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U.S. Talking Oil Exports Just When World Needs It Least



The U.S. Congress is talking about allowing unfettered oil exports for the first time in almost four decades. Its timing couldn’t be worse.

There’s space in the global market for 1 million to 1.5 million barrels a day of U.S. crude if the ban vanishes, Energy Information Administration chief Adam Sieminski told a congressional subcommittee at a Dec. 11 hearing. That would be less than 2 percent of worldwide demand. With prices sliding amid a glut, the figure is bound to be even smaller, according to consultants including Wood Mackenzie Ltd.

As members of Congress promise more hearings on repealing the restrictions on oil exports, the world is awash in the stuff. Global prices have fallen by almost half since June to the lowest in five years amid slower demand growth and rising supply. What’s more, the kind of crude flowing in record volumes from U.S. shale plays is already abundant in the market.

“If they dropped the export ban today, how much crude would get exported?” Harold York, vice president of integrated energy research at WoodMac in Houston, said by telephone. “Today? I say none. At these prices, why would a barrel leave?”

Global crude prices have fallen 48 percent to below $60 for the first time since 2009. Producers say the U.S. shale boom may falter if they can’t reach overseas markets, while refiners fight to keep the limits, which have reduced domestic costs and allowed them to export record amounts of gasoline and diesel.
‘Lower End’

Brent, the global benchmark, fell as much 91 cents, or 1.5 percent, to $59.10 a barrel on the London-based ICE Futures Europe exchange before trading hands at $59.44 at 12:04 p.m. Singapore time. The U.S. marker West Texas Intermediate lost 98 cents to $54.95.

Congress will hold more discussions on repealing the law in 2015, Representative Ed Whitfield, a Kentucky Republican and chairman of the House Energy and Power Subcommittee, said at the Dec. 11 hearing in Washington.

Sieminski said his export estimates, which come to about 15 percent of U.S. production at most, were based on demand at foreign refineries for light oil. About 15 percent of global refining capacity is designed for light oil, compared with about 30 percent of production, York and his colleague Michael Wojciechowski said by e-mail.

During the meeting, Sieminski described the amount of potential shipments abroad as being “more to the lower end than to the upper end” of the range.
Price Discount

“The kind of oil we have in surplus here is a light, sweet crude, and the market for that is not unlimited,” he said. “So the question is, how much of that could you put out on the global market” before it’s saturated, he said.

Light Louisiana Sweet, the benchmark price for light oil on the U.S. Gulf Coast, would need to sell for several dollars less than Brent, the global marker, to attract foreign buyers to charter ships and send it abroad, York said. The discount has averaged $1 a barrel this month, down 79 percent since May.

“LLS is selling close to parity with Brent, so it can’t fetch a higher price somewhere else,” said York. “That said, the debate we’re having on oil exports is still worth having even if the opportunity to export isn’t commercial today.”

Once the U.S. starts shipping more crude oil, it will put more supply on the global market and leave less in the U.S., shrinking the price difference further and making it less economic to export, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Congressional Hearing

Congress is debating whether the U.S. still needs export restrictions passed in 1975 on the heels of the Arab oil embargo that caused gasoline shortages and long lines of cars at retail pumps. Horizontal drilling and hydraulic fracturing have pushed U.S. oil production to the highest in 31 years.

Sieminski told the subcommittee that U.S. output may soon hit an all-time high, surpassing the record of 9.6 million barrels a day set in 1970, while gasoline demand is down 4.4 percent from the peak in 2007 and likely to fall further because of more stringent fuel economy standards.

Current exceptions to the ban include shipments to Canada and re-exports of foreign oil. The U.S. has sent abroad 314,000 barrels a day this year, on pace for the highest annual level on record. The U.S. also gave permission in March to companies to export ultra-light crude after lightly processing it.

Representative Joe Barton, a Republican from Texas, introduced legislation last week to end the export ban, saying the domestic oil boom has rendered the law outdated.
Jones Act

Jay Hauck, executive director of Consumers and Refiners United for Domestic Energy, a group opposed to lifting the ban, said the benefit of exporting U.S. oil doesn’t outweigh the damage done to refiners, who are sending 3.6 million barrels of petroleum products a day abroad, the most in the world.

One way to ease the pain to refiners would be to grant more waivers to a law that forces companies to use U.S. ships to transport cargo between two American ports.

Known as the Jones Act, the law makes it more expensive to ship Texas crude to New Jersey than to Montreal. That would put coastal refiners in the U.S. at a disadvantage to foreign counterparts for oil from the two largest shale fields in the U.S., the Eagle Ford and the Permian Basin.

Refiners don’t expect a full repeal of the shipping law, said Stephen Brown, a lobbyist for Tesoro Corp. (TSO), the largest refiner by capacity on the U.S. West Coast. Waivers for coastal fuel shipments would be a compromise, he said.

“Refiners will be at the table for any discussion of relaxing the crude export restriction and reform of the Jones Act in that context will need to be part of that conversation,” Brown said in Washington after the hearing.

For Related News and Information: U.S. Getting Rid of Oil Addiction as Price Plummets in Glut Ending U.S. Oil Export Ban Argument Bolstered by Price Collapse There Are 300,000 Iraqi Barrels Signaling Oil Glut to Deepen
Source: Bloomberg

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners



…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live



The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured



…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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