Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 22 August 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening. This week the post has been delayed by one day.
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Dakota Access Pipeline fight will heat up again in two federal courts | S&P Global Platts – The Dakota Access Pipeline will continue to flow crude oil for now, but the legal battle heats back up again soon as the fight to shutter the pipeline continues in two separate federal courts. A three-judge panel of the US Court of Appeals for the DC Circuit ruled on Aug. 5 that the pipeline could remain open for now — the same day that was the initial deadline for the 570,000 b/d crude system to be closed. But, as part of a mixed-bag ruling, the panel also kicked the case back to the judge, James Boasberg, who ordered the pipeline shuttered to potentially make a stronger argument for its unprecedented closure. The oil and gas industry and environmentalists are closely watching the case that could determine whether a three-year-old crude pipeline, which serves as the main crude artery from the Bakken Shale, can permanently be closed after it’s built and is up and running. The legal argument is that the pipeline’s construction should never have been allowed because permitting allegedly was fast-tracked by the US Army Corps of Engineer and the pipeline-friendly Trump administration without undergoing the proper environmental reviews. “What makes this case so unusual is the pipeline is already built,” said James Coleman, an energy law professor at Southern Methodist University. “There really aren’t many precedents.” While the shutdown injunction case is back in the hands of Judge Boasberg, of the US District Court for the District of Columbia, the three-judge appeals panel is expediting legal arguments over the ruling that forces the Corps of Engineers to conduct a stronger assessment and draft an Environmental Impact Statement, called an EIS, which couldn’t be completed until 2021 at the earliest. Although the appeals court let the pipeline continue to operate in the meantime, the court also upheld the yanking of the pipeline’s federal water permit. That means the Corps of Engineers has until Aug. 31 to detail the options it is considering on how — or how not — to justify keeping the pipeline safely flowing while its environmental permitting remains vacated. The lead plaintiffs, the Standing Rock Sioux Tribe, and their legal representation at Earthjustice, contend the pipeline is now operating illegally because the permitting was lost. The strong assumption is the Corps of Engineer will let the pipeline to stay open, said attorney Jan Hasselman of Earthjustice. “Everyone always assumed that vacating the permit meant shutting down the pipeline, and it’s almost like the goalpost got moved,” Hasselman said. “That’s certainly the conversation we’ll have with the appeals court.” In the appellate court, initial arguments are due on Aug. 26 and all replies are due by the end of September. The three-judge panel ordered an “expedited” court schedule this year. “I can’t remember this ever happening before,” Hasselman added. “We’ll be litigating the same case in two different courts at the same time.”
Keystone Pipeline operators pay more than $52,000 for 2019 Walsh County oil spill – TC Energy has agreed to pay more than $52,000 for the Keystone Pipeline oil spill last year that released about 383,000 gallons of crude oil onto about five acres of farmland outside of Edinburg, N.D. in October.The settlement, dated Aug. 10, states that the Canada-based pipeline company formerly called TransCanada Energy agreed to pay a $32,000 administrative penalty as well as a $20,354 environmental emergency cost recovery fee to the North Dakota Department of Environmental Quality.DEQ Director Dave Glatt said the $52,354 payment was received on Aug. 10.When determining the administrative penalty for a pipeline company responsible for a spill on North Dakota soil, Glatt said factors, such as how much damage was done and how quickly the company acted to clean the oil, are considered. The cost recovery fee covers the cost of DEQ’s own response to the spill. Glatt said the administrative penalty in this case is relatively low, because of how quickly TC Energy responded to the spill and how quickly it was able to remediate the site.”(TC Energy) were able to shut down the pipeline very quickly, and that resulted in minimizing the impact and so they were able to clean this up in short order,” Glatt said. “Some sites, it may take years to clean them up, but that wasn’t the case here.”As of earlier this summer, the spill has been contained and the site remediated to the DEQ’s satisfaction. Glatt said that, after the contaminated soil was removed and taken to a landfill, TC Energy workers reconfigured the land to its original contour and re-vegetated the site.DEQ will continue to monitor the site to make sure the grasses and plants return to their normal growth, but he expects there will be no long-term impacts to the land because of the spill or remediation work.
Trump Admin Pushes Final Drilling Plan for Arctic National Wildlife Refuge — The Arctic National Wildlife Refuge, thanks to protections put in place 60 years ago, has remained a pristine oasis in the most remote section of Alaska. Now, the Trump administration is finalizing plans to end those protections and to lease the federal lands to oil and gas exploration, according to The New York Times. The maneuver will allow oil and gas companies to exploit the vast reserves that sit under what environmentalists call “the last great wilderness,” according to The Guardian. The Arctic National Wildlife Refuge is estimated to sit above billions of barrels of oil. However, the 19-million acre sanctuary is home to polar bears, various waterfowl, migrating caribou and Arctic foxes that make the area their year-round home. In all, the refuge is home to more than 270 species, including the world’s remaining Southern Beaufort Sea polar bears, 250 musk oxen and 300,000 snow geese, according to The Washington Post. The Trump administration plans to open the perimeter to drilling, roughly 1.6 million acres in coastline, as The New York Times reported. The Department of the Interior said it had completed all the requisite reviews and intended to start selling leases to the land soon. Speaking to reporters, Secretary of the Interior David Bernhardt said, “I do believe there could be a lease sale by the end of the year,” as The New York Times reported. Bernhardt added that offering the leases, “marks a new chapter in American energy independence” and predicted it could “create thousands of new jobs,” according to CNN. He also said in his conference call with reporters that he was moving forward with a 2017 budget bill, passed by a Republican-led congress, that insisted that the Federal government open up oil and gas leasing on the Arctic National Wildlife Refuge, according to The Washington Post. The push to open up the wildlife refuge marks a significant energy policy for an administration that has been hostile to the urgency of the climate crisis and invested heavily in greenhouse gas-emitting fossil fuels. According to research from the Centers for American Progress, the drilling would result in more than 4.3 billion tons of CO2 emissions, which is roughly 75 percent of the nation’s annual carbon dioxide emissions, according to The Washington Post.
The federal government will hold an ANWR lease sale. But drilling would be more than a decade away – Anchorage Daily News – The Trump Administration on Monday set the stage for a lease sale in the Arctic National Wildlife Refuge in the coming months, but industry observers and Alaska leaders say oil won’t flow for years. Drilling in the sensitive coastal plain faces strong resistance, questions about future demand for oil and vows from large banks not to invest in the region, they said. But some said that while litigation could slow the lease sale, the promise of a large discovery in a little-explored land land, where oil has been found at the surface, means drilling is certain.Rep. Don Young, R-Alaska, who has fought for development in ANWR for generations, said that with litigation from conservation groups likely, he doesn’t think there’s enough time to hold a lease sale this year. But it will be held next year, he said. Like Prudhoe Bay, where drilling was also controversial before it began, oil production from the refuge will eventually create significant jobs and revenue for Alaska and the U.S., Young said in an interview. Led by Alaska’s congressional delegation, Congress in 2017 approved legislation calling for two lease sales by late 2024, at least 400,000 acres apiece in the coastal plain of the 19-million-acre refuge in northern Alaska. On Monday, Interior Secretary David Bernhardt finalized a more than two-year environmental review that analyzed potential drilling in the refuge, signing a record of decision that puts all available land, or 1.6-million acres, on the table for possible leasing. Congress mandated the lease sales, so they have to go forward, Benhardt said, in a meeting with reporters on Monday. The first lease sale will be held by late 2021, and the second by late 2024, he said. “The question of whether or not there will be a program in ANWR has really been answered,” he said. “The issue now is how do we go about it, and how durable that is.”
Trump Administration Finalizes Plan to Open Oil Drilling in Alaska’s Arctic Refuge – The New York Times – The Trump administration on Monday finalized its plan to open up part of the Arctic National Wildlife Refuge in Alaska to oil and gas development, a move that overturns six decades of protections for the largest remaining stretch of wilderness in the United States.The decision sets the stage for what is expected to be a fierce legal battle over the fate of the refuge’s vast, remote coastal plain, which is believed to sit atop billions of barrels of oil but is also home to polar bears and migrating herds of caribou.The Interior Department said on Monday that it had completed its required reviews and would begin preparations to auction off drilling leases. “I do believe there could be a lease sale by the end of the year,” Interior Secretary David Bernhardt said.Environmentalists, who have battled for decades to keep energy companies out of the refuge, say the Interior Department failed to adequately consider the effects that oil and gas development could have on climate change and wildlife. They and other opponents, including some Alaska Native groups, are expected to file lawsuits to try to block lease sales.“We will continue to fight this at every turn,” said Adam Kolton, executive director of the Alaska Wilderness League, in a statement. “Any oil company that would seek to drill in the Arctic Refuge will face enormous reputational, legal and financial risks.”Though any oil production within the refuge would still be at least a decade in the future, companies that bought leases could begin the process of seeking permits and exploring for oil and gas.President Trump has long cast an increase in Arctic drilling as integral to his push to expand domestic fossil fuel production on federal lands and secure America’s “energy dominance.” Republicans have prized the refuge as a lucrative source of oil and gas ever since the Reagan administration first recommended drilling in 1987, but efforts to open it up had long been stymied by Democratic lawmakers until 2017, when the G.O.P. used its control of both houses of Congress to pass a bill authorizing lease sales.“ANWR is a big deal that Ronald Reagan couldn’t get done and nobody could get done,” Mr. Trump said in an interview with Fox & Friends on Monday.It remains unclear how much interest there will be from energy companies at a time when many countries are trying to wean themselves from fossil fuels and oil prices are crashing amid the coronavirus pandemic. Exploring and drilling in harsh Arctic conditions remains difficult and costly.Nevertheless, by proceeding with the lease sales, the Trump administration has made the Arctic refuge a potential issue in the presidential campaign, and the region’s fate may ultimately hinge on the election’s outcome. The Democratic nominee for president, Joseph R. Biden Jr., has called for permanent protection of the refuge. However, even if he were to win the White House, it could prove difficult for his administration to overturn existing lease rights once they have been auctioned to energy companies.
The Energy 202: Trump team up against the clock to sell Arctic drilling rights by Inauguration Day – The Washington Post – The Trump administration is racing to sell off the right to drill deep in the Alaskan Arctic – to protect against the possibility that Joe Biden, if elected, could undo one what would be among the president’s most significant energy policy achievements. The presidential election is putting pressure on Trump’s deputies at the Interior Department to be on track to complete a lease sale in the Arctic National Wildlife Refuge before Inauguration Day in January 2021. That would make it much more difficult for a future Democratic administration to reverse the decision to open the ecologically sensitive caribou and polar bear habitat to oil and gas extraction, experts say. “They have a very narrow window,” said Matt Lee-Ashley, a senior fellow with the Center for American Progress, a left-leaning think tank that opposes drilling in the Arctic refuge. “They certainly can do it, but the margins of error are smaller.” The coastal plain within the Arctic National Wildlife Refuge in Alaska. (U.S. Fish and Wildlife Services/AFP via Getty Images) The coastal plain within the Arctic National Wildlife Refuge in Alaska. (U.S. Fish and Wildlife Services/AFP via Getty Images) (Handout/Us Fish And Wildlife Services/Af) The Interior Department just finalized a plan to hold a lease sale, but didn’t say when exactly it would take place. The plan released Monday calls for the first oil and gas auction to be held by December 2021. The move opens the door for leasing on the 1.6 million-acre coastal plain on Alaska’s North Slope after drilling there was authorizing by congressional Republicans in a 2017 budget bill. AD Without mentioning the upcoming election, Interior Secretary David Bernhardt suggested his department may complete the lease sale soon. “I do believe that there certainly could be a lease sale by the end of the year,” Bernhardt told reporters this week, though he added that he is “not really driven by the political dynamics.” “The president has this issue as one of his priorities that he discussed with us,” he said. Looming over the leasing process is a promise from Biden to block drilling in the refuge if elected president. His campaign reiterated that commitment Monday after the Trump administration released the plan. Now both the oil industry and politicians in Alaska are eager to see leases sold sooner rather than later. Frank Macchiarola, a senior vice president at the American Petroleum Institute, a major oil and gas lobbying group in Washington, said his organization “would support seeing a lease sale this year.” AD “This has been an important priority for the industry for a number of years,” he added. Perhaps no one did more to usher the drilling provision through Congress than Sen. Lisa Murkowski (R-Alaska), chairwoman of the Senate Energy and Natural Resources Committee. Getting Congress to permit drilling there was a goal long sought by Alaska politicians, including her father, former senator and governor Frank Murkowski (R). She, too, wants “to see a lease sale this year,” she said. “We should not delay this opportunity,” she added.
An oil company wants to use giant chillers to refreeze the ground that climate change is thawing in order to drill for more oil – which will ultimately accelerate global warming – ConocoPhillips, one of the nation’s largest oil companies, might soon be forced to face symptoms of a problem it helped create – melting permafrost wrought by climate change. In a planned project in northern Alaska, where global warming is causing the frozen soil to thaw, the company said it would use chillers to keep the ground beneath key infrastructure frozen, according to an environmental impact statement published by the Bureau of Land Management (BLM) last Friday, Bloomberg Law first reported. The oil-drilling infrastructure, itself, could also exacerbate the thawing of the ground, the agency said. The project, known as Willow, could produce more than 160,000 barrels of oil per day over a period of about 30 years, during which climate change is likely to worsen warming, BLM said. In the last 60 years, average temperatures in the region rose by 3 degrees and they’re expected to increase by as much as 12 degrees by the end of the century “if global emissions continue to increase,” the agency said. The transportation sector – which runs on fuels made with oil – is the largest source of planet-warming emissions in the US. The oil produced by the ConocoPhillips project is thus likely to accelerate global warming and the melting of Alaska’s permafrost. “Climate change is affecting the Arctic and our operations, but these effects are incremental, which means they can be effectively monitored and addressed as they arise,” a ConocoPhillips representative said in a statement. “For example, in addition to closely monitoring changes in the depth of the usual summertime thawing of the permafrost surface layer each year, where necessary we use cooling devices (thermosyphons) that can chill the ground enough in the winter to help it remain frozen through the summer.”
BP disputes Greenpeaces oil spill claims – OIL company BP has insisted there has been no oil spill from its Andrew platform, 140 miles northeast of Aberdeen, after activists from Greenpeace said they had recorded pollution originating from the installation. Greenpeace said they had “witnessed” the spill from its ship Esperanza on Saturday and reported the incident to Marine Scotland and the Maritime and Coastguard Agency (MCA) the following day. The environmental activists, currently campaigning in the North Sea, said aerial photographs clearly show that the pollution originates from the Andrew platform, operated by BP. BP in Aberdeen said on Tuesday morning that water produced from platform operations was discharged to the sea in accordance with applicable regulation. A company spokesman said: “BP, as a responsible operator, carries out continuous monitoring analysis in addition to sampling as required by UK regulation. “The results of this analysis and sampling have been shared with the regulator and the composition of produced water from Andrew is within approved limits. “BP will continue to analyse the produced water from Andrew to ensure this remains the case. The spokesman added: “There is not a spill at the Andrew platform.” This video grab captured from drone footage shows oil floating on the surface of the North Sea in the Andrew oilfield.This video grab captured from drone footage shows oil floating on the surface of the North Sea in the Andrew oilfield. Climate finance adviser for Greenpeace UK Charlie Kronick responded: “Given the scale of the pollution witnessed, which goes beyond the 500m exclusion zone, it’s troubling if this is considered normal operating practice.
Venezuela coast could take half a century to recover from oil spill, researcher says (Reuters) – A strip of Venezuela’s western coastline boasting pristine beaches and fragile ecosystems like mangroves and coral reefs could take more than half a century to fully recover from the environmental impacts of a recent oil spill, a researcher said on Wednesday. The country’s opposition-controlled National Assembly last week opened an investigation to determine the causes and consequences of the oil slicks that began washing up on the Caribbean coast of western Falcon state in early August. “We project that the negative consequences on ecosystems and their components could last for 50 years or more,” Julia Alvarez, a biologist with Venezuela’s SVE ecological society, told reporters. Alvarez added that the area was also home to mollusks that likely would have died instantly on contact with the oil, threatening the livelihood of fishermen in the area at a time of severe economic contraction in Venezuela. Independent researchers and opposition lawmakers have said the spill likely originated from the El Palito oil refinery in nearby Carabobo state, citing satellite images showing slicks near the refinery in late July, days before oil began washing up on the coasts of Morrocoy national park. A report published by the SVE and Venezuela’s Simon Bolivar University cited satellite images showing that the slick first appeared on July 22 near the refinery. Given its length of 5.6 km (3.5 miles) and width of 1.5 km, the researchers calculated it contained around 26,700 barrels of oil.
Australians charged ‘substantially’ more for country’s gas than buyers overseas – Consumers and businesses on Australia’s east coast are paying significantly more for gas than international customers buying its liquified natural gas (LNG) exports, the competition watchdog has found.An interim report by the Australian Competition and Consumer Commission (ACCC) found domestic gas users were offered prices of between $8 to $11 a gigajoule in late 2019 and early this year. By comparison, LNG exporters were selling to their north Asian customers for less than $6 a gigajoule by early 2020.The LNG netback price, a measure of what a gas supplier would expect to receive, has been below $5.50 since May. The ACCC chair, Rod Sims, said he was concerned about a widening gap between domestic and export parity prices. It would have an “inevitable impact” on Australia’s industrial sector during a difficult economic period, he said.“I am yet to hear a compelling reason from LNG producers as to why domestic users are paying substantially higher prices than buyers in international markets,” Sims said in a statement. “When we have lower gas prices around the world, and the Australian market linked to world gas markets, it is vital that Australian gas users get the benefit.”International oil and gas prices have crashed in recent months due to the Covid-19 shutdown, Saudi Arabia and Russia flooding the global oil market and, according to some analysts, investors’ increasing wariness about the financial risk of backing fossil fuel assets as the world looks to cut greenhouse gas emissions.Sims said the impact of Covid-19 and the collapse in oil prices were being felt at all levels of the gas supply chain. “They have highlighted key areas of dysfunction in the market,” he said.The Morrison government and its handpicked National Covid Coordinating Commission have embraced the falling price as an opportunity and backed public support for gas infrastructure. The commission’s chair, Nev Power, has played down suggestions of a green recovery from the pandemic built on clean energy. A leaked draft report by the commission’s manufacturing taskforce recommended the government underwrite a massive expansion of the domestic gas industry – including government help to open new fields and build hundreds of kilometres of pipelines – that could reduce the domestic price to about $6 a gigajoule, with a goal of $4. Analysts have dismissed this as unrealistic.
Shell working to eliminate oil pollution in Niger Delta through effective operational activities – The cause of the spillage is one or more of the combinations of poor maintenance of oil infrastructure, corrosion, equipment failure, sabotage and theft. Experts say oil spill is a form of pollution caused by the release of a liquid petroleum hydrocarbon into the environment, especially the marine ecosystem, due to human activity. Not stressing much on the fact, the negative impacts caused in the processes of oil exploration and production are no less of commercial and environmental catastrophes, the world over. Since Nigeria discovered the ‘black gold’ in Oloibiri, in 1956, there has been a resultant environmental degradation from gas flaring, dredging of larger rivers, oil spillage and reclamation of land due to oil and gas extraction across the Niger Delta region. Chiefly as a result of intensified petroleum exploration and production since the 1960s, oil spillage has likewise intensified. However, for the last decade, in particular, the Shell Petroleum Development Company of Nigeria Limited (SPDC), a wholly-owned Shell subsidiary which operates an unincorporated joint venture (SPDC JV), has been working to eliminate spills from its operational activities and to lower the scale of oil pollution in its operations. According to the “Nigeria Briefing Notes 2020,” the SPDC JV, in 2019, reduced operational spills to its lowest levels and significantly reduced breaches from wellheads and cleaned up more spill sites than ever before. The energy company, in the review period, reported a decrease of 46.6 per cent or seven operational spills, relative to 15 spills recorded in the previous year of 2018. Not undermining illegal activities of oil theft, pipeline vandalism and others inhibiting a normal operating environment for its operations, the SPDC has remained resilience in accordance with its policy to eliminate spills from its operational activities. In fact, when a leak is identified, reports say the SPDC JV team responds to contain any of such spilled oil and clean up. In 2019, the company remediated 130 sites. That said, there is no doubt that, as a company operating to the same technical standards as other Shell companies globally, there is still much work to do to get the company to its target of “Goal Zero” in all spills, operational and third-party vandalism. But through a solid strategy, active partnerships, closer community engagements, bold security and new surveillance equipment, the SPDC has been steadily making good progress in the areas of performance, illegal activity, response and investigation, remediation and clean-up in Ogoniland.
Ship that oozed oil off Mauritius coast splits in two– A ship that has leaked more than 1,000 tonnes of oil in pristine waters off the coast of Mauritius has split in two. The bulk carrier MV Wakashio ran aground on a coral reef off the southeastern coast of Mauritius on July 25 and began oozing oil more than a week later, threatening a protected marine park boasting mangrove forests and endangered species. Mauritius declared an environmental emergency and salvage crews raced against the clock to pump the remaining 3,000 tonnes of oil off the stricken vessel. “It was confirmed on August 15 that the vessel has broken into two,” the ship’s operator Mitsui OSK Lines said in a statement Sunday, noting that the information came from the vessel’s owner, Nagashiki Shipping. The split was caused by a crack in a cargo hold on its stern side, Mitsui said. Officials had been preparing for the development for days, and images taken Saturday indicated it was inevitable, with the two pieces only partially attached. ‘Worst ecological disaster’ Nearly all the remaining 3,000 tonnes of oil had been pumped off the ship by that time, though there were still 90 tonnes on board, much of it residue from the leakage. Oil-oozing ship off Mauritius coast Oil-oozing ship off Mauritius coast Mitsui noted Sunday that “an amount of unrecovered oil is believed to have leaked out of the vessel”, without providing details. Thousands of Mauritians have volunteered day and night to clean the powder-blue waters that have long been a favourite among honeymooners and tourists. The spill is both an environmental and economic disaster for Mauritius, which relies heavily on tourism. The spill already qualifies as the “worst ecological disaster” for the Indian Ocean island nation, Greenpeace Africa campaigner Happy Khambule said, adding that it “puts unique species under immediate threats”.
Japanese Tanker Splits in Two After Creating Environmental Disaster for Mauritius – The Japanese cargo ship that hit a coral reef near Mauritius and spilled thousands of metric tons of fuel into the island nation’s turquoise waters split in two over the weekend, The Guardian reported. “At around 4.30 p.m., a major detachment of the vessel’s forward section was observed,” the Mauritius National Crisis Committee said in a statement regarding The MV Wakashio. “On the basis of the experts’ advice, the towing plan is being implemented.” The ship ran aground near Blue Bay Marine Park, a designated conservation area that is home to dozens of unique coral and fish species. To protect the area, crews used floating dams to cordon it off and divert the oil. India is helping the effort by sending 28 tons of material, including dams and barges to help lessen the oil spill impact, NPR reported. Tug boats are trying to haul the ship hundreds of miles into the Indian Ocean in order to sink it, but NPR reported that bad weather is hampering plans to remove it. It’s estimated that at least 1,000 tons from the ship’s 4,000 tons of oil spilled into the Indian Ocean, and by the time the ship split, nearly all of the remaining fuel had been removed, except for 90 tons that couldn’t be reached since it was mostly leakage residue, CBS News reported. The Mauritius National Crisis Committee said that booms had been placed near the ship as it broke apart to absorb any of the remaining fuel leakage. The ship’s owner, Nagashiki Shipping, will consider compensation requests from Mauritius, the BBC reported. The Japanese environment minister, Shinjiro Koizumi, said that Japan would send a team of officials and specialists to assess the damage, the Guardian reported. While the full impact of the oil spill is still unfolding, the damage could severely harm Mauritius’ tourism-based economy for decades, The Guardian reported. Besides the hit to tourism, scientists noted that the damage could affect the local ecosystem for just as long. “This oil spill occurred in one of, if not the most, sensitive areas in Mauritius,” oceanographer Vassen Kauppaymuthoo told Reuters. “We are talking of decades to recover from this damage, and some of it may never recover.”
Birthday Party & Quest for WiFi led to Wakashio grounding off Mauritius – “The 58-year-old captain of the ill-fated Newcastlemax-type bulk carrier WAKASHIO could face negligence charges” after it was discovered the crew was celebrating a crewmember’s birthday as the ship edged closer to the Mauritius coastline seeking wifi signals just prior to the bulk carrier’s grounding on a reef off the island’s south coast. It appears seeking close proximity to the populated shore is a common practice for ships out to sea weeks at a time. It is done so crews can pick up TV signals, internet, and cell phone access. Crews can call home or catch up on the news.First reported by local newspaper “L’Express,” these bombshell revelations come from investigators interviewing the crew of the Japanese-owned WAKASHIO a Panamanian-flagged ship.The WAKASHIO grounded on a reef near UNESCO protected sites on the evening of July 25. Before the catastrophe, local authorities noticed the close proximity of the WAKASHIO to the Mauritius coastline and had been trying to contact the ship before the accident to warn it off from its flawed course. A later story after talking to the crew revealed the crew was celebrating a birthday and had missed the initial and urgent calls. The wrecked ship is now on the verge of breaking up (and has done so), has spilled around 1,000 tonnes of bunker fuel into the pristine Mauritian waters, and has created the republic’s greatest ecological disaster. The “Newcastlemax” designation refers to ship size; Maximum beam 50 meters with a maximum overall length of 300 meter. It is the largest vessel to be able to enter the port of Newcastle, Australia at about 185,000 DWT.
Mauritius Oil Spill Tragedy: How and Why the MV Wakashio Ran Aground, and Aftermath – A mysterious course change, a birthday party, oil on the beaches, and a billion dollars in compensation (maybe). Nagashiki Shipping’s Capesize bulk carrier Wakashio, which, loaded with oil, ran aground on a reef off Pointe Desny[1], southeast Mauritius, on July 25, 22 days ago, broke in two today.[2] Here’s before-and-after satellite imagery: Here’s a close-up image of the Wakashio: And here’s an aerial view, showing the nasty effects of oil on Mauritius’ turquoise water: (Most of the oil was removed from the tanker before it broke up, so this photo shows the vile residue.) A few days ago, Yves covered the grounding, the ecological effects, the (mostly successful) efforts to pump the low sulfur and diesel oil out of the ship to keep it out of the ocean, and the volunteer efforts to clean up the oil that did escape; she also gave a link to a crowd-funding site for cleaning and protecting the Mahebourg Lagoon[3] where the oil spilled. In this post, I’ll look at what we know today about how the Wakashio ran aground, the nature of the oil spill, and compensation for the spill.
Japan ramps up aid to Mauritius after oil spill – Japan is sending a second team of experts to help clean up more than 1,000 tons of oil that leaked from a Japanese-owned bulk carrier into pristine waters off the coast of Mauritius. The decision came as the Mauritian government vowed to seek compensation from the ship’s owner and insurer for “all losses and damages” related to the disaster. Tokyo has already dispatched one team of six experts, including a coastguard expert and diplomats, to aid in the response. The new team of seven experts is to leave Japan on Wednesday and will carry materials such as sorbent to help clean up the oil, Japan’s embassy in Mauritius said in a statement Monday. “The oil spill has caused serious damage over the southeast coastal environment of Mauritius and will have an inevitable impact on the country’s tourism industry as well,” the statement said. “Japan has decided to dispatch the team out of comprehensive and holistic consideration of all circumstances, including the request of urgent assistance from the government of the Republic of Mauritius and the friendly relationship between the two countries,” it said. The MV Wakashio ran aground on a coral reef on July 25 and began oozing oil more than a week later. Both the Mauritian and Japanese governments have come under fire for not doing more immediately to prevent a large-scale spill. Japanese firm Nagashiki, the ship’s owner, has pledged to “sincerely” respond to requests for compensation over damage to the marine environment. The ship split in half over the weekend, and a portion remains stranded on the reef. At a meeting Monday, the national crisis committee formed in response to the spill determined that it was “still risky to remove the remaining small amount of residual oil in the engine room” of that portion of the ship, according to a statement issued Monday night. “Oil-pumping operations should resume as soon as the weather permits,” the statement said.
Japanese team- Mauritius oil cleanup won’t be easy – Japanese experts assessing the impact of an oil spill caused by a Japanese ship off Mauritius say they have no idea how long it will take to clean up contaminated areas.Specialists in maritime anti-pollution measures began working at sites where oil from a ship operated by Mitsui O.S.K. Lines washed ashore. The vessel ran aground off the Indian Ocean island nation on July 25.The team reported its initial findings online on Friday, three days into the survey. One member said the contamination is widespread, with oil reaching some 10 kilometers north of the stranded ship.He said the vessel suffered such severe damage that an attempt to retrieve it from shallow waters of only 10 meters deep would be challenging. Another expert said mangrove swamps are inundated with oil, making it difficult to gain access and clean the entangled roots of the trees.
Cleanup of oil leaked from Japanese-owned ship to be prolonged— A Japanese disaster relief team dispatched in response to the leakage of fuel oil from a Japanese-owned freighter that ran aground off Mauritius said Friday it cannot estimate when the cleanup operation could be completed. “The spilled oil has stuck to coastal mangroves where it is hard to remove,” a member of the team said in an online press briefing hosted by the Japan International Cooperation Agency via the videoconferencing app Zoom. Using chemicals to dissolve the oil is not a viable option as it may harm the ecosystem, the team said, adding that it was not presently aware of any damage to underwater coral. The team, which consists of four experts from the Japan Coast Guard and one official each from the Foreign Ministry and JICA, arrived in the Indian Ocean island nation on Monday. A recent survey of the area found that oil had spread to around 10 kilometers north of where the ship had ran aground near Pointe d’Esny, an area designated as a wetland of international importance under the Ramsar Convention. More than 1,000 tons of fuel oil has leaked from the vessel, according to its operator Mitsui O.S.K. Lines Ltd. The team expects to finish removing all the oil remaining inside the vessel within the next few days, weather permitting. The Panama-flagged bulk carrier Wakashio, owned by Nagashiki Shipping Co., was carrying a total of some 3,800 tons of fuel oil when it ran aground on July 25. The oil began to leak last week when one of the five fuel tanks cracked.
Mauritius oil clean-up team turns focus from sea to mangroves – A Japanese disaster relief team helping to clean up a devastating oil spill off the Indian Ocean island nation of Mauritius is focusing on mangroves, beaches and wetlands after most of the oil at sea had been collected, it said on Tuesday. A Japanese bulk carrier struck a coral reef on July 25, spilling about 1 000 tonnes of fuel oil in what environmentalists say is the country’s worst ecological disaster, killing wildlife and damaging pristine waters. “As most of the spilled oil at sea has been collected, we are moving into a next stage, with the focus on cleaning up the seaside and minimising the environmental impact,” Keiji Takechi, deputy team leader, told an online news conference from Mahebourg, Mauritius. “Environmental experts who can give advice and instruction are needed now.” Japan sent six officials, mainly oil spill experts, to Mauritius last week and plans to send another team of environment ministry officials and specialists this week. Team leader Junji Gomakubo said the focus was not only on the immediate impact. “We also need to think about plans to restore the environment in the long run, like in a 10-, 20-, 30-year span,” he said. The full impact of the spill is still unfolding, scientists say. As island residents scrambled to mop up the oil slicks and clumps, they saw dead eels and fish floating in the water, as fuel-soaked seabirds limped ashore. The damage, scientists say, could impact Mauritius and its tourism-dependent economy for decades.
Mauritius Arrests Captain of Ship Behind Devastating Oil Spill – The captain of the ship that ran aground off Mauritius and caused an environmental crisis when oil began leaking close to the island nation’s unique marine ecosystems was arrested, both police and the captain’s lawyer said on Tuesday. The captain, 58-year-old Sunil Kumar Nandeshwar of India, was charged with endangering safe navigation,BBC News reported. Chief officer Tilak Ratna Suboda of Sri Lanka was also arrested, according to The New York Times. “We have arrested the captain of the vessel and another member of the crew. After having been heard by the court they have been denied bail and are still in detention,” Inspector Siva Coothen told Reuters.Nandeshwar was arraigned in a district court in the Mauritius capital of Port Louis. Both men will appear in court again Aug. 25, Nandeshwar’s lawyer Ilshad Munsoor told The New York Times.The MV Wakashio ran aground on one of Mauritius’ reefs July 25 and began leaking oil less than two weeks later. It is estimated that at least 1,000 tons of the roughly 4,000 tons on the ship spilled into the Indian Ocean. The rest was removed before the ship split in two over the weekend, except for 90 tons still on the ship.Rough weather conditions have made the remaining oil unsafe to remove, BBC News reported.”Due to the adverse weather conditions, it is still risky to remove the remaining small amount of residual oil in the engine room,” the National Crisis Management Committee said on Monday.While other major oil spills have been worse in terms of total oil released into the environment, this spill was catastrophic because it occurred near two protected marine ecosystems and one wetland of international importance.Scientists say damage from the spill could impact Mauritius’ marine life and related tourism for decades, according to Reuters. “This oil spill occurred in one of, if not the most, sensitive areas in Mauritius,” oceanographer Vassen Kauppaymuthoo told Reuters Aug. 13. “We are talking of decades to recover from this damage, and some of it may never recover.” It still isn’t clear why the ship passed so close to shore when it ran aground. The Mauritius coast guard tried repeatedly to warn the vessel that it had charted a dangerous course, but received no reply, an anonymous maritime official told Reuters.
Greenpeace warns Mauritius not to sink vessel that caused oil spill – Plans by Mauritius to sink part of a broken-up vessel that caused a disastrous oil spill should be shelved, environmental watchdog, Greenpeace, said on Wednesday. “Out of all available options, the Mauritian government is choosing the worst one,” said Happy Khambule of Greenpeace Africa. “Sinking this vessel would risk biodiversity and contaminate the ocean with large quantities of heavy metal toxins, threatening other areas as well, notably the French island of La Reunion,” he added. The Mauritian government announced its plan to sink part of the Wakashiho earlier in the week, after the Japanese-owned ship broke in two weeks after running aground off the tourist island. The government said the front of the vessel, owned by Nagashiki Shipping, would be towed into deep waters and sunk, while the rest would be removed bit by bit. The vessel leaked about 1,000 tons of the 4,000 tons of fuel oil it was carrying into the popular honeymoon resort’s pristine coastal waters, an area that is home to rare flora and fauna. The company and the Mauritian government have been under increasing pressure to explain why the vessel sailed so dangerously close to the reef and why it took authorities days to arrive at the scene. Authorities blame bad weather for the delay. The ship’s captain, an Indian national, and officer, a Sri Lankan, were arrested on Tuesday in the capital St Louis and have been charged with endangering safe navigation.
Mauritius oil spill puts spotlight on ship pollution– Small island nations face an existential and developmental threat from ship-source pollution endangering their vulnerable marine ecosystems and ocean economies. An effective international legal regime can help. Often close to world shipping lanes, small island and coastal nations are at particular risk from oil spills. Reliant on the marine environment and its biodiversity for tourism, fishing and aquaculture, islanders face an existential threat when oil spills happen in their waters. This is why the environmental crisis unfolding in Mauritius is of grave concern. It also brings into focus the international legal framework in place to provide support when ship-source environmental disasters strike, a new UNCTAD article says. The seas and their use are governed by several international conventions. But some are not ratified by all countries that might benefit, and others are yet to enter into force. This creates murky waters when oil spills happen, as not all parties have the same liability and compensation recourse, depending on which kinds of ships are responsible for the pollution and whether they have signed up to existing conventions. “There’s a need for universal participation in the existing international legal framework, where all nations are party to agreements, so when incidents like this occur, vulnerable countries are protected,” said Shamika N. Sirimanne, UNCTAD’s technology and logistics director. She said such oil spills herald negative environmental and socio-economic consequences for developing countries, especially small island developing states (SIDS). Ms. Sirimanne added: “Sustainable Development Goal 14 calls on us to protect life below water and this means minimizing pollution at every possible turn, including putting all necessary precautions in place to manage environmental disasters like oil spills when they do happen.”
India’s crude imports fall to lowest in over a decade in July – (Reuters) – India’s crude oil imports fell in July to their lowest since March 2010 as fuel demand slowed amid renewed coronavirus-induced lockdowns and closures of refinery units for maintenance, government data showed on Thursday. Crude oil imports last month slumped about 36.4% from a year earlier to 12.34 million tonnes, or 2.92 million barrels per day, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed. That marked a fourth straight monthly decline. Fuel demand in the world’s third-biggest oil importer and consumer also fell, posting a fifth consecutive year-on-year drop. The country reported a record daily jump of 69,652 coronavirus infections on Thursday, taking the total number of cases to 2.84 million, data from the federal health ministry showed. India is also Asia’s third-biggest economy, which imports and exports refined fuels. Refined product imports surged 46.4% to 4.07 million tonnes year-on-year, mainly due to a sharp jump in India’s fuel oil imports. Fuel oil imports rose to record 1.22 million tonnes in July from 127,000 tonnes a year ago. Reliance Industries Ltd (RELI.NS), operator of the world’s biggest refining complex, has been buying some straight-run fuel oil from countries including Iraq to process at its revamped coker, to maximise refining margins.
COVID-19 Positive Russian Oil Minister Will Join OPEC+ Meeting – Russia’s Energy Minister Alexander Novak will take part in the virtual meeting of the OPEC+ monitoring panel on Wednesday, despite testing positive for COVID-19, Russia’s energy ministry said on Tuesday. Earlier on Tuesday, Russian Prime Minister Mikhail Mishustin said that Novak had tested positive for the coronavirus while he was on a visit to Russia’s Far East. Novak returned to Moscow and will work remotely, the ministry said.Novak feels good and doesn’t have any symptoms, and he plans to take part in the OPEC+ panel’s meeting on August 19 via video conference, a representative of the Russian energy ministry told Russian outlet RBC.Prime Minister Mishustin and Vladimir Putin’s Press Secretary Dmitry Peskov have recovered from COVID-19 after contracting the virus earlier this year.The Joint Ministerial Monitoring Committee (JMMC) holds meetings every month until the end of 2020, instead of ahead of every full OPEC+ meeting only, because of the volatile oil market and the highly uncertain trajectory of global demand recovery.The JMMC is meeting this week, but it will not discuss any revisions of the ongoing production cut pact and is not expected to make any major decisions to tweak the deal, Novak said last week.The OPEC+ coalition saw its compliance rate with the oil production cuts at 95 percent in July, four sources from the group told Reuters on Monday, which is a level similar to the previous month, if the additional one-month voluntary cuts from Saudi Arabia, the UAE, and Kuwait for June are excluded. At last month’s panel meetings in mid-July, the JMMC noted an improved compliance rate with the cuts. The overall compliance rate for the OPEC+ group was a record-breaking 107 percent in June, but it was due to the additional voluntary contributions from Saudi Arabia, the United Arab Emirates, and Kuwait, which cut a total of 1 million bpd in June on top of their shares
Oil steady as China’s plans to boost U.S. imports counters tensions — Oil prices steadied on Monday as news that China planned to ship large volumes of U.S. crude in August and September countered rising tensions between the two countries and a delay in the review of their trade pact over the weekend. Brent crude was up 17 cents at $44.97 per barrel, and West Texas Intermediate crude traded 32 cents higher at $42.33 per barrel. The emergence of new coronavirus hot spots particularly in Europe also put pressure on fuel demand and oil prices, analysts said, while a weak dollar lent some support. “Clearly the market is not tightening as quickly as initially anticipated. Demand is taking longer than expected to get back to normal levels,” ING Group said. Market sentiment soured after the United States and China delayed a review of their Phase 1 trade deal initially slated for Saturday, citing scheduling conflicts. However, in a positive signal, Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September. Investors are also looking for more clues on future supply from a meeting this week of a panel representing ministers of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. The Joint Ministerial Monitoring Committee (JMMC) monitors OPEC+ production curbs agreed earlier this year. Last month, the JMMC recommended that cuts be eased from Aug. 1 to about 7.7 million barrels per day (bpd) from a reduction of 9.7 million bpd since May, in line with an earlier OPEC+ agreement. Iran’s oil minister, Bijan Zanganeh said “OPEC’s performance has been successful because the price of oil has risen from $16 in May to around $45 and has stabilised.” ANZ estimated that demand had risen 8 million barrels per day (bpd) over the past four months to 88 million bpd – still 13 million bpd below this time last year. .
Oil Rises on Commodities Rally; Talk of OPEC Cuts -Crude prices rose Monday, helped by a broad commodities rally and a media report suggesting that OPEC+ members were pulling their weight in complying with the alliance’s production cuts. A panel of the Saudi-steered and Russia-assisted Organization of the Petroleum Exporting Countries and its allies will meet Wednesday to review the market amid efforts to roll back some two million barrels from production cuts of around 9.6 million barrels per day agreed to in May. A Reuters report on Monday, quoting two OPEC+ sources, said the group members’ compliance with cuts was seen at around 97% in July. New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled up 88 cents, or 2.1%, at $42.89 per barrel. London-traded Brent, the bellwether for global crude prices, closed the New York session up 57 cents, or 1.4%, at $45.37. Crude prices were also helped by the broader outperformance of commodities amid plunging yields on the U.S. 10-Year Treasury note and the slide of the Dollar Index. Yields on the 10-year note initially plunged 5% on Monday, before recovering slightly to show a deficit of 3.8% late afternoon in New York. The dollar index, which pits the greenback against a basket of six currencies, was down to as low as 92.75 earlier in the day before stabilizing to 92.85. China is living up to its end of the trade deal the two parties signed in January, U.S. President Donald Trump said Monday, even though the nation has fallen short so far of promised purchases of U.S. products, Reuters reported. Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September. The U.S. Energy Information Administration’s estimates of unexpectedly strong crude stockpile draws at home have also kept oil supported, despite the International Energy Agency forecasting a weaker global outlook for fuels amid the Covid-19 outbreak.
Oil steadies as demand fears offset high OPEC+ compliance – (Reuters) – Oil prices steadied on Tuesday as high compliance with supply cuts from the OPEC+ producer group offset demand fears from the new coronavirus. Brent crude futures rose 9 cents to settle at $45.46 a barrel. U.S. West Texas Intermediate (WTI) crude futures ended unchanged at $42.89 a barrel. Supporting prices on Tuesday, a technical panel found that compliance with OPEC+ oil output cuts in July was between 95% and 97%, according to a draft report seen on Monday by Reuters. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, eased their cuts in August to 7.7 million barrels per day (bpd) from 9.7 million bpd previously. OPEC+ will hold a ministerial panel meeting on Wednesday. “Expect OPEC+ to communicate that they request strict compliance from all members and cheer for the success of the measures to date,” said Rystad Energy’s Bjornar Tonhaugen. Still, the coronavirus pandemic, which has raged for months, shows no signs of letting up. In the Americas alone, almost 11.5 million have contracted the disease, and over 400,000 people have died as a result of the pandemic, the World Health Organization regional director Carissa Etienne said on Tuesday. The United States and Brazil are the biggest drivers of the COVID-19 case count in the Americas, Etienne added. “There are still ongoing concerns about COVID and there are continuing concerns about the lack of a deal in Congress for stimulus,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. The U.S. Congress has so far failed to agree on another fiscal relief package to stem economic fallout from the pandemic. Meanwhile, some European countries have renewed travel quarantines, which impact jet and motor fuel demand.
Oil rises slightly as inventory draw outweighs demand worries -Oil prices were little changed on Wednesday as concerns lingered over soft U.S. fuel demand while global producers feared a second prolonged wave of the coronavirus pandemic was a major risk for the market recovery. U.S. crude oil stockpiles fell 1.6 million barrels last week, while fuel demand was down 14% from the year-ago period over the last four weeks, Energy Information Administration data showed. “The drop in gasoline demand week-over-week was a concern. That’s still showing weakness,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “The only thing that is holding us back is demand,” he said. Brent crude futures were down 13 cents at $45.33 a barrel, but still not far off a five-month high above $46 a barrel reached earlier in August. West Texas Intermediate crude settled 4 cents higher at $42.93 per barrel. Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister said, while urging compliance with a global deal to cut output. The Organization of the Petroleum Exporting Countries and its allies such as Russia, a grouping dubbed OPEC+, began a meeting on Wednesday to review the compliance levels with the deal, aimed at supporting prices. . “Based on the average projections of various institutions, … it is estimated that the world will reach about 97% of pre-pandemic oil demand during the fourth quarter – which is a big recovery from the huge falls in April and May,” said Prince Abdulaziz bin Salman. A draft OPEC+ statement, seen by Reuters, said a second prolonged wave of the pandemic was a major risk for the oil market recovery. OPEC+ sources have said the group was unlikely to change on Wednesday its output policy, which currently calls for reducing output by 7.7 million barrels per day (bpd) versus a record high 9.7 million bpd up until this month.
U.S. oil benchmark erases loss, finishes flat after EIA reports drop in gasoline inventories – The U.S. crude benchmark shook off early losses to end little changed on Wednesday, finding support after government data showing a fall in gasoline inventories soothed jitters over demand as a pandemic-lightened driving season moves into its final stretch.Traders were also keeping an eye on a meeting of an OPEC+ panel that was expected to recommend sticking with the current schedule of production curbs as major producers gauge the COVID-19 pandemic’s affect on the demand outlook.West Texas Intermediate crude for September delivery rose 4 cents, or 0.1%, to close at $42.93 a barrel on the New York Mercantile Exchange, while October WTI CLV20, -1.33%, the most actively traded contract, lost a penny to close at $43.11 a barrel. October Brent crude fell 9 cents, or 0.2%, to $45.37 a barrel on ICE Futures Europe.The Energy Information Administration said U.S. crude inventories last week fell by 1.6 million barrels, while gasoline inventories were down 3.3 million barrels. Oil had been under pressure after the American Petroleum Institute late Tuesday reported a rise in gasoline inventories, which would be a bearish sign in the final stretch of summer driving season. The EIA said distillate inventories rose by 200,000 barrels. September gasoline futures rose 0.75 cent, or 0.6%, to close at $1.2905 a gallon.
Oil drops as demand risk rises, U.S. stockpiles fall less than expected – Oil prices fell on Thursday as major producers warned of a risk to demand recovery if the coronavirus crisis is prolonged, while U.S. crude inventories dropped less than expected. Brent crude was down 36 cents, or 0.8%, at $45.01 a barrel by 0442 GMT, having slipped 0.2% in the previous session. U.S. oil was down 38 cents, or 0.9%, at $42.55 a barrel, after inching higher on Wednesday. Stockpiles of crude in the United States fell for a fourth straight week, even as net imports rose. However, the 1.6 million barrel decline was less than a Reuters poll showing expectations for a 2.7 million barrel fall. Stockpiles of crude in the United States fell a fourth straight week, even as net imports rose, the Energy Information Administration said on Wednesday. However, the 1.6 million-barrel decline for the week to August 14 was less than a Reuters poll showing expectations for a 2.7 million-barrel fall. Fuel demand was down 14% from the year-earlier period over the last four weeks, the EIA data also showed. Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi energy minister said on Wednesday, while urging partners to comply with a deal to cut output. Saudi Energy Minister Prince Abdulaziz bin Salman was speaking at a virtual meeting of the Organization of the Petroleum Exporting Countries and allies such as Russia – a grouping known as OPEC+. The meeting was reviewing compliance with production cuts and left output reductions unchanged. “The positive outcome from the OPEC+ meeting was counter-balance (to) the EIA reporting that U.S. oil inventories last week fell by (less than the) consensus,” s Still, a draft OPEC+ statement, seen by Reuters, said a second extended wave of the pandemic posed a major risk for the oil market recovery. The group pressed members such as Nigeria and Iraq to do more to meet their quotas after they exceeded them between May and July. OPEC alone in the past decades generally produced well over 30 million barrels per day of oil but after this year’s cuts, its output stood at 20 million to 22 million bpd.
Oil prices pull back as worries linger over demand – Oil futures ended lower Thursday, under pressure after a rise in weekly jobless claims added to concerns about the outlook for demand already shaken by minutes of the Federal Reserve’s last meeting. West Texas Intermediate crude for September delivery declined 35 cents, or 0.8%, to finish at $42.58 a barrel, while October WTI, the most actively traded contract, fell 29 cents, or 0.7%, to $42.82 on the New York Mercantile Exchange. The global benchmark, October Brent crude BRNV20, -0.20%, finished down 47 cents, or 1%, at $44.90 a barrel on ICE Futures Europe.“The energy market is seen as a good barometer for global demand and seeing as dealers are less optimistic about the state of the global economy in light of [Wednesday’s] Fed minutes, oil has tumbled,” said David Madden, analyst at CMC Markets, in a note.Crude futures remained lower after data showed the number of first-time U.S. weekly jobless claims rose back above 1 million last week.Minutes of the Fed’s July 28-29 meeting released Wednesday afternoon said staff economists told policy makers they were lowering their estimate for economic growth over the second half of the year. Meanwhile, a meeting of the OPEC+ alliance’s Joint Ministerial Monitoring Committee on Wednesday offered no surprises, with ministers maintaining output cuts of 7.7 million barrels a day, but emphasizing the need for countries that failed to cut enough in previous months to make compensatory reductions this month and next. Support in Wednesday’s session also was tied to weekly inventory data from the Energy Information Administration, which said U.S. crude inventories last week fell by 1.6 million barrels, while gasoline inventories were down 3.3 million barrels. Oil had been under pressure after the American Petroleum Institute late Tuesday reported a rise in gasoline inventories, which would be a bearish sign in the final stretch of summer driving season. The EIA said distillate inventories rose by 200,000 barrels.But the data didn’t dispel worries about demand as the economy continues to wrestle with the COVID-19 pandemic.Gasoline demand fell to 8.6 million barrels a day, remaining around 10% lower than in previous years, wrote analysts at Commerzbank. The fall in gasoline inventories was presumably due not only to a fall in gasoline production but also a fall in gasoline imports, that dropped by almost half to 557,000 barrels a day, they said.
Oil ends lower on demand worries – Oil futures finished lower Friday, under pressure from continued worries over prospects for demand as the COVID-19 pandemic undermines economic growth. West Texas Intermediate crude for October delivery lost 48 cents, or 1.1%, to finish at $42.34 a barrel on the New York Mercantile Exchange, while the global benchmark, October Brent crude shed 55 cents, or 1.2%, to settle at $44.35 a barrel on ICE Futures Europe. WTI ended the week with a gain of 3 cents, or 0.1%, while Brent fell 1%. Crude remained under pressure after oil-field services company Baker Hughes Co. BKR, -1.78% reported that the number of U.S. oil rigs rose by 11 this week to 183, ending a three-week streak of declines. The number of rigs has fallen sharply this year in response to crude’s earlier pandemic-induced plunge, with the number of units down 571 from the same time last year. Eurozone purchasing managers index readings Friday showed a slowdown in the region’s economic activity, while data out of Japan indicated a continued decline in activity. Meanwhile, a renewed rise in COVID-19 cases in parts of Europe and elsewhere have underlined worries about the outlook for energy demand. In Asia, a cutback in refining activity in response to poor fuel demand is a troubling sign, analysts said. “Simply put, demand for crude has waned over the past month. Firm refinery run rates paired with an increased amount of refined product output and weak end use demand leads to an excess of gasoline and diesel being exported or dumped onto the open market,” said Michael Tran, analyst at RBC Capital Markets, in a note. “This pattern crushes regional refinery margins, which can result in lower refinery run rates and crude demand destruction,” he said, noting that Asian margins are a leading market indicator heading into fall and the end of the summer driving season. Crack spreads – the difference between the price of crude and the petroleum products refined from it – “will not improve until either demand leads the way or run cuts curtail output,” he said. September natural-gas futures jumped 4.1% to end at $2.488 per million British thermal units, leaving it with a weekly rise of 3.9%. September gasoline fell 1.24 cents, or 1%, to $1.2841 a gallon, while September heating oil shed 3.87 cents, or 3.1%, to close at $1.2080 a gallon. Gasoline saw a weekly rise of 3.2%, while heating oil retreated 2.3%.
Oil slides 1%, but still posts fifth week of gains in last six – Oil prices dropped on Friday as the economic recovery worldwide runs into stumbling blocks due to renewed coronavirus lockdowns, even as major global crude producers limit crude supply. The euro zone’s economic recovery from its deepest downturn on record has stalled this month as pent-up demand unleashed by the easing of lockdowns in July dwindled, a survey showed. By contrast, U.S. housing and manufacturing survey data came in better than expected, offsetting a surprising increase in jobless claims on Thursday. Brent crude futures were down 84 cents, or 1.9%, at $44.06 a barrel, heading for a nearly 2% weekly fall. West Texas Intermediate crude futures settled 48 cents, or 1.12%, lower at $42.34 per barrel. “Right now, the concerns about demand and the uptick in COVID cases seems to be the big reason why we’re weaker,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. India’s crude oil imports fell in July to their lowest level since March 2010, while U.S. motorists drove 13% fewer miles in June than a year earlier, according the U.S. Department of Transportation. Libya’s national oil company said it could restart oil exports after the North African country’s internationally recognized government in Tripoli announced a ceasefire, putting further pressure on oil prices. “This is a market that can’t afford to absorb any additional barrels,” said John Kilduff, partner at Again Capital LLC in New York. OPEC+, which consists of the Organization of the Petroleum Exporting Countries and allies, including Russia, was focused on ensuring members that had overproduced against their commitments would reduce output. An internal report showed the group wanted oversupply between May and July compensated for with cuts this month and next, Reuters reported. It also showed OPEC+ expects oil demand in 2020 to fall by 9.1 million barrels per day, and by as much as 11.2 million bpd if there is a resurgence of coronavirus infections.
UN chief urges Yemen’s Houthis to grant access to decaying oil tanker – UN Secretary-General Antonio Guterres urged Yemen’s Houthis to allow an assessment team to travel to a decaying oil tanker that is threatening to spill 1.1 million barrels of crude oil off the war-torn country’s coast. More then a month ago Houthi officials said they would agree to allow a UN mission to conduct a technical assessment and whatever initial repairs might be feasible on the Safer tanker. But the United Nations is still waiting for formal authorization. Guterres is “deeply concerned” about the condition of the oil tanker, UN spokesman Stephane Dujarric said on Friday. The United Nations has warned that the Safer could spill four times as much oil as the 1989 Exxon Valdez disaster off Alaska. “He specifically calls for granting independent technical experts unconditional access to the tanker to assess its condition and conduct any possible initial repairs,” Dujarric said. “This … will provide crucial scientific evidence for next steps to be taken in order to avert catastrophe.” The Safer tanker has been stranded off Yemen’s Red Sea oil terminal of Ras Issa for more than five years. The UN Security Council has also called on the Houthis to facilitate unconditional access as soon as possible.
IMO assists efforts to prevent an oil spill from FSO Safer – IMO is contributing to international efforts aimed at preventing an oil spill from the deteriorating floating storage and offloading unit FSO Safer moored off the coast of Yemen. The Organisation is also leading on the contingency planning efforts aimed at enhancing preparedness to mitigate the environmental impacts of a potential spill. IMO has mobilised a technical expert to develop contingency plan based on a variety of risk scenarios, which would play a key role in improving the efficiency, effectiveness and management of emergency response operations in the event of a spill from the FSO Safer. The contingency plan will outline the roles and responsibilities of key players and assist in coordinating the response. It will also clarify equipment requirements and locations of stockpiles and identify priority areas. IMO will also provide training to the relevant actors. The expert is currently working remotely in close communication with all relevant stakeholders. IMO is offering technical advice to support the joint international efforts, led by the wider UN family*, to assess the current condition of the FSO Safer and examine ways to secure the 150,000 MT of light crude oil currently on board. Following recent reports of water entering the engine room, it is considered that the risk of an oil spill from the FSO Safer is increasing. The floating storage and offloading unit, moored off the coast of Yemen, has not been inspected or maintained since 2015, leading to serious concerns about its integrity. “While IMO is proactively working on contingency planning, it is hoped that international efforts will succeed in paving the way to assessing the state of the FSO and taking necessary measures, in order to prevent an oil spill from occurring”, said Patricia Charlebois, Deputy Director, Subdivision for Implementation at IMO. “In the case of oil spills, prevention is always better than cure. However, should these efforts fail, we want to ensure adequate preparedness measures are in place”, she added. Ms. Charlebois highlighted that the situation is particularly complex due to the conflict in the region and the COVID-19 pandemic.
Saudi Arabia Refuses To Learn From Its Two Failed Oil Price Wars – Having failed to achieve the slightest semblance of success in the two oil price wars that it started – the first running from 2014 to 2016, and the second running from the beginning of March to effectively the end of April this year – it might be assumed that key lessons might have been learned by the Saudis on the perils of engaging in such wars again. Judging from various statements last week, though, Saudi Arabia has learned nothing and may well launch exactly the same type of oil price war in exactly the same way as it has done twice before, inevitably losing again with exactly the same catastrophic effects on it and its fellow OPEC members. At the very heart of Saudi Arabia’s problem is the collective self-delusion of those at the top of its government regarding the Kingdom’s key figures relating to its oil industry that underpins the entire regime. These delusions are apparently not discouraged by any of the senior foreign advisers who make enormous fees and trading profits for their banks from Saudi Arabia’s various follies, most notably oil price wars. It is, in the truest sense of the phrase, aperfect example of ‘The Emperor’s New Clothes’, although in this case, it does not just pertain to Crown Prince Mohammed bin Salman (MbS) but to all of the senior figures connected to Saudi Arabia’s oil sector. One of the most obvious examples of this is the chief executive officer of Saudi Arabia’s flagship hydrocarbons company, Saudi Aramco (Aramco), Amin Nasser, who said last week – bewilderingly for those who know even a modicum about the global oil markets – that Aramco is to go ahead with plans to increase its maximum sustained capacity (MSC) to 13 million barrels per day (bpd) from 12.1 million bpd. Quite aside from the sheer pointlessness of this posturing in a world already awash in oil as a result of the negative demand effect of the COVID-19 pandemic and the output overhang from the oil price war just ended, this comment from Saudi Arabia’s third-ranking oil man (after MbS, albeit by the loosest possible definition, and Energy Minister, Abdulaziz bin Salman al Saud), is extremely misleading. As such, it feeds into the oil market’s collective understanding since the 2014-2016 oil price war that anything that Saudi Arabia says about its oil industry is not to be taken as true, without a lot of additional fact-checking. Regarding the ‘maximum sustained capacity’ statement, to begin with, this term is one that has been repeatedly used by Saudi Arabia since the first oil price war disaster to cover for two other long-running delusions relating to the real level of its crude oil reserves and to the real level of its spare capacity.
Trump Touts “Making Very Big Oil Deals” As Condition For Rapid Troop Exit From Iraq – President Trump has again vowed that all US troops will soon be out of America’s second longest occupation in Iraq (behind the longest running war in Afghanistan). But curiously, like in neighboring Syria, he tied concluding the US mission there directly to the possibility of oil and resource benefits for American companies:“We look forward to the day when we don’t have to be there,” Trump said during an Oval Office meeting with Iraqi Prime Minister Mustafa al-Kadhimi.“We were there and now we’re getting out. We’ll be leaving shortly and the relationship is very good. We’re making very big oil deals. Our oil companies are making massive deals. … We’re going to be leaving and hopefully we’re going to be leaving a country that can defend itself.” Over the past months the president has been on record as desiring a troop withdraw as soon as possible, following tensions in January which nearly took the Pentagon to war against Iran-backed Shia militias in the country, in the wake of the US assassination of IRGC Quds Force chief Qassem Soleimani.But the persistent key question remains as to the future presence of the some 5,000 US troops still in the country is the timetable. When pressed by reporters on the issue, Trump turned to Secretary of State Mike Pompeo, who replied: “As soon as we can complete the mission. The president has made very clear he wants to get our forces down to the lowest level as quickly as we possibly can. That’s the mission he’s given us and we’re working with the Iraqis to achieve that.” So it appears these twin objectives have emerged out of years of endless mission-creep and ambiguously defined “justifications” for staying there (a hallmark of the so-called ‘war on terror’ era: forever shifting objectives, or in some cases no objectives at all):
- Countering Iran and leaving an Iraqi security force strong enough to be fully independent of the Shia militias.
- “Make very big oil deals,” as Trump underscored Thursday.
United Arab Emirates-Israel agreement cements US-led alliance against Iran – US President Donald Trump announced last Thursday that the United Arab Emirates (UAE) is to “normalise” relations with Israel in a deal to be known as the “Abraham Accords.” The Abraham Accords supposedly makes recognition of Israel dependent upon Israeli Prime Minister Benjamin Netanyahu halting plans to annex swathes of Palestinian land in the West Bank occupied since the June 1967 war. The aim is to side-line the fate of the Palestinians, which for decades defined the Arab states’ attitude towards the Zionist state, in order to cement an alliance between the Sunni petro-monarchies and Israel against Iran.The UAE claimed publicly that its decision was a way of encouraging peace efforts and taking Israel’s planned annexation of parts of the West Bank off the table, arguing that relations with Israel should be tempered with “realism.” Netanyahu rejected this, insisting that he had only agreed to “delay” the annexation, with the plan remaining “on the table.”The agreement is in reality bound up with the Trump administration’s “maximum pressure” sanctions regime targeting Iran, tantamount to a state of war, aimed at overturning its government and installing a client regime that would reinforce US hegemony over the resource-rich Middle East and strengthen Washington’s position against China.The announcement is the result of years of backroom talks on issues ranging from trade and security to intelligence-sharing that included Israel’s opening of an office in 2015 in Abu Dhabi. Its timing meets the needs of all three parties. It comes as Israel’s economy is unravelling in the wake of the COVID-19 pandemic and as Netanyahu’s trial proceedings on charges of bribery, corruption, and breach of trust in three separate cases move to the evidence hearings set for January. It gives the beleaguered Netanyahu, who heads a fractious coalition and faces increasing opposition from his support base among far-right forces, the chance to pose as Israel’s master statesman.It likewise enables Trump, who is trailing in the polls against Joe Biden, the Democrats presidential candidate, to claim a diplomatic “triumph” after his administration’s draft Security Council resolution extending a UN ban on arms sales to Iran, due to expire in October, was defeated, paving the way for Iran to purchase arms from other major powers. The UAE is seeking Washington’s approval for its request to purchase the US F-35 advanced combat aircraft and armed unmanned aerial vehicles, reversing its previous reliance on French fighter jets and Chinese drones. It is also seeking US support for major concessions from Qatar – in exchange for lifting the UAE’s, Saudi Arabia’s and Bahrain’s three-year long blockade of Qatari airspace and land crossings.
In act of high seas piracy, US hijacks Iranian oil bound for Venezuela – The US interdiction of oil shipments bound from Iran to Venezuela represents a dangerous escalation of the “maximum pressure” sanctions that Washington has imposed against both countries, raising the threat of armed conflict. The Department of Justice issued a statement Friday bragging that it had carried out the “largest-ever seizure of fuel shipments from Iran.” It said that “approximately 1.116 million barrels of petroleum” had been stolen “with the assistance of foreign partners.” There has been no indication of what “foreign partners” were involved in this act of piracy, but US officials claim that the seizure did not involve military force. Rather, it appears that some combination of threats and bribes were used to convince the Greek owners of the four tankers carrying the fuel – identified as the Bella, Bering, Pandi and Luna, all of them flying Liberian flags – to give it up. According to the Wall Street Journal, the threats included sanctions against the ships’ owners and crews that would prevent them from accessing US ports, US banks and US dollars. The pseudolegal basis for Washington’s act of high seas piracy was a seizure order issued by a US District Court judge in Washington, DC based upon the Justice Department’s claim that the oil constituted “foreign assets or sources of influence” for the Islamic Revolutionary Guard Corps, a major component of the Iranian military, which Washington has branded as a “Foreign Terrorist Organization.” This designation, imposed without any justification in April of last year, represented the first time that Washington has deemed a branch of another country’s government as “terrorist.” Since unilaterally abrogating the JCPOA nuclear deal between the major powers and Tehran in 2018, the Trump administration has imposed a crippling economic sanctions regime against Iran tantamount to a state of war, while building up US forces in the region in preparation for military confrontation. Gloating over the operation, President Donald Trump falsely claimed at a White House press briefing last Friday, “We seized the tankers, and we’re moving them … to Houston.” In reality, the oil was offloaded from the Greek-owned vessels onto tankers contracted by the US military. Two of these transfers took place off the coast of Oman, and two off the coast of Mozambique. The Greek-owned ships themselves were not seized. While denouncing the US action, Iranian officials have pointed out that the oil had already been sold to Venezuela and did not belong to Iran. Furthermore, the ships themselves were neither owned nor flagged by Iran.
Iran Slams US “Pirates Of The Caribbean” But Insists Seized Tankers & Fuel Didn’t Belong To Them – President Trump confirmed at the White House press conference on Friday: “We have four tankers. They are going to Houston, and they’re there… Iran is not supposed to be doing that. And so we did – we seized the tankers, and we’re moving them, and moved, to Houston.”Yet details have not emerged as to precisely how the seizure of the fuel aboard four Iranian vessels – the Luna, Panid, Bering, and Bella – went down last Thursday. A US official emphasized to the WSJ last week the vessels were taken “without the use of military force” but provided no further details.Meanwhile Tehran appears to be disputing that Iranian fuel allegedly bound for Venezuela was taken at all. Foreign Minister Javad Zarif condemned US authorities as “Pirates of the Caribbean” in a tweet, adding that, “Sadly for them, stolen booty wasn’t Iran’s.” “Pirates of the Caribbean” have their own judges and courts now. Sadly for them, stolen booty wasn’t Iran’s. Fuel was sold F.O.B. Persian Gulf. Ship and flag weren’t ours either. Hollow, cheap propaganda doesn’t deflect from miserable failure of US diplomatic malpractice at UN. – Javad Zarif (@JZarif) August 15, 2020 Previously the DOJ said it sought a federal court order “seeking to forfeit all petroleum-product cargo aboard four foreign-flagged oil tankers” and that it was done in accord with US laws targeting sanctions-busting. As geopolitical commentator Jason Ditz has pointed out: “It is not clear how exactly the shipment was seized. With US sanctions on Venezuela targeting the maritime industry, it is possible the shipowners were threatened with the loss of registration or insurance, which could have been enough for them to comply and sail to a US port.” Iran’s president Hassan Rouhani also slammed US claims of the seizure as “a lie” to cover up the “humiliation” of the UN Security Council failure to extend the Iran arms embargo:
Same Narrative, Rotating ‘Bad Guys’- Iran Paid Off Taliban Insurgents To Kill Americans – A little over a month ago we were told that Russian military intelligence was paying the Afghan Taliban to kill American troops. As many predicted, that “bombshell” – later admitted by some of the same sources that initially promoted it to be of “sketchy” intelligence origin – was very short-lived, grabbing headlines for a few days, only to be rapidly memory-holed akin to the fate of other Russiagate-related ‘anonymous sources say’ type stories. In the foreign-policy-think of the D.C. blob, the cast of “rogue” actors constantly threatening US national security seamlessly rotates, entering in and out of familiar narratives when convenient, and now CNN is out with the latest: “US intelligence agencies assessed that Iran offered bounties to Taliban fighters for targeting American and coalition troops in Afghanistan, identifying payments linked to at least six attacks carried out by the militant group just last year alone, including a suicide bombing at a US air base in December, CNN has learned.” Administration officials say it was US intelligence’s uncovering of the Iranian bounties plot which was decisive in convincing President Trump to assassinate IRGC Quds Force chief Qassem Soleimani on January 3rd. The killing by drone of Soleimani came less than a month after a particularly devastating attack on Bagram Air Base which resulted in two civilian deaths, and injuries to four American personnel, among more than 60 others wounded. That attack was on December 11, 2019. CNN writes: “The name of the foreign government that made these payments remains classified but two sources familiar with the intelligence confirmed to CNN that it refers to Iran.” So there it is – the largely debunked ‘Russian bounties’ story lives on apparently, in new form, fed to the public by anonymous intelligence sources. The CNN story even links the two threads together, suggesting that two major American enemies, Russia and the Islamic Republic, are now essentially handing out vast amounts of cash to mujahideen to kill Americans in Central Asia.
Turkey makes significant Black Sea gas find: sources – (Reuters) – Turkey has found significant gas resources in the Black Sea, two Turkish sources said, a discovery which could help the country cut its dependence on energy imports if the gas can be commercially extracted. President Tayyip Erdogan told energy executives on Wednesday he will announce “good news” on Friday that will herald a “new period” for Turkey – comments which drove up shares in Turkish energy firms and lifted the lira from this week’s record low. He gave no details but the sources said he was referring to a gas discovery in the Black Sea, and one source said the scale of the reserves could potentially meet Turkey’s energy needs for 20 years. Turkey’s drilling ship Fatih has been operating since late July in an exploration zone known as Tuna-1, about 100 nautical miles north of the Turkish coast in the western Black Sea. “There is a natural gas finding in the Tuna 1 well,” the source said. “The expected reserve is 26 trillion cubic feet or 800 billion cubic metres, and it meets approximately 20 years of Turkey’s needs.” However he cautioned that it could take seven to 10 years to start production, and estimated investment costs at between $2 billion and $3 billion. Officials, including Energy Minister Fatih Donmez, have given no details of Friday’s announcement, saying Erdogan will spell out the “surprise” himself.
Erdogan Announces “Biggest Gas Discovery In Turkey’s History” As Lira Resumes Plunge – Turkey’s lira was up as much as 1% just ahead of President Tayyip Erdogan’s major announcement Friday – crucially before tumbling again – in which he declared a “significant gas find” in the Black Sea. He unveiled “the biggest gas discovery in Turkey’s history” during a speech in Istanbul. Per Bloomberg, the “Turkish lira erased gains against U.S. Dollar as Erdogan continues his speech. Borsa Istanbul 100 index reversed more than 1.3% gains to 0.7% loss” – perhaps given many likely see this as but a desperate attempt for him to provide some deus ex machina as Turkey’s economy is imploding and locals are fleeing the lira to buy gold. BREAKING – Turkey has discovered a gas reserve as big as 320 billion cubic meters in Black Sea, Erdogan says. He says this is the largest ever gas discovery in history pic.twitter.com/CYGoa0PdPf Despite the lira hitting a record low 7.4 against the U.S. dollar this week, the potential major energy find could reduce Turkey’s dependence on energy imports, which Turkey’s leaders hope will breath a sign of life back into the spiraling economy. Erdogan said the discovery is sure to mark the start of a “new era” for the country, detailing that Turkey will aim to achieve the first gas production from the find by 2023. But again, it appears that based on immediate reaction to his speech at least, markets aren’t quite buying it just yet.
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