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Coronavirus Outbreak: VLCCs Hit the Hardest

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Coronavirus Outbreak: VLCCs Hit the Hardest

…As Coronavirus Case Confirmed after Hundreds Leave Cruise Ship Westerdam***

The daily cost of hiring a very large crude carrier (VLCC) for 12 months has fallen by over 20% in the last month predominantly impacted by the outbreak of coronavirus in China and the slashing of its demand for oil, data from VesselsValue shows.

Some 79% of China’s seaborne crude oil shipments arrive by VLCCs, while Suezmaxes and Aframaxes represent only 9% and 10% respectively, according to the data from Poten and Partners.

The VesselsValue’s charter rate assessment indicates that the fall equals to USD 4 million over a one year period, or a fall from USD 53,460 per day on January 14, 2020, to USD 42,250 per day on February 14, 2020.

Spot earnings have fallen by over 70% during the same period, the valuation agency said.

The dwindling trend is evident on the VLCC route from the Middle East to China, marking a drop in demand from 3.42 billion ton-miles per day in 2019 to practically zero in February 2020.

In the meantime, However, tankers are flexible and can be redeployed. As time progresses, we expect the market to “normalize” to some extent,” Poten said in its weekly overview on the tanker market.

“As rates have come down, relatively cheap VLCCs will encroach on Suezmax routes in the Atlantic Basin and they
may be used for floating storage, especially now that the oil markets have moved into contango. There have been various reports in recent weeks of traders and oil companies looking to use vessels for floating storage to take advantage of this contango play.”

The outbreak has also seen a major break in the sale and purchase of vessels, as well as delays of newbuilding deliveries and repairs, with the majority of Chinese shipbuilders invoking Force Majeure clauses.

Of the total orderbook of 389 tankers from MR’s up to VLCC that are under construction worldwide, 99 (25%) are being built in China, according to the data from Poten.

Many of the ships, especially the ones scheduled for delivery in 2020 are expected to be delayed as shipyards face shortages of labor and parts.

This also applies to the installation of scrubbers and ballast water treatment systems that owners had planned in Chinese yards, which are expected to be pushed.

“There are diverging views on whether we have seen the worst of the outbreak or whether it will take some time to get under control, but oil companies are already positioning themselves to quickly ramp up crude purchases to take advantage of lower oil prices. Recent oil prices rallies indicate that some refiners are already buying in anticipation of a recovery,” the report reads.

Wood Mackenzie estimates gas demand loss in China had reached 2 billion cubic metres (bcm) by the end of the first week in February, with more than half of this loss concentrated in the industrial sector.

With a resumption in economic activity, the consultancy group estimates a full-year gas demand reduction of between 6 bcm and 14 bcm in 2020, depending on the length of time required to contain the outbreak.

Year-on-year growth rates drop to 6% and 4%, respectively, mostly as a result of Q1 downgrade, as compared to pre-coronavirus outlook’s 8%.

The downside impact to Chinese LNG demand ranges between 2.6 million tonnes (Mt) ‘best case’ with recovery by April and 6.3 Mt in a more ‘prolonged case’ with a slower return to normal.

“The coronavirus outbreak and its impact on Chinese gas demand could not have come at a worse time for the already oversupplied global LNG market. Disappointing APAC demand growth contributed to the halving of LNG prices through 2019, and with further new volumes emerging from US producers, we were already anticipating lower prices through 2020,” WoodMac said.

“With too much LNG, and nowhere left to place it, it looks like a supply correction is needed to balance the market. We are expecting supply response in some markets like Egypt and potentially in Eastern Australia, where the likes of Shell and APLNG could attempt to sell gas into the domestic Queensland gas market. However, it is US Gulf producers who have the highest marginal cost of supply and the most flexibility.”

LNG contracts under force majeure

The Chinese government said it would offer support for companies seeking to declare force majeure on international contracts. The first such reported notes were sent by CNOOC last week to LNG suppliers, and CNPC and Sinopec could follow suit.

Entering force majeure is rare in LNG markets and will be contractually complex, WoodMac explains.

Contract wording will need to explicitly include epidemics as force majeure events. Demand reduction on its own or a notice by a relevant Chinese government authority will likely be insufficient. In addition, prior to being released from their obligations to receive a cargo, buyers would need to follow contract procedures, proving that actions have been taken to minimize and overcome the impact of the force majeure event.

The consulting group believes that while major Chinese buyers may call for force majeure, suppliers may instead insist on trying to defer deliveries to later in the year once the demand impact of coronavirus has diminished.

“Given the wide spread between high contracted prices and low spot market prices expected to persist through 2020, there is a strong commercial incentive for each side to resist the actions of the other. If buyers do succeed in exercising force majeure, the revenue impact on sellers could be significant. The approximate price for many of these oil-indexed contracts is around 14.5% of oil range, equating to US$8.83 per million British thermal units (Mmbtu) (using US$54 per barrel of oil equivalent); this compares with spot prices of around US$3.15/MMBtu,” WoodMac estimates.

In the meantime, a female passenger, who recently disembarked Holland America Line’s cruise ship Westerdam in Cambodia, tested positive for coronavirus in Malaysia.

The woman, an American national, was stopped at the Kuala Lumpur airport in Malaysia and found infected with COVID-19, the US Embassy Cambodia said.

“One female guest remains in a hospital in Malaysia with a reported positive result for COVID-19 according to Malaysian Deputy Prime Minister Dr. Wan Azizah Wan Ismail. She is currently in stable condition. Her traveling companion tested negative for COVID-19,” Holland America Line said in a separate statement.

“We are in close coordination with some of the leading health experts from around the world,” Dr. Grant Tarling, Chief Medical Officer for Holland America Line, explained.

Also read:  Coronavirus Outbreak: Royal Caribbean Cancels 18 Sailings

“These experts are working with the appropriate national health authorities to investigate and follow-up with any individuals who may have come in contact with the guest.”

The coronavirus case was found after hundreds of cruise passengers have disembarked the cruise ship since Friday.

Last week, Cambodian authorities granted clearance to Westerdam to begin disembarkation of passengers in Sihanoukville.

Westerdam was allowed to dock in Cambodia after it had been banned from several other ports due to the coronavirus threat. Prior to arrival in  Sihanoukville, all 2,257 passengers and crew were screened for illness including the taking of individual temperatures. No individual at that time was identified with an elevated temperature, according to the cruise line.

Holland America Line added that guests who were able to disembark in Cambodia underwent additional health screening and temperature checks. Furthermore, the passports of everyone on board were reviewed to ensure no one had traveled through mainland China in the 14 days prior to the cruise.

During the voyage, there was no indication of the infection on board. The guest who tested positive did not visit the ship’s medical center to report any symptoms of illness. An additional 20 guests who reported to the medical center during the cruise were tested by health officials for COVID-19, and all results were confirmed negative.

“Westerdam remains alongside in Sihanoukville, Cambodia, where officials from the Cambodian Health Ministry are on board today to complete testing for COVID-19 on the 255 guests and 747 crew that are awaiting clearance,” Holland America Line informed on February 17, adding that the process is expected to take several days.

 

 

World Maritime News

 

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NNPP: Clergyman Predicts Peace, Stronger Party

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NNPP: Clergyman Predicts Peace, Stronger Party

…As NAGAFF Members seek God’s Intervention over intractable party Crisis

A clergyman, Pastor Joel Uzor, has predicted a new era of peace and the emergence of a stronger New Nigerian Peoples Party (NNPP) following divine intervention, sequel to bouts of selfless prayers by members of the National Association of Government Approved Freight Forwarders (NAGAFF), on Thursday.

The faithful NAGAFF members on Thursday defied the heavy downpour, to sincerely seek the face of God, and pray that the crisis rocking their party will soon end, and the party should get stronger in the future.

Speaking during the prayer session organized by NAGAFF members for the survival of NNPP, Pastor Uzor stressed that enemies of the party will soon give way for genuine members, and this will lead to a stronger and better NNPP.

The clergyman, who presides over the Rock of Evidence Assembly, emphasized the importance of prayer in overcoming the crisis, citing relevant scriptures to support his message.

Dr. Boniface Aniebonam

He prophesied that NNPP would emerge stronger from the crisis, with those bent on destroying the party leaving peacefully without troubling genuine members.

Pastor Uzor described the controversy as a prolonged disagreement between two or more parties, citing examples from the Bible, including the story of Abraham and Lot.

 He also encouraged NAGAFF members to pray fervently for God’s intervention towards not only a peaceful political party. but even a peaceful Nigeria.

Dr. Boniface Aniebonam, Founder of NAGAFF and NNPP, also spoke at the event, describing the association as a prayerful group. He lamented the internal crisis in NNPP, saying it is uncalled for, and emphasized the need for God’s intervention to achieve the desired peace.

The crisis has brought together, concerned members of the business community with the political membership of the party, in going spiritual; and praying for peace and stability in the party.

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NNPP Crisis: Freight Forwarders Defy Rain To Pray For Peace

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NNPP Crisis: Freight Forwarders Defy Rain To Pray For Peace

The grey line between Commerce and Politics further blurred on Thursday as Members of the National Association of Government Approved Freight Forwarders (NAGAFF) defied a heavy rain to offer prayers for peace in the New Nigeria Peoples Party (NNPP).

Crisis hit the maritime people’s dominated party, the NNPP, following the alleged attempt by its former Presidential flag, Rabiu Kwankwaso, his alleged expulsion from the party, and the subsequent cacophony of allegations and counter allegations, plunging the freight forwarders’ pride into internal crisis.

The prayer session, led by the Chairman of the Board of Trustees of the association, Mr Chidiebere Enelaman, was held at the NAGAFF Headquarters in Apapa, Lagos.

Enelama said that the association decided to hold the prayers because of its close ties with the party, its brainchild which was founded in 2002 by NAGAFF’s founder, Dr Boniface Aniebonam.

“Almost all NAGAFF members are members of the NNPP. The party was formed not only to win elections in Nigeria but to propagate issues that would be favourable to the Maritime sector.

“It is sad to watch the ongoing internal wrangling and not intervene.

NNPP CRISIS: NAGAFF Goes Spiritual, Organizes Prayer Session To Entrench Peace

“We believe so much in the power of the Almighty and we believe He will restore peace to the NNPP,” he said.

The chairman said that the prayers were a response to the internal crisis brewing within NNPP, particularly concerning the expulsion of Sen. Rabiu Kwankwaso, the party’s 2023 Presidential Candidate, due to alleged anti-party activities.

“NAGAFF as the parent body of the NNPP, under the leadership of Aniebonam, shall continue to appreciate and remember the role played by Kwankwaso in the last presidential elections.

“We hope that God shall intervene in the internal wranglings of the NNPP and also give Kwankwaso the wisdom to retrace his steps in the issues concerning NNPP and his role therein,” he added.

Also speaking, Aniebonam said that prayer remains the key to resolving issues.

He narrated how seeking divine intervention had worked for NNPP in the past during the challenging Kano State governorship election.

Aniebonam noted that the association remained hopeful that God would once again intervene and bring peace to NNPP during the period of internal discord.

“When the odds were against the party in the Kano State governorship election at the tribunal and appeal court, we ran to God for intervention at the Supreme Court and He answered.

“It is our hope and belief that God will answer us again at this trial period of internal crisis. We shall forge ahead to elect a great leader in Nigeria at God’s time.

“As founder and life member of the NNPP board, it is my greatest desire to see peace reign and for the splinter group to retrace its steps.

“I’m a father to all and I sincerely believe that God will hearken to our prayers,” he added.

The prayer session was officiated by Pastor Joel Ozor of the Rock of Evidence Assembly in Ojo, Lagos.

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Ease of Smuggling Ends on Adamawa/ Taraba Axis, As Bashir Efforts Yield Fruits

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Ease of Smuggling Ends on Adamawa/ Taraba Axis, As Bashir Efforts Yield Fruits

The ease of smuggling on the Taraba axis may be temporarily over, as a drive by the Nigeria Customs Service NCS to thwart illicit trading has begun to yield outstanding results.

The new Adamawa/ Taraba Area Command Controller, Garba Bature Bashir confirmed this, highlighting that, only two weeks under his leadership, the Command had recorded five incidents of interception of over N10 million worth of petrol (Premium Motor Spirit PMS) snoozing its way, to the neighbouring Country, Cameroon Republic. 

 “In the past two weeks, our drive to thwart smuggling rings in this command has produced outstanding results. The success recorded so far could invariably predicated on the synergy, robust border management, intelligence sharing and unwavering efforts of our operatives”, Comptroller Garba Bashir stated, noting that a key item, petrol was on its way to Cameroon.

“The Command Officers while on anti-smuggling operations along the Command frontiers within two weeks under my leadership had recorded five (05) incidents of interception of Premium Motor Spirit (PMS) on its way to the neighbouring Country, Cameroon Republic. 

“The intercepted and seized PMS plus the Means of Conveyance hereinafter are Valued at Ten   Million, eight hundred and seventy-one thousand, four hundred and ninety-six naira and twenty-five Kobo only (N10,871,496.25) as the Duty Paid Value (DPV)”, Bashir also said.

Pointing out that while no suspect was apprehended during the Operations because the suspects abandoned the items and absconded in an attempt to circumvent arrest, the Command remains undaunted and committed to its anti-smuggling mandate.

“The seized items include the following:

i.​12,435Litres of Premium Motor Spirit (PMS) packed in 491x25L and 8 x 20L Jerry Cans.

ii.​one used Mitsubishi truck -Means of conveyance of the PMS and

iii.​One used Motor Cycle – the Means of Conveyance of the PMS.

“The seizure of these items is in line with sections 150 and 248 of the Nigeria Customs Service Act 2023 and considering the facts that the Command’s territorial borders are officially closed. 

“However, due to the inflammable nature of these PMS, it will be auctioned immediately after this briefing following the standard operating procedure (SOP) and as enshrined in section 119 of the Nigeria Customs Service Act 2023 and the proceeds accrued remitted into the Federation Account accordingly.

“Smuggling activities had done more harm than good to the nation. It hinders our national growth and strangles our trade policies concerning revenue, foreign investment, preservation of domestic trade and growth, food security and public security. 

“Smuggling networks are often connected to diverse illicit activities, such as money laundering, terrorism financing and human trafficking, which can disrupt national security and the rule of law.

“The Nigeria Customs Service, Adamawa/Taraba Area Command on this point, will never give up in its fight against the menace of smuggling until the command is purged of it. 

“We want to unwaveringly tell the smugglers that our operatives are strategically repositioned along the borderlines to fasten their exit out of this illicit business”, he further said, advising the illicit traders to renounce economic sabotage and illicit trade into and out of the Command’s territorial borders, and adopt legitimate business, as the Command Operatives will not rest on their oars until we stamp out smuggling across all the command borders.

“To the border Communities and the patriotic Nigerians, we solicit your partnership in the area of providing timely intelligence that can aid our operations in getting rid of this economic scourge from our nation. 

“To the transporters and oil marketers to be vigilant and patriotic to deny these smugglers a supply chain. And to the Media Personnel, please do increase awareness campaign to educate the general public on the dangers and negative impacts of smuggling on our socio-economic development.

“Finally, we attributed these huge successes recorded so far to the unwavering support and encouragement of the management of the Nigeria Customs Service under the tenacious leadership of Bashir Adewale Adeniyi MFR, who has continued to give all the required backup and supply chain for our smooth anti-smuggling operations. 

“We wholeheartedly appreciate his unrelenting drive for service advancement”, Bashir stated, stressing the combined, cooperative advantage of all the Customs Units, which comprise the CIU, FOU, SIS, Valuation, ICT; and the synergy with other security agencies as well.

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