OPEC will hold talks with non-member oil producers on Wednesday in a bid to hammer out details of a global agreement to cap production for at least six months as Russia lent its support for the plan.

Ministers from OPEC members embarked on a flurry of talks at an energy conference in Istanbul to shore up support for the OPEC deal they agreed in Algeria last month hoping to adopt it at the end of November.

Oil prices that have more than halved since mid-2014 as global supplies swelled.

"I can say that many countries from outside OPEC are willing to join ... we are not talking about support, we are talking about contribution," Saudi Energy Minister Khalid al-Falih told Reuters on Tuesday in Istanbul.

Representatives of some OPEC members and non-OPEC countries including Russia, Azerbaijan and possibly Mexico will hold a round-table meeting at 1100 GMT on Wednesday on the sidelines of the World Energy Congress, according to OPEC ministers.

Any deal would initially be applied over six months and then reviewed, OPEC Secretary General Mohammed Barkindo said.

"We are confident that the other non-OPEC producers will join this (agreement) because it is in the benefit of all producers ... and also consumers," Barkindo said.

Eulogio Del Pino, the petroleum minister for cash-strapped Venezuela said he preferred a deal to extend for a full year in order to include peak output periods of different oil producers.

Last month in Algiers, the Organization of the Petroleum Exporting Countries agreed modest oil output cuts. The goal is to cut production to a range of 32.50-33.0 million barrels per day (bpd). OPEC's current output PRODN-TOTAL is a record 33.6 million bpd.

The International Energy Agency said global oil supply could fall in line with demand more quickly if OPEC and Russia agree to a steep enough cut in production, but it is unclear how rapidly this might happen. [IEA/M]

Any deal would face challenges from a 3 billion barrel global inventory build in recent years as well as efforts by OPEC members Libya and Nigeria to increase production curtailed by conflict.

Iran, OPEC's third largest member, had said it would not curb its supplies before it reached 4 million barrels per day, a level it had seen before international sanctions were imposed in 2012 and lifted in January this year.

Speaking at the Istanbul conference, Russian Energy Minister Alexander Novak said that the world's top producer would maintain its current oil output unchanged under a deal. Russia pumped 11.1 million barrels per day in September.

On Monday, President Vladimir Putin said Moscow was ready to join the proposed cap on oil output by OPEC members.

Falih said he would not attend Wednesday's meeting due to prior engagements but met with Novak in Istanbul on Tuesday.

He is due to meet his Russian counterpart for talks later this month in Riyadh, according to a statement by the Saudi energy ministry.

"The ministers emphasized that their two countries are committed to working together and with other producers, OPEC and non-OPEC, to help improve oil market fundamentals, which will benefit producers, consumers, the energy industry and the global economy," the statement said.

http://www.reuters.com/article/us-oil-opec-idUSKCN12B2AI

Saudi Aramco’s chief has said a new “road map” is needed to help smooth the transition from fossil fuels to green energy.

Amin Nasser, the firm’s president and chief executive, said gradual improvements would “not be enough” and called for sweeping transformation.

Speaking at the 23rd World Energy Congress in Istanbul, Mr Nasser said the “Energy 2.0” road map should consist of three elements: investment in oil and gas supply, financial resilience and investment in technology.

Mr Nasser said supply would fall behind demand “over time” as new discoveries become more challenging and expensive to operate.

Current primary energy demand is 280 million barrels of oil equivalent, of which 80% is met by fossil fuels.

By 2040, that demand will be 360 million barrels of oil equivalent, with 75% met by fossil fuels, Nasser said.

He also said Aramco would sign preliminary agreements with Turkish contractors for construction work in Saudi Arabia.

At the same time, Aramco is looking into downstream opportunities in Turkey, he added.

https://www.energyvoice.com/oilandgas/middle-east/121535/saudi-aramco-warns-supply-drop-off-hints-turkey-deals/

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Demand growth continues to slow due to vanishing OECD growth and a marked deceleration in China

Global oil supply rose by 0.6 million barrels per day (mb/d) in September, the newly released IEA Oil Market Report  (OMR) for October informs subscribers. Non-OPEC supply was up nearly 0.5 mb/d on higher Russian and Kazakh flows and OPEC supply was at an all-time high. World oil output of 97.2 mb/d was up 0.2 mb/d from last year due to strong OPEC growth. Non-OPEC supply is forecast to drop by 0.9 mb/d in 2016 before rebounding by 0.4 mb/d in 2017.

Meanwhile OPEC crude output rose by 160 kb/d to a record 33.64 mb/d in September as Iraq pumped at the highest ever and Libya reopened ports. Supply from the group stood 0.9 mb/d above 2015 due to robust Middle East output. OPEC has agreed to cut supply to between 32.5 mb/d and 33 mb/d, with details to be set by end-November.

Demand is forecast to expand by 1.2 mb/d this year, with a similar gain expected in 2017. Growth continues to slow, dropping from a five-year high in 3Q15 to a four-year low in 3Q16 due to vanishing OECD growth and a marked deceleration in China. The potential for colder weather should see growth rebound somewhat in 4Q16.

OECD commercial inventories fell for the first time since March, by 10 mb to 3 092 mb in August due to a larger than seasonal decline in crude stockpiles. Preliminary data for September show crude stocks falling in both Japan and the US.

Weighed down by autumn maintenance, global refinery throughput in 4Q16 is expected to decline seasonally by 1.1 mb/d, up just 70 kb/d year-on-year. Global throughput in 2016 is expected to grow y-o-y by just 220 kb/d, the lowest annual growth rate in more than a decade, excluding the last economic recession.

Benchmark crude prices rose in September as market rebalancing continued and participants anticipated an OPEC supply cut. At the time of writing, front month ICE Brent was trading at $53.05/bbl with front month NYMEX WTI lower at $51.15/bbl.

http://www.iea.org/newsroomandevents/pressreleases/2016/october/iea-releases-oil-market-report-for-october.html?utm_content=buffer3c29c&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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Crude prices of $60 a barrel would probably trigger a strong increase in North American oil production while trimming global demand growth, the head of the International Energy Agency said.

Brent crude reached a one-year high of $53.73 a barrel in London on Monday after Saudi Arabia and Russia, the world’s two largest crude producers, pledged a joint effort to limit output to counter a global glut and prop up prices.

“We may well see, in a short period of time, strong production growth coming from North America and elsewhere,” IEA Executive Director Fatih Birol said Tuesday in a Bloomberg TV interview. “Prices around $60 would be sufficient.”

Many oil producers are facing “serious challenges” to their economies due to lower prices, Birol said. Benchmark Brent crude slid from more than $115 a barrel in June 2014 to less than $28 in January this year. Prices tumbled after the Organization of Petroleum Exporting Countries adopted a policy of pumping without limits to try to squeeze higher-cost producers, including U.S. shale drillers, from the market.

Prices should be determined by supply and demand rather than by any intervention in the market, Birol said.

http://www.bloomberg.com/news/articles/2016-10-11/iea-head-sees-60-oil-prompting-surge-in-north-american-output

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The number of rigs drilling for oil and gas in the North Sea, home of the Brent crude benchmark, plunged in September to the lowest in nearly 35 years as companies cut spending to weather low prices.

Baker Hughes Inc., the services company that tracks drilling activity worldwide, said just 27 rigs operated last month in the North Sea, the lowest number since records started in January 1982. The previous low was set in October 1999, when oil prices plunged to $10 a barrel.

The North Sea, which includes the shallow waters of the U.K., Norway, Denmark, Germany and the Netherlands, enjoyed its heyday in the 1970s and early 1980s, when a series of big oilfields, including Brent, Forties, Ekofisk and Oseberg, were discovered. The region, where operating costs are relatively high, has been badly hit by the price slump that started in late 2014 when OPEC adopted a policy of pumping at will.

Despite the drop in oil and gas drilling rigs, North Sea production notched two consecutive years of increases in 2014 and 2015 thanks to the tail wind of projects approved during the boom years of $100-a-barrel oil. July output, the latest for which data is available, surged to a four-year high, according to the International Energy Agency.

Job Cuts

The future does look bleak, however, as companies cut spending and fire workers. Oil & Gas U.K., a trade body, said in June that the British oil industry alone will ax 120,000 jobs by the end of the year. The numbers include non-oil producing jobs in the wider economy, including hotel staff and taxi drivers. On top of those losses, companies operating from Norway to the Netherlands have also announced staff cuts.

The estimates demonstrate how much oil companies have tightened their belts in order to weather the collapse in crude prices and the effect of the downturn on the wider economy. Brent, the global benchmark, has tumbled from as high as $115 a barrel two years ago to about $52 a barrel now.

The industry has been spending beyond its means, and has no choice but to improve its performance, Deirdre Michie, chief executive officer of Oil & Gas U.K., said in June.

BP Plc said in January it would cut North Sea jobs by 600 over the next two years, while Royal Dutch Shell Plc said on May 25 it was planning 475 job cuts in its U.K. and Ireland exploration and production business, mostly this year.

http://www.bloomberg.com/news/articles/2016-10-07/north-sea-oil-and-gas-drilling-activity-plunges-to-all-time-low

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Egypt received oil shipments from an unspecified source on Tuesday, according to Petroleum Ministry spokesperson Hamdy Abdelaziz, who said the move came after Saudi Aramco decided it would suspend delivery of energy products to the North African country.

Abdelaziz said to Mada Masr that this month’s delivery failure “does not mean that the entire import agreement with Aramco will be canceled, since the halt may be due to technical or logistical reasons, which are normal in all economic agreements.”

The current deal between Aramco and the Egyptian government brings the equivalent of 700,000 barrels of fuel per month to Egypt at a cost of $23 billion for 15 years.

The news site also contacted two different sources from the Saudi company, both of whom chose to remain anonymous.

One of the sources said the halt occurred due to technical reasons, but the agreement will still function normally.

“The agreement is still working and is not subject to any changes. It is purely technical and is related to the latest OPEC meeting held at the end of September,” the source said.

The other source, however, suggested that the decision to halt Egypt’s October petroleum imports had a “political nature.”

“We don’t know the background of the issue and we cannot determine the reason behind it specifically,” the source stated.

Although the issue could be technical and related in some way to the OPEC agreement, Saudi Arabia’s halt of petroleum products to Egypt follows conveniently a spat between the two after Egypt backed separate Russian and French Draft resolutions on Syria at the UN Security Council this last weekend.

In response, Abdallah Al-Mouallimi, Saudi UN ambassador,chastised Egypt for supporting the Russian draft. “It was painful to see that the Senegal and Malaysia positions were closer to the Arab consensus on Syria compared to that of an Arab representative.”

A Washington-based Saudi lobbyist, Salman Al-Ansari, took to Twitter, adding, “Excuse me, Arab Republic of Egypt, but your vote in favor of the Russian draft in the Security Council made me doubt your motherhood of the Arabs and the world''.

The deal with Aramco has saved Egypt millions of dollars per month while it is desperately trying to revive its downbeat economy and narrow its budget deficit—one of the largest in the Middle East. In an attempt to raise cash, Egyptian authorities intend to start their initial public offerings (IPOs) program with state-held oil companies in a plan to raise US$10 billion from listings in three to five years.

http://oilprice.com/Latest-Energy-News/World-News/Egypt-Begins-Receiving-Imports-from-Unspecified-Source-After-Aramco-Debacle.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

Hong Kong-based trader Winson Oil has bought a very large crude carrier (VLCC) to store oil in the Mediterranean as it pushes to expand its business in Europe, two company sources said.

The step could boost Asian gasoil margins if the firm enters the spot market to make large purchases to fill the vessel, traders said.

Winson bought the VLCC in July for $28 million and has renamed it Winson No. 5, one of the sources said on Tuesday, declining to be identified as he was not authorised to speak with media.

The ship is currently docked in Shenzhen, China for repairs and maintenance and will be moved in about 1 or 2 months, ready to receive oil products.

"The plan is to store gasoil and the ship will first travel to Singapore and eventually to the Mediterranean Sea as offshore inventory storage," the source said. He did not give a timeframe for the move to Europe.

The vessel was built in 2001 and can hold around 2 million barrels of oil, according to shipping data on the Reuters Eikon terminal.

The step is part of the company's plans to expand in Europe, the source said. Winson Oil will trade in European markets from an office that was incorporated in Dubai in February, he added.

Storing gasoil in VLCCs is unusual as it can be more expensive than using tanks on land, but some of the costs can be mitigated by owning a vessel.

With its headquarters in Hong Kong, Winson Oil has recently been stepping up its oil trading activities in Singapore, where its trading arm is based, routinely buying gasoil from Taiwan and selling it as bunker fuel into North Asia.

The company has offices in Hong Kong, Singapore, Taiwan, China, Dubai and other Asian countries, and has a fleet of more than 25 vessels, according to its website.

The company has no plans to reduce its leasing of tanks onshore to store gasoil due to the purchase of the VLCC, the sources added.

VLCC charter rates from the Middle East to Asia hit a new four-month high on Monday at around $40,200 per day.

http://www.reuters.com/article/winson-shipping-idUSL4N1CH1VX

India’sOil and Natural Gas Ministry is considering offering investors leeway to explore adjoining areas to the 67 marginal oil and gas fields already up for auction.

Faced with the challenge of securing positive responses from prospective bidders in a weak oil and gas market, the Ministry is trying to take cognisance of concerns raised at investor road shows, one being that the marginal oil and gasfields offered for contracts are too small.

Since the marginal oil and gas fields on the block are just a few square kilometres each, compared with hundreds of kilometres for most oil and gas fields, several prospective foreign investors have expressed concerns that the operations will not be of their usual scale.

Hence, the Ministry is considering its options regarding the adjoining areas around the 67 blocks, a government official said.

The 67 marginal oil and gas blocks have been combined into 47 contracts. Of these, 30 blocks are less than 25 km2 and the rest less than 10 km2.

Domestic and international exploration and production (E&P) companies have until the end of the month to submit their bids.

However, offering adjoining areas to investors is proving to be a challenge for the government. Officials pointed out that the marginal oil and gas field boundaries had already been demarcated and, since these were already discovered fields, government could come up against legal challenges if it changed the boundaries once the auction process had been initiated.

To avoid such roadblocks, the Ministry is talking to prospective investors seeking their view on opening upexploration of adjoining areas for exploration to winning bidders of the marginal fields once the current round of bidding is completed.

The idea is for winning bidders to enter into a fresh round of competitive bidding to explore the adjoining areas under the newly unveiled Hydrocarbon Exploration and Licensing Policy (Help) and avoid allocating the adjoining areas to winning bidders through preferential allotment.

The government has replaced the New Exploration and Licensing Policy (Nelp), under which nine rounds of auction have been completed but the tenth round had been nixed, to put Help in place. Under the latter, E&P companies will have the freedom to explore and extract any fuel they discover, including coalbed methane, shale gas, oil or gas, without having to seek fresh approvals for each resource discovered and that too under a composite revenue-sharing agreement.

Earlier, under Nelp and production sharing contracts, E&P companies that were successful bidders at auction, were allowed to recover costs entailed in developing the block, as approved by the government, and the government’s share of revenue was determined based on revenue generated from the block adjusted for developmental costs.

http://www.miningweekly.com/article/india-mulls-options-to-sweeten-deals-for-marginal-oil-gas-fields-2016-10-11

With a key meeting of the International Maritime Organization less than two weeks away, the financial, environmental, regulatory and energy-related implications of changing shipping fuel emission norms has come back into the spotlight.

IMO's Marine Environment Protection Committee will meet in London October 24-28 amid a raging debate on how best to handle the proposed implementation of a 0.5% cap on sulfur content in marine fuel from 2020.

"This transition will be more disruptive than the switch to the 0.1% sulfur blend in the ECAs because the 0.5% cap will affect the industry worldwide and have a significant impact on fuel supplies," Goh Swee Chen, chairperson of Shell Singapore, said at the Singapore International Bunkering Conference.

The higher cost of production and increased use of gasoil in the blend will drive up the cost of 0.5% sulfur fuel oil and a lack of demand for high sulfur fuel oil will drag down HSFO prices, Swee Chen said.

According to shipping industry estimates, close to 2.5 million b/d or over 75% of the current bunker fuel market will be displaced when the lower sulfur content norms are implemented.

While more than half of this or 1.5 million b/d will be used in the incremental coker capacity that is expected to come on stream, it still leaves another 1 million b/d of surplus putting pressure on HSFO prices.

Alternative markets such as bitumen will have to be found to dispose off fuel oil, Andy Milnes, BP's CEO for Integrated Supply and Trading for the Eastern Hemisphere, said at the conference.

The displaced bunker fuel will be substituted with middle distillates. More than 7.5% of existing global distillates production of 33 million b/d is expected to be needed for cleaner marine fuels, according to industry estimates.

"It is not just about switching a configuration of the refinery but to change the very nature of fuel [the industry] is producing and it entails investments," ExxonMobil's Policy Planning Senior Adviser Eddy H. Van Bouwel said.

There is a provision for IMO to delay the implementation of the new sulfur content cap to 2025.

While a decision is not expected anytime soon, the MEPC meeting later this month will take up any matter concerned with the prevention and control of pollution from ships.

SHIPOWNERS' DILEMMA

"We would like the industry to go as clean as possible in what is economically viable for the companies and the sooner they make their choice, the better it is for the planet," Jacques Werner, the Dutch ambassador in Singapore, said at the conference.

The shipping industry is urging for clarity on the sulfur content issue soon so as to plan their investments accordingly.

The IMO's decision on whether to implement the sulfur cap in 2020 or delay it to 2025 will also have an impact on the number of ships that will be recycled.

"An earlier timeline might mean an earlier ship recycling date and these decisions too will have cost implications," Shell's Swee Chen said.

For the last few years, owners have been ordering ships with engines that can be run on both gas and bunker fuel or dual fuel-fired engines, said Carlos Torres, BP's global head of marine fuels in the eastern hemisphere.

A bigger challenge for the industry was to design supertankers which carry oil cargoes but are run on LNG, without operational hazards, Torres said.

Ships that run on LNG need to have a fuel tank system that can pressurize gas and is fully segregated from the oil cargo space.

Retrofitting existing oil tankers with LNG fuel compliant storage and engines may be a complex and expensive task, but trials on designing new ships are going on and a few product tankers already run on LNG.

"LNG is too dense and dissipates quickly and segregating it in fuel tanks in ships that carry oil cargoes is not an insurmountable issue," said Arthur Bowring, managing director of the Hong Kong Ship Owners Association.

River-trade vessels deployed in China are being retrofitted to run on LNG, Bowring said. Currently, there are around 80 LNG-fuelled ships in operation worldwide with dozens more on order. Global merchant fleet population is over 85,000 ships.

Experts say that LNG fuel will become popular with ships moving on specific routes and between ports with bunkering facilities. They include cruise lines, container ships, Ro-Ro vessels and ferries.

"We are heading into an era of multiple fuels where both gas and low sulfur fuels will be used," Torres said, adding that dry bulk carriers and containers would be able to make a relatively easier transition to LNG fuel.

This also brings into focus the role of oil majors that produce and refine fuels and also trade in them and move them on ships.

"We can provide market intelligence on the kind of fuel to be used depending on the routes, ports and ship types," Torres said.

To comply with multiplicity of regulations worldwide, including various Emission Control Areas, ships have to maintain up to three different types of fuel in segregated tanks.

High and low sulfur fuels are incompatible and utmost care needs to be taken while changing fuels to avoid any choking of filters, said Narhari Mahanta, a consultant scientist with Andrew Moore and Associates. PORTS GEAR UP FOR LNG BUNKERING

Shipowners are currently reluctant to make an investment in cleaner fuel tonnage because they don't seen enough returns or incentives and ports needed to set up adequate infrastructure to instill confidence among them, BP's Milnes said.

An international focus group that includes Singapore, Rotterdam, Antwerp and Zeebrugge and which is working towards building a network of LNG bunker ready ports along the Asia-Europe shipping route, was expanded this week to include Jacksonville, Ulsan and representatives from Norway and Japan.

Currently LNG is mostly offered on an as-is-where-is basis but as demand grows there will be need for more testing on specifications such as methane content, water level and impurities, said Bhavnani Raghuvir, vice-president of Viswa Lab.

"We will provide a suitable environment to companies for delivering cleaner fuels to their clients," said Bob Sanguinetti, CEO, Gibraltar Port Authority, which signed an agreement with Shell to provide LNG.

Enforcement of rules will also be critical. "Penalty for non-compliance has to be higher than the cost of compliance," said Joshua Low, global head of trading at Maersk Oil Trading.

http://www.platts.com/latest-news/shipping/singapore/feature-shipowners-ready-to-embrace-cleaner-fuels-27685695

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India, the world’s fourth largest liquefied natural gas (LNG) importer, is set to see its demand for LNG double in the next four years, courtesy a glut in the global market and the country’s own increasing demand from the power and fertilizer sector.

India is the largest LNG importer after Japan, Korea, and China and its import capacity over the next four years is expected to double to 45 million tonnes per annum (MTPA) against 22 MTPA currently, says a 5 October report by Citi Research.

The report adds that India’s LNG demand increased from 14 to 16 million metric tonnes (MMT) from FY15-FY16, and has the potential to touch 30 MMT by FY20.

“We believe India’s LNG demand has the potential to increase from 16 to 30 MMTPA over FY16-20E, even if we limit our exercise to clearly identifiable demand contributors already connected to the grid,” Citi Research said.

One of the key reasons for the spike in demand could be due to the revival of gas-based power generation in India as a result of the lower LNG prices brought on by the oncoming global LNG glut, which could drive Asian spot prices to below 10% to Brent in 2017 (against 11-12% currently).

In recent months, Indian LNG imports have risen substantially, with volumes at 1.62 MMT in August, up 9% on a monthly basis and 35% on a yearly basis. This has been aided by falling LNG prices as well as the government’s efforts in increasing gas consumption (especially the power & fertiliser pooling policies introduced last year).

The report states that Essar Group plans to restart its two captive gas-based power capacities at Hazira in Gujarat (500 MW + 515 MW), subject to availability of re-gasification capacity. Both these plants have been shut since 2013, but the economics have now turned favourable as the alternative is to buy relatively more expensive power from the grid.

In addition, Essar will also require LNG for the gas requirement at its steel plant in Hazira and its refinery at Vadinar. “A recent feasibility report released by the Essar Group highlights a total LNG demand estimate of 3.9 MMTPA from the aforementioned power, refinery, and steel plants,” the report stated.

Also, there is potential for 7 million standard cubic metres per day (mscmd) of additional gas consumption by the fertiliser sector due to additional production of 3.7 MMT of urea by existing units over the next four years as part of the pooling mechanism.

Refineries, petrochemicals and small industries in Gujarat could also add to the increase in LNG demand.

On an average, the Indian refinery sector consumes about 10-15 mscmd.

Oil minister Dharmendra Pradhan launched the Gas for India campaign last month, targeted at promoting gas usage in the country. The campaign will educate citizens on the various benefits of using gas as the preferred fuel, in a bid to raise the share of gas in the country’s energy basket to 15% from the current 6.5%, which is substantially below the world average of 24%.

Apart from efforts to communicate the benefits of using gas as a fuel, the government is also setting up infrastructure for gas usage and promoting a nationwide gas grid. As part of this move, the government has launched a project on city gas distribution (CGD) network in smart cities to encourage the urban population to shift from LPG (Liquefied Petroleum Gas) to PNG (piped natural gas).

The LPG freed up will then be given to below poverty line families under a scheme that was launched by Prime Minister Narendra Modi in May, which aims to supply 50 million free LPG connections to the BPL families over a period of five years.

However, the lack of pipeline infrastructure is preventing large scale adoption of LNG in the country. India’s current gas pipeline infrastructure is heavily skewed toward the western, northern and southern parts of the country that account for 75% of the network and 90% of consumption.

“Although there are several pipelines planned for the unconnected regions of the country, there has been little progress on them and hence our estimates on demand from the sectors highlighted earlier are not dependent on their completion and we only include contributions from sources where we feel the existing infrastructure is sufficient to handle the demand,” the report said.

http://www.livemint.com/Industry/VqSoCe4MVRPL2AEUuFaMBN/Indias-LNG-demand-set-to-double-in-next-4-years-Report.html

A little-known investment company said it intends to order up to 20 liquefied natural gas (LNG) carriers, probably from South Korean shipbuilders. The contracts would be worth as much as $3.8 billion, two people with direct knowledge of the matter told Reuters.

CBI Energy and Chemical, which is controlled by Australian and Canadian investors and has offices in Hong Kong, also disclosed in a statement to Reuters that it would be seeking to buy floating LNG production and import facilities as part of an ambitious plan for Africa and Asia.

The orders would be a major shot in the arm for South Korea's ailing shipbuilding industry, which has been hit by a collapse in new orders as global trade growth slows and after the slump in commodities prices in recent years.

CBI Energy would be taking advantage of low shipbuilding costs and cheap credit, that make it easier for newcomers to tap into a global switch towards cleaner sources of energy, LNG traders said. Depressed LNG prices are encouraging demand for the fuel, they added.

The company said in a statement to Reuters that "there is a need to custom-build specialty LNG carriers that will meet CBI's business needs."

It said that CBI has plans for Africa and Asia that include natural gas extraction, pipelines, marine transportation logistics, LNG plants, rail transport, power generation, chemical plants, and an LNG distribution network, including retail gas stations.

CBI has entrusted Korea Offshore and Ship's Technology Co Ltd (KOST) to find South Korean shipbuilders for the projects, officials from the two companies said.

"South Korea's LNG carriers are the best in terms of design, shipbuilding and delivery speed," an executive at CBI, who declined to be identified, told Reuters. "The shipbuilding industry is in a slump. This would be a stimulus."

MASSIVE OVERCAPACITY

KOST could approach STX Offshore & Shipbuilding, Daewoo Shipbuilding & Marine Engineering Co, Samsung Heavy Industries and Hyundai Heavy Industries Co Ltd to build the vessels, the person added.

It is not yet clear whether the contract would be concentrated with one or two shipbuilders or be spread more widely, said the official from KOST, who also declined to be identified. Initially there would be 10 firm orders, with an option to buy 10 more carriers, this person said.

South Korean shipbuilders have also been hit by increased competition from Chinese and Japanese yards, and massive overcapacity in the shipping industry.

The collapse of Hanjin Shipping, the world's seventh largest container shipper at the end of August, dealt a further blow to sentiment. Korea Development Bank forecast in a report the same month that the country's shipbuilders would suffer a 92.3 percent plunge in orders this year.

"Global shipyards including those in the main shipbuilding countries of South Korea, China and Japan, have seen the volume of orders in tonnage terms slump this year to the lowest level in more than 20 years," said Peter Sand, chief shipping analyst at ship owners lobby group BIMCO.

LNG carriers are a bright spot, though, because of demand for cleaner energy, said the KOST official.

The person said talks with shipbuilders would start after detailed plans were made, adding that it would take two to three months to select contract winners based on price, quality and the ability to meet delivery deadlines.

The vessels would each have the capacity to transport 120,000 to 175,000 cubic meters of LNG, the two sources said.

The first ship was due to be delivered in 2019, they said, adding the remaining vessels would be delivered at a rate of one ship every two-to-three months.

SHIPPING LNG TO CHINA

CBI Energy is a holding company registered in the British Virgin Islands and lists offices in Hong Kong, Beijing and Switzerland.

Its core investments are in coal poly generation, a "clean coal" technology, as well as LNG and associated supply chain businesses, according to the company statement.

The CBI executive said the group was 70 percent Australian owned and 30 percent Canadian owned. He declined to provide further details.

It has raised 2 billion euros from European private equity investors to fund the orders, the executive added.

The KOST official said CBI planned to ship LNG from Africa and the Middle East to China.

KOST, which is based on South Korea's southeastern island of Geoje, the country's shipbuilding hub, supervises shipbuilding projects.

The order would increase the global fleet of LNG tankers by more than 3 percent, making CBI a significant new player in the LNG logistics business if it opted to operate all the vessels itself. There are currently 460 tankers in service, with a further 170 on order.

A 174,000 cubic meter LNG carrier costs around $198 million to buy, down from $205 million two years ago, shipping services firm Clarkson said.

South Korean shipbuilders, Samsung Heavy and Daewoo Shipbuilding and Marine Engineering, are the most popular shipbuilders for LNG tankers, having built 22 percent and 21 percent respectively of the LNG carriers operating worldwide, according to data from shipbroker Banchero Costa (Bancosta). Of the LNG carriers under construction and on order, 37 percent of the current order book is placed at Daewoo shipyards, 14 percent at Hyundai Heavy and a further 11 percent at Samsung, Bancosta said.

Between 2016 and 2020, global LNG production capacity is expected to rise by about 50 percent to around 370 million tonnes a year, with major new projects in Australia, the United States and elsewhere, and this expected run-up in supply has dragged on prices.

"Although as many as 2,200 new cargoes of LNG are set to come on-stream by 2019 or 2020, the growth in the sector continues to be quite uncertain," according to a Bancosta report last month.

"European Union demand is fairly stable, global gas demand has slowed in the face of competition from other energy sources within the power sector, and from the persistence of low prices in energy commodities."

http://www.reuters.com/article/us-southkorea-shipbuilding-lng-idUSKCN12C0EL

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Royal Caribbean Cruises Ltd has announced that its newest class of ships will be powered by LNG and introduce the use of fuel cell technology. The ships will join the fleet of Royal Caribbean International.

RCL signed a Memorandum of Understanding (MoU) with shipbuilder Meyer Turku for the new class of vessel under the project name ‘Icon’. The vessels will be delivered in 2Q22 and 2Q24. In the meantime, the company confirmed that it will begin testing fuel cell technology on an existing Oasis-class ship next year, and will also run progressively larger fuel cell projects on new Quantum-class vessels being built in the next several years.

Richard Fain, Chairman and Chief Executive Officer (CEO) of Royal Caribbean Cruises Ltd, said: "With Icon class, we move further in the journey to take the smoke out of our smokestacks […] We are dedicated to innovation, continuous improvement, and environmental responsibility, and Icon gives us the opportunity to deliver against all three of these pillars."

Fain continued: "Increasing the commitment to LNG makes it easier for suppliers to make their own infrastructure commitments […] As more ships are built for LNG, the number of ports that support it will grow."

The Icon ships are expected to run primarily on LNG but will also be able to run on distillate fuel, to accommodate occasional itineraries that call on ports without LNG infrastructure.

Michael Bayley, President and CEO of Royal Caribbean International, said: "Our guests expect us to push every envelope we can […] And on this new class of ship, we began by challenging ourselves to find a new approach to power and propulsion that is safe, reliable, and more energy-efficient than ever before."

Jan Meyer, the CEO of Meyer Turku, added: "Our partnership with RCL has created a number of groundbreaking ship classes, such as Oasis, Celebrity Solstice, Quantum, and Mein Schiff, and we are grateful that Royal Caribbean is again giving us the opportunity to partner with them on a new class of ships."

Harri Kulovaara, RCL's Chief of Ship Design, said: "We believe fuel cells offer very interesting design possibilities […] As the technology becomes smaller and more efficient, fuel cells become more viable in a significant way to power the ship's hotel functions. We will begin testing those possibilities as soon as we can, and look to maximise their use when Icon class debuts […] There is a long lead time for Icon class, and we will use that time to work with Meyer Turku to adapt fuel cell technology for maritime use." Kulovaara said that additional regulatory standards would also need to be developed for the technology.

Because of the long lead time, Kulovaara said that many Icon design elements are in early stages. The Icon ships would likely accommodate approximately 5000 passengers, but details are still being worked out.

This order is contingent upon the completion of contractual conditions, including documentation and financing. Final contracts are expected to be completed by year end.

https://www.lngindustry.com/small-scale-lng/11102016/royal-caribbean-cruises-orders-lng-fuelled-ships/

Climate-change activists on Tuesday disrupted the flow of millions of barrels of crude from Canada to the United States in rare, coordinated action that targeted several key pipelines simultaneously.

Activists in four states were arrested after they cut padlocks and chains and entered remote flow stations to turn off valves in an attempt to stop crude moving through lines that carry as much as 15 percent of daily U.S. oil consumption. The group posted videos online showing the early morning raids.

Protest group Climate Direct Action said the move was in support of the Standing Rock Sioux Tribe, which has protested the construction of a separate $3.7 billion pipeline carrying oil from North Dakota to the U.S. Gulf Coast over fears of potential damage to sacred land and water supplies.

Officials, pipeline companies and experts say the protesters ran the danger of causing environmental damage themselves by shutting down the lines. Unscheduled shutdowns can lead to a build-up of pressure and cause ruptures or leaks, they said.

The activists had studied for months how to execute the shutdowns safely, said Afrin Sopariwala, a spokeswoman for the group.

"We are acting in response to this catastrophe we are facing," Sopariwala said, referring to global warming.

Police confirmed four arrests, three in Washington state and one in Montana. Protesters were also arrested in Minnesota and North Dakota, the activist group said, after the action early on Tuesday.

The pipelines carry crude produced from Canada's oil sands to the United States. Environmentalists have fought for years to stem Canadian oil sands production, which some call tar sands, in favor of cleaner energy.

Together, the lines affected can carry up to 2.8 million barrels of oil a day. No damage has been reported to the lines and the shutdown had little impact on the oil market. One of the lines restarted on Tuesday.

"Tampering with energy infrastructure is a dangerous activity and it could cause harm to citizens and surrounding communities, which is unacceptable," said Canadian Energy Minister Jim Carr.

His ministry was monitoring the situation closely, he said, adding that safety and security of energy infrastructure was a top priority.

Carl Weimer, executive director at the industry watchdog Pipeline Safety Trust, said the action was a "dangerous stunt".

"Closing valves on major pipelines can have unexpected consequences endangering people and the environment. We do not support this type of action," he said.

The incident is the latest in a series of actions by environmentalists and others in response to growing concern over the effects of fossil fuels on the environment and the potential effects on land and livelihoods of spills.

On Monday, 27 people were arrested for protesting the North Dakota pipeline including actress Shailene Woodley, who narrated her arrest on Facebook Live.

SHUT

Enbridge Inc said that it temporarily shut its Line 4 and 67 pipelines at its valve site in Leonard, Minnesota, but that there would be no effect on deliveries. The company said in a statement the activists "are inviting an environmental incident" and endangering public safety.

Spectra Energy Partners LP said trespassers had tampered with a valve on its Express Pipeline in Montana. It said it was taking steps to restart the line after shutting it down as a precaution.

The other pipelines the group claimed to have shut are TransCanada Corp's Keystone pipeline and Kinder Morgan Inc's TransMountain pipeline.

TransCanada said its Keystone pipeline in North Dakota was shut down temporarily as a precaution after protesters tried to disrupt it.

Kinder Morgan confirmed trespassers broke into a location of one of its two Trans Mountain feeder lines in Washington state but it was not operating that part of the pipeline at the time and no product was released. The company said the line has since reopened and deliveries on Trans Mountain were not affected.

All Tuesday's protesters and their support crews have been arrested, Sopariwala said.Protesters have previously shut lines down in more isolated incidents but it is rare, said Richard Kuprewicz, president of pipeline safety consultancy Accufacts Inc.

"It's rare because ... you can be prosecuted and go to jail," he said. "Even if nothing happens, it can be dealt with very harshly."

In January, Enbridge was forced to shut a crude pipeline in Ontario, Canada, after a protester tampered with a valve station, while in December the company turned off another line in the province of Quebec for several hours after activists chained themselves to equipment.

Protesters have been buoyed by the recent success of Native American groups and environmentalists in their campaign against construction of the 1,100-mile (1,770-km) Dakota Access pipeline, a project spearheaded by Energy Transfer Partners LP that would carry oil from North Dakota's Bakken shale fields into Texas.

Construction of one section in North Dakota has been halted in response to the concerns of the Standing Rock Sioux Tribe, and is under review.

http://www.reuters.com/article/us-usa-canada-pipelines-idUSKCN12B26O

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Spectra Energy’s Algonquin Incremental Market (AIM) pipeline project is an $876 million expansion of the existing Algonquin pipeline system that will carry 342 million cubic feet of natural gas per day to New England states that badly need the gas. 

On March 3, 2015 the Federal Energy Regulatory Commission (FERC) issued their final approval for the project, allowing it to go forward. Construction began last year and continues now. 

Earlier this year NY Gov. Andrew Cuomo tried to stop work on the pipeline . A few months later NY’s lib Dem senators got in on the act. 

We’re happy to report none of the above efforts to stop AIM succeeded. Last week FERC issued an order allowing part of the AIM project–in Putnam County, NY, and Fairfield County, CT–to power up and begin service. 

However, not all of the project is yet built. Four nutjob protesters criminally locked themselves inside a piece of pipeline in Verplanck (Westchester County), NY yesterday. They were there to protest “filthy fossil fuels” like natural gas…

http://marcellusdrilling.com/2016/10/part-of-aim-pipeline-begins-to-flow-protesters-hide-in-pipe/

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Oil service firm Frank’s International has agreed to buy a US well engineer for about $320million.

Frank’s will pay $150million in cash and hand over 12.8million shares for Houston-headquartered Blackhawk Speciality Tools, according to Simmons and Co, which advised on the deal.

Founded in Louisiana in 2008, Blackhawk supplies cement products, well intervention tools and service to the global oil and gas industry. It’s main focus is on the Gulf of Mexico.

Frank’s employs about 3,000 employees and provides services in over 60 countries. It has a base in the Altens Industrial Estate in Aberdeen.

Frank’s president Gary Luquette said: “Similar to Frank’s, Blackhawk has a reputation for combining exceptional service with an innovative portfolio of technology that delivers consistent value to customers.

“Together we will continue to offer the same reliable service customers expect, while furthering customer relationships with new products and services across the Frank’s global footprint.

“Joining Blackhawk’s cementing tool expertise with Frank’s global tubular running services franchise will allow us to offer customers worldwide a more integrated suite of best-in-class products and services to address their well construction needs across all environments from land to shelf to deepwater.”

Blackhawk chief executive Billy Brown said: “Joining the Frank’s global family is the next step in continuing the expansion of Blackhawk’s industry leading specialty products and equipment.

“Our team is proud of the progress we have made in developing innovative products and strong customer relationships through quality and reliable service, and we appreciate the support we have enjoyed from our partners at Bain Capital.

“Combining Frank’s and Blackhawk is the right strategic move at the right time, providing customers the same exceptional service with a broader platform to accelerate future growth.”

https://www.energyvoice.com/oilandgas/121526/franks-snap-blackhawk-320m-deal/

BP Plc on Tuesday said it would vigorously defend itself against a federal civil suit by Marathon Petroleum Corp (MPC.N) alleging that it had failed to deliver a Texas oil refinery and three products terminals in the condition promised under a $2.4-billion sales agreement signed in 2012.

"This suit is nothing more than an attempt by Marathon to renegotiate the terms of the Texas City refinery purchase of almost four years ago," Geoff Morrell, BP's senior vice president of U.S. communications and external affairs, said in an emailed statement.

Marathon took over the 459,000 barrel-per-day (bpd) refinery in Texas City, Texas, and terminals when the transaction closed on Feb. 1, 2013, and began finding problems that breached the sale agreement, according to the lawsuit filed on Monday.

When sold in 2013, the Texas City refinery fulfilled the terms of the sale agreement and met all commitments BP had made to federal regulators, Morrell said, adding BP tried to resolve Marathon's complaints through mediation.

"It is disappointing that immediately following the first mediation session, Marathon chose to go to court."

Marathon also alleged BP planned to carry out an overhaul of an aromatics recovery unit prior to the sale being complete, but did not do so after signing the sale agreement, according to the lawsuit.

However, BP said it spent billions of dollars in the years before the sale to upgrade the Texas City refinery.

"Marathon insisted on and received a discounted sales price so it could make some additional capital investments," Morrell said. "Marathon conducted extensive due diligence and was given virtually unrestricted access to documents and equipment at the refinery."

The BP Texas City refinery was the site of a March 23, 2005, explosion that killed 15 workers and injured 180 others. BP was fined $84.6 million by the U.S. Occupational Safety and Health Administration between 2005 and 2012 for safety rules violations found at the refinery in investigations following the blast.

BP pleaded guilty to a federal environmental law violation and paid $50 million to the U.S. Justice Department in 2009. BP also paid more than $2 billion to settle lawsuits stemming from the 2005 explosion.

Monday's lawsuit was filed in the U.S. District Court for Southern Texas in Galveston, Texas by Marathon subsidiary Marathon Petroleum Co LLC against BP subsidiaries BP Products North America Inc and BP Pipelines (North America) Inc.

http://www.reuters.com/article/us-marathon-bp-refinery-lawsuit-idUSKCN12B0BG