|
Sri Lanka signs agreement with KEPCO for power generation
( Colombo Page News Desk, Sri Lanka ) Sri Lanka has cooperated with a Korean power company to strengthen the bilateral partnership in the energy sector to boost the power generation in the island.
Sri Lanka's Ministry of Power and Energy has a signed a letter of intent with Korea Electric Power Corp.(KEPCO), that country's sole power supplier on April 1 to strengthen bilateral cooperation, according to a KEPCO statement.
Sri Lanka's power monopoly Ceylon Electricity Board under the Power and Energy Ministry has also signed a memorandum of understanding with KEPCO on the same day to develop projects in areas such as thermal power plants, renewables and power grids, the Korea Herald reported.
After signing the two deals for bilateral cooperation in the power sector in Colombo KEPCO chief executive Cho Hwan-eik said based on closer partnerships with the two governmental organizations in Sri Lanka, KEPCO expects to further contribute to Sri Lanka's power market in the near future.
According to KEPCO, the thermal power market in Sri Lanka is a feasible area for a strong bilateral partnership.
"The government of Sri Lanka has a plan to double the facilities of thermal power generation over the next 10 years to offset the declining generation of hydroelectricity," a spokesperson for KEPCO Lee Seo-young said.
Backed by its experiences in the Southeast Asian power market, KEPCO says it would have the upper hand when the government of Sri Lanka launched a thermal power project.
Hydro power generation in Sri Lanka has dropped to 16% of the total power generation due to the severe drought persisting in the island. Most of the hydro power reservoirs have almost dried due to the prolonged drought dropping the reservoir storage to 23.7% of total capacity.
Over 80% of the daily power requirement of Sri Lanka is now generated thermally from coal and oil incurring heavy losses to the CEB.
USWC employers confident of reaching deal with the ILWU without labour unrest
On one side will be a large team of senior executives representing terminal operators, ocean carriers and stevedores. On the other will be probably an even bigger group of officials from the International Longshore and Warehouse Union.
Caught in the middle and unable to do anything more than just watch on the sidelines are US importers and exporters, ranging from the likes of supermarket giant WalMart to small mid-west farmers with little experience of international trade.
But whatever their size, beneficial cargo owners and freight forwarders, along with Washington, Wall Street, the business community and even the general public, will be monitoring events closely.
Although there will plenty of people around the negotiating table, most of the talking will be left to just two of them — James McKenna, chief executive of the Pacific Maritime Association, which represents employers, and Robert McEllrath, president of the ILWU — or Jim and Bob as they are better known to their respective colleagues.
What they both hope to achieve is a new contract for the 23,000 registered longshore workers employed at the 29 ports along the US west coast without any industrial action that would disrupt terminal operations, with inevitable consequences right along the supply chain.
But this is not just a local issue. West coast ports may be losing market share, but they still handle some 45% of total US container volumes. Combined volumes through Los Angeles and Long Beach came to 14.6m teu in 2013.
Furthermore, Pacific coast ports, ranging from the two southern California heavyweights and Oakland, close to San Francisco, to Seattle and Tacoma just south of the Canadian border, support some 9m US jobs with a domestic business impact of over $1trn, according to Mr McKenna. Around 12% of US GDP is tied to cargo moving to and from US west coast ports, the PMA estimates.
With so much at risk, shippers started drawing up contingency plans some time ago, supposedly ready to spring into action at the first hint that talks may be running into trouble.
Yet early signs have been promising, with McKenna stating in no uncertain terms that he does not anticipate any strike action.
Instead, he expects a new labour contract covering US west coast dockworkers to be agreed by the end of July without any cargo disruption.
The existing six-year contract expires at the end of June. Although a new one is unlikely to be inked by then, with the timetable likely to overrun as it did in 2006, the PMA president does not see that as a cause for alarm.
“I don’t think so,” Mr McKenna replied unequivocally when asked whether there could be a strike.
Other employers are also sounding positive about the forthcoming talks.
“We have every belief in Jim and Bob that the bargaining will take place in good faith,” says Gene Seroka, president of APL’s Americas division and a PMA board member.
“Both sides have much at stake this year as we forge ahead with a new contract to promote commerce, employment and the well-being of supply chains.”
Mr Seroka is confident that the union fully understands the competitive pressures that west coast ports face, and does not want to jeopardise their commercial standing in the global shipping and logistics industries.
Mr McEllrath has not commented, but signals from the union are nevertheless equally promising.
“Neither side can afford a strike,” one ILWU source told Containerisation International. “There won’t be any disruption.”
Despite those reassurances, shippers are unconvinced and already making contingency plans for possible labour unrest during the negotiations, having expressed concern about the relatively short time available in which to come to an agreement.
The Transpacific Stabilization Agreement wrote to the PMA in early March on behalf of cargo interests represented on TSA shipper panels, asking for the talks to be brought forward. The PMA negotiates on behalf of 72 members that operate on the US west coast, including ocean carriers, terminal operators and stevedores.
Mr McKenna does not think an earlier start date would guarantee a contract agreement ahead of the June 30 deadline.
In 2008, the two sides began talking in mid-March but failed to reach agreement before the expiry date.
“From March to the beginning of June, we got nothing done,” he told the recent Trans-Pacific Maritime conference. “There was no pressure to move.”
Starting early “is not going to change what we get done, there is plenty of time and I am optimistic we will get a contract without disruption”, he said.
Neither does he think having the government’s Federal Mediation & Conciliation Service sitting in on the negotiations would be helpful.
Their involvement “would not necessarily be a good thing — it means we cannot do it ourselves,” he insists. The union side agrees.
But Washington will be watching, ready to intervene should the ports shut down, as happened in 2002 when the Taft-Hartley Act was invoked, enforcing a mandatory cooling off period, but only after a nine-day lockout.
A repeat of that is what alarms the business community, although talk of shifting cargo to other gateways, such as Canadian and Mexican west coast ports, or those on the US Gulf and eastern seaboards, is seen as a largely empty threat.
Rickmers Group chief executive Ron Widdows, who spent 30 years with APL and is a former chairman of the TSA, questions where shippers who currently move cargo through Los Angeles and Long Beach — which together form one of the world’s largest container port complexes — could realistically go as an alternative.
“Contingency planning was always a bit of an over-used term,” he claims.
Cargo flows the way it does “because that is the way the customer wants it to — you cannot make massive changes to your supply chain.The west coast has to work”, Mr Widdows asserts.
But nervousness within the shipper community reflects memories of what happened in 2002 when employers locked out ILWU members during protracted and confrontational talks.
More recently, there were very difficult negotiations between east coast longshore workers and employers last year.
In late 2012, a dispute involving clerical workers shut most container terminals in Los Angeles and Long Beach for more than a week when ILWU members refused to cross picket lines.
A jurisdictional dispute involving the ILWU over who should handle certain tasks at Portland almost drove away the Oregon port’s largest customer, Hanjin Shipping. A settlement of sorts was finally reached in March.
Carriers reckon that for every day a port is out of action, it takes between five and seven days to recover.
Top of the agenda at this year’s contract negotiations between the PMA and ILWU will be medical benefits, and in particular who should pay the tax due on so-called Cadillac plans such as those enjoyed by ILWU members, to be levied under President Barack Obama’s affordable-healthcare programme. The two sides may agree on a three-year rather than six-year contract with a view to revisiting the medical benefits should the law change after the next US presidential elections.
Pensions, automation and union jurisdiction are also expected to figure highly, with wages usually less of an issue than might be expected.
The PMA will be drawing ILWU attention to the fact west coast ports’ share of US container volumes dropped from the long-term average of around 50% to 48% in 2012 and to 45% last year, as they continued to lose discretionary cargo that moves beyond the immediate hinterland.
As well as competition from ports in Canada and Mexico, cargo is also being lost to the US east coast as more lines introduce services from Asia via the Suez Canal, to deploy ships of up to around 9,000 teu displaced by even larger vessels.
Adding to the pressure is the fact that the region seeing the fastest population growth is the US southeast.
With cargo volumes through US west coast ports growing around only 1%-2% over the past few years, Mr McKenna is warning that the picture was “not very rosy”, clouded by the “new competitive environment” in which shippers have more options than ever before.
“There is too much at risk and we cannot afford to go backwards,” he says. “Maintaining our competitive advantage is more important than ever before.”
But he will also have plenty of positive points to raise.
Robotics are gradually being introduced to some terminals in Los Angeles and Long Beach, including OOCL’s state-of-the-art Long Beach Container Terminal now under construction, the TraPac facility jointly owned by Mitsui OSK Lines and Brookfield Asset Management, and APL’s Global Gateway South.
New technologies are still regarded with some suspicion in union circles, though, but Mr McKenna is in no doubt about the benefits.
Since the 2002 contract which marked the start of new technologies on the waterfront, with automation also featuring prominently in the 2008 agreement, the registered workforce has grown by 34%.
“Modernising terminals protects union jobs,” he will be telling the ILWU leadership.
Furthermore, “peaceful resolution of a new contract is critical in preserving manufacturers’, shippers’, and retailers’ confidence in the ports as reliable and problem-free gateways for products moving in and out of the US”, he says.
“We need a contract that works for all of us, one that addresses today’s economic realities, continues to provide for employees, retirees and their families, meets our new regulatory obligations and strengthens our combined efforts to fend off competition to our west coast ports as vital gateways for goods moving in and out of the US.”
Yes, the stakes are high, and there will be plenty of hard bargaining — but both sides expect to have a new contract in place by the end of July, without any damaging industrial action.
Owners urged to avoid allure of cheap money
( LL ) IN THE view of some Singapore maritime heavyweights, shipowners should resist ordering too many vessels — despite readily accessible financing — because of concerns regarding overcapacity.
When asked about Singapore’s apparent lack of equity and export credit financing, compared with a buoyant debt financing market, executives from Pacific International Lines and Keppel said cheap cash from abundant financing opportunities could actually create significant problems down the road.
“There is growth of shipping funds after the financial crisis… Because money is cheap and the world is flush with money,” PIL managing director Teo Siong Seng said in a Sea Asia event.
Mr Teo, also chairman of Singapore Maritime Institute, said the asset plays of equity funds in shipping could artificially push up vessel prices — which might lead to a later collapse of ship values.
“Ships are as cheap as they can be… equity funds build vessels so they can sell at higher prices a few years later,” he said. “That gets me very worried.”
“You see something like a bubble in real estates and commodities.”
Mr Teo also sought to offer some possible solutions. Especially in the container sector, he has called for consolidation and re-focusing on services rather than simply pursuing fleet size.
“We will see further consolidation… It is a matter of bringing people together to realise the challenges and the opportunities, and look at how we can overcome them together,” Mr Teo said.
“Everybody just looks at size and scale. In the end, customers may suffer.
“We need to remain equally focused on the ‘softer side’ of shipping such as customer service and information technology.”
Tan Beng Tee, assistant chief executive in development at Maritime and Port Authority of Singapore, pointed out that Singapore lacked the history of attracting shipping stocks like the US.
“Moreover, deepsea shipping stocks are still languishing. Offshore shipping stocks in Singapore are doing relatively well, though,”’ Ms Tan said.
However, Singapore’s offshore sector faces other types of issues.
China has aimed to develop the country’s rig building capability this decade, offering financing packages to owners via state-owned banks and its export credit agency, while Singapore lacks such strong government initiatives.
According to data from financier Religare, Chinese rig builders won orders worth $11.3bn in 2013, compared to Singaporean firms’ $8bn of orders.
Keppel Offshore & Marine managing director Michael Chia said there was no need for Singapore to follow the Chinese example, however.
“The world is full of cash, but that does not mean shipowners can be irresponsible just because the price is cheap… All the cash would encourage speculations that destroy the industry [eventually],” Mr Chia said.
“We believe in a more sustainable way of doing business.”
Low take-up for multi-year contracts in transpacific trades
( LL ) MULTI-YEAR contracts were the future once, at least for cargo moving across the Pacific.
Both ocean carriers and cargo owners were keen to move away from the annual round of service contract negotiations that puts so much pressure on each side and invariably leaves one party feeling aggrieved. Instead, many felt it would be better to have rate and volume commitments that extended beyond the traditional 12 months in order to obtain better long-term stability and predictability.
Fine words, but the truth is that very few have been signed over the past few years, and that situation looks set to remain in the forthcoming contracting season.
The majority of contracts filed with the Federal Maritime Commission expire on April 30, a legacy of the Ocean Shipping Reform Act of 1998. That creates a hectic few weeks in the run up to May 1 as container lines and shippers try to gauge the market for the coming year and do their best to negotiate a deal that will not make them look foolish in the months ahead.
Failure in one camp is virtually a given.
Almost no-one anticipated shrinking volumes in 2009 and the associated collapse in freight rates. Few predicted the sudden recovery the following year that sent freight rates soaring.
The China-US west coast component of the Shanghai Containerised Freight Index fell to almost $950 per feu in mid-2009 as world trade stalled, but then climbed to more than $2,800 in mid-2010 on massive inventory replenishment.
When the market moves against contract parties in such a way, one or the other is likely to walk away from its commitments, but attempts by the Federal Maritime Commission to offer a dispute resolution service have not made any progress.
But neither has the concept of long-term contracts that might have helped to smooth out the volatility over a period of years.
“Multi-year contracts are not happening,” says Brian Conrad, executive administrator of the 15-member Transpacific Stabilization Agreement.
Although pricing benchmarks such as the SCFI or World Container Index now exist that should make it easier to construct a multi-year agreement, both carriers and shippers still have their doubts about the concept.
As Maersk Line North American president Michael White acknowledges, “multi-year contracts are easy to talk about, harder to do”.
Furthermore, despite the extreme rate swings of four or five years ago, the transpacific trades are far less volatile than the Asia-Europe trades, thanks in part to annual contracts that account for the lion’s share of ocean cargo that moves from Asia to the US.
Consequently, most container lines have signed only a handful of agreements covering freight rates and volume commitments that extend for more than the typical 12 months.
“It’s something clients want to talk about, but what we are lacking right now is the mechanism by which rates can be constructed to have long-term viability,” says Gene Seroka, president Americas for APL.
Likewise, most other leading carriers are seeing similarly low numbers.
“It’s very small. I am surprised,” Cosco executive vice-president Howard Finkel told the recent Trans-Pacific Maritime conference.
“Not many have embraced the idea.”
NYK’s North American president William Payne has had a similar experience with only a few long-term contracts on the company’s books.
Alliance partner Hapag-Lloyd appears to have negotiated more, though, with Wolfgang Freese, head of the German carrier’s American region, disclosing that around 15% of service agreements with customers were long-term, with the goal to raise that to nearer 20%.
Should there be more interest, then carriers say they are ready to enter in to discussions with their customers about the most suitable mechanism.
“The conversation gets a little bit deeper each year,” says Mr Seroka.
“And if the client thinks it is important, then so do we.”
K Line forecasts a capesize-led dry bulk recovery through 2014-2015
( Lloyd’s List ) KAWASAKI Kisen Kaisha has forecast brighter prospects in the dry bulk shipping markets this year and next, led by a capesize sector enjoying healthy Chinese iron ore demand, according to company statements.
Sharing the view of many other industry players, the Japanese carrier says fewer deliveries of newbuilding vessels, slow steaming and Chinese demand could support the bulker sector until at least 2016, when many speculative orders are due for delivery.
According to K Line, the global dry bulk fleet grew by 5.7% in 2013, slower than the year before, and industry-wide slow steaming helped to tighten spot tonnage.
Capesize fleet growth is expected to be minimal this year but as Australian iron ore producers raise output to meet demand from China, the supply-demand balance may well improve.
“Crude steel production in China will maintain at as high levels as 2013 and the demand for iron ore import is concurrently steady,” investor and public relations general manager Kiyoshi Tokonami told Lloyd’s List.
“Since the supply of new tonnage in 2014 is supposed to be at a slower pace compared to 2013, the bulk market is expected to be good for the time being.”
Offering further proof of strong fundamentals, trade data cited by RS Platou showed shipments of iron ore to China were up 20% on-year from Australia and 5% from Brazil during January-February.
Oversupply concerns are also easing in other segments due to fewer deliveries of panamax, supramax and handysize vessels.
K Line’s study shows that the number of cancelled orders for handysize bulkers exceeded vessel deliveries last year and suggests that the same situation may repeat itself this year, providing support to the sector.
However, the company also forecasts possible market volatility ahead with risks of a slowdown in the Chinese economy, abnormal weather, industrial disputes and uncertainties over the global economy.
Another wild card is Panama Canal expansion, which means capesize vessels could carry iron ore from Brazil and coal from the US east coast and Columbia via the enlarged waterway to Asia instead of sailing through the Cape of Good Hope.
Such opportunities will depend on Panama Canal toll fees, K Line says.
It also pointed out the market’s underlying worry is that a large number of speculative orders for capesize and ultraxmax vessels could trigger a market downturn from 2016.
The company will take a cautious approach when ordering newbuilding vessels, seeking to control spot market exposure.
K Line’s senior managing executive officer Hiromichi Aoki says almost all of the company’s fleet of some 100 capesize vessels is tied to long-term charter contracts, which provides a cushion should spot rates head south.
In contrast, nearly 50% of its nearly 80 panamax ships and 70% of some 70 handysize vessels trade in spot markets or on short-term charter deals.
“Our basic business strategy is to have very small free tonnage, except for small-size ships,” Mr Aoki said.
The company has been ordering fuel-efficient vessels to maintain its fleet size, although rapid expansion is unlikely.
“We will have newbuilding ships for replacement of old tonnage,” Mr Tokonami said.
K Line is due to take delivery of eight bulkers in fiscal 2014 from April 1, 10 vessels in fiscal 2015 and one ship in fiscal 2016.
In March, the company booked two 180,000 dwt vessels and three 200,000 dwt ships at Imabari Shipbuilding which will be delivered in 2017.
It is in talks for five more similar-size ships.
Owners investing in chemtankers must adapt to new trade patterns
BELGIAN buyers are understood to have paid a total of $10m for two small secondhand chemical tankers — just two deals out of the five sales reported over the last few days by brokers as interest steadily builds in this sector.
Alongside the $10m that brokers say was splashed out on the Dutch-owned, 2008-built, 6,450 dwt sisterships Orarikke and Orarose , the 2008-built, 5,606 dwt Ayse-S is understood to have been sold for $13.5m.
The 2010 and 2011-built, 19,983 dwt sisterships ICDAS-09 and ICDAS-11 have also gone to unnamed buyers for $19m each.
Moreover, traders and brokers are reporting that offers are being made to buy other vessels at prices higher than market levels.
Behind this interest in chemical tankers is a strong expectation of recovery in the chemical tanker freight market — perhaps more so than for other tankers due to palpably improving market fundamentals of supply and demand.
Lloyd’s List has touched on the topic before, but it is worth revisiting it with the latest figures and views, some of which shed new light on the most appropriate way forward for owners.
It has become pertinent because owners are now diversifying into chemtankers, putting these ships and their risks and opportunities more under the spotlight than they have been in recent memory.
According to DVB Bank, the chemical tanker market is expected to continue its slow recovery due to the inelasticity of fleet supply.
A so-called “tight” market with fewer available ships to carry cargoes means owners will be more in the driving seat when it comes to commanding rates from charterers looking to hire a ship.
Fearnleys says the current orderbook is 2.8m dwt, 9% of the 30.3m dwt live fleet, and forecasts net fleet growth of 2%-3% in the coming years.
Against this, demand growth is expected to be 4%-5%, implying gradual improvement in the chemical tanker market balance.
Fearnleys estimates that fleet utilisation will rise from 75% in 2013 to 77% in 2014, 78% in 2015 and 80% in 2016.
Helping to drive improvements for the fleet is the arrival of new cargoes from the Middle East as it increases production and export capacity, according to DVB Bank.
However, a worry is that China appears to be intent on becoming self-sufficient in chemicals, potentially relying less on imports, says the bank.
This could reduce the number of long-haul journeys from the Middle East, cutting tonne-mile demand for chemical tankers.
To offset that loss, other Asian countries will develop chemical production industries and seek to export short-haul into China, creating new trade lanes for shipowners to exploit in the intra-Asian market.
“Players in the chemical tanker market need to adapt to these structural changes in the global petrochemical industry and adjust their services to the new requirement,” warns DVB Bank in a March report.
These new trade opportunities in Asia might see vessels discharging in ports in Southeast Asia and Latin America, rather than China.
“Those chemical tanker operators who understand their own business and quickly react to the potential changes are expected to become [or] remain successful,” says DVB.
Against this background of change and understanding that change, money is being raised to fund fleet expansions.
Stalwart Tankers, for example, has launched an initial public offering and expects to raise up to $162m. It plans to add five secondhand 20,000 dwt stainless steel tankers to its four 25,000 dwt newbuildings and its five-strong live fleet.
However, interest in chemical tankers could simply be down to a buccaneering investor appetite for trying out something new that does not hold too many downside risks.
“We have seen strong interest for chemical tankers over the past months and while the supply of tonnage remains manageable still, we also find the investor interest to be partly driven by ‘what’s the next big thing’, as product, dry bulk, LPG and crude tankers has largely seen asset values move higher,” said Arctic Securities analyst Erik Stavseth.
This search for the next big thing may be a relevant factor, but it does not detract from the underlying strength of the market fundamentals.
Mr Stavseth agreed that the outlook for chemical tankers appears to be improving and expectations are of demand growth of 5%-6% in 2014.
Such growth has led Fearnleys to strike a particularly optimistic tone, saying that “the moment for chemical tankers is finally arriving”.
General Maritime owner Peter Georgiopoulos certainly seems to think so. He has set up a new company, Chemical Transportation, which has ordered five new stainless steel tankers with an option for an additional five.
If all 10 units are ordered, the value of the deal would be up to $400m — a hefty bet on the next big thing.
The market can, therefore, expect more such newbuilding deals and more purchases of secondhand vessels in the coming quarters as the attraction of chemical tankers grows.
Mitsubishi buys stake in Valencia’s TVC Stevedoring
( LL ) JAPAN’S Mitsubishi Corp has acquired a stake in TCV Stevedoring from Spanish box terminal operator Grup Martin, in an effort to enter the container handling business in Valencia, Europe’s fifth largest container port.
Mitsubishi is taking a 60% stake in a new joint venture with Japanese intermodal operator Kamigumi, which will hold a 40% stake. The joint venture will hold 25% of TCV, with Grup Martin holding the remainder.
This deal marks Mitsubishi’s first full-scale entry into the terminal business.
In a statement, Mitsubishi said the project responded to the Japanese government’s strategy to promote the export of infrastructure-related industries and systems.
It also brings a new player with significant financial heft into the ports and terminals sector. Mitsubishi said it would further its interest in container terminals in emerging countries including those in Asia, Africa and Latin America.
Mitsubishi said the 4.5m teu handled by Valencia was similar to the scale of operations at the Port of Tokyo. It added that over half of Valencia’s average annual growth in container volumes could be accredited to traffic between Valencia and ports in Asia.
The company expects Valencia will see continued growth in from this sector.
Valencia operates as a major Mediterranean transhipment hub.
Last month, JP Morgan Asset Management received approval from the Port Authority of Valencia for a ?100m ($138m) investment in facilities controlled by Noatum, Spain’s biggest terminal operator, in which it owns a majority stake on behalf of institutional investors.
The expansion will increase both quay and yard space and improve intermodal connectivity.
Australia to scrap cabotage rules
( LL ) THE Australian government has published a consultation document to investigate options that could see the country’s cabotage rules overturned.
Launching the paper, Approaches to Regulating Coastal Shipping in Australia, acting prime minister and infrastructure minister Warren Truss said Australia’s shipping industry was being hindered by red tape and a lack of competition.
If the recommendations in the consultation document are adopted, the government could scrap laws designed to protect local ship operators from competition from foreign owners.
The paper states that the regulation is damaging the Australian economy due to increased shipping costs and by restricting access to timely and flexible services.
Australia’s cabotage regulations were introduced under the Labour government in 2012.
Foreign-flag vessels operating in Australian waters require a licence and are subject to local employment and taxation laws.
The licence process allows Australian ships to make the case to undertake voyages that are proposed to be undertaken by foreign vessels.
“Trade movements to and from, as well as around, Australia’s coast are unique in their requirements because of geographic conditions and the nature of the commodities carried,” the paper says.
“The lack of competitiveness of Australian shipping has not only led to a decline in its participation in international trades, but has also affected the domestic coastal trades through either high freight rates or the loss of freight to the road and rail sectors.”
The report adds that Australia is heavily dependent on shipping, with 99% of international trade volumes transported by ship and Australian ports managing 10% of the world’s sea trade.
“A viable shipping industry is recognised by a wide range of OECD and developing countries as an important factor of national economic prosperity and it is clear that shipping will have to play a stronger role in our transport task into the future,” it says.
Despite this, the number of Australia-flagged ships has halved over the past decade, according to Mr Truss.
With volumes expected to double by 2030, a framework was required to manage this growth.
( LL ) BG GROUP, one of the world’s leading traders and sellers of liquefied natural gas, has moved the centre of its global LNG and oil marketing business to Singapore from its head office in the UK, reflecting the importance of developing the city-state as an Asian LNG trading hub.
The company’s president for global LNG and oil marketing, Steve Hill, has relocated to Singapore as part of the initiative.
He said in a statement that Asia was the world’s largest market for LNG and where BG Group already sent the majority of its cargoes.
“By moving the centre of our global LNG and oil marketing business to Singapore, the heart of the fastest-growing LNG region, we are closer to many more of our existing customers and are better positioned to develop new and deeper relationships in the region,” he said.
The company already has an office in Singapore and the move clearly underlines its significance to LNG trading and shipping.
According to BG Group, the global natural gas market is set to grow at an average of 2.4% per year to 2025, largely driven by strong growth in Asian demand.
Global LNG growth will be twice as fast, at around 5% over the same period, spurring BG Group’s strategic decision to manage its global LNG and oil marketing business from Singapore.
To date, BG Group has delivered over 1m tonnes of LNG on board 20 LNG vessels to Singapore’s 3m tonne per year import terminal.
A record volume of regasified LNG scheduled over a 24-hour period was attained during early April, showing the rapid increase in LNG market share in Singapore and its contribution to energy security, according to BG Group.
“With the increased capacity planned for the LNG terminal on Jurong Island and a second facility also being considered, we look forward to supporting Singapore in fulfilling its vision to create a highly competitive LNG market and become an energy supply hub for the whole region,” said Mr Hill.
BG Group’s role as a trader and seller of LNG is significant. It has made LNG sales to more than 40 customers around the world, and supplied 25 of the 27 LNG importing countries around the world.
( LL ) TWO British former marines detained in Nigeria after being sent to guard a piracy-threatened product tanker sailing ex-Warri were simply in the wrong place at the wrong time, the head of the private maritime security company that employed them maintains.
Andrew Varney, managing director of Manchester-based Port2Port, denied any suggestion of wrongdoing on the part of Vincent Haywood and Piers Eastwood, and is hoping that the men will be released after a hearing scheduled for Wednesday.
The arrests come after the Seaman Guard Ohio case in India, in which around three dozen seafarers were held in Tuticorin in October after being accused of violating arms-controls regulations.
Most were released at the weekend, although the master and one British national security officer are still in prison.
However, the developments have raised fears that that PMSC operatives are facing harassment while going about their legitimate business.
Through its local affiliate Port2Port West Africa, which is licensed and registered in Nigeria, P2P was asked to provide security for the 1998-built, 40,533 dwt product tanker Crete , which is on charter to the Switzerland-based oil trader Nimex Petroleum.
The voyage was due to begin in Escravos on March 21, but the master asked for the vessel to be rerouted to Warri after it was attacked by pirates the day before.
Port2Port sent Mr Haywood and Mr Eastwood, plus seven local marine police, to form a riding squad. The men made their way to Warri, with a view to boarding, and were staying in a hotel prior to embarkation.
“A contingent of military arrived and arrested our two guys, along with an undisclosed number of individuals in the same hotel, with no explanation whatsoever,” said Mr Varney in a telephone interview.
The maritime police officers remonstrated at the time that this was a mistake, but to no avail, said Mr Varney. The two Britons were taken to an undisclosed location, which P2P was only able to ascertain thanks to contacts on the ground.
By Saturday March 22, Mr Varney had flown to Nigeria.
At that stage, the men had been detained rather than formally arrested and no charges had been placed. Mr Varney assumed that this was a simple case of mistaken identity.
P2P tried engaging locally through its Nigerian directors, without success, and the matter was taken up through the Foreign Office.
At some point over the weekend, Mr Haywood and Mr Eastwood were moved to Benin City, which is the seat of the brigade-level command in the region.
P2P was able to access the custody officer, and was assured that the men were being treated properly. They were said to be part of an investigation into an illegal bunkering operation.
Mr Varney denied to Lloyd’s List that he had any knowledge of any illegality, saying that P2P was simply engaged in a commercial relationship with a charterer.
Mr Haywood and Mr Eastwood were again moved, this time to Yenagoa, headquarters of the Joint Task Force, the tri-service Nigerian counterforce to militants in the Niger Delta, established after an amnesty was agreed in 2009. Limited access was granted via a Nigerian intermediary.
Late in the business day on March 28, the JTF held a press conference. It produced photographs of the P2P men along with a number of other individuals and announced that they were under arrest.
Consular and legal access was granted for the first time, and it was ascertained that Mr Haywood and Mr Eastwood were in reasonable health, although detention conditions had been poor in the first seven days and they had not been given reasons for why they were being held.
An application for their release was lodged at the High Court in Yenagoa over a week ago and a hearing is set for Wednesday.
Mr Varney emphasised that Nigerian law enforcement agencies had a right to prosecute for criminality and said P2P had tried to work with them, but nevertheless he regarded the arrests as “a preposterous situation where our guys have been accused of the most preposterous allegations”.
He said: “That’s been frustrating. They are still detained without charge, but we have at least had some dialogue.
“We have been able to converse with them, we have had access, we have been allowed to glean from the State Security Service what their intentions are.
“Their intent is to conclude this matter in a dignified fashion, so they can conclude this having done due process themselves where their predecessors failed and they can present something to the Nigerian public that makes sense.
“Unfortunately, trapped in the middle of this process are two innocent UK nationals who have been held without charge for over 14 days.
Mr Varney added that PMSCs were responsible for making sure they abided by rules of countries in which they operated, and he was keen not to cast aspersions on the Nigerian authorities.
Theft of crude oil is rife in the country, and 2014 could be the worst year yet for revenue loss, he said.
“They [the Nigerian authorities] have an absolute right to deal with that in the most robust way possible, but unfortunately that does not include detaining UK nationals on spurious allegations for which they have absolutely no evidence.”
Nevertheless, what has happened highlights the perils facing maritime security operatives in complex environments.
“We are in the risk business, we are attuned to these things, we are expected to be able to deal with the unorthodox and the non-standard,” said Mr Varney. “But what you don’t expect is for state actors to detain your people without charge.
“The painful irony in this is that we responded to this request because Crete had been attacked by pirates just the day before.”
He added: “We are there to enhance capabilities, we are a force multiplier. We train the maritime police, we have invested heavily in that space. We contribute to the Nigerian economy, we pay our taxes in Nigeria, we employ Nigerians. We are there to mitigate criminality, not to add to it.
“We will learn some valuable lessons from this exercise, without question, and we are already under way to a root-and-branch analysis.
“If I cannot be 100% certain that I do not face risk from state actors in the discharge of these operations, then I won’t do them, because I will not put my personnel at any additional risk on top of that which is acceptable in the discharge of those duties.”
The Bayelsa High Court in Yenagoa, the Bayelsa state government and the Nigerian High Commission in London did not respond immediately to emailed requests for comment on this article.
Nigeria’s two representatives at the International Maritime Organization in London, Capt IA Olugbade and A Suleiman, could not be reached by telephone and did not immediately respond to an email request for comment.
Email addresses and telephone numbers for the State Security Service remain classified information in Nigeria.
But Peter Cook, chief executive of the Security Association for the Maritime Industry, said: “We have been in communication with Port2Port from a very early stage on this and providing them with counsel and advice.
“They have done an excellent job. They have taken into consideration all the factors and taken decisions based on the information they have received.
“We urge the British government and the Foreign and Commonwealth Office to support Port2Port in what they are doing to secure the release of Vincent and Piers as soon as possible.”
US Containerized Exports See Steepest Decline Since 2009
( JOC ) U.S. containerized exports tumbled 9.0 percent year-over-year in February to 923,493 TEUs, the lowest monthly volume in 32 months, according to preliminary figures from PIERS, the Data Division of JOC Group. This 9.0 percent drop was also the steepest year-over-year decline since August 2009.
( LL ) THE successful start to the year for shipping lines operating on the Asia to Europe trade lane was largely wiped out in February as volumes suffered a strong decline.
The latest data from Container Trades Statistics shows that Asia to Europe volumes declined by 7.4% on-year in February to 859,900 teu.
This follows on from an 8.5% on-year increase to 1.4m teu in January.
|