Daily Archives: April 23, 2017

Singapores Keppel Corporation, the worlds largest offshore rig builder, said it expects an extended slowdown in the offshore sector even though oil prices have recovered from their historically low levels a year ago. This is due to, among other factors, the oversupply of rigs and support vessels. It will take some time before the industry fully recovers, Loh Chin Hua, Keppels chief executive, said, CNBC reported. His remarks are a testament to challenges that the oil support services sector still faces. The recovery in oil prices have yet to translate into greater oil exploration and production activities, which will help to shore up demand for rigs and support vessels. The prolonged slowdown resulted in Keppel reducing its global workforce in its offshore and marine unit by close to 18,000, or about 49%, since the start of 2015, according to Loh. The company also stopped operations at two overseas yards and announced plans to close three in Singapore. While Keppels offshore and marine unit has held up against an unfavorable environment, smaller players in the industry are not as lucky. Singapore-listed Swiber Holdings and Ezra Holdings made headlines after failing to repay their debt, leading to their bankerswhich include the three largest lenders in Singaporeto put aside more money to cover for bad loans coming from the beleaguered sector. Analysts agreed that demand for the oil support services looks set to remain sluggish for now, but noted that outlook is slowing improving. Expectations are low, and while there is unlikely to be demand for new-built rigs, there remains the possibility of production-related orders, as well as floating liquefied natural gas orders, said OCBC Investment Research analyst Low Pei Han in a note.

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No Rescue in Sight for Offshore Services - Financial Tribune

Oil is trying to recover after Wednesday's shellacking, but oversupply fears still remain. As rumors and murmurs circulate about an extension to the OPEC production cut, hark, here are five things to consider in oil markets today:

1) Wednesday we mentioned how we're seeing a strong influx of arrivals into the U.S. Gulf Coast from the Middle East this week (something we originally alluded to last month). This is in response to an increase in March loadings heading to the U.S., after Middle East producers favored sending crude to Asia in January and February.

That said, while we are seeing increasing arrivals into the U.S. Gulf, it may not necessarily translate to higher imports this week. After reaching its lowest point since last September early last week, crude waiting offshore in the U.S. Gulf has been rising, up over 9 million barrels in the last ten days:

2) We've discussed recently here how more Latin American and West African barrels have been heading towards Asia, pulled by favorable price spreads (i.e., Brent and WTI versus the Dubai-Oman benchmark). It is important to remember, however, that crude flows do come in the other direction.

As our ClipperData illustrate below, the U.S. receives on average one and a half million barrels each month from Southeast Asia, with the majority of this coming from Indonesia (and light sweet Minas crude at that). We also see grades from Vietnam, Malaysia and Thailand, which - along with the Indonesian grades - generally all head to the Hawaiian islands.

We do occasionally see some Southeast Asian barrels arrive on the West Coast, however. For example, Kutubu blend from Papua New Guinea was discharged at BP's (NYSE:BP) Ferndale refinery this month. This is the first arrival of the light crude grade to U.S. shores on our records.

3) The chart below is from this Bloomberg article, which endorses our well-worn mantra that OPEC members had the 'pedal to the metal' at the end of last year: they exported as much as they possibly could. Hence, all of the cartel's efforts in the first half of this year is being spent unwinding the impact of that exuberance.

Bloomberg uses the IEA's supply and demand projections to highlight that it will take until the end of June for OPEC production cuts to bring stockpiles back in line with December's level. This will leave inventories still some 200 million barrels above the 5-year average, leaving OPEC a lot of work still to do to achieve their goal. From this data point alone, it seems fair to assume that OPEC will roll over their production cut deal into the second half of the year.

4) The latest drilling productivity report from the EIA was particularly interesting due to its latest data on drilled but uncompleted wells (DUCs, quack). Not only are we seeing DUCs rise to a new record in the Permian Basin (hark, up 90 - or 5 percent - to 1864 wells), but Eagle Ford is also rising (hark, up 26 to 1,285). The ability to bring incremental volume to market as needed only further endorses expectations for an amply-supplied domestic market going forward.

5) Finally, stat of the day comes from this article about Venezuela. Eighteen of PdVSA's 31 oil tankers were out of commission at the end of March due to either being in disrepair or needing to be cleaned. Vessels are crude-stained and need to be cleaned before entering foreign ports.

To make up for the lost tankers, PdVSA is leasing more than 50 tankers, at a cost of up to $1 million a month per vessel. With the oil sector accounting for ~90 percent of Venezuela's government revenues, it appears both its oil sector and broader economy are spiraling out of control.

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Crude Waiting Offshore In U.S. Gulf Rises | Seeking Alpha - Seeking Alpha

UPDATE: This story was originally published on April 7. On April 22, the Trump Administration said itwould honor an Obama-era agreement with Australia, under which the United States would resettle up to 1,250 asylum seekers stuck in offshore processing camps on two South Pacific islands: Manus in Papua New Guinea and the tiny island nation of Nauru.Back in January, President Donald Trump described the deal as "dumb".

In Sydney, Vice President Mike Pence said the deal would be subject to vetting and that honoring it "doesn't mean we admire the agreement." Part of the agreement is that in return for the US taking the refugees from Manus and Nauru, Australia will resettle some refugees from El Salvador, Guatemala and Honduras who are in refugee camps in Costa Rica.

This means that Abdul Aziz Muhamat, who has been in the detention camp on Manus Island for almost four years (and the subject of our story below), has a good chance of being resettled in the United States. We will continue to monitor the story.

Remember that "dumb deal" President Donald Trump tweeted about back in January, after his less-than-cordial phone call with Australia's prime minister?

It had to do with an Obama-era pledge to accept migrants into the US that Australia rejected. Trump put it this way:

Well,some of those "illegal immigrants" have been stuck in Australian offshore detention camps for almost four years.One of them is Aziz, a 25-year-old asylum-seeker from Sudan.

"We have been locked away in a place where it's an isolated island and far away from the [others]. When you cry or when you scream, no one can hear you."

Aziz had the bad luck of entering Australian waters aboard a smuggler's boat from Indonesia in October 2013, just a few months after a new law had taken effect. The law said that asylum-seekers arriving in Australia by boat would no longer be allowed into the country, ever not even for processing. And so after his boat was intercepted, Aziz was flown to anAustralian-funded immigration detention center on Manus Island, which is part of Papua New Guinea.

Fast-forward some 864 days, to March 2016. Aziz gets a WhatsApp audio message fromAustralian journalist Michael Green. Green was investigating conditions in Australia's detention camp on Manus Island, and someone gave him Aziz's phone number.

Hisfirst audio message to Aziz: "Hi, this is Michael here. I just thought that I would leave a voice message so that you could hear my voice. Bye."

Aziz responded. "Michael, yeah bro. Uh, how you doing? Um, good to hear from you. So, how's your day and how things are going with you down there?"

Green was entranced. "From the first night that I sent him messages, really from the first one, Aziz was just so warm and generous with his answers. And I had been a bit apprehensive because, you know, who am I? I'm just some guy contacting him."

Some 3,600 audio messages later, Green and Aziz are still audio pen pals. The Australian journalist has created a podcast, The Messenger, about Aziz and what life is like for those in indefinite detention in Australia's deeply disputed offshorecamps.

The Australian-funded camp where Aziz resides is called the Manus Regional Processing Centre, but there hasn't been much processing of the detainees' asylum applications. Many of the roughly 800 men at Manus have been languishing there for several years.

For Aziz, his audio messaging relationship with Green has been a godsend. In one early message, Aziz says:"I was just looking for something ... to pass ... my time. And I was looking for something that [can] help me to reinvigorate my memory. To be honest, I forgot heaps because our brain is not really functioning anymore because we have been in this place for a long time and whatever we had got we had lost it."

Aziz had a tough life even before he ended up in indefinitedetention on a remote Pacific island.He's from the Darfur region of Sudan. His family fled their village when he was 16 because of the conflict there. For the next three years he livedin a refugee camp his family is still there until his father persuaded him to leave. Sudanese rebel militias were raiding refugee campsand looking for fighting-age boys. Aziz first made his way toSudan's capital, Khartoum, to live with an uncle. But it was too dangerous there so he proceeded toIndonesia. That didn't work out either. His final try: the smuggler's boat to Australia which landed him on Manus Island.

Conditions at the Manus camp are grim. Early on, the detainees lived in tents and there was no air-conditioning on the blazing hot tropical island. For a long time they couldn't leave the camp or have phones, though Aziz had one smuggled into him. Eventually, they got A/C, a gym, and some English classes, and a local court ruled that the camp had to allow the detainees phones and give them permission to leave the camp for trips into the nearby town.

"What I learned really is that it's this strange combination of both being ... indefinite, there's nothing happening," says journalist Green. "But at the same time it's incredibly volatile. The men there are following the news incredibly closely about what's going to happen to them. And policies change a lot. Rumors spring up. Rules constantly change about what they are and are not allowed to do. It's a really troubling place."

Another message from Aziz: "I have to do what I could to protect myself and to keep myself, like, active. I'm an energetic person and I don't want to lose my energy. Sometime I play soccer and I do other different stuff. I do reading and writing, a little bit of everything because I just want to keep myself active and I don't want to, like, harm myself."

Aziz has told Green that he's seen some detainees cut themselves with razors, swallow nail clippers and laundry powder, drink shampoo, and jump from fences. Then there's the constant depressing feeling of never knowing when they'll be able to leave the island and be resettled somewhere else. "Everything about their lives is controlled," says Green. "They have to queue up for everything. They have to ask for toilet paper.They have to queue up forlaundry powder. They basically can't make any decisions about their own lives and that has a really debilitating effect on people."

At one point, Green worried that he was being too intrusive in his audio messages to Aziz.

Message from Green: "I just want to say that if you don't want to answer any questions, don't worry about it. Or if you don't [feel] like answering, just tell me because I'll probably just keep asking questions until you tell me to leave you alone."

Message from Aziz: "Oh, come on Michael. Just ask me any question. I'm not the kind of man to say don't ask me or don't do that to me, man. I'm happy to answer any question."

Their conversation is not in real time, but in 30-second sound bursts."It's really strange," says Green. "At various times, I'll look at my phone and there might be a hundred or 150 messages from Aziz and I'll spend the next few hours going through them. Not only that, they don't necessarily come through in the order that he sendsthem, which is really confusing. You know I feel like I know him so well but I don't get the pleasure of a free-flowing conversation."

In Australia, the offshore detention camps are deeply controversial. That's why the November 2016 agreement Australia struck withthe outgoing Obama administrationto resettle the refugees was so important. It provided a solution for both the detainees and the Australian government.

After Aziz and the other detainees heard about the deal, they were ecstatic.

Message from Aziz: "People were really happy. We are really happy. You know, kind of like someone who has lost hope and then finally they got it back. They got it back. They were so happy about the deal."

But then Donald Trump was elected and had that fateful phone call with Australia's Prime Minister Malcolm Turnbull. After that came Trump's attempted ban on travel to the US from Muslim-majority nations, which targeted countries that are heavily represented among the detainees on Manus Island and Australia's other offshore camp on the island nation of Nauru.

Green messaged Aziz: "And so what do you think's going to happen next?"

Aziz responded: "I feel like this is kind of my destiny. After this prison, I may end up in another prison or end up in another place or I will have a better life or, I don't know what will happen. But from what I can see right now, I'm still having a dark future."

But there are signs that the United States may honor the Obama administration's agreement with Australia, after all. There are reports in the Australian press that Homeland Security officials have been on Manus doing prescreening, fingerprinting and photographing with some detainees. Those are preliminary steps in the process of resettlement to the US.

In response to a query from this reporter, a State Department official emailed: Initial pre-screening interviews by a team from the Department of States Resettlement Support Center of refugees referred for resettlement consideration on Nauru and Manus have been completed as planned and DHS/USCIS interviews began on April 2. ... The United States agreed to consider referrals from the UN High Commissioner for Refugees (UNHCR) of refugees now residing in facilities in Nauru and Manus Island, Papua New Guinea (PNG). These refugees are of special interest to UNHCR and the United States is engaged in this resettlement effort on a humanitarian basis.

But that's the State Department. One office that hasn't yet weighed in on the process, which seems to have already begun, is the White House.

From PRI's The World 2017 PRI

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New hope for a Sudanese asylum-seeker stuck in an Australian offshore detention camp - Delmarva Public Radio

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After German tender, Belgium may revoke offshore concessions Recharge (subscription) Belgium's government to the chagrin of developers considers to revoke the concessions for the Seastar, Mermaid and Northwester 2 offshore wind projects in order to allocate future support through a competitive tendering process. The move could be a ...

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After German tender, Belgium may revoke offshore concessions - Recharge (subscription)

Clean Energy News (blog)

A senator attacked Trump and Congress on offshore oil drilling. We fact-check the claims. Miami Herald On the anniversary of the Deepwater Horizon BP oil spill, Sen. Edward Markey, D-Mass., attacked President Donald Trump for his stance on drilling and portrayed Congress as doing nothing in the aftermath of the 2010 explosion. Trump looking to open up ... Deepwater Horizon Anniversary Reminds Why Offshore Drilling Should Be Phased Out, Not ExpandedClean Energy News (blog) all 49 news articles »

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A senator attacked Trump and Congress on offshore oil drilling. We fact-check the claims. - Miami Herald