Floating Production, Storage Orders Set Record Pace

by OGJ editors, OGJ, Houston, Aug 3, 2011
A record pace in the number of floating production and storage orders was noted in a recent study by International Maritime Associates [IMA] Inc., Washington DC. [Please see remarks below -- D.R.]

The study found that the industry has placed a record 14 orders for floating units since March. Currently 256 floating systems are in service or available worldwide, according to the study.

Of these, 62% are floating production, storage, offloading (FPSO) vessels; 17% are production semisubmersibles; 9% are tension leg platforms; 7% are production spars; and the remaining 5% are production barges and floating storage and regasification units (FSRUs).

Eleven of the 256 units are not on a field and are available for reuse.

The 14 orders since March include the world’s first floating LNG vessel. The $3 billion Prelude FLNG [please see remarks and image below -- D.R.] is the most expensive floating production unit ordered to date, the study noted.

Among the other orders, 9 are FPSOs (1 purpose-built unit, 6 units converted from trading tanker hulls, and 2 modification redeployments), 2 production spars, and 2 purpose-built FSRUs. The 14 construction contracts for these units exceed $11 billion, the study said.

Current order backlog includes 53 production floaters, a net increase of 6 units since March. This extends the buildup in backlog that began in second-half 2009, the study noted.

Of the 53 units, 28 have purpose built hulls and 25 have converted tanker hulls. Also 20 are orders from leasing operators, while 33 are orders from field operators.

The study identified 196 projects in the bidding, design, or planning stage that potentially will require floating production or storage. These projects are declared discoveries or planned developments where floating production or storage is an option.

Brazil has the most with 50 potential floater projects in the planning cycle. Next in line is Southeast Asia with 37, followed by West Africa with 36, Northern Europe with 22, Gulf of Mexico with 17, and Australia with 11.

Of the 196 planned projects, 53 are in the bidding or final design stage. Major hardware contracts for these 53 projects are likely to be let within the next 12-18 months, the study noted.

Another 143 floater projects are in the planning or study phase, and major hardware contracts for these are likely to be let in 2013-18, according to the study. [Full story]

(IMA has been producing detailed market reports on floating production for the past 15 years. The reports focus on equipment requirements for floating production projects. They are designed for use in business planning by companies servicing this sector. Three reports are issued during the year -- in March, July and November. For the July 2011 Floating Production Systems Report and for previous reports, please see IMA, here. Floating liquefied natural gas/FLNG is a revolutionary technology that will allow Shell to access offshore gas fields that would otherwise be too costly or difficult to develop. Shell took final investment decision on the Prelude FLNG Project on May 20, 2011. It will start building a FLNG facility to produce and export LNG off the coast of Australia at the site of the gas field. Moored far out to sea, some 200 kilometers from the nearest land in Australia, the FLNG facility will produce gas from offshore fields, and liquefy it onboard by cooling for export at sea. The Prelude FLNG facility will be the largest floating offshore facility in the world. It will be built at Samsung Heavy Industries’ Geoje Island shipyards in South Korea---please see "Prelude FLNG - An Overview," and "Shell Decides to Move Forward with Groundbreaking Floating LNG." and "Samsung Says Shell Prelude FLNG Vessel To Cost $3 Billion," as well as my tweets on Twitter dated on May 20 and June 23, 2011, here. Separately, please see my post "BOEMRE Approves First FPSO Use in the U.S. Gulf of Mexico." -- D.R.)
                               Graphic of Shell's Prelude FLNG

                                                                    Source: Shell, here

Purvin & Gertz Estimates Future [U.S.] Unconventional Oil Output

by Paula Dittrick, OGJ Senior Staff Writer, OGJ, Jun 24, 2011
Unconventional oil production from the Bakken, Eagle Ford, and Niobrara plays is expected to approach 900,000 b/d in 2015 and exceed 1.3 million b/d by 2020, a consultant forecast.

Purvin & Gertz Inc. estimates current oil production from the Bakken, Eagle Ford, and Niobrara plays at 350,000-400,000 b/d.

The Bakken formation is in North Dakota and Montana, the Eagle Ford is in South Texas, and the Niobrara is in Colorado and Wyoming.

Geoff Houlton, a vice-president with Purvin & Gertz in Houston, told OGJ that shale oil production likely will help offset US oil import volumes in coming years.

Increasing supplies of light, sweet crude from shale oil plays are expected to reduce oil imports of similar quality crude into the Gulf Coast by greater than 500,000 b/d by 2016, he said.

Purvin & Gertz released its base-case forecast in a study entitled “US Midcontinent Crude Oil Market Analysis,” which examined oil logistics and pricing. [Read more]

(Current production from the Eagle Ford is roughly 100,000 barrels per day of crude oil and condensate >> OGJ, May 6, 2011 or EPP press release May 3, 2011. Also, please see my post "BENTEK: Eagle Ford Crude Oil Production Expected to Grow Fivefold in Five Years," here. For maps of the Eagle Ford shale, please see here. For the map of North American shale plays from the U.S. Energy Information Administration/EIA, including the United States, Canada and Mexico, as of May 9, 2011, please see here. Operators increased North Dakota's Bakken production from less than 3,000 barrels per day in 2005 to over 230,000 barrels per day in 2010. The Bakken's share of total North Dakota oil production rose from about 3 percent to about 75 percent over the same period. North Dakota produced an average of 307,000 barrels of crude oil per day in 2010 and comprised about 5.6 percent of the nation's total crude production. The increase in U.S. crude oil production in 2010 was led by escalating horizontal drilling programs in U.S. shale plays---please see my post "United States: Oil Production from Shale Formations, 2005-2010 -- EIA," here. UPDATE: In its Twitter post on June 25th, Platts said, "About 50,000 b/d of Bakken crude oil not being shipped out of N. Dakota due to record flooding in Minot area: state official." -- D.R.)

World's Top 6 Net Oil Importers, 2008-2010 -- EIA

by David Rachovich

Top World Oil Net Importers (Million Barrels Per Day), 2008-2010*

Rank	Country	Year 2010	Year 2009	Year 2008
1.	United States	9.6	9.6	11.0
2.	China	4.8	4.3	3.9
3.	Japan	4.3	4.2	4.6
4.	Germany	2.3	2.3	2.4
5.	India	2.3	2.2	2.1
6.	South Korea	2.2	2.1	2.1

*Estimates of production and consumption. Does not include stockbuild.

Source: U.S. Energy Information Administration (EIA), China Country Analysis Briefs, 2009-2011 (charts).

(China's net oil imports reached about 4.3 million barrels per day in 2009, making it the second-largest net oil importer in the world behind the United States and for the first time surpassing Japan’s imports. -- D.R.)

ExxonMobil Fuel Supply up 140 Percent into Area Devastated by Earthquake

ExxonMobil website, news releases, Tokyo, Business Wire, Mar 28, 2011
In an ongoing effort to quickly and safely supply much needed fuel to the areas in Japan hardest hit by the earthquake, ExxonMobil Group Japan has increased fuel supply into its Tohoku region dealer service station network by 140 percent above pre-earthquake levels.

Since the March 11 earthquake and tsunami, ExxonMobil has moved more than 24 million liters of fuel, including gasoline, diesel, and kerosene, into the Tohoku region in northeast Japan, enough to fill 1,200 tank trucks.

“We are acutely aware of the suffering and anxiety of the many people affected by the earthquake,” said Philippe Ducom, president of ExxonMobil Group Japan. “The top priority of our 2,900 employees in Japan is to work together to continue to build a stable supply chain and help restore operations at our dealer services stations so that people in the most affected areas can get much-needed fuel.”

“The rapid and safe restoration of our Esso, Mobil, and General service station network is a result of the tremendous effort of our supply business partners, fuels marketing local representatives, and service station dealers in Tohoku,” added Ducom. “It is through their strong commitment and dedication that more than 60 percent of our dealer sites are back in operation and more are being added every day [compared with just 31 percent on Mar 19 -- D.R.]. Yet there is still much work ahead to get fuel to people in Tohoku.”

ExxonMobil dealers have a network of 360 Esso, Mobil, and General service stations in the Tohoku region. [...]

All [four] of ExxonMobil’s refineries in Japan [i.e., TonenGeneral Sekiyu’s 335,000 b/d Kawasaki, 156,000 b/d Sakai, 170,000 b/d Wakayama and Kyokuto Petroleum Industries/KPI’s 175,000 b/d Chiba -- D.R.] are running at higher than normal rates, continuing increased supply to stock devastated areas. In addition, the reopening of ExxonMobil’s Shiogama Terminal in Sendai continues to boost fuel supplies into the Tohoku region. [Read more]

(ExxonMobil is the world's largest refiner---please see my post "World's Top 25 Largest Refining Companies, Jan 1, 2011 -- OGJ," here. According to Oil & Gas Journal via the EIA's Japan Country Analysis Brief, Mar 2011, Japan had 4.7 million bbl/d of oil refining capacity as of January 2011, and has the second-largest refining capacity in the Asia-Pacific region after China. According to Wood Mackenzie, Japan is the second largest refining base in the Asia-Pacific region (after China) with crude distillation capacity of 4.4 million bbl/d. The devastating 9-magnitude earthquake which struck Japan's northeast March 11 had in its immediate aftermath shut almost 1.4 million bbl/d or some 30% of refining capacity because of either physical damage, loss of power or as a safety precaution. All or parts of the refinery units were shut down after the earthquake at Exxon's Kawasaki refinery and the Chiba refinery. Exxon's other two refineries---the Wakayama refinery and the Sakai refinery---were not affected by the disaster in Japan. Also, the Kawasaki refinery cogeneration unit is now maximizing electrical generation to provide power to the electricity grid, which is under supplied following the tragedy. About 33 megawatts of power is currently---as of Mar 23---being transmitted to the grid, which is enough electricity for about 10,000 Japanese households. ExxonMobil typically sends 10-15 megawatts/month of surplus power from an in-house power generator at the Kawasaki refinery to Tokyo Electric Power Co./Tepco prior to the earthquake. Kyokuto Petroleum Industries Ltd., i.e. KPI, is a 50-50 joint venture of Exxon Mobil and Mitsui Oil Co. Also, ExxonMobil holds a 50.02 percent stake in TonenGeneral Sekiyu. For information on Japan's nuclear crisis and its impact, please see my posts under the category/label "Japan." -- D.R.)

Iraq Says to Produce 6.5 mil b/d by 2014; Disputes IMF Figures

Platts, Dubai, Mar 30, 2011
The Iraqi Oil Ministry Wednesday insisted that it was on track to achieve a crude oil production target of 6.5 million b/d by 2014, and disputed a recent IMF report suggesting a lower output rise because of infrastructure challenges.

Oil Ministry spokesman Assem Jihad said in a statement that Iraq expected its oil production, currently at around 2.7 million b/d, to rise to 3.3 million b/d in 2012, 4.5 million b/d in 2013 and 6.5 million b/d the following year.

Iraq is targeting close to 13 million b/d of production capacity by 2017 after awarding long term service contracts to foreign oil companies for development and further development of some of its biggest oil fields [output is projected to increase considerably, following the two bid rounds in June and December of 2009, that resulted in 11 Technical Service Contracts---TSCs---with most of the world's top oil companies, please see David Rachovich, Iraq's Oil Sector: Present, Past and Future -- D.R.].

The latest oil ministry figures obtained by Platts show that Iraq produced 2.63 million b/d in February, down slightly from a post-war record of 2.652 million b/d in January [also, please see my post "OPEC's Top Crude Oil Producers, 2010-Jan. 2011," here -- D.R.]

Jihad said the targets were in line with plans established in coordination with the foreign oil companies.

Oil Minister Abdul Karim Luaibi had not seen the figures contained in the IMF report but they appeared based on "inaccurate data and reports," he added.

The IMF said in a country report issued March 28 that while Iraqi oil production was projected to increase considerably over the medium- to long-term, to 12.2 million b/d over the next seven years in a best case scenario, there were infrastructural risks that could hamper the developments.

"While these production goals could be feasible in the longer term, the main risks in the coming years will be bottlenecks in the export infrastructure that will need to be addressed," the IMF said.

Noting that the government had plans to expand the country's oil, pipeline and export infrastructure, it said execution would take time, in which case production would rise to 5.35 million b/d by 2017 if a more conservative scenario was adopted.

"In addition, large investments in supporting activities are also underway and planned, including the construction of desalination plants to produce water for injection in the fields, and storage facilities. These investments will require time to implement, and suggest a more gradual increase in Iraq's oil production," the IMF said. "Based on more conservative assumptions for the time it will take to expand Iraq's export capacity, oil production could still increase to over 5 million b/d by 2017."

Jihad, referring to the report, said that the ministry had put port and storage expansion projects on a fast track.

These plans include building 24 new storage tanks with capacity of over 300,000 b/d as well as floating platforms with capacity of 900,000 b/d each to absorb the anticipated higher exports [sic]. The plans also include two single point moorings to link the storage tanks to southern export terminals [sic].

The project, which Jihad said would normally take 4-5 years to complete, will raise export capacity by 1.8 million b/d and be completed by the end of this year. The second phase will be finished by the end of next year, he said.

Current export capacity from the south is estimated at 1.6 million b/d [sic, Basra - 1.6 million b/d, Khor al-Amaya - 0.7 million b/d, but their efffecive capacity is less -- D.R.] and the lack of storage facilities has hampered a more rapid rise in oil production from southern oil fields, where output has risen by more than 300,000 b/d since the start of the year.

The additional crude has come as the leaders of three foreign consortia awarded contracts to develop the giant Rumaila, Zubair and West Qurna 1 oil fields have reported reaching the 10% initial output hike from the three fields. However, latest figures from the oil ministry show that output has fallen slightly, apparently because of restricted export and storage capacity. [...]

The IMF said that oil export revenues in 2010 exceeded budgetary projections as higher oil prices offset lower export volumes. It said exports last year averaged 1.85 million b/d, well below Baghdad's 2.1 million b/d target.

"The shortfall reflected periods of bad weather and attacks on pipelines, as well as the lack of an agreement with the Kurdish region to secure additional exports," it said.

"Export prices were substantially higher, however, averaging just over $74/barrel during the year, compared to a budgeted price of $62.50/barrel," it said, adding that total oil export revenues reached $50 billion in 2010 compared with a budget forecast of $48 billion and up from $39 billion in 2009.

But this was still well below the peak of $63 billion in 2008, when oil prices [WTI] rose to a record above $147/b [the price of Kirkuk crude oil reached an all-time high of $134/b in July 2008 -- D.R.] before shedding more than $100/b by the end of that year.

The resumption of Kurdish oil exports in early February pushed up Iraqi oil exports to 2.2 million b/d, the highest since March 2003 [and the highest figure in 22 years, please see David Rachovich, Iraq's Oil Sector: Present, Past and Future, Table 1 -- D.R.]. Iraq has targeted exports of 2.25 million b/d in 2011, including 100,000 b/d [sic] from the Kurdish province.

It based its 2011 budget on an oil price assumption of $76.50/b, below current global oil prices. [Read more]

(Please see the International Monetary Fund/IMF's report, published on Mar 28, 2011, especially Box 1, here. Iraq was the sixth largest supplier of crude oil to the United States in 2010, after Canada, Mexico, Saudi Arabia, Nigeria and Venezuela---please see my post "U.S. Crude Oil Imports from Top 15 Countries," here. For Rumaila, West Qurna-1 and Zubair, please read my Dec 2010 - Jan 2011 blog posts under the category/label "Iraq." -- D.R.)

BOEMRE Approves First FPSO Use in Gulf of Mexico

by Nick Snow, OGJ, Mar 17, 2011
The US Bureau of Ocean Energy Management, Regulation, and Enforcement [the former Minerals Management Service] approved Petrobras America Inc.’s application to use a floating production, storage, and offloading vessel to produce oil and gas from its Cascade-Chinook project in the Gulf of Mexico. This will be the first time that FPSO technology has been used in the [U.S.] gulf, the US Department of the Interior agency said on Mar. 17.

The BW Pioneer FPSO [please see image below -- D.R.] will receive production through dual flow lines, which connect it to two free-standing hybrid risers for each field, also a new technology for the gulf, Petrobras America said.

BOEMRE said it approved the project’s production safety system permit and supplemental deepwater operating plan following extensive consultations with the producer.

The FPSO will have a production capacity of 80,000 b/d of oil and 16 MMcfd of natural gas, with production expected to begin soon, it indicated.

The project is in the gulf’s Walker Ridge area in 8,200 ft of water [2,500 meters] about 165 miles [266 kilometers] off Louisiana. [Full story]

                                                  Source: Petrobras via MARINE LOG.com here

(Also, the FPSO has an oil storage capacity of 500,000 barrels. Natural gas processed by the BW Pioneer will be transported to shore by pipeline, while crude oil will be offloaded to shuttle tankers for transportation. In the event of a hurricane or tropical storm, the facility is designed to disconnect from the turret-buoy and move off location until the storm has passed. FPSOs are widely used in offshore Brazil and West Africa---e.g., please see its use in Ghana, here. The FPSO vessel to be used in the project is owned and operated by Oslo-based BW Offshore. The company already operates another FPSO ship in the Mexican side of the Gulf, among many others around the globe. -- D.R.)

Intertanko: World Oil Shipping Routes 'Under Threat' from Piracy

by Eric Watkins, OGJ, Feb 11, 2011
Piracy in the Indian Ocean is rapidly getting out of control and is threatening to disrupt flows of oil to markets in the US and around the world, according to an oil shipping industry association.

“The piracy situation is now spinning out of control into the entire Indian Ocean right to the top of the Arabian Sea over 1,000 miles from the coast of Somalia,” said Joe Angelo, managing director of the International Association of Independent Tanker Owners (Intertanko).

“If piracy in the Indian Ocean is left unabated, it will strangle these crucial shipping lanes with the potential to severely disrupt oil flows to the US and to the rest of the world,” Angelo said.

Angelo’s remarks came after pirates off the coast of Somalia captured a Greek-flagged supertanker carrying nearly 300,000 tons of crude oil to the Gulf of Mexico, the second successful attack against an oil tanker by sea bandits in as many days.

The Irene SL [see image below -- D.R.] was sailing 360 km east of Oman carrying 266,000 tons of crude and a crew of 7 Greeks, 17 Filipinos, and 1 Georgian when it was attacked, officials said. The value of the oil on board was estimated at $150 million.

Intertanko underlined the potential gravity of the hijacking, saying that that the Irene SL’s cargo of Kuwaiti crude represents nearly 20% of total US daily oil imports. This one cargo is 12% of all oil coming out of the Middle East Gulf each day, and 5% of total daily world seaborne oil supply.

“The hijacking by pirates of 2 million bbl of Kuwaiti crude oil destined for the US in a large Greek tanker in the middle of the main sea lanes coming from the Middle East Gulf marks a significant shift in the impact of the piracy crisis in the Indian Ocean,” Intertanko said.

That view was shared by John Drake, a senior risk consultant for London-based security firm AKE, who said the situation is only going to worsen, largely due to the payment of ransoms.

“With rising ransoms, pirates are able to hire more men, bribe more officials and wait longer periods to negotiate,” Drake said.

The Irene SL is the second oil tanker to be attacked in that region in 2 days. On Feb. 8, Somali pirates firing small arms and rocket-propelled grenades hijacked the Savina Caylyn, an Italian-flagged Aframax crude tanker transiting the Indian Ocean to Malaysia from Sudan with 80,000 tonnes of oil.

After that attack, Adm. Giampaolo Di Paola, chairman of NATO's Military Committee, said piracy “is spreading across the entire Indian Ocean, a fundamental crossroads for world traffic.” [Full story]

(Nevertheless, it should be noted that Kuwait does not rank among the major oil suppliers to the U.S.---see my post here. Crude supplies from Kuwait amounted to some 200,000 barrels a day in the month in 2010. -- D.R.)
                                              VLCC MV Irene SL

Source: EU NAVFOR Somalia, here. Description: Builder: Hyunday Heavy Ind, Ulsan, South Korea, 319,247 DWT 

East Asian LNG Imports in 2010

Compiled from two sources: World Gas Intelligence and Fairplay 24, Feb 9, 2011
Full-year 2010 LNG import data for East Asia are now in (the World Gas Intelligence report), and they confirm early indications of a surge that left regional LNG imports of 123 million tons (167 bcm) up 17.5% from 2009 and more than 14% from the previous peak of 107.8 million tons recorded in 2008.

Leading the rise was China, whose LNG imports shot up by 68% to 9.3 million tons. Japan, which has a much larger intake of LNG, had an 8.4% rise, but to 69.95 million tons, to marginally exceed its 2008 record high. South Korea closed out the year with 25.6% growth to 32.47 million tons, down from a year-to-date increase of 30% for the first 11 months, reflecting a 5.4% slide in December imports. "This is an astounding performance for LNG in the face of an 11% increase in the average ex-ship price paid in the region over the course of last year to $10.16 per million BTU," a WGI analyst said. The figures showed an increase in gas use in East Asia, not merely a rapid recovery from the 2008-9 financial crisis and ensuing recession, the analyst added.

By comparison, oil demand grew by 9.4% in China in 2010 and by just 1.1% in Japan.

(Japan is the world's largest importer of liquefied natural gas---LNG---followed by South Korea and Spain, according to the 2010 data. LNG demand in Japan was buoyed by increased power generation to meet higher air-conditioning demand during hot summer weather last year that saw temperatures soar. A series of technical problems at Japanese nuclear reactors also helped to push up spot LNG demand, with utilities forced to raise their thermal power generation levels to make up for the nuclear power disruptions. For major LNG exporters to Japan in 2010, please see bar chart here. Concerning the South Korea's imports of LNG, please read also my post remarks, in round brackets, here. For South Korea's 2010 LNG imports, please see also my post "Asian LNG Outlook ...," here. -- D.R.)  

World Watch: [Oil/Gas Markets and Egypt]

by Jim Washer, EI
Geopolitics is making a comeback in oil markets. WikiLeaks revelations in December about Arab support for a US nuclear strike against Iran gave a modest boost to crude oil futures, and now civil unrest in Egypt has provided the impetus to push prices above $100/bbl for the first time since September 2008. Egypt is a significant oil and gas producer, but is more important as an energy transit point -- together, the Suez Canal and the Sumed [Suez-Mediterranean] pipeline handle around 2.8 million b/d of crude and products as well as 7% of the world’s LNG trade. [See remarks below -- D.R.]. While Egypt is therefore an important chokepoint, energy markets are in unusually good shape to cope with any disruption. Oil prices may have revisited $100/bbl, but there is plenty of slack in global energy infrastructure -- Opec is sitting on some 6 million b/d of spare upstream capacity, and commercial and strategic inventories remain ample. [Full story]

(Closure of the Suez Canal and the Sumed Pipeline---see map, sorry for the blurriness and the proportion, and photo below---would divert tankers around the southern tip of Africa, the Cape of Good Hope, adding 6,000 miles---or 9,656 kilometers---to transit, according to the Energy Information Administration--EIA, increasing both costs and shipping time. According to a report released by the International Energy Agency (IEA), shipping around Africa would add 15 days of transit to Europe and 8-10 days to the United States. On the other hand, energy analysts believe the real risk is not a closure of the desert conduits---the Suez Canal and the Sumed Pipeline---but that the unrest gripping Cairo will spread to neighboring nations or other Arab countries. Barclays Capital Research report---accessed via Platts, here---noted that around 14% of the world's LNG trade transits the Suez Canal each day with the vast majority of cargoes originating in the Middle East and heading towards Atlantic Basin markets. Also, Egypt exported around 2 Bcf/d of gas in 2009, the majority [some 70%] in LNG form, accounting for around 3.2% of global LNG supply. "In the event of a disruption of LNG exports from Egypt, the greatest implications for gas markets would be for Spain," Barclays Capital said, adding that global LNG markets were well supplied with "ample" production capacity available to meet any potential Egyptian shortfall. The report also noted that Egypt exports gas via the Arab Gas Pipeline, or AGP, and its El Arish-Ashkelon branch, which has the capacity to carry about 1 Bcf/d to Israel, Lebanon, Jordan and Syria. "Most Egyptian [oil] drilling activity has been halted as a result of the political instability, as several international E&P companies have announced staff evacuations," Barclays said. "Gas production, however, has not been affected so far, and there have been no reports of force majeure on LNG deliveries. Egypt's sea ports are officially open, although staff shortages and an absence of customs officials at the Alexandria and Damietta ports are reported to cause traffic disruptions." Egypt has two LNG plants at Idku and Damietta and operations have so far not been affected despite the evacuation of foreign staff. Gas flow to Israel has also not been interrupted. Israel received an estimated 2.1 billion cubic meters, i.e. bcm, in pipeline gas from Egypt in 2010, up from 1.7 bcm a year earlier. -- D.R.)

                                             Source: Oil Capital Ltd. via EIA

                                    Photo: Suez Canal

Source: National Geographic. Description: A tanker carrying liquefied natural gas (LNG) passes through Egypt's Suez Canal in 2007.

China Pips South Korea to the Post as Top Shipbuilder for Second Year

Platts, Jan 17, 2011
China has overtaken South Korea as the world's top shipbuilder for the second consecutive year, data released by shipbrokers and the Chinese government last week showed.

London-based Clarkson Research said in its latest report that Chinese shipbuilders have snapped up a total of 15.9 million compensated gross tons or CGT in new orders while South Korea was in the second spot with 11.77 million CGT.

Compensated gross tonnage is a unit of measurement that allows comparison of different shipyards' production regardless of the types of vessel produced.

"In terms of production, they [Chinese] are ahead. The problem is the accessibility of their ships in the international market," a source who is in charge of sales and purchase at a shipbroking company said.

"People who really want to wait to buy a ship will go to the South Koreans [while] someone who needs a ship [soon] will look to the Chinese," he added.

QUALITY VERSUS QUANTITY DEBATE GOES ON

While the jury is still out on who builds better ships, the source described the South Korean shipbuilders' work as more "refined." They "don't offer any discounts to get orders," he added. ...

(However, in terms of order value, South Korean shipbuilders outpaced Chinese rivals by winning contracts valued at a combined $30.61 billion in 2010, higher than the comparable figure of $28.29 billion for Chinese shipyards. Back in 2003 South Korea became the world’s top shipbuilding country by outstripping Japan in three key categories, i.e. shipbuilding volume, order backlogs and new orders. But Chinese rivals outpaced South Korean shipyards in the number of new orders received and order backlogs in 2009 as China grabbed new orders at cheap prices while their South Korean counterparts continued to focus on high-priced vessels and offshore facilities. -- D.R.)

BP Still the Biggest Seller of Bunker Fuel in Singapore in 2010

Platts, Jan 10, 2011
Oil major BP held on to the top spot of Singapore's list of bunker suppliers by volume for the eighth consecutive year in 2010, data posted on the republic's Maritime and Port Authority website Monday shows, despite losing its team of bunker and fuel oil cargo traders earlier in the year.

ExxonMobil and South Korea's SK Energy had also maintained their 2009 position, coming in after BP with the second and third largest volume sold in 2010. Aegean Bunkering took the fourth spot in 2010, while independent bunker supplier Global Energy slipped to the fifth from the fourth spot last year.

Meanwhile, global bunker supplier Chemoil was the sixth biggest seller of bunker fuel in Singapore in 2010, improving from its ninth position in 2009.

European trader Glencore, which has a 51.54% stake in Chemoil through Singfuel Investment, maintained its position as the 15th biggest seller of bunker fuel.

MPA does not reveal the actual volume sold by each company but Singapore, the biggest bunkering port in the world in terms of sales, sold a record 40.9 million mt of bunker fuel in 2010. This is 12.3% higher compared with the 36.4 million mt of bunker fuel it sold in 2009. Read more

Petrobras to Miss 2010 Brazil Oil Output Goal by 4.6%

by Peter Millard, Bloomberg, Dec 30, 2010
Petroleo Brasileiro SA, Brazil’s state-controlled oil company, will miss its 2010 domestic production target by 4.6 percent even after reaching record daily output earlier this week.

Petrobras, as the Rio de Janeiro-based company is known, produced an average 2 million barrels of oil a day in Brazil this year, below a 2.1 million-barrel target, according to a regulatory filing today. Daily output reached a record 2.26 million barrels on Dec. 27, Petrobras said. [Oil and liquids but not including natural gas production in barrels of oil equivalent per day, i.e. boed. -- D.R.]  

"2010 was a disappointment," Marco Saravelle, an equity analyst at Coinvalores in Sao Paulo, said today in telephone interview. "They need to set targets that they can meet."

Output fell in October to the lowest level since July, 2009, after Petrobras shut several offshore platforms for maintenance. The company has boosted output since November after starting several wells in the offshore Campos Basin. [Above -- full, see also map in this blog, here]

(Even falling below target, Petrobras has had a good performance in 2010. Petrobras performs various activities overseas too, and maintains a steady international operation. It is present in Angola, Argentina, Bolivia, Nigeria, etc. In late 2009, ultra-deepwater drillship Petrobras 10000--see image below, for instance, has started work in Angola. Petrobras monthly average in Brazil for December will be approximately 2.12 million barrels a day, 4.4% higher than the production achieved in November 2010, which was 2.03 million barrels a day -- see Scandinavian Oil-Gas Magazine, here. If the natural gas production is figured in, Petrobras’ total production in Brazil, in November, in barrels of oil equivalent per day--boed, reaches 2,378,674. This is 4.2% more than the daily average reached in October 2010 [2,283,689 barrels], and 3% more than its total average, i.e. including oil and gas, in November 2009. Considering the fields in Brazil and abroad, Petrobras' total oil and natural gas production averaged 2,620,347 boed in November 2010, compared with 2,534,274 boed in October 2010 -- see Scandinavian Oil-Gas Magazine, here. Brazil’s oil output, including foreign output, rose to a record 2.089 million barrels a day in November 2010, from 1.986 million barrels a day in November 2009, namely a 5.2% rise. Petrobras has been ranked fourth in the Platts Top 250 Global Energy Companies Rankings 2010, reflecting the 2009 financial performance, behind ExxonMobil, BP and Gazprom Oao---please see my post, here. Also, Petrobras retained its spot as the No. 15, in the 2011 Petroleum Intelligence Weekly's/PIW's ranking for 2009---please see my blog stand-alone page "Companies" > Petrobras, here. -- D.R.)             

Source: Shipspotting.com. Specifications: 6th generation deepwater; builder - Samsung; design - Samsung 10000 Double Hull. Description: Petrobras 10000 in the yard in Geoje, South Korea.

What is Beijing Willing to Do to Secure Oil and Gas Supplies?

by Michael Richardson, The Japan Times online, December 27, 2010
China's dependence on increasing amounts of oil imported from potentially unstable areas of the Middle East and Africa through vulnerable shipping channels has become an uncomfortable fact of life for the government in Beijing.

Chinese policymakers have called it their "Malacca dilemma," a reference to fears that the Straits of Malacca and Singapore in Southeast Asia, the channel used by most ships steaming between East Asia and the Middle East-Africa region, could be disrupted or even closed in a crisis.

Countries flanking the straits, chiefly Indonesia, Malaysia and Singapore, have sought to reassure China that this key artery for international shipping is secure.

Indeed, the bigger risk to oil supplies today is the possibility that a confrontation between the West and Iran could threaten the flow of oil from the Persian Gulf through the narrow Hormuz Strait, the only way into and out of the gulf by sea. China gets about half its imported oil from this energy-rich but volatile zone.

From being a net oil exporter in the early 1990s, China now imports just over half the oil it uses. Last year, it surpassed Japan to become the world's second-largest oil importer after the United States. The U.S. Defense Department reckons that China will import almost two-thirds of its oil by 2015 and four-fifths by 2030.

As if that was not set to create a perfect storm of energy supply worries, China in 2007 became a net importer of natural gas as well, after almost two decades of self-sufficiency.

While oil meets nearly 20 percent of China's total energy consumption, gas accounts for just 3 percent. But this is rapidly changing, as the government tries to move electricity generators, heavy industry, and home-heating and cooking away from polluting coal to gas, the cleanest of the fossil fuels.

China's gas consumption has tripled in the past decade and is expected to make a similar leap over the next 10 years, driven by growing industrial production and expanding urbanization in the world's second-biggest economy. By 2020, gas is projected to have a 10 percent share of energy use.

Where will all this extra oil and gas come from and how will China seek to secure its foreign energy sources and supply lines? More

(According to the U.S. Energy Information Administration's--EIA--China Country Analysis Brief, November 2010, here: " China consumed an estimated 8.3 million barrels per day (bbl/d) of oil in 2009, up nearly 500 million bbl/d from year earlier levels. During that same year, China produced an estimated 4.0 million bbl/d of total oil liquids, of which 96 percent was crude oil. China’s net oil imports reached about 4.3 million bbl/d in 2009, making it the second-largest net oil importer in the world behind the United States and for the first time surpassing Japan’s imports. " - See EIA graphic below, sorry for the blurriness, D.R.)

Notes: EIA graphic accessed via China Country Analysis Brief, Nov 2010. Top 10 includes UK (not indicated). Also, Dutch net oil imports were larger than Taiwan's imports. -- D.R.