop toits gas imports from Russia. Now Norways Statoil will instead provide gas for heat and hot water in the country.

Despite the challenges due to its position between European democracies and Putins autocracy in Russia,Estonia is looking to increase its clean energy capacity. Ithas already overshot its clean energy generation targets for 2020.

Starting almost a decade ago, Estonian developer 4Energia has been going through the environmental and technical permitting of what was proposed as a 700 MW to 1,000 MW wind farm northwest of the island of Hiiumaa in the Baltic Sea.

(4Energia is also known as Nelja Energia: Nelia means four, referring to four clean energy sources the firm plans to specialize in: wind, water, biomass and solar.)

Six years ago, the director of the Lithuanian Wind Energy AssociationSaulius Piksrys told Wind Energy Update:

The main challenge for the development of wind energy generation facilities in the Baltic States are vested interests among companies importing electricity from Russia. Powerful lobbyists are able to slow down the process significantly, even impeding the relevant law-making.

It has taken 4Energia years to develop the Hiiumaa Offshore Wind Farm. Finally, with all that paperworknow in hand, the last hurdle is financing.

Image Credit: Wikimedia: Baltic Sea off Estonia

4Energia has proposed to utilize the EUs cooperation mechanism to help finance the Hiiumaa Offshore Wind Farm, its largest Baltics project.

As a very small nation of just 1.3 million, it is not easy for Estonia to justify such a massive offshore wind farm that further overshoots its own country climate targets under the EU Directive. Estonia has already met its EU target of 25% renewable energy by 2020, and it exports surplus renewable energy to its neighbors.

One approach being taken to finding funding, is presenting the project as a way for another country that is not meeting its target to finance it under the EU Cooperation Mechanism, whereby:

Joint projects:Two or more EU countries can co-fund a renewable energy project in electricity or heating and cooling, and share the resulting renewable energy for the purpose of meeting their targets. These projects can but do not have to involve the physical transfer of energy from one country to another.

A partnership like this could be a win-win. An EU member state that is not able to meet its targets could be the financing partner. Financing a project elsewhere would qualify such a partner as having met its own 2020 target. Such an arrangement could also be beneficial in getting wind turbine orders from the array if financed by a nation with an industrial wind sector.

But the peculiar combination of factors that would be needed, of being at risk of not meeting its own target AND yet having its own growing industrial wind sector is an unusual combination.

The UK, or even better, France, might be a good potential financing partner. Both France and the UK are at risk of missing their targets but while the UK imports most of its turbinesfrom Germany, France is expanding its domestic wind manufacturing.

It is unrealistic to expect a small nation of 1.3 million like Estonia to set up its own domestic supply chain for building this offshore wind farm, even such a large one. Instead, the turbines, towers, nacelles and cables will be imported, with Germanys Enercon and Finlands WinWind acting as the main suppliers.

While 4Energia is the largest wind developer in the Baltics, to date its projects have been only on land.

Offshore wind development is generally more challenging than onshore, but the Baltic Sea does offer a relatively easy transition geologically, with a shallow and sandy seabed. Costs are lower in the sheltered Baltic Sea than in the more exposed North Sea, because lower wave heights reduce the costs of construction and ongoing maintenance. 4Energia will use ice-proof gravity-based foundations.

In turn, this ease of access for performing maintenance results in more productive hours of operation which further lowers costs again. 4Energia projects that the Hiiumaa Offshore Wind farm would have a very high capacity factor of approximately 50%, and promptand easy maintenance would be needed to achieve that.

In addition to 4Energias project, an equally ambitious Estonian offshore wind project has just begun the multi-year permitting process, this one in the Baltic Seas Riga Gulf.

Eesti Energija is the countrys state-owned primary power generator, distributor, and supplier. Its renewable arm just submitted its application to build another gigantic offshore wind farm south of Kihnu Island in the Bay of Riga. This too is proposed at a 7001,000-MW capacity. (Applicants seem to be given leeway in finalizing capacity in Estonia.)

In addition to these two huge offshore wind farms, another smaller project has made its application to begin its own environmental permitting. Neugrund, a startup firm, proposes to develop the Neugrund Offshore Wind Farm on Estonias North coast up by the Gulf of Finland. The planned capacity is between 100 MW and 234 MW.

Image Credit: Wikimedia Market in the Estonian old historic town of Tallinn

Estonia isexpanding its clean energy to the point of being a clean energy exporter, and has shifted its gas buys to state-owned Statoil, in the worlds only oil-rich liberal democracy, Norway.

The independent state of Estonia can only exist permanently in a space of democratic values, said Estonian president, Kersti Kaljulaid at this weeksEstonian Independence Day. A small state cannot function in a geopolitically tense place such as ours if it is internally undemocratic.

Related stories:

Why Putin Wants A Trump Kleptocracy Russian Military Threat Halts Giant Offshore Wind Project NATO Renewable Energy To Penetrate Into Russian Petro-State Who Benefits If Russian Oil Sanctions End? Trumps Lies Threaten Wind Techs: Fastest-Growing US Job

Buy a cool T-shirt or mug in the CleanTechnica store! Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech daily newsletter or weekly newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.

Tags: 4Energia, autocracy, Baltics, democracy, Eesti Energija, Estonia, Neugrund, offshore wind, Putin, Russia, WinWind

Susan Kraemer writes atCleanTechnica, CSP-Today and Renewable Energy World. She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities!As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

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Estonia To Finance 1000 Megawatt Offshore Wind Farm At Hiiumaa - CleanTechnica

Kitten stowaway gets first-class treatment on offshore Taranaki gasfield rig – Stuff.co.nz

JEREMY WILKINSON

Last updated16:44, February 28 2017

ANDY JACKSON/Stuff.co.nz

Veterinarian Gemma Kinross says Maui the kitten had a "full belly" but was "very dirty" after being found on an off shore oil rig.

A kitten that stowed away on a container ship toan offshore oil and gasrig had to be specially flown off by helicopter.

Named Maui- after the gasfield off the coast of Taranaki she was found on- the three-month old kitten won over workers at the site, and has even been adopted by one.

Maui was flown first-class by helicopter off the field once she was discovered, but not before she was spoilt with sardines and milk by the Maui team.

ANDY JACKSON/Fairfax NZ

Shona Salisbury from St Aubyn Veterinary Clinic spends some time with stow away kitten, Maui.

Shell New Zealand chairman Rob Jager said it was likely she'd climbed into a shipping container while it was being loaded, and wasn't discovered until she was at the platform roughly 50kilometres off thecoast.

READ MORE: *Help, it's a wasp: the daftest Fire Service callouts in the past year *Cat stuck up tree in New Plymouth had to be hosed down *Mega moggie captures heart of New Plymouth woman *Council reunites cat's body with owner for farewell *Cat missing for two years is reunited with New Plymouth owners *Slice of cat heaven in New Plymouth

"It's unusual to have a small animal or bird found offshore but it has happened before," he said.

ANDY JACKSON/Fairfax NZ

Maui came in a bit dirty and shy but is pretty much back up to full health.

"Now one of the guys from the Maui team is taking her home. He looked after her when she was offshore and has convinced his wife they should keep her.

"Unless someone claims her."

Animals aren't allowed on the platform and fortunately Maui didn't cause any damage duringher short stay.

STOS

Rebekah Smith, platform medic, at Maui B with Maui the kitten.

Workers managed to lure her into a cage borrowed from a local vet with a rasher of bacon, then loaded her onto a specially-requested helicopter.

She's now staying at St Aubyn Vet Clinic in New Plymouth until her new family takes her home.

Vet Gemma Kinross said she got a call from one of her clients asking to borrow a cage to take to the Maui B platform.

Stuff

Maui the kitten's journey from New Plymouth to the Maui B gasfield roughly 49 kilometres off the coast.

"It was all a bit confusing, I just thought they meant the port," she said.

"But then they said it needed to be pretty fast because there was a helicopter waiting."

Aside from coming in a bit shy, dirty and slightly traumatised from her helicopter ride, Maui was healthy even after a few nights at the platform.

"We have no idea what her start in life was like, we checked for a microchip straight away," Kinross said.

"It seems like everyone loved her, someone rang today saying they would have her as soon as she could leave."

Kinross suspected Maui was seeking food when she got into the container andit looked like she had stowed away to the right place, coming back with a full belly from the crew's attentions.

Maui isn't the first cat to stowaway on and oil and gas ship. In 2001 a cat called Colin's stowed away on the methanol tanker Tomiwaka from New Plymouth to South Korea.

Colin'sbelonged to one of the tanker terminal workers at Port Taranaki, but after falling asleep on board the Tomiwaka she set sail for international waters.

On her arrival back home by air New Plymouth's mayor Peter Tennent named her an honourary ambassador of the district. Sadly she passed away in 2007.

-Stuff

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Kitten stowaway gets first-class treatment on offshore Taranaki gasfield rig - Stuff.co.nz

Exclusive: Algeria’s Sonatrach in talks to begin offshore drilling – source – Reuters

By Lamine Chikhi | ALGIERS

ALGIERS Algeria's Sonatrach wants to start offshore oil drilling and has begun discussions with U.S. operators Exxon Mobil Corp (XOM.N) and Anadarko (APC.N) as well as Italy's Eni (ENI.MI), a source at the state energy company told Reuters on Sunday.

The North African OPEC member nation has struggled to attract oil investment in recent years because of tough terms that have made foreign companies wary.

Sonatrach last year began a more flexible approach to bilateral talks with foreign partners.

Low oil prices have also pressured Sonatrach, prompting it to focus on developing production at more mature fields in the southern Sahara and bringing online delayed gas projects. Offshore drilling could offer another area for growth.

"Seismic operations carried out by Sonatrach have shown an interesting potential in the areas including Bejaia and Oran," said the source, who asked not to be identified. Bejaia is an eastern port and Oran is a port city in western Algeria.

Algeria needs the know-how and expertise of major international firms to launch offshore drilling, the source said.

"Foreign partners, including Anadarko, Exxon Mobil and Eni were invited by Sonatrach to provide technical assistance given the experience they acquired in the Gulf of Mexico and deep water in Mozambique," the Sonatrach source said.

"The offshore is complementary to our operations in the south. It will also contribute to boosting our output," the source said.

The source did not give any information on the timing or scale of any offshore projects.

Such details, including when the drilling will start, are expected to be announced soon by Sonatrach's leadership, the source said.

Algeria's earnings from oil and gas fell to $27.5 billion in 2016 from $35.7 billion in 2015 and more than $60 billion in 2014.

Algeria's oil output was previously estimated at 1.1 million barrels per day (bpd) but it has cut production by 50,000 bpd under an agreement between OPEC and non-OPEC producers aimed at raising crude prices.

(Editing by Patrick Markey and Jason Neely)

MELBOURNE London zinc prices have nearly doubled over the past 13 months and are closing in on nine-year highs, but signs of tightening in the global market for refined zinc means the rally may have further to run.

NEW YORK Passive investment funds are poised to shift an estimated $2 billion from far-term to near-term crude futures over the next week, anticipating an energy market rally as a historic OPEC output cut slashes supply.

BAGHDAD Iraq signed a $500 million agreement with ABB to implement energy projects, Prime Minister Haider al-Abadi's office said in a statement on Sunday.

Continued here:

Exclusive: Algeria's Sonatrach in talks to begin offshore drilling - source - Reuters

Eidesvik offloads offshore construction vessel – Splash 247

February 27th, 2017 Grant Rowles Europe, Offshore 0 comments

Norways Eidesvik Offshore has sold 2009-built offshore construction vessel Viking Poseidon to an unnamed buyer.

Eidesvik says a deposit has already been paid and delivery is expected to take place mid-March.

The sale will have a positive effect of around NOK180m ($21.5) according to Eidesvik, after it recorded a NOK130m ($15.5m) impairment charge on the vessel in the fourth quarter of 2016.

Viking Poseidonrecently came off a contract with Siemens Wind Power supporting operations in the German sector.

The vessel was previously on charter to Harkand, who cancelled the contractin May 2016 after into went into administration.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrades Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.

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Eidesvik offloads offshore construction vessel - Splash 247

Total Gabon Refocuses on Its Principal Offshore Assets by Selling Interests and Transferring Operatorship in Several … – Business Wire (press…

PORT-GENTIL, Gabon--(BUSINESS WIRE)--Regulatory News:

Total Gabon (Paris:EC) has signed an agreement with Perenco for the sale of interests in five mature fields and the Rabi-Coucal-Cap Lopez pipeline network. The agreement also includes the transfer of operatorship on certain other fields. The transaction represents a value of $177 million before adjustments, and is subject to approval by the authorities.

Under the terms of the agreement, Total Gabon will divest all of its interests in the onshore Coucal, Avocette and Atora fields as well as the Rabi-Coucal-Cap Lopez pipeline network, and a partial interest in the offshore Hylia field. Operatorship of these assets will also be transferred to Perenco. In addition, Total Gabon will sell all of its interest in the onshore non-operated Igongo field. The production from the fields being divested represents about 5,000 barrels per day (b/d), or 10% of Total Gabons 2016 SEC production.

In addition, Total Gabon will transfer the operatorship of the offshore Grondin, Gonelle, Barbier, Mandaros, Girelle and Pageau fields to Perenco while retaining its existing 65.3% equity interest in the assets. This change in operatorship will generate the opportunity for synergies with Perencos nearby operations.

Unaffected by the transaction are Total Gabons operated interests in the Anguille area, the offshore Torpille, Torpille Nord Est and Baudroie-Mrou fields, the deep offshore Diaba permit and the Cap Lopez oil terminal. Total Gabon will also retain its non-operated interest in the onshore Rabi field.

In a context of volatile Brent prices where the objective of improving operational efficiency is a priority, this agreement allows us to transfer the operatorship of certain assets to Perenco in order to take advantage of synergies with their nearby operations. In addition, it allows Total Gabon to refocus on its strategic operated assets and to assure the sustainability of our activities in the country, commented Guy Maurice, President of Total Gabon.

Summary of the transaction:

Total Gabon interest pre- sale

Total Gabon interest post-sale

Unaffected interests:

Total Gabon interests

About Total Gabon

Present in Gabon for over 85 years, Total Gabon is one of the leading operators in the country. In 2016 Total Gabons operated production was 55,000 b/d, and its equity production was 47,400 b/d. Upon completion of the transaction, Total Gabon will retain the position of second largest producer in Gabon, with around 45,000 b/d.

Socit anonyme incorporated in Gabon with a Board of Directors and share capital of $76,500,000 Headquarters: Boulevard Hourcq, Port-Gentil, BP 525, Gabonese Republic http://www.total.ga Registered in Port-Gentil: 2000B00011

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Total Gabon Refocuses on Its Principal Offshore Assets by Selling Interests and Transferring Operatorship in Several ... - Business Wire (press...

BW OFFSHORE: INVITATION TO Q4 2016 PRESENTATION 28 FEBRUARY – GlobeNewswire (press release)

February 27, 2017 00:00 ET | Source: BW Offshore Limited

BW Offshore will release its Q4 2016 results on Tuesday 28 February at 07:30 (CET). The company will host a presentation of the financial results 09:00 (CET) the same day at Hotel Continental in Oslo, Norway. The presentation will be given by CEO Carl K. Arnet and CFO Knut R. Sthre.

The presentation will be broadcasted via webcast, and will also be available for replay. Please visit http://www.bwoffshore.com for login-details.

For further information, please contact:

IR@bwoffshore.com

About BW Offshore:

BW Offshore is a leading global provider of floating production services to the oil and gas industry. BW Offshore has a fleet of 14 owned FPSOs and one FSO represented in all major oil & gas regions world-wide. BW Offshore has a long track record on project execution and operations. In more than 30 years of production, BW Offshore has executed 38 FPSO and FSO projects. The company is listed on the Oslo Stock Exchange.

Further information is available on http://www.bwoffshore.com.

This information is subject of the disclosure requirements acc. to 5-12 vphl (Norwegian Securities Trading Act)

Related Articles

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BW OFFSHORE: INVITATION TO Q4 2016 PRESENTATION 28 FEBRUARY - GlobeNewswire (press release)

Mitsubishi UFJ Financial Group: More Questions Than Answers (Negative Rates, Offshore Funding, And LNG Exposure) – Seeking Alpha

Last year, I was endlessly ringing the alarm bells about Japanese financials, particularly the impact of negative rates on profitability (e.g. net interest margin) and of money market reform and dollar strength on offshore funding, i.e. funding for overseas operations. (See here, here, and here.)

With all of the 'happenings' going on in the U.S. currently as it relates to politics and financials, it's been easy to forget about the global reality... that is, that a third of the world's credit assets are still negative-yielding, that deflationary pressures are still alive and well despite the positive trend shift in the U.S. and other key areas (e.g. PPI in China), and that the Japanese financial sector is still under significant stress.

So, returning to the topic of Japanese financials, in its CLSA Japan Investors Forum presentation this year, Mitsubishi UFJ Financial Group (NYSE:MTU), one of the "Big 4" of the Japanese financial institutions, sought to lay out how it is addressing these ongoing situations and how it plans to achieve growth in the future. Of particular note was the focus on negative rate impact and non-JPY (i.e. offshore) funding for its foreign operations; if MUFG felt it necessary to address these issues in front of its large institutional investor clients, it must be of ongoing concern.

Negative Rate Impact and Offshore Funding

On negative rate impact, MUFG states its impact on lending has generally been in line with expectations. If you've been a follower of mine, you're probably well aware of the "in-line expectations" of the effects of NIRP in Japan, but to review, the effects have been namely:

What is most concerning is MUFG's "initiatives" to counter the effects of NIRP. MUFG offers little substance on how it is trying to counter its declining profits as a result of NIRP; the details it does present amount to mere sales promotion, pushing customers into alternative investment products and other strategies. That's all well and good, but where is the concrete guidance? No mention of the impact of NIRP as it relates to exposure to synthetic derivatives, e.g. IRSs or CDSs, (not that any bank provides proper info on derivatives exposure anyway) or MUFG's high exposure to variable rate products on the asset side of the BS leaves me with more questions and concerns than before.

As for offshore funding crunch concerns, MUFG does seek to allay fears of any such contagion occurring.

By relative comparison, MUFG's exposure to the commercial paper (CD/CP) market - where most of this contagion related to dollar strength and money market reform has taken place - is smaller than that of other institutions. And that 70% of its offshore funding is backed by customer deposits is reassuring. However, regardless, overseas business will continue to suffer the effects of a stronger dollar, as we've already seen, from H1'15 to H1'16, the impact from exchange rate losses for overseas business with Japanese corporates depressed gross profits to the tune of ~20 billion.

Light Natural Gas Exposure

Now, losses from money markets or forex are negative but are small enough to be mitigated. What is most concerning to me is recent events regarding the LNG (light natural gas) sector. Japan is the world's largest importer of LNG, mainly from the U.S. and Canada. For much of the past several years, natural gas prices have remained depressed along with crude and other energy products. However, as recently as this Tuesday, futures plunged by nearly 10% as the possibility of an El Nio event, i.e. warmer climate, in the U.S. increased; natural gas prices are down over 30% year-to-date and it's only been two and a half months. (See here, here, and here.)

From a macroeconomic perspective, this may sound great as Japan now gets to import energy on the cheap, however, from the perspective of a financial institution underwriting the finances of an LNG E&P or shipping company, this could spell big trouble.

The question we need to ask is: How much exposure does MUFG actually have to energy price volatility, specifically the latest LNG volatility?

Total and net exposure to the energy/mining sectors has been decreasing over time and now sits at ~9.1 trillion, or $80 billion; most large-scale financial institutions have pretty sizeable exposure to energy and commodities so this is not inherently unusual or negative. However, let's take a closer look.

Most of that exposure is concentrated in midstream (pipelines/vessels) and upstream (E&Ps) corporate credit in the Americas (mainly U.S. and Canada producers) and Japan (LNG ships/transport). If prices are plunging (in an environment of already depressed prices), this could disrupt the entire "LNG Revolution" which had promised to be Japan's cheap energy alternative to nuclear.

MUFG states that exposure to commodity price risk is limited in that only 38% of MUFG's project finance credit exposure contains such risk, however it bases such a definition on the notion that "...projects whose revenues are determined based on oil/gas process volume or facility operational days [is not exposed to commodity price risk]." This is questionable. If the natural gas market is in severe stress, that will affect volumes and whether or not those facilities remain operational, no? Thus, I am skeptical at how MUFG determines projects are completely free from commodity price risk for a commodity company.

Conclusion

MUFG is by no means in crisis mode. In fact, as detailed in its presentation, there are many reasons to invest in potential growth for the future, such as Bitcoin participation, RegTech, and AI-driven investing. (However, these are highly competitive fields with players that have a lot more capital to expend, so some caution is warranted.) But, the potential short-term impact from negative rates, dollar strength, offshore funding concerns, and LNG volatility could be acute and severe. And MUFG's response to these possible contingencies leaves me with more questions than answers.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Mitsubishi UFJ Financial Group: More Questions Than Answers (Negative Rates, Offshore Funding, And LNG Exposure) - Seeking Alpha

Numbers against offshore oil | Editorials | postandcourier.com – Charleston Post Courier

The numbers speak for themselves. Tourists spent more than $20 billion in South Carolina in 2015, setting a record high for the state. That number tops the previous year by nearly a billion dollars.

In 2014, tourism supported one of every 10 jobs in South Carolina. It generated well over $1 billion in direct tax revenue for the state and local governments.

And tourism revenue has increased almost without exception every year for nearly three decades. There are no signs of that trend slowing, much less reversing itself.

But imagine the devastation of the South Carolina economy if those tourism dollars suddenly went somewhere else. Imagine if the states coastal communities lost their summer visitors, if fishermen were finally forced completely out of business, or if the natural environment of the coastline was forever damaged.

Thats the very real possibility that some seem willing to trade for oil and natural gas drilling off the South Carolina coast. But again, its not just about hypotheticals. Its about the numbers.

Estimates from the American Petroleum Institute, an oil and gas lobbying group, put the 20-year economic impact of drilling offshore of South Carolina at just $2.7 billion. Again, thats $2.7 billion over 20 years.

In other words, oil and gas might generate less than 1 percent of the economic impact that tourism has on South Carolinas economy. And a single major spill would risk the tourism industrys vitality for years.

Even exploration using seismic testing risks marine wildlife, particularly marine mammals who can become disoriented by the loud blasts.

Its not worth it.

Seismic testing was stopped offshore of South Carolina just about a month ago, but exploration companies already are gearing up to try again. So conservation groups are preparing to fight back.

Not surprisingly, every coastal government in South Carolina has come out against opening the states waters to offshore drilling. So have Reps. Mark Sanford, R-S.C., Jim Clyburn, D-S.C. and Tom Rice, R-S.C. So did Henry McMaster when he was lieutenant governor.

Given the cold, hard numbers its hard to imagine that the states other leaders in Columbia and Washington would still support such a reckless plan.

Gov. McMaster, in particular, has the opportunity to differentiate himself from his predecessor, Gov. Nikki Haley, by reasserting his opposition to offshore drilling and oil exploration in S.C. waters. Throughout his career as S.C. attorney general and lieutenant governor, Mr. McMaster strongly supported environmental protections. He should continue to do so as governor.

Sens. Tim Scott, R-S.C., and Lindsey Graham, R-S.C., should also stand up against any future effort to open up Atlantic waters to oil and gas drilling.

It just doesnt make sense to risk $20 billion a year and the states largest economic sector for an industry that might at best bring in a mere fraction of that over the next two decades.

Continued here:

Numbers against offshore oil | Editorials | postandcourier.com - Charleston Post Courier

Teekay Offshore Partners’ (TOO) CEO Ingvild Sther on Q4 2016 Results – Earnings Call Transcript – Seeking Alpha

Teekay Offshore Partners L.P. (NYSE:TOO)

Q4 2016 Earnings Conference Call

February 23, 2017 12:00 ET

Executives

Ryan Hamilton - IR

Ingvild Sther - Teekay Offshore Group's President & Chief Executive Officer

David Wong - Teekay Offshore Group's CFO

Kenneth Hvid - Teekay Corporation's President & CEO

Vince Lok - Teekay Corporation's CFO

Analysts

Michael Webber - Wells Fargo

Spiro Dounis - UBS Security

Fotis Giannakoulis - Morgan Stanley

Espen Landmark - Fearnley

Ben Brownlow - Raymond James

Operator

Welcome to Teekay Offshore Partner's Fourth Quarter 2016 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards you will be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder this call is being recorded.

Now for opening remarks and introductions I would like to turn the call over to Ingvild Sther, Teekay Offshore Group's President and Chief Executive Officer. Please go ahead.

Ryan Hamilton

Before Ms. Sther begins, I would like to direct all participants to our website at http://www.teekayoffshore.com, where you will find a copy of the fourth quarter of 2016 earnings presentation. Ms. Sther will review this presentation during today's conference call.

Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the fourth quarter 2016 earnings release and earnings presentation available on our website.

I will now turn the call over to Ms. Sther to begin.

Ingvild Sther

Thank you, Ryan. Hello, everyone, and thank you for joining us on our Fourth Quarter 2016 Investor Conference Call. I'm joined today by David Wong, the CFO at Teekay Offshore Group; as well as Kenneth Hvid, Teekay Corporation's President and CEO; and Vince Lok, Teekay Corporation's CFO. During our call today, I will be walking through the earnings presentation which can be found on our website.

Turning to Slide 3 of the presentation. I will briefly review some of Teekay Offshore's recent highlights. In the fourth quarter of 2016, the partnership generated the distributable cash flow or DCF of $21.6 million, resulting in a full-year DCF of $161.3 million. On a per unit basis, the partnership generated DCF of $0.15 per unit for the fourth quarter and $1.28 per unit for fiscal 2016. The partnership generated cash flow from vessel operations or CFVO of $135 million and $584 million in the fourth quarter and fiscal 2016 respectively.

Although we had anticipated better results in Q4, some key factors negatively impacted our results including a temporary suspension of operations for the Arendal Spirit UMS, which I will discuss further in the moment and higher operating cost in the shuttle fleets mainly to further upgrade the Naviod Anglia portrayed in the North Sea, off to returning her from a charter in Brazil earlier this year.

While Q4 was a challenging quarter, we have made good progress on initiatives to further reduce cost from our operations. In early January, we completed the sale of the 1995-built shuttle tanker Navion Europa for net proceeds of approximately $40 million and recorded a gain of approximately $7 million.

I'm also pleased to report that after having secured a three-year CoA contract for the Glen Lyon project in September 2016, we are now close to finalizing in new five-year plus extension option shuttle tank a contract of affreightment in the North Sea. This CoA is expected to commence during the first quarter of 2018 and because the contract will be serviced by the partnership's existing CoA shuttle tanker fleet, it will further increase our fleet utilization and enhance the partnership's cash flow without the need for incremental capital expenditures. We are encouraged by the continued strong fundamental in our shuttle tanker business where we are a market leader.

Turning to Slide 4, the shuttle tanker market continues to tighten with both charter rates and utilization increasing driven by strong underlying fundamentals. You can see this in the graph on the right side of the slide which compares North Sea shuttle tanker contract of affreightment or CoA rates, with North Sea anchor handler rates [ph]. All rates in other offshore services have weakened due to the low oil price environment and reduced ENP spending.

Shuttle tanker rates have been increasing due to both demand and supply factors. Demand for shuttle tanker capacity has continued to grow due to a combination of more listing points and newbuilds coming on stream. And at the same time, the supply of available shuttle tanker capacity fleet continues to strength with no uncommitted new buildings and order and an aging global fleet that will see several investors' retirement before the year 2020.

As a result, North Sea shuttle tanker CoA rates have increased by approximately 40% over the last two years, given the limited available capacity in the shuttle tanker markets, which Teekay Offshore has benefited from.

Turning to Slide 5, as noted in my opening remarks, we continue to work hard at reducing cost. In a shuttle tanker business, we have seen a steady decline in our North Sea shuttle tanker operating expenses since 2008 primarily driven by a shift in our manning model to employ more ratings and officer from the Philippines as well as a strong focus on reducing our supply chain cost.

Through our 2016, our FPSO business underwent a significant initiative to reduce operating expenses, which resulted in reduced supply chain cost and changes on board our FPSOs to reduce crude cost. During 2016, the partnership also took measure to reduce costs in its onshore organization. Through these initiatives, we have reduced our onshore headcount by approximately 75 employees which will result in run rate G&A savings in future quarters.

Turning to Slide 6, I would like to update you on the status of the Arendal Spirit UMS. In November 2016, the Arendal Spirit UMS experienced an operational incident related to its dynamic positioning system. We also had an April 2016 incident which resulted in the replacement of the unit's gangway. Following the DP incident, the charterer Petrobras initiated an operational review. While the operational review is underway, Petrobras has to spend the charter high payments to the partnership. Throughout this period, we have maintained an ongoing dialog with Petrobras and our main priority is to address their concerns and return the unit to full operation as soon as possible.

Turning to Slide 7. We continue to push forward to deliver on our pipeline on our committed growth project. This is a slide we have shown you in previous quarters, updated to reflect the latest remaining CapEx and financing figures as of December 31, 2016. As a reminder, once all of these projects have delivered, they are projected to contribute an additional $200 million per year of run rate CFVO. Over the next several slides, I will provide a brief update on each of these projects.

Turning to Slide 8. As noted during our third quarter earnings in November 2016, the Petrojarl I FPSO upgrade project has experienced delay an additional cost and is now scheduled to be on the field in late 2017. The main causes for delay include a more challenging top side upgrade than originally anticipated; a condition of the units following a cold layer prior to the project and scope changes. Despite these setbacks, progress is being made on the units which is now approximately 85% complete and we continue to increase resources at the yard to ensure work continues to progress according to the revised delivery schedule.

We have been in close dialog with the charterer QGEP [ph], and are close to reaching a commercial agreement on a revised delivery date. Given the commercial sensitivity of these negotiations, I can't provide additional details at the moment, but I look forward to offsetting you further once these negotiations have concluded.

Turning to Slide 9; progress on Gina Korg FSO conversion project, continues and as of today, the unit is approximately 98% complete. We have experienced a slight delay in the project as we come down the home stretch. However, we expect to commence the charter within mid-2017. The converted FSO unit [indiscernible] is expected to have a fully-built up cost of approximately $280 million. The unit will operate under a three-year term period contract, plus 12 additional one year extension auctions on the Gina Korg field in the in the North Sea.

Turning to Slide 10. The Libra FSO conversion project at the Jurong shipyard in Singapore remains on schedule and was 98% complete as of the end of January 2017. As you can see in the naming ceremony photo at the bottom right of this slide, we were very close to sail away. This has been a well-run project for Teekay Offshore and our joint venture partner, and we remain on-track to complete the project both on schedule and within the project's $1 billion budget.

This unit is expected to achieve first oil by Q3 2017 and we will operate on the Libra field [indiscernible] offshore per sale under 12-year charter for a consortium of oil major as shown at the bottom of the slide.

Turning to Slide 11; our three East Coast Canada shuttle tanker newbuildings are also on schedule and on budget. Construction on all three vessels has commenced with the first vessel now 65% complete and construction on the third vessel just under way. You can see on the total at the top right of this slide, one of the massive whole sections being lowered into place at the Samsung yard in Korea. These three vessels which have a total cost of approximately $375 million are scheduled to deliver during the second half of 2017 and first half of 2018. They will replace two end charters and one owned vessel, currently servicing this 15-year plus extension options, contract with the consortium of nine oil companies. The vessels are fully financed with a $250 million long-term debt facility secured in June 2016.

Turning to Slide 12; I will conclude the review of our projects with an offset on our towage newbuildings. Our towage business ALP currently has a fleet of 10 long-haul towage vessels consisting of seven underwater vessels and three remaining newbuilding vessels which are scheduled to deliver during 2017. The ALP phase is the most technologically advanced and youngest towage fleet in the market and we will be the only owner of 300 tons volatile vessels capable of the largest FPSO and FLNG tows.

In January 2017, we completed a successful tow of the Kraken FPSO from the Keppel yard in Singapore to the Kraken oil field in the UK sector of the North Sea, which you can see in the photo at the bottom of the slide. Although the long-haul towage market currently remains challenging. We have been maintaining fleet utilization by booking short-term contracts, which include drilling rig repositionings and scrapping, mooring and hook-up installations and ad-hoc emergency tows.

Turning to Slide 13. I would like to wrap up my first quarterly conference call by reviewing our top priorities for 2017. Foremost, we will remain focused on striving for high standards for safety and operational excellence. There is compromise here. This is what our customers expect from Teekay Offshore and this is vital both for retaining their trust and winning new business.

Teekay Offshore has 53 underwater assets of which 50 are on contract. Unlike many others in the offshore sector, our assets are producing cash flow. Although we have done a lot, I still see a great opportunity for us to continue to improve both our operations and bottom line performance through better decision-making at every level of the organization.

Second, as highlighted by the time on today's call devoted to our committed growth projects during 2017, we will be keenly focused on execution and delivering these projects for contract start up. Some of these projects are more challenging than others, but delivering on all of these projects will be essential for growing the partnership's operating cash flow.

Third, we have three FPSO charters which are coming up for renewal in 2018 and 2019, which we're working diligently to extend or secure new contracts. Extending these cash flow is a top priority and we are in active discussions with all of the current quarters. I hope to be able to provide further updates on these efforts in the coming quarters.

Fourth, as we mentioned previously, we also plan to focus on optimizing our asset portfolio which may include certain asset sales and/or seeking joint venture partners. This will help further strengthening our balance sheet and liquidity position. In this phase of a challenging offshore market, we remain focused on strengthening Teekay Offshore's financial position and financial flexibility so that we can take advantage of opportunities as the offshore markets recovers.

Thank you, all, for listening. Operator, we are now available to take questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] At this time, we'll go first to Michael Webber with Wells Fargo.

Michael Webber

Hey, good morning, guys. How are you?

Ingvild Sther

Good. Thank you.

Michael Webber

Good. Ingvild, congrats on your first call and it's good to be speaking with you again this morning. I wanted to start off with actually some business to get done at the parent level, some FPSO, FPSO extension. It looks like an amendment to the best but the implications for the FPSO space for the relet market for TOO's assets, it seems like they're in place. It was a nice surprise. I'm just curious, how should we think about the rechartering, the relet market, or the employment outlook for assets like the Voyager in a few years? Has it changed significantly? And I guess what are the successful extension in amendments to the parent level say about the assets of TOO and the FPSO market in general?

Ingvild Sther

Yes. I guess you would be hearing more about the Teekay FPSOs on the call tomorrow. But generally, we can say that the psychology of the market is different when the oil price is around $55 region than last year when it was around $30. It's obviously the focus of our customers to extract as much value as they can out of the field that we are on and that's a combination of how much oil we are producing, the oil price and the cost of the fuel. So we are working very closely with all the customers on the [indiscernible] contract will come off contract the next year to find the sweet spot where they can extract maximum value out of the field.

Michael Webber

Got you. That's helpful. You mentioned in your prepared remarks and the release as well, there's kind of an ongoing opportunity set within the shuttle tanker market. Can you talk to how deep you think that is? How much of an opportunity are there on a dollar basis or in terms of number of assets you really see out there for TOO for the next couple of years? It's been a bit surprising that you guys have been able to steadily add business specially over the past two years in this environment.

Ingvild Sther

Yes. There are two markets in the shuttle tanker business one is the time charter market where you are a charter for longer periods of time and the other one is the CoA market where the customers take at heart a fraction of a vessel. So more like it's actually service. And those are quite different. We know that there's a lot of vessels that will retire in the next two to three years in the North Sea. That will provide opportunities both for the time charter market where we see [indiscernible] is out with requirement for vessels right now and also for the CoA market. What's special about the COA market is that you have to have a combination of contracts and vessels to make it work. You need to have a certain size and that makes it more difficult to start from scratch to build up a position in this market.

Michael Webber

Got you. All right, that's helpful. A couple more and I'll turn it over. I do want to touch on the Arendal Spirit second issue there. I know it's under operational review. You probably can't get into too many details about the outcome, but I'm curious, what options does Petrobras have legally within the operational review? I guess what's the spectrum of outcomes here? They can pursue once that operational review is triggered. Can they renegotiate the contract? Can they walk away from it? Do we even kind of set the landscape for us maybe without getting into specifics about how the actual outcome and the booking like?

Ingvild Sther

I was on Brazil three weeks ago and that's what relevant people in Petrobras and the focus is for them to complete the operational review; and for us it's to provide them with the information they need to complete that operational review and to get the unit back in total operation.

Michael Webber

Got you. But does going into operational review trigger any potential rights for Petrobras within the contract that investors should be aware of in terms of spectrum of outcome?

Ingvild Sther

No. Our focus is really just to get the Petrobras comfortable with the operation and the safety of the unit and I think that is the focus of Petrobras as well. So, it is an operational review.

Michael Webber

Okay. Like in the follow up before. One more and I'll turn it over. The Gina Krog and I might have missed this did you guys give a reason for the slight delay there and is there any incoming adjustment to the charter contract or anything along those lines for the delay? I'm not entirely sure what the rational is behind it.

Ingvild Sther

We are working hard to complete the final stage of the project down in Singapore and have a focus on getting that completed. It's just taking a bit longer time at the home stretch of the project here. We have a very good and open dialog with charter and we expect that there won't be any...

Michael Webber

No changes to the charter?

Ingvild Sther

No.

Michael Webber

Okay. That's helpful. I'll turn it over, but thanks for the time.

Ingvild Sther

Thank you.

Operator

We'll go next to Spiro Dounis with UBS Security.

Spiro Dounis

Thanks, Ingvild. I just wanted to start off on the Varg. Sorry if I missed any update there. But just wondering if you could update us, just around timing of when you think that you could get rechartered and maybe what the cost parameters could be if it does actually need being worked on to a new field. I think historically, you guys have given a range anywhere between 2018 and 2020. is that still the case? Or have you been able to refine that at all?

Ingvild Sther

For Varg, we have been working and we are working on several opportunities. One of the opportunities we worked on was the winter [ph] that announced a couple of weeks ago that they will go with the tie back option. So we are now working on one specific project but we also see that there are still other inbound requirements for this unit. And as we know, it's a quite flexible unit that has -- meet the Norsok [ph] requirement. We are quite confident that we will find work for and I think the time line is same as what we said last quarter.

Spiro Dounis

Okay, that's helpful. And just as we think about the EBITDA uplift, I guess from these new shuttle tanker, the new CoAs that you signed, I was wondering if you could provide a number on that and maybe just had to think about how many shuttle tankers do you have right now that you feel are under-utilized and what are the uplifts that we can expect there for the ones that go into that CoA?

Ingvild Sther

It will really be to optimize the fleet and get the maximum utilization out of the fleet that we have and we are basically sold out for 2017 and we are getting a good utilizationals for 2018. What we will look at is how can we optimize the fleets even more to get more utilization out of it. So for instance, if some of the peers require storage to set the water for 10 days, can we free up some of the shuttle capacity by using ordinary tanker and then get some more utilization out on our fleet. Those are the things we are looking after to really get the maximum benefit out of our shuttle fleet the next couple of years.

Spiro Dounis

Got it. And then last one for me, just around funding projects and repaying debt over the next two years. Could you just maybe walk us through some of the big sources and uses of cash as we think about that going forward? From a vessel sale perspective or a sale lease back perspective, do you feel like you've done everything you can there? Could we expect more of that down the road? Thanks.

Ingvild Sther

Yes. I will redirect that question to Vince.

Vince Lok

Sure. As Ingvild mentioned and as what we mentioned last year, we've always contemplated further strengthening of TOO's balance sheet by I guess what we call it asset portfolio optimization, which is really looking at some asset sales and bringing some joint venture partners as we've done a little bit in TOO, but for more extensively in TGP. And that gives us additional source of capital as well to not only delever our balance sheet, but also provide another source of growth capital going forward. In terms of the major uses of capital, of course it's really to fund the equity portion of our remaining CapEx program. We have all the debt facilities in place, but there is some remaining equity that's still needed to fund those and we can use a lot of the existing liquidity to fund that, of course. But as you know, we do have some bond maturities that are coming up in late 2018, particularly these two knock [ph] bonds at the end of 2018. They do have a requirement that requires us to issue equity to offset any dividend. So it would be nice to start chipping away at some of those maturities and sort of remove the diluted effect of those bonds. So that's another thing we're considering as we're looking at asset sales.

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Teekay Offshore Partners' (TOO) CEO Ingvild Sther on Q4 2016 Results - Earnings Call Transcript - Seeking Alpha

DNB: Bigger companies and lower prices are the way forward for offshore – ShippingWatch UK (subscription)

The offshore sector needs to have fewer and bigger companies in order to get out of the current crisis. And the costs must be reduced even further.

This is the mantra at one of the world's biggest shipping and offshore banks, Norway's DNB, which on the one hand still has significant involvement in the maritime sector, but which has also reduced and is continuing to scale down its exposure to the sector.

Lending to shipping has been reduced by 40 percent over the past five years, while loans to offshore-related businesses have been scaled down 14 percent since the crisis in offshore began in the late summer 2014.

According to DNB's Head of Shipping, Offshore, and Logistics, Kristin Holth, who oversees a portfolio of close to USD 22 billion, the bank will continue this development in 2017 as part of its policy aimed at reducing its exposure to capital-heavy sectors, though the bank has no plans to take more drastic steps as, for instance, the German banks, which are divesting massive loans or are planning to withdraw from shipping entirely.

The sector will remain important to DNB, she stresses.

"We are focusing on the long term. But there's no doubt that this is a very trying time, especially for the offshore sector. 2017 will also be difficult for the sector, which is going through a challenging transition. But it will be necessary to create bigger and fewer companies while also reducing costs," says Holth in a comment to ShippingWatch following publication of the banks annual report.

In the past year the bank made impairments totaling NOK 7.4 billion, around USD 888.1 million, which was significantly more than 2015's NOK 2.3 billion. A considerable part of the increased impairments relate to shipping, oil, and logistics, where the bank had to impair NOK 2.9 billion, corresponding to 41 percent of the combined impairments for the year.

This also marks a major increase compared to 2015 when impairments on loans to shipping, oil, and logistics totaled NOK 1.3 billion. But this is not surprising, in light of how the markets developed last year, says Holth.

"It's a tough period for the maritime segments, so it's only natural that this results in larger impairments," she says, maintaining the bank's confidence that there will be a need for oil for "decades into the future."

The costs of producing oil on the Norwegian shelf have dropped significantly within just a few years. For the two major fields, Johan Castberg and Johan Sverdrup, break-even prices in terms of when oil extraction is profitable are significantly lower today.

According to DNB's own estimates, break-even for Johan Castberg now hovers at USD 45 per barrel, while break-even for Johan Sverdrup has dropped to USD 30 per barrel. But the levels could turn out to be even lower. It recently emerged that the break-even price for Sverdrup, according to Aker BP, is down at less than USD 20 per barrel in phase one, less than USD 30 per barrel in phase two, and below USD 25 per barrel for the final phase in which the field will be fully developed.

Holth has been pleased to see how a large consolidation in Norwegian offshore is emerging and picking up speed. She points to the latest example of Farstad and Solstad with the two Norwegian shipping icons Fredriksen and Rkke as masterminds, an example which more will hopefully follow.

"One of the problems is that there are still too many vessels on the water. It is therefore positive when we see the industry consolidate, as is the case now," she says.

The plan is for the coming company "Solstad Farstad" to have a fleet of 154 vessels, while also achieving annual synergies of NOK 400-600 million.

The strained oil price and low employment for offshore carriers have sent Farstad Shipping and the carrier's fleet of 55 vessels into a financial crisis, just as virtually all players in Norwegian offshore are hit by developments in the sector. Add to this the fact that the sector has invested too much in building its fleet when the oil price was high, which resulted in massive debt stakes for many of the companies. As such, close to one fourth of the entire Norwegian offshore fleet was stacked at the turn of the year.

There have also been signs of consolidation in Norwegian shipping. Last year Stolt-Nielsen acquired similarly Norwegian Jo Tankers ahead of Odfjell, a carrier which is calling for consolidation in the sector.

In recent months, well-known Norwegian shipping people have spearheaded two new banking and financing initiatives aimed specifically at the shipping sector, and which are not least motivated by the fact that the traditional banks are gradually withdrawing from the sector.

English Edit: Daniel Logan Berg-Munch

Supply carriers face a bitter North Sea winter

Danske Bank and DNB hit by oil slump in 2016

DNB scaling down exposure to shipping and offshore

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CSA Ocean Sciences Inc. (CSA), along with team members Oasis and TNO, has been awarded a contract from the Bureau of Ocean Energy Management (BOEM) for the project entitled, A Parametric Analysis and Sensitivity Study of the Acoustic Propagation for Renewable Energy Sources and Projects (PASS). The main objective of the PASS study is to standardize modeling approaches for sound propagation from activities associated with offshore renewable energy development for the Atlantic Outer Continental Shelf. More specifically, the projects aim is three fold: 1) characterize the sensitivity of the sound field to known variability in propagation conditions for wind farm installation activities, including but not limited to pile driving; 2) improve understanding of shallow water propagation characteristics and the sound field caused by pile driving and related activities; and 3) provide a harmonized methodology for estimating the volume of ocean impacted from each activity.

Environmental compliance documents are prepared by BOEM for US offshore renewable energy projects, and underwater acoustic modeling is an integral element of these documents to understand potential acoustic impact on marine life. Acoustic modeling is conducted by different contractors, using a variety of models and approaches, which results in diverse estimations of predicted sound fields, thus, making it difficult to understand to what degree predictions are within acceptable norms.

Ultimately, this study will recommend a consistent underwater acoustic modeling approach and quantify the acoustic impact volume associated with the construction of renewable energy facilities. These results will assist BOEM with unifying, understanding, and validating the range of acoustic modeling results used for compliance documents through determination of the salient environmental parameters that influence predicted acoustic fields and, hence, mitigation needs. Understanding the limits and strengths of the acoustic modeling approaches will increase understanding and lead to harmonization of approaches as well as facilitate a reduction in inconsistency.

For more information about this important study and other CSA services, click here.

McDermott International, Inc. (NYSE:MDR) announces it has acquired the newly built pipelay and construction vessel Amazon to better position the Company for ultra deepwater and SURF projects.

The Amazon. McDermott- Kloet

This is a great opportunity for the Company to expand the technical capabilities of our global fleet and grow in the deepwater and SURF markets and greatly increase our ultra deepwater project coverage, said David Dickson, President and Chief Executive Officer of McDermott. Due to current market conditions and the opportunistic nature of the transaction, we were able to acquire what is essentially a new, enabling asset at a fraction of the original build cost.

McDermott plans to upgrade the vessel to address the ultra deepwater market with a state-of-the-art J-lay system outfitted with the latest vessel technology. In the near term, the Company plans to make minor capital expenditure investments to bring the vessel up to Company standards. As McDermott finalizes its upgrade plans, the Company plans to use the vessel on existing construction and pipelay projects.

Funding for the vessel acquisition has been secured through a sale and leaseback arrangement under which McDermott has control of the vessel in exchange for a daily charter-hire rate. The planned upgrade to the state-of-the-art J-lay system and related financing are expected to be considered in line with market conditions.

Completed in 2014, the Amazon is equipped with 49,514 square feet (4,600 square meters) of deck space complete with two 440-ton (400-tonne) cranes, a service speed of 12 knots and accommodation for up to 200 crew and service staff.

Pharos Offshore have recently completed the development and enhancement of a 2,500m rated SMD-built tracked (or free-flying) jet trencher, which has subsequently been named the UTV400.

The 400hp Trenching ROV (TROV) set the benchmark for cable maintenance scopes when it was first introduced in to the offshore market. Pharos Offshore have now brought the system back in-line with current working practices by modernizing the equipment and doubling the burial capabilities.

The system utilizes high power to provide numerous inspection, repair and maintenance tasks, with the ability to de-bury, cut and recover a multitude of subsea products with enhanced efficiency. Offering a trench capability of 2m max depth, soil dependent, 100kPa max, the UTV400 tool packages, 1.0/ 1.5 and 2.0m, can be changed out at sea depending on project requirements and can work to a minimum jetting speed of 100m/h even in firm seabeds.

Integrated surface feed option for operations from 0 - 20m water depth. The system is capable of performing works from the shore end (5m WD) right through to 2,500m water depth. With further development, and an extensive re-engineering program delivered by Pharos Offshore Group to enhance the systems efficiency, the TROV will now continue to boast its reputation for reliability and performance. The unit has become an essential part of any cable installation or maintenance package due to its small deck requirements and ease of maintenance.

Pharos Offshore are able to offer a project package which includes a Sea State 5 launch and recovery crane, now with greater efficiency and burial ability, the system will go on to perform works for Pharos clients across the offshore oil, gas, renewable and telecommunications markets on a global scale.

Pharos Offshore delivers engineering solutions for subsea cable installation, maintenance and repair. We work with clients across the offshore Oil & Gas, Submarine Telecoms and Renewable Power industries. Our in-house expertise includes highly skilled and experienced offshore technical professionals and on-shore engineering management and operational support teams. Pharos Offshore develops subsea cable handling and burial solutions, including vehicle and handling systems, with a proven track record in taking projects from concept design, delivery, testing and on-going support.

Craig International has signed a global agreement with energy major, Shell to provide services for equipment stock resale.

The oilfield procurement specialist recently launched Craig Collaboration to provide companies with the opportunity to reduce wastage and duplication, recoup financial outlay and sell unwanted items which are often sitting in storage, this is considered a radical shift in the approach to procurement in the oil and gas industry.

Craig Collaboration connects companies looking to sell spare equipment with those looking to buy. Oil and gas companies around the world have substantial surplus equipment stock, much of which is sitting in costly storage, and Craig Collaboration will allow them to realize value from this.

Jill MacDonald, joint managing director of Craig International, said: There is a lot of equipment going unused in the oil and gas industry and it makes sense from a business and environmental point of view to reuse it.

Craig International will provide all Shells spare stock across the globe for resale.

We have developed a system that leads the way in improving efficiency right across the supply chain in the oil and gas industry. Rather than waiting for things to improve, Craig International is delivering inventive approaches and investing in products that make life easier and provide value for clients.

As well as the ability to buy and sell equipment stock, a further function of the Craig Collaboration approach is that it allows businesses to use the platform as an inventory controller.

Our system will flag if a customer is looking for a piece of kit in Aberdeen which their Dubai business has available, said Ms. MacDonald. This eliminates waste and means customers can be fully confident that they are getting best value for their money.

The system we have developed is unique in its capacity to service the equipment buying and selling requirements of the entire oil and gas industry. Any company can sign up and their surplus equipment will be offered to buyers globally with whom we are in contact regularly.

Ms. MacDonald added: With 19 years experience, we are harnessing our knowledge, expertise, contacts with buyers and our global buying power to benefit the industry as whole.

We have generated a great deal of interest in Craig Collaboration since it launched with many well-known operators and drilling companies coming on-board in an easy way for them to increase efficiencies and reduce waste.

Stuart Hay, appointed as ecommerce inventory coordinator at Craig International, will be the focal point for Shell. Mr. Hay has 18 years of oil and gas procurement experience and has worked across the drilling, engineering and construction, subsea and offshore accommodation sectors. He will be supported in his role by an inventory administrator due to be appointed in the coming weeks.

Craig Collaboration also provides sellers with an analysis of the interest expressed on their surplus equipment, allowing clients to make an informed decision on whether or not to dispose of it.

A division of Craig Group, Craig International is a global market leader in oilfield equipment procurement with bases in Europe, South Africa, Middle-east and North America. The company is set to dominate in other sectors as it expands its reach into downstream oil and gas, petrochemicals and manufacturing markets. Craig International now delivers procurement services for refineries and manufacturing sites in all its key regions around the world.

Fugro has been awarded a contract by Shell/BG Kenya for the execution of a seabed survey to detect natural leakages of hydrocarbons. The seeps survey complements a seismic exploration programme that was completed recently offshore Kenya.

Fugro Discovery

Undertaking a four-week campaign of multibeam data acquisition and precise sampling, Fugro will mobilise its specialised survey vessel, Fugro Discovery, to Kenya in March. Seabed sampling will be carried out using a drop corer and multibeam data will be acquired with the latest deepwater high resolution multibeam echo sounder, installed in a newly designed gondola on the vessel hull.

The project is one of many seeps campaigns completed in the worlds oceans for Shell by Fugro and demonstrates the added value of consistent execution of site works and standardised deliverables. Managed under a joint Fugro-Shell Safety Leadership programme, the project optimises both companies expertise in efficient and safe delivery.

Peter Boon, Regional Business Development Manager for Fugro in Africa comments, Seeps surveys are an important part of Fugros site characterisation services and were very pleased to reintroduce the Fugro Discovery to African waters, where she will demonstrate the excellent value they represent when exploration budgets are limited. These important seabed surveys support the decision making process for drilling operations, especially in frontier regions like East Africa.

Olympic Shipping has chosen Kongsberg Maritimes new K-Walk integrated vessel gangway solution for installation aboard the Multipurpose Offshore Vessel (MPSV), Olympic Orion. Designed to significantly increase efficiency and safety for Walk-to-Work duties, K-Walk will be integrated with the advanced Kongsberg Information Management System (K-IMS) and the existing K-Pos Dynamic Positioning system on board Olympic Orion, which will be upgraded as part of the installation in the latter half of 2017.

Olympic Orion will utilize the innovative K-Walk solution following its launch as part of KONGSBERGs new Integration Strategy in Fall 2016. The system takes a new approach to increasing productivity and efficiency for Walk-to-Work vessels by improving operability of key systems on board. In addition to full integration with K-IMS to enable mission and route planning for increased service capability within a wind farm, the system interconnects with the DP and a planning station. The system extends vessel availability by increasing the operational weather window.

Through integrated mission planning, automated vessel maneuvering and gangway hook-up, K-Walk introduces a step-change for increasing efficiency and productivity of the Walk-to-Work operations that are integral to Wind Farm Construction and Maintenance projects. While providing a completely safe, motion compensated gangway for the fast transfer of personnel and materials, integration enables more efficient approach and settlement at wind turbines and more effective logistics. The system is activated prior to entering a wind turbines safety zone, reducing vessel speed and launching the K-Walk hook up process during approach. Because of the integration with the DP, the gangway is able to move into position while the vessel is still moving, positioning it safely as the vessel arrives on station.

The integration of K-Walk with K-IMS is a unique approach that enables in-depth mission planning, resulting in increased productivity and efficiency by finding the most preferred route for increased service capability within the wind farm. The system will be fully connected with Olympic Orions DP system, offering increased operability with a new condition based operator environment, which requires less manpower and has minimal training requirements. The K-Walk solution for Olympic Orion will also improve time for mobility and safety with an integrated lift system for transfer of people and goods, including electric trolleys (under design) for movement of pallets across the gangway. Overall, K-Walk significantly enhances operational time efficiency, which improves productivity with the ability to serve more wind turbines within the same time frame.

We are very satisfied to select Kongsberg Maritimes new fully integrated Gangway solution for our MPSV Olympic Orion, says Bjrn Kvalsund, COO, Olympic Subsea. We also see a potential to install this integrated Gangway solution on board several of our existing vessels in order to provide W2W services into an expanding and interesting market segment.

Olympic Orion embodies the future that we envisioned with the launch of our Integration Strategy last year and we are delighted to work with Olympic Shipping for our cutting-edge new K-Walk solution,said Stene Frsund, Executive Vice President, Global Sales and Marketing, Kongsberg Maritime. K-Walk provides Olympic Orion with total oversight of route planning and gangway hook-up operations. It enables better real-time and long-term management decisions, and empowers safer, more predictable, and efficient operations through reduced human interaction and automation based on the deep integration of critical systems on board.

BOURBON announces its first pipelay contract awarded by Total Gabon for the engineering, procurement, construction and installation of 25 km of 6 rigid pipeline as part of the Hylia Water Injection Project using Zap-Lok technology. This award reflects BOURBON's capacity to offer integrated services and light turnkey projects to major oil & gas companies.

3D view from Cortez Subsea of Bourbon Evolution 800 with pipelay spread

For the execution of this contract, BOURBON is subcontracting key suppliers, mainly Cortez Subsea, for pipelay equipment and Wood Group for the pipeline design and pipelay engineering. Operations are scheduled to start in Q2 2017 offshore Gabon with an MPSV from the Bourbon Evolution 800 series. ROV services and a PSV, all provided by BOURBON, will also support survey and air diving operations for spool and riser installation.

We are very proud of the trust that Total has placed in us for this first pipelay EPCI contract. Such a comprehensive project allows BOURBON and its Gabonese partners to demonstrate our capacity to bring the best integrated services and cost-effective solutions to our clients, commented Patrick Belenfant, BOURBONs Senior VP Subsea Services.

Among the market leaders in marine services for offshore oil & gas, BOURBON offers the most demanding oil & gas companies a wide range of marine services, both surface and sub-surface, for offshore oil & gas fields and wind farms. These extensive services rely on a broad range of the latest-generation vessels and the expertise of more than 9,500 skilled employees. Through its 37 operating subsidiaries the group provides local services as close as possible to customers and their operations throughout the world, of the highest standards of service and safety.

BOURBON provides two operating activities (Marine Services and Subsea Services) and also protects the French coastline for the French Navy.

In 2016, BOURBON'S revenue came to 1,102.6 million and as of December 31, 2016, the company operated a fleet of 514 vessels.

Placed by ICB (Industry Classification Benchmark) in the "Oil Services" sector, BOURBON is listed on the Euronext Paris, Compartment B.

* EPCI: Engineering, Procurement, Construction and Installation.

Ulstein and SeaOwls have launched a pioneering heavy-lift jack-up vessel design. The cruciform structural lay-out makes the solution more than 10% lighter than conventional designs. The concept aims to install the next generation 10-12 MW wind turbines in the same time frame as used today for installing 6-8 MW units.

SeaOwls and Ulstein launched SOUL at the Offshore Wind Journal Conference on 7 February 2017. In combination with a high capacity crane, SOUL enables operators to take the next step in developing offshore wind farms.

The development of this novel jack-up vessel is the logical next step in our strategy to widen our portfolio and become a leading company in supporting the offshore wind industry with more efficient assets, says Tore Ulstein, deputy CEO at Ulstein Group. Combining the vast track record in heavy lift vessel designs from our Dutch Ulstein branch with SeaOwls experience in jack-up technology, resulted in an innovative jack-up vessel concept based on proven technologies.

Scaling-up conventional heavy lift jack-up vessel designs proves challenging due to the disproportional weight increase compared to gain in Variable Deck Load (VDL).

We noticed this created uncertainty with turbine manufacturers, wind farm operators and installation contractors on how to install the future generation wind turbines, as floating vessels are not a viable alternative, comments Erik Snijders, founder and managing director at Rotterdam based SeaOwls. So we went back to the optimal jack-up design, a square platform with the legs spaced out as much as possible. Rotating the platform by 45o provided a natural bow shape with two legs and the crane on vessel center line.

This seemingly simple twist in the design allowed to make a huge improvement in operational aspects as well, adds Bram Lambregts, deputy managing director at Ulstein Design & Solutions BV. With the main crane around the stern leg, optimal main deck reach and over-the-side lifting capabilities is created. And as the hull now houses much larger leg footings, bearing pressures on the seabed are reduced, while the wake of the spud cans does not interfere with the inflow to the propulsion thrusters.

The SOUL series will come in various sizes, allowing the transport of 3 up to 6 of the 10-12MW wind turbines. Still, all loading and installation operations can be performed without the need of ballast water.

A preview of the SOUL concept has been presented to a select group of industry players, which resulted in valuable and very positive feedback from prospective clients, such as: One of the most viable new solutions to meet the installation challenges the offshore wind industry is facing.

Statoil awards Simon Mkster Shipping AS contracts for three emergency response and rescue vessels (ERRV), and Havila Shipping ASA for one ERRV. The contacts have a total value, included options, of NOK 2.7 billion. The vessels will be part of Statoils area-wide emergency response on the Norwegian continental shelf (NCS).

The emergency response vessels play an important role in addressing government authorities and the companys own requirements for rescue, hospital, fire-fighting, emergency towing and oil spill preparedness.

Photo credit: Statoil

Statoil has an extensive emergency preparedness system on the NCS, and through the contracts we have secured four vessels that are tailored to our waters. I look forward to continuing our long-standing and good partnership with Simon Mkster Shipping and Havila Shipping, says Philippe F. Mathieu, Statoils senior vice president for joint operations support.

The contracts will run for seven years, with five one-year extension options. The three vessels from Simon Mkster Shipping are Stril Poseidon, Stril Merkur and Stril Herkules. Havila Shipping has been awarded a contract for the vessel Havila Troll. Statoil has a total of six ERRV vessels on the NCS, and one vessel currently being upgraded to an adequate relief vessel.

The vessels will cover emergency response services on the NCS together with the 24-hour operations center at Sandsli. In addition, Statoil has five operative SAR helicopters on the NCS.

Safety and emergency preparedness are top priorities in our operations. Through the new contracts we are well prepared for important emergency response tasks on the NCS in the years to come. The contracted vessels incorporate some of the most sophisticated technologies for emergency response offshore, says Mathieu.

The area emergency response vessels are fitted with two MOB boats, fire-fighting equipment, minimum 110-tonne towing capacity and an emergency hospital. In addition, the vessels carry oil spill response equipment such as oil booms and skimmers, and storage capacity for oil spill clean-up in accordance with NOFO requirements, in addition to oil dispersing equipment. The vessels also have a stern lifeboat recovery system, and a helipad. In the bid process fuel efficiency has been part of the evaluation criteria.

All contracted vessels have been performing similar tasks for Statoil for many years, and shipping companies and crews are therefore well acquainted with the tasks to be performed.

Statoil is working closely with several private and public players about the emergency preparedness system on the NCS. Through the Norwegian Clean Seas Association for Operating Companies (NOFO) the company has access to oil spill response resources along the entire coast.

ELA Container Offshore GmbH announced the development of a new offshore container type: a 10 m x 3 m wide, high-cube accommodation container with interior hallway and two cabins. The first 24 containers of this new type have already been built at the premises in Haren, Germany. ELA Offshore managed to deliver all required containers from scratch in only 3 months from project kick-off, including design and development up to turnkey delivery on an offshore converter station in the German North Sea.

With the new 33-feet-container, ELA Container Offshore sets a new standard in terms of quality of living and comfortability: A modern and appealing wooden-look for the cabinets and beds, as well as a yacht flooring create more comfort and improve the feel-good factor.

To come up with the best suitable container type, especially for Offshore Windfarms, we sat together with our customer, DNVGL and German authorities, who are responsible for the German Arbeitsstttenrichtlinien (ASR), to create a new generation of container type, says Hans Gatzemeier, Managing Director of ELA Container Offshore GmbH.

The new units accord with the regulations of DNVGL-ST-E273 Portable Offshore Units, April 2016 and ST-E272 2.7-2 Offshore Service Modules Section 3, February 2016. In addition the containers correspond to HSE. All containers have fire detectors, fire extinguishers and emergency escape ways. After connection to the fire fighting-system of the platform as well as the PAGA system, the highest safety standards are guarded.

With the new 33-feet-container, ELA Container Offshore sets a new standard in terms of quality of living and comfortability: A modern and appealing wooden-look for the cabinets and beds, as well as a yacht flooring create more comfort and improve the feel-good factor. Sufficient room space, single sleeper rooms, beds with sizes from L = 2100 mm x W = 1000 mm, ensuite bathrooms, 32 Flatscreen TV, large windows with curtains and very good insulation for high end noise reduction also convinced the German Authorities. They checked everything according to German ASR-Regulations.

The 2-4 pax containers (single or double cabins) provide not only more space per person, but also an inner hallway between the two living cabins, which makes outdoor gangways obsolete. Despite their size and high-end accommodation the containers do not exceed the weight of 9.5 tons.

ELA Offshore managed to deliver all required containers from scratch in only 3 months from project kick-off, including design and development up to turnkey delivery on an offshore converter station in the German North Sea.

Available for sale and rent, the new 33 ft container will add a new standard to the already existing 20 ft ELA Offshore Accommodation Containers. With the new type we offer more possibilities of accommodating the people working offshore. Depending on quantity of extra accommodations needed and available space on deck, we can provide our clients with the best and most cost effective mobile accommodation solution, continues Gatzemeier.

ELA Container has already gained diverse experience in the Offshore-Wind and Offshore Oil & Gas Industry. Whether on pontoons, transformer platforms, rigs or supply vessels - ELA Container is the ideal partner, offering tailor-made concepts for all requirements in the form of Living Quarters, Offices, Dining Rooms, Galleys, Laundries, Recreation or Locker Rooms and all types of Carrying Units. ELA Offshore containers are equipped with all the necessary utilities. This guarantees, in combination with all ELA Offshore features, a long service life, functionality and comfort.

The high quality Containers are Made in Germany according to German quality standards and possess all necessary certifications such as DNV 2.7-1 / EN 12079-1 or DNV 2.7-3, DNV 2.7-2, based on SOLAS, IMO FSS Code and MLC as well as CSC and are approved from several IACS-companies. In terms of fire resistance, an A60 insulation provides high safety standards. Every container will be checked before delivery. Depending on customer requirements, ELA Offshore Containers are individually customized, immediately operational and are available at short notice.

The main features of ELA offshore accommodations include:

Global demand for liquefied natural gas (LNG) reached 265 million tons (MT) in 2016 enough to supply power to around 500 million homes a year. This included an increase in net LNG imports of 17 MT.

Many expected a strong increase in new LNG supplies would outpace demand growth during 2016. Instead, demand growth kept pace with supply as greater than expected demand in Asia and the Middle East absorbed the increase in supply from Australia, according to Shells first LNG Outlook.

Photo credit: Shell

Global LNG trade demonstrated its flexibility time and again in 2016, responding to shortfalls in national and regional gas supply and to new emerging demand, said Maarten Wetselaar, Integrated Gas and New Energies Director at Shell. The outlook for LNG demand is set to grow at twice the rate of gas demand, at 4 to 5% a year between 2015 and 2030.

China and India which are set to continue driving a rise in demand were two of the fastest growing buyers, increasing their imports by a combined 11.9 MT of LNG in 2016. This boosted Chinas LNG imports in 2016 to 27 MT and Indias to 20 MT.

Total global LNG demand increased following the addition of six new importing countries since 2015: Colombia, Egypt, Jamaica, Jordan, Pakistan and Poland. They brought the number of LNG importers to 35, up from around 10 at the start of this century.

Egypt, Jordan and Pakistan were among the fastest growing LNG importers in the world in 2016. Due to local shortages in gas supplies, they imported 13.9 MT of LNG in total.

The bulk of growth in LNG exports in 2016 came from Australia, where exports increased by 15 MT to a total of 44.3 MT. It was also a significant year for the USA, after 2.9 MT of LNG was delivered from the Sabine Pass terminal in Louisiana.

LNG prices are expected to continue to be determined by multiple factors, including oil prices, global LNG supply and demand dynamics and the costs of new LNG facilities. In addition, the growth of LNG trade has evolved into helping meet demand when domestic gas markets face supply shortages.

LNG trade also is changing to meet the needs of buyers, including shorter-term and lower-volume contracts with greater degrees of flexibility. Some emerging LNG buyers have more challenging credit ratings than traditional buyers.

While the industry has been flexible in developing new demand, there has been a decrease in final investment decisions for new supply.

Shell believes further investments will need to be made by the industry to meet growing demand, most of which is set to come from Asia, after 2020.

In China, a government target has been set for gas to make up 15% of the countrys energy mix by 2030, up from 5% in 2015. Meanwhile, Southeast Asia is projected to become a net importer of LNG by 2035, a significant transformation for a region which includes Malaysia and Indonesia currently among the major LNG exporters in the world.

Read the full LNG Outlook

Forum Energy Technologies, Inc. (NYSE:FET) has announced that as part of a long planned transition its Board of Directors appointed Mr. Prady Iyyanki as President and Chief Executive Officer, effective May 16, 2017. Mr. Iyyanki currently serves as President and Chief Operating Officer. Mr. C. Christopher Gaut, the current Chief Executive Officer, will become Executive Chairman. The Board has also nominated Mr. Iyyanki to stand for election as a director at the 2017 Annual Meeting of Stockholders Meeting in May.

Prady Iyyanki, left and C. Christopher Gaut, right. (Photo: Business Wire)

Cris Gaut commented, It has been a privilege to serve as Chairman and CEO of Forum since its inception six and a half years ago. Three years ago we brought Prady on board to create a more professional, streamlined, and efficient organization that was capable of becoming a force to be reckoned with in the oilfield manufacturing space. Since then he has proven himself at every turn to be an excellent leader with strong business judgement. I was pleased to recommend this move to our Board, and I look forward to the continued growth and prosperity of the company under Pradys leadership.

I am honored to lead Forum into its next chapter, said Prady Iyyanki. Cris successfully set the direction for Forums business and financial strategy, led the transition to being a public company and built a firm foundation of trust with our investors and customers. He established Forum as a strong competitor within the oilfield equipment manufacturing sector, and has proven to be an excellent mentor for me and many others. In his new position, he will continue to be actively involved with our larger strategic matters, as well as acquisition and capital markets efforts. I look forward to continuing my strong partnership with Cris.

Prady joined Forum in 2014 after sixteen years of experience with General Electric (GE) in various senior management roles. He served as President and CEO of GE Genbacher/Gas Engines from 2006 2011 and President and CEO of Turbomachinery Equipment from 2011 2012. He has a Bachelor of Science in Engineering from Jawaharlal Nehru Technology University, India and a Master of Science in Engineering from South Dakota State University.

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Categories | Offshore Source

Hornbeck Offshore: A Consolidator In The Offshore Supply Vessel Industry – Seeking Alpha

Investment thesis

Shares of Hornbeck Offshore Services (NYSE:HOS) are an attractive security, even if the industry is in trouble. Unlike its competitors, HOS is well positioned to survive the market downturn.

What is going on?

The outlook for the worldwide Offshore Support Vessel market is bleak and turning darker every day. Shares of Hornbeck Offshore Services plummeted by 22% on February 16 after the company posted its earnings. On that single day, the trading volume reached over 8 million shares, which is one-fourth of the total shares outstanding.

The OSV market is extremely oversupplied. Currently, close to 200 vessels face demand for less than 100.

Over a year ago, HOS already showed signs of strength compared to its competitors: a cleaner balance sheet, a much newer and high-spec fleet, excellent management, and relatively late debt maturities. Now, the market has come to recognize this situation, and even after the recent cut in market prices, HOS still has the largest capitalization among its competitors.

During the earnings call, Hornbeck Offshore's CEO, Todd Hornbeck, made a very interesting comment:

"Third, and as I said earlier, we believe value creation in the offshore vessel space cannot begin, again, without meaningful acquisitions of high-spec assets and businesses over the overleveraged industry players. Given our ultra high-spec fleet profile, successful operating track record, ample cash position, and public company platform, we think we are the natural acquirer in such a transaction, especially in the domestic Jones Act market.

Earlier in this cycle, the industry mantra was lower for longer. The message we have recently been hearing from our customers, almost uniformly, is that they now see oil prices as lower forever. They no longer view this as a U-shape recovery, but an L-shaped recovery, or so we're told.

Deepwater projects can work in that kind of world, but not at economics that drive key pieces of the supply chain out of business. Lower forever must also mean greater efficiencies and reliability in this supply chain. Smart acquisitions can achieve those objectives in the OSV space, given the high operating risk and capital-intensive nature of this business. And for this industry, such acquisitions are necessary."

This has puzzled a few fellow investors. (How can a company in such dire situation turn to acquire "assets and businesses"?) But actually, Mr. Hornbeck has already stated multiple times that he could use the revolving credit facility to finance acquisitions.

Let's take a look at some key balance sheet items:

Cash on hand is certainly not enough to repay the debt. The company's cash position has decreased by $43 million in the last year, or 16%. But the debt starts to mature in late 2019. There is plenty of time for a recovery and for management to find options and creative solutions.

Let's compare Hornbeck Offshore's situation with Tidewater, the largest player in the industry. Tidewater has not defaulted only because the debtholders are granting limited waivers for covenant compliance. Its current liabilities are $2.3 billion, and current assets are $1.16 billion. The company is struggling for survival and is at the mercy of its lenders, but still paid $3 million to management for "Talent Retention".

Looking ahead

We can get a glimpse of the future if we look at the North Sea OSV market, where Solstad Offshore recently acquired 3 competitors. Among those are Farstad Shipping.

Farstad Shipping could not meet its obligations, so the debtholders converted to equity. This meant a wipeout for shareholders, because the shares outstanding jumped from 39 million to 4.9 billion.

Immediately after that, all shares of Farstad were converted into class B shares of Solstad Offshore (the acquirer). The combined Solstad plus Farstad is much larger, and the former debtholders of Farstad can cash out by simply selling their new Solstad shares in the open market. Solstad did not need to lay out cash, and the company acquired very clean assets.

GOM situation

The Gulf of Mexico offshore industry will always need some OSVs, and someone must be there to manage those assets. When debtholders take over failed competitors, they will probably take the logical steps towards maximizing value and cashing out as much as they can.

Many companies that operate in the Gulf have extremely negative cash flows. Some are unable to meet 2017 commitments - like Island Offshore and Gulfmark. As the saying goes, "If something cannot go forever, then eventually it must stop". There are too many companies operating in the OSV market - too many vessels, too many headquarters, and too many G&A expenses.

Consolidation in the industry is going to happen, and there will be a lot of pain for shareholders.

One Bright Side

In the US zone of the Gulf, offshore operations are forced to hire Jones Act-qualified vessels. Those vessels must be owned, crewed and operated by Americans. And if they are owned by a foreign entity, even for one day, the vessels stop qualifying forever.

In order to maximize value in the event of a consolidation, all the assets need to be put under a competent American management with long experience in this industry. This points to very few companies, like HOS and SEACOR Holdings (NYSE:CKH).

Takeaway

My thesis is this: By now, a significant portion of debtholders in the industry are hedge funds that have acquired the debt (i.e., the companies!) at a very low cost basis. They will merge them with the survivors, just like it happened in the North Sea, and sell their new shares in the market.

(That's why they want to do it with a company that is already public - there is no point in merging with Edison Chouest and then be stuck with an illiquid stake in a private company.)

Some facts about HOS:

Yes, there are other companies besides Hornbeck that could be acquirers. Also, HOS could go to zero and be wiped out. But the story is getting better every day. I believe that at current prices, even after a some dilution of current shareholders, the stock could bring a very reasonable return in a few years.

For investors, this has been an exciting roller coaster ride, and the development of this crisis stirs both our interest and our nerves.

Disclosure: I am/we are long HOS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Hornbeck Offshore: A Consolidator In The Offshore Supply Vessel Industry - Seeking Alpha

Dream of Offshore US Wind Power May Be Just Too Ugly for Trump – Bloomberg

Offshore wind companies have spent years struggling to convince skeptics that the future of U.S. energy should include giant windmills at sea. Their job just got a lot harder with the election of Donald J. Trump.

The Republican president -- who champions fossil fuels and called climate change a hoax -- has mocked wind farms as ugly, overpriced and deadly to birds. His mostvirulent criticism targeted an 11-turbine offshore project planned near his Scottish golf resort that he derided as monstrous.

Companies trying to build in the U.S., includingDong Energy A/S and Statoil ASA, are hoping to change Trumps mind. They plan to argue that installing Washington Monument-sized turbines along the Atlantic coast will help the president make good on campaign promises by creating thousands of jobs, boosting domestic manufacturing and restoring U.S. energy independence.

We are a billion-dollar heavy industry that is set to build, employ and invest, Nancy Sopko,manager of advocacy and federal legislative affairs for the industry-funded American Wind Energy Association, said in an interview. We have a great story to tell to this administration.

The push to win over the Trump administration comes as offshore wind is on the brink of success in North America after a decade of false starts.Costs are falling dramatically. Deepwater Wind LLC completed the first project in U.S. waters in August. And in September, the Obama administration outlined plans toease regulatory constraints and take other steps to encourage private development of enough turbines to crank out 86,000 megawatts by 2050. Thats about the equivalent of 86 nuclear reactors.

We are an industry on the rise,ThomasBrostrom, Dongs general manager of North America, said in an interview. We want very much to come in and explain to the new administration what we can do for job creation and energy independence.

A White House spokeswoman did not respond to requests for comment.

The stakes are significant. Dong, Statoil, Deepwater and other companies secured a total of 11 leasesto build offshore wind farms. To move forward, developers will need permits from multiple agencies and, in some instances, federal grants to refurbish ports. For instance, Deepwaters 30-megawatt wind farm off Rhode Island benefited from a $22.3 million U.S.Transportation Department grant to upgrade piers and terminals for use as a staging area.

To be clear, installing turbines at sea requires years of planning, and Trump may be out of office by the time some developers need federal approvals. State governments, meanwhile, remain the biggest drivers of renewable energy development, because they can mandate that utilities get a certain amount of power from offshore wind or other sources.

Nevertheless, offshore developers need a basic level of cooperation in Washington to keep the nascent industry moving forward. "They dont want to lose the progress that theyve made, said Frank Maisano, a Washington-based energy specialist for the lobbying firm Bracewell LLP.

Shoring up Trump administration support will require developers to shedclimate change talking points and dispel any notions that offshore wind is an environmental relic of the Obama administration, said Timothy Fox, an analyst at Washington-based ClearView Energy Partners LLC. It may help that two of the biggest developers -- Dong and Statoil -- have deep roots in offshore oil and gas.

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"Logically there should be a good match here with the Trump administration," Kit Kennedy,the Natural Resources Defense Councils director of energy and transportation, said in an interview. "We will see if ideology gets in the way."

Persuading the president himself could be challenging. The bare-bones energy plan posted on the White House website calls for increasing coal, oil and natural gas production -- but makes no mention of wind or other forms of clean energy. Trump in 2012 tweeted: Not only are wind farms disgusting looking, but even worse they are bad for peoples health.

Ultimately its unclear whether Trumps 140-character appraisals of wind energy will translate into U.S. policy, or if they were simply reactions to windmills potentially spoiling views from his golf coursein Aberdeenshire, Scotland. Either way, the commander-in-chiefs personal support may not be crucial for developers in the U.S.

The key figures for offshore wind companies to persuade are deputy secretaries, directors and others within the Interior and Energy departments. A central player is the yet-to-be-named director of the Bureau of Ocean Energy Management, an Interior Department agency responsible for granting leases to offshore oil, gas and wind developers.

The industry may already have a few key allies. Rick Perry, Trumps proposedenergy secretary, oversaw a record expansion of wind energy during his time as Texas governor. And at least one high-ranking official who has supported offshore wind at the Bureau of Ocean Energy Management -- Acting Director Walter Cruickshank -- remains in place.

We have a lot of experience with this,said Danish ambassador Lars Gert Lose,who is helping Fredericia, Denmark,-based Dong with lobbying efforts. There is a misconception that wind energy is all driven by climate change. But this is a very competitive industry.

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Dream of Offshore US Wind Power May Be Just Too Ugly for Trump - Bloomberg

MSP ‘inundated’ with offshore worker discrimination concerns – BBC News


BBC News
MSP 'inundated' with offshore worker discrimination concerns
BBC News
An MSP has been "inundated" with former oil and gas workers claiming they have been discriminated against when seeking jobs outwith the industry. BBC Scotland revealed this month that Aberdeenshire East MSP Gillian Martin had passed concerns about ...

and more »

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MSP 'inundated' with offshore worker discrimination concerns - BBC News

New tax measure takes aim at Offshore Trusts – BizNews

*This content is brought to you by BDO South Africa

By David Warneke*

A bombshell hidden in the detail of the 2017 Budget review relates to the taxation of offshore trusts. It refers to the 2015 Budget review in which it was announced that measures would be introduced to the tax treatment of foreign companies held by interposed trusts. No specific countermeasures were however introduced and the 2017 Budget review proposes that such countermeasures be introduced to curb abuses.

What appears to be targeted is the fairly common situation in which an offshore discretionary trust is established and holds the shares in an offshore company. Most often, funds are advanced to the offshore trust which subscribes for shares in the offshore company, or funds are advanced direct to the offshore company. The offshore company then invests in foreign shares or other assets. Profits accruing to the offshore company are effectively converted into foreign dividends in the hands of the foreign trust, which escape South African income tax.

The 2015 Budget Review stated that consideration would be given to taxing such foreign companies as controlled foreign companies (CFCs). However, as mentioned above, no countermeasures were enacted.

The implication of treating such a foreign company as a CFC would be that a South African resident or residents would potentially be taxed on the underlying net income of the foreign company (determined as if the foreign company were a SA tax resident) in proportion to their participation rights in the foreign company. If the foreign company had invested in minor holdings of less than 10% in other foreign companies, for example foreign listed securities, then the South African resident would potentially be subject to income tax on dividends received from such foreign listed securities at a maximum effective rate of 20% and capital gains tax on the disposal of such foreign listed securities.

The proposal does not specify the circumstances in which South African residents would be deemed to hold participation rights in the offshore company so that the CFC rules might apply. For example, most foreign trust structures are set up such that the trustees, the majority of whom are foreign resident, have full discretion with regard to the vesting and distribution of income and capital. In such a case the deeming of a South African resident or residents to control the foreign company represents a legal fiction.

It is unclear whether the proposal is likely to seek to tax the beneficiaries of such a discretionary trust on a notional proportion of the net income of the foreign company or to tax the founder of the trust.

However it should be borne in mind that in the majority of cases, funds are introduced into the foreign trust or company by way of a loan. Such loan if made between a South African tax resident and the foreign trust or foreign company on non-arms length terms and conditions would generally give rise to the transfer pricing rules in terms of which the loan is deemed, for fiscal purposes, to be on arms length terms and conditions. An arms length rate of interest is therefore deemed to apply to the loan which interest is subject to income tax in South Africa in the hands of the lender.

If an arms length rate of interest on the loan is subject to income tax in South Africa then hopefully the proposal would not either not apply or compensation would be made for the inclusion of the interest in the hands of South African tax residents.

Clarity will be provided when the first draft of the Taxation Laws Amendment Bill of 2017 is released, most likely to be in June 2017.

Link:

New tax measure takes aim at Offshore Trusts - BizNews

W&T Offshore Expected to Reduce Net Losses in 4Q16 – Market Realist

W&T Offshore's Upcoming 4Q16 Earnings Release: What to Expect PART 1 OF 9

W&T Offshore (WTI) is set to report its 4Q16 and fiscal 2016 earnings on March 1, 2017, after the market closes. For 4Q16, excluding one-time items, the current consensus EPS (earnings per share) estimate for W&T Offshore is -$0.13. W&T Offshore is expected to cut its losses by more than 48% in 4Q16 from the adjusted EPS of -$0.44 in 4Q15.

On a sequential basis and excluding one-time items, W&T Offshores 4Q16 current EPS estimate indicates ~26% lower losses than the adjusted EPS of -$0.24 in 3Q16.

Although W&T Offshore reported negativeincome in 3Q16, it washigher thanin 3Q15. Correspondingly, W&T Offshores adjusted EPS were higher in 3Q16, at -$0.24, compared with -$0.82 in 3Q15.

W&T Offshores 3Q16 adjusted net income excludes one-time charges and benefits of ~$68 million. Most of that total was related to the impairments of natural gas and oil properties, tax-related adjustments, and a gain on exchange of debt. Including these one-time items, W&T Offshores net GAAP (generally accepted accounting principles) income was $46 million ($0.48 per share) in 3Q16, compared with -$478 million (-$6.29 per share) in 3Q15.

Peers Diamondback Energy (FANG) and EOG Resources (EOG) reported net income of approximately -$2.2 million (-$0.03 per share) and -$190 million (-$0.35 per share), respectively, in 3Q16.

In fiscal 2016, excluding one-time items, Wall Street analysts expect W&T Offshore to report adjusted net income of approximately -$141 million, compared with -$223 million in 2015. Excluding one-time items, Wall Street analysts expect W&T Offshore to report EPS of -$1.86 in 2016, compared with -$2.94 in 2015. In the next part, well take a look at W&T Offshores revenue estimates.

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W&T Offshore Expected to Reduce Net Losses in 4Q16 - Market Realist

Trump to seek jobs advice from firms that offshore US work – Reuters

By Andy Sullivan | WASHINGTON

WASHINGTON President Donald Trump, who has vowed to stop U.S. manufacturing from disappearing overseas, will seek job-creation advice on Thursday from at least five companies that are laying off thousands of workers as they shift production abroad.

Caterpillar Inc (CAT.N), United Technologies Corp (UTX.N), Dana Inc (DAN.N), 3M Co (MMM.N) and General Electric Co (GE.N), are offshoring work to Mexico, China, India and other countries, according to a Reuters review of U.S. Labor Department records.

Executives from the five companies are among a group of business leaders due to meet with Trump on Thursday to discuss how to help the president deliver on his promise to increase factory employment, according to the White House.

About 2,300 U.S. workers at these five companies stand to lose their jobs within the next two years as a result of offshoring, according to the Labor Department's Trade Adjustment Assistance Program, which provides retraining benefits to workers displaced by global trade. Reuters obtained the information through a Freedom of Information Act request.

The companies confirmed the planned job cuts to Reuters. It is not clear whether the other 19 executives due to meet with Trump on Thursday are currently offshoring work, as the TAA program does not cover all workers who lose their jobs due to global trade.

The lost jobs amount to a small fraction of the hundreds of thousands of U.S. workers employed by those involved in the meeting. General Electric, for example, employs 125,000 U.S. workers, financial filings show.

On the campaign trail and in the White House, Trump has painted globalization as a zero-sum game that has enriched low-wage countries while leaving the United States littered with abandoned factories and underemployed workers, and he has threatened to tax companies that offshore U.S. jobs.

The experience of companies on Trump's task force, however, shows the reality is more complex in a world where they are serving customers across the globe. Several said they were creating many new U.S. factory jobs even as they move work to other countries.

It's not clear whether Trump will opt for the carrot or the stick.

Trump plans to meet business leaders to hear their reasons for "why they're going offshore," said a White House aide who spoke on condition of anonymity.

Blue-collar workers who share Trump's skepticism of global trade say they will be watching closely to see if he will try to save their jobs. "I don't think he's a typical politician, so there is hope alive for middle-class families that he will do something," said Scott Schmidt, one of 222 workers at a GE engine plant in Waukesha, Wisconsin who are due to lose their jobs later this year when the company shifts production to Canada.

General Electric CEO Jeffrey Immelt is among those due to meet with Trump on Thursday.

GE says it is closing its Waukesha plant because Congress has hobbled the U.S. Export-Import Bank's ability to finance large export orders while most other industrialized nations still offer such financial support. The company says it laid off 225 workers last year at a Houston factory for the same reason, shifting production to France, the United Kingdom and Hungary.

GE says it is also closing an Ohio factory and laying off 180 workers because consumers are buying fewer of the florescent and incandescent light bulbs they make there. What production remains will be handled by a factory in Hungary.

OFFSHORING AND ONSHORING

The U.S. economy lost 6 million manufacturing jobs from 2000 to 2010, roughly one-third of its total, in part due to offshoring, but the sector has added 900,000 jobs since then, according to the U.S. Bureau of Labor Statistics.

Multinational companies say labor costs now are only one factor they consider when deciding where to manufacture. An auto maker, for example, may decide to build a particular model in the country where sales are strongest, prompting parts suppliers to set up there as well so they can turn around orders quickly.

The offshoring picture is also more complex than official statistics indicate as a shuttered factory in the United States does not always mean a new factory abroad.

When auto-parts maker Dana Corp closes a factory later this year in Glasgow, Kentucky that is operating at 20 percent of capacity, one of its plants in Ohio will pick up the work, along with other factories in Mexico, India and China. Dana CEO James Kamsickas is among those scheduled to meet with Trump on Thursday.

The company plans to hire nearly 700 U.S. workers over the next three years as it expands factories in four U.S. states, spokesman Jeff Cole said.

That is little comfort to the 223 people in Kentucky who will lose their jobs. "It seems like all these CEOs and companies have turned their backs on the American worker," said Dana employee Tim Wells, one of those who will be laid off.

LAYOFFS STILL PLANNED

The group also includes United Technologies CEO Gregory Hayes, who took heat from Trump last year for planning to move jobs from Indianapolis to Mexico. The company struck a deal with the incoming president in November to preserve roughly 700 jobs in exchange for $7 million in tax breaks.

United Technologies says it still plans to lay off 786 workers at a separate Indiana plant and move production to Mexico this year. The company is also moving work from a facility in Arden Hills, Minnesota, resulting in a loss of 72 jobs. Most of that work is staying in the United States but some is moving to Poland, spokeswoman Bethany Sherman said, and some of the affected workers will be offered positions elsewhere.

The company is adding more than 1,000 new jobs in the United States, Sherman said.

Other participants include Caterpillar Chairman Doug Oberhelman, who oversees a company that is laying off 712 workers in the American South and Midwest and moving the work to China, Mexico, Italy, France and Germany as it weathers the largest sales slump in its history. A Caterpillar spokesman said it is simultaneously creating 1,300 new manufacturing jobs elsewhere in the United States.

Also due to participate is Inge Thulin, CEO of 3M, which is eliminating 130 jobs in suburban Cincinnati and moving production to Mexico. The company says it has added more than 2,000 U.S. manufacturing jobs over the last five years.

(Additional reporting by David Shepardson; Editing by Ross Colvin and Bill Rigby)

President Donald Trump's administration on Wednesday revoked landmark guidance to public schools letting transgender students use the bathrooms of their choice, reversing a signature initiative of former Democratic President Barack Obama.

MEXICO CITY A bid by U.S. President Donald Trump to deport non-Mexican illegal migrants to Mexico that has enraged Mexicans will top the agenda when officials from both countries meet on Thursday amid a deepening rift between the two nations.

WASHINGTON Conservatives are all smiles this week at an annual convention in Washington, celebrating President Donald Trump's win, but beneath the surface lurk tensions central to how Republicans will govern in the next two years and the 2018 election outlook.

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Trump to seek jobs advice from firms that offshore US work - Reuters

Russia inks second Turkish Stream pipe offshore construction contract – New Europe

Published 20:07 February 22, 2017

Updated 20:07 February 22, 2017

South Stream Transport BV, Allseas Group sign construction contract for second string of offshore section

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Gazproms South Stream Transport BV and Swiss-based offshore pipe-laying and subsea construction company Allseas Group signed on February 20 in Amsterdam a contract to build the second string of the Turkish Stream gas pipelines offshore section, Gazprom said in a press release.

The document was signed as part of the option included in the construction contract for the pipelines first string, which had been inked in 2016, the Russain gas monopoly said.

In a similar fashion to the construction of Turkish Streams first string, Allseas plans to use Pioneering Spirit, the worlds largest construction vessel, to lay more than 900 kilometres of pipes across the seabed for the second string of the pipeline.

The first string of the gas pipeline is intended for Turkish consumers, while the second string will deliver gas to the border of Greece and Turkey and onto southern and southeastern Europe.

While the first string to Turkey is likely to be completed, the second string to Europe has to abide by EU law and is facing resistance from Brussels since it will not add to the blocs diversification of supply sources. The project is supposed to replace Russias plans to build South Stream that were abandoned in December 2014.

Each string of Turkish Stream will have the throughput capacity of 15.75 billion cubic metres of gas per year. On October 10, 2016, Russia and Turkey signed the Intergovernmental Agreement on the Turkish Stream project.

South Stream Transport BV, a wholly-owned subsidiary of Gazprom, is responsible for the construction of Turkish Streams offshore section.

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Russia inks second Turkish Stream pipe offshore construction contract - New Europe

Fugro to conduct natural leakage survey in offshore Kenya … – Offshore Technology

Fugro has received a contract from Shell / BG Kenya to conduct a seabed survey in the offshore region off the East African coast to identify natural leakages of hydrocarbons.

This seeps survey will complement the seismic exploration programme that was completed recently in offshore Kenya. The seeps campaign will acquire multibeam data and precise sampling over four weeks.

Fugro has planned to send its specialised survey vessel, Fugro Discovery, to Kenya next month to conduct the campaign.

The company will perform seabed sampling using a drop corer.

Fugro also stated that multibeam data will be collected using the latest deepwater high-resolution echo sounder, which will be installed on a newly designed gondola on the vessel hull.

"These important seabed surveys support the decision-making process for drilling operations, especially in frontier regions such as East Africa."

Fugro regional business development manager in Africa Peter Boon said: Seeps surveys are an important part of Fugros site characterisation services and were very pleased to reintroduce the Fugro Discovery to African waters, where she will demonstrate the excellent value they represent when exploration budgets are limited.

These important seabed surveys support the decision-making process for drilling operations, especially in frontier regions like East Africa.

This project will be managed under the joint Fugro-Shell Safety Leadership programme to ensure efficiency and safe delivery.

Fugro has completed multiple seeps campaigns for Shell worldwide.

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Fugro to conduct natural leakage survey in offshore Kenya ... - Offshore Technology