Brazil: Lula delays docking of Iranian warships

Brazil bowed to the US pressure and declined an Iranian request for two of its warships to dock in Rio de Janeiro at a time when Brazilian President Luiz Inacio Lula da Silva was planning his trip to Washington to meet US President Joe Biden, reports Reuters.

Brazil's decision represents a gesture for closer ties with the Biden administration after US-Brazil relations soured under Lula's far-right predecessor Jair Bolsonaro. The move came despite Lula's longstanding opposition to US sanctions on Tehran, advocating for a neutral foreign policy.

On January 13, Brazil granted permission for the IRIS Makran & IRIS Dena ships to dock in Rio's port during January 23-30, according to a post in the official government gazette.

That window has been scrapped, with the ships now authorized to dock between February 26 and March 03, the Brazil's foreign ministry said.

A US official with direct knowledge of the situation said the prospect of Iranian warships in Rio ahead of Lula's meeting with Biden on Friday "was something unpleasant we wanted to avoid."

"There were a lot of behind-the-scenes conversations about this at many different levels," the official said, adding it was good news that the dates would no longer coincide.

A Brazilian military source confirmed that the federal government, via the foreign ministry, had shifted the dates and blocked the Iranian ships from docking.

"It's true that there was a veto (from the government)," said the source, speaking on condition of anonymity. "The Iranian ships could not come during this period."

A spokesperson for Brazil's foreign ministry said it was a "wrong assumption" to say Washington had pressured Brazil.

"The ships not coming between January 23 to 30 had nothing to do with us, and then it was rescheduled to February 26-March 03," said the spokesperson. "Nothing to do with the US"

Diplomacy with Iran was one of the highlights of Lula's efforts to bolster Brazil's international standing during his previous presidential mandate.

In 2010, he sought to broker a nuclear deal between Iran and the United States, traveling to Tehran to meet then-President Mahmoud Ahmadinejad.

Lula recoiled at US sanctions on Iran and has declined to choose sides in the Russia-Ukraine war, saying Brazil is neutral and wants dialogue to reach peace.

European Union Floating Wind Turbine Experience

Floating wind has gained further momentum with proof that the European Union’s FloatGen facility, off the coast of Brittany, has run at maximum power more than 60% of the time over a three-month period.

The figure of running at maximum power of 60% of the time is significantly higher than bottom-fixed installations; however, there is a significant shortage of suitable sector support vessels so far.

The FloatGen facility, comprising a 2MW Vestas turbine mated with a ‘damping pool’, BW Ideol, that reduces the impact of heavy swells and high seas in stormy conditions, has affirmed findings from Equinor’s floating wind facility, the 30MW Hywind Scotland wind park. This was commissioned in 2017 and has demonstrated a performance factor of more than 57%.  

Commenting on the data, BW Ideol’s Chief Executive Paul de la Guérivière said, “FloatGen – one of the few floating wind turbines currently in operation across the globe – continues to deliver outstanding results in terms of reliability, efficiency, and production. It keeps on validating the merits of our unique floating offshore wind technology, even in the harshest environments.

“Such repeated performance, high availability and consequently high capacity factor underlines the benefits of floating wind and its ability to capture the best possible wind resources without depth constraints, contributing to a much needed energy resilience in the process,” he added.

The drive for floating wind development has gathered momentum in Europe over the last 12 months as energy security climbs the agenda in the wake of Russia’s invasion of Ukraine almost a year ago. The climate change emergency is adding extra impetus.

The FloatGen findings have far-reaching implications for shipping’s offshore sector. There is already a dramatic shortage of large offshore wind installation vessels and few are capable of handling the vast components required by the floating wind sector.

In the US, offshore wind has become a top priority for the Biden Administration and many regions, particularly off the deepwater west coast, are unsuitable for bottom-fixed installations.

Although there are now several Jones Act-compliant vessels under construction, there is a dire shortage of installation and support vessels for both the early fixed-bottom facilities, and the floating installations of the future.

Earlier this week, Netherlands-based ship design and construction group, Damen, released design details of a floating wind installation vessel, FLOW-SV. The highly sophisticated 150 meter ship, ready for methanol propulsion, has a maximum pull strength of 1,000 tons for embedding anchors around each turbine, two remotely operated vehicles for surveying and checking the security of anchor groundings, and a range of propulsion and component handling capabilities to meet the floating wind installation challenge.  

Courtesy: Seatrade Maritime News

People of Pakistan need replies from the incumbent government and the IMF

After having read the details of foreign exchange reserves held by Pakistan a few questions come to my mind, I am sure my readers also have similar questions. Let me enumerate some:

1. Is the present economic team competent enough to occupy these officers? If they could not resolve top of the agenda item, negotiations with IMF, in all the honesty allowing these incompetent people in strategically important office tantamount to ruining the country.

2. The Prime Minister as well as the Finance Minister is putting the blame of hike in electricity and gas tariffs, withdrawal of subsidies, collection of petroleum levy on IMF, will they be kind enough to let the nation know the proposals they had sent to the IMF?

3. Why the IMF is not demanding cut in the extravaganzas of the incumbent government?

4. IMF has endorsed all the hikes, despite knowing that Pakistan will plunge deeper into the debt. My question to the lender of last resort is, have you come up with a bailout program for Pakistan or want to keep the present rulers in power and let the country meet eminent default?

Fall in natural gas prices new headache for United States

A 46% drop in natural gas prices this year is rippling across the US shale patch, threatening to slow drilling and chill deal-making in a move unthinkable six months ago as global demand soared.

Analysts are chopping their outlook for gas prices this year, and for production and earnings. The drop has also put a cloud over merger and acquisition activity, analysts said.

Such moves were unfathomable six months ago as Russia reduced its gas flows to Europe and US gas became a hot commodity. The number of active gas-drilling rigs jumped about 48% to 157 in the first six months of 2022, according to data from oilfield services firm Baker Hughes.

Analysts expect gas drilling rigs to fall beginning this month. Two services firms - Liberty Energy and Helmerich & Payne - recently warned they may need to relocate equipment as operators pull back in gassy areas.

US gas futures were trading on Wednesday at US$2.42 per million British thermal units (mmBtu) amid warmer weather and a prolonged LNG export plant outage, down from over US$9 per mmBtu in August 2022. They averaged US$5.46 per mmBtu last year, the highest price in over a decade.

The outlook is for more of the same. Prices will remain around US$2.50 per mmBtu this summer, down from an earlier US$3.50 per mmBtu outlook, predicts energy technology firm Enverus. It also sees exit-to-exit 2023 production growing by 1.7 billion cubic feet per day (bcfd), from 3 bcfd in 2022.

The company says well completions activity in the Haynesville gas region will need to fall by about 8% to prevent storage from exceeding a limit of 4.3 trillion cubic feet (tcf).

"If we don't see a decline in activity in the Haynesville, we'll blow through" the US storage maximum of 4.3 tcf, said Jonathan Snyder, an Enverus vice president.

The gas-price drop has slowed deal-making and threatens some proposed acquisitions that have not closed, said Andrew Dittmar, who tracks mergers and acquisitions for Enverus.

Prices further out should stave off any collapse in drilling and deal-making. Gas delivered in January and February 2024 is trading above US$4 per mmBtu, well above where those contracts traded in recent years.

"Is someone buying the assets for more than the next 10 months? If it is more than for the next 10 months, current pricing shouldn't drive the deal value," said Thomas McNulty, who advises on mergers and acquisitions and runs his own firm.

 

 

Russia demands United States to clarify its position in Nord Stream explosions

According to Retures, Russian foreign ministry said on Wednesday the United States had questions to answer over its role in explosions on the undersea Nord Stream gas pipelines last year.

Commenting on a report published earlier on Wednesday that said the United States was involved in the explosions, Russian Foreign Ministry spokeswoman Maria Zakharova called on the White House to comment on the facts that had been presented.

Reuters was unable to verify the report, published by US investigative journalist Seymour Hersh on his blog, alleging US involvement in the explosions.

The White House said on Wednesday that Hersh's account was utterly false and complete fiction.

Moscow, without providing evidence, has repeatedly said the West was behind the explosions affecting the Nord Stream 1 and 2 pipelines last September - multibillion-dollar infrastructure projects that carried Russian gas to Germany under the Baltic Sea.

Western officials have denied those accusations.

"The White House must now comment on all these facts," Zakharova said in a post on her Telegram page where she summarised Hersh's main claims regarding the alleged US involvement.

Investigators from Sweden and Denmark - in whose exclusive economic zones the explosions occurred - have said the ruptures were a result of sabotage, but have not said who they believe was responsible.

Russia said the countries have something to hide and are purposefully blocking Russia out from the investigation.

Construction of Nord Stream 2, designed to double the amount of gas Russia could send directly to Germany under the sea, was completed in September 2021, but was never put into operation after Berlin shelved certification just days before Moscow sent its troops into Ukraine in February.

(This story has been corrected to say that blasts were inside exclusive economic zones of Sweden and Denmark, not in their territorial waters.)

 

India: DP World to develop container terminal at Deendayal Port

DP World has won a major concession to develop, operate and maintain a container terminal at Deendayal port in Gujarat, on the western coast of India.

The project involves the construction of a mega-container terminal at Tuna-Tekra through a Public-Private Partnership (PPP).

Once complete, the terminal will include a 1,100-metre berth, and will be capable of handling vessels carrying more than 18,000 teu. Total capacity will be 2.19 million teu.

The contract was awarded by the Deendayal Port Authority under on a Build-Operate-Transfer (BOT) basis.

The future terminal will help unlock future container traffic growth in India, catering to exports and imports from Northern, Western and Central India, reducing logistics cost and enhancing efficiencies across supply chains.

"India represents a significant landscape for opportunity. As the value chain becomes more integrated, significant growth opportunities exist across the entire Indian ports and logistics space,” said Sultan Ahmed Bin Sulayem, Group Chairman and CEO of DP World.

“With the development of Tuna Tekra mega-container terminal in Gujarat, DP World will be well placed to capture these opportunities, further connecting Northern, Western and Central India with global trade and driving value for all our stakeholders.

This is yet another step in our collective efforts with the National Investment and Infrastructure Fund to leverage our expertise in logistics infrastructure and local knowledge to further strengthen India’s supply chain," he added.

DP World already operates five terminals – two in Mumbai, one each in Mundra, Cochin and Chennai – with a combined capacity of approximately 6 million teu and with the addition of Tuna Tekra Container Terminal DP World will have a capacity of 8.19 million teu.

This is along with seven multimodal inland terminals connected to DP World’s rail network, cold storage facilities and container freight stations. It is also developing three economic zones across the country in Mumbai, Cochin and Chennai.

The new terminal will be constructed and equipped with most modern facilities and equipment over an area of approximately 63 hectares. The terminal will be well connected to the hinterland through the network of roads, highways, railways and the Dedicated Freight Corridors.

Russia: Lost oil revenue bonanza for shippers and refiners

Western sanctions on Russia have significantly reduced state oil revenues and diverted tens of billions of dollars towards shipping and refining firms, some with Russian connections.

Most of the winners from the sanctions are based in China, India, Greece and the United Arab Emirates, a handful are partly owned by Russian companies.

None of the firms is breaching sanctions, but they have benefited from measures designed by the European Union and the United States to reduce the revenues of what they call Russian President Vladimir Putin's war machine.

As the Ukraine conflict heads into a second year, the calculations show that Russia's income has dropped but the volume of exports has remained relatively stable despite sanctions.

Putin told the West that sanctions would trigger an energy price rally. Instead, international benchmark Brent oil prices have fallen to US$80 per barrel from a near-all-time high of US$139 in March 2022, weeks after the start of the war. Before Moscow's invasion of Ukraine began on February 24 last year, Brent traded at around US$65 to US$85 per barrel.

After the Group of Seven (G7) industrialized nations imposed a price cap on Russian oil in December 2022, Moscow's oil export revenues fell by 40%YoY in January this year, Russia's finance ministry said.

"Low official oil price meant that the Russian state budget has suffered in recent weeks," Sergey Vakulenko, non-resident fellow at the Carnegie Endowment for International Peace, said.

Vakulenko was a former head of strategy at Russian energy major Gazprom Neft. He left the firm and Russia days after the start of the war.

"Judging by the customs statistics, some of the benefit was captured by refiners in India and China, but the main beneficiaries must be oil shippers, intermediaries and the Russian oil companies," he added.

Sanctions on Russia - probably the harshest imposed on an individual state - include outright bans on purchases of Russian energy by the United States and the EU, as well as bans on the shipping of Russian crude anywhere in the world unless it is sold at or below US$60 per barrel.

Russia has diverted most crude and refined products to Asia by offering steep discounts to buyers in China and India versus competing grades from the Middle East, for instance.

The ban on shipping and the price cap have made buyers wary and forced Russia to pay for transportation of crude as it does not have enough tankers to carry all of its exports.

As of late January, Russian oil firms were offering discounts of up to US$20 per barrel for crude to buyers in India and China.

In addition, Russian sellers have also paid up to US$20 per barrel to shipping companies to take crude from Russia to China or India.

As a result, Russian companies received only less than US50 per barrel of Urals at Russian ports in January, down 42%YoY and just 60% of the European Brent benchmark price, according to the Russian Finance Ministry.

By comparison, a US exporter of Mars crude - a grade similar to Urals - would pay about US$5 to US$7 per barrel for shipping a cargo to India. Given a discount of US$1.6 per barrel versus the US benchmark WTI, a US exporter would collect some US$66 per barrel at a US port, or 90% of the benchmark price.

With output of 10.7 million barrels per day (bpd) in 2022 and exports of crude and refined products of 7.0 million bpd, the discount and additional costs would see Russian producers' revenues falling by tens of billions of dollars in 2023.

The head of the International Energy Agency (IEA), Fatih Birol, said on Sunday the price cap reduced Moscow's revenue by $8 billion in January alone.

However, because some lost revenues are captured by Russian firms, the exact hit to earnings of producers and the state is difficult to quantify.

As a further complication, some Russian oil grades, including Pacific grade ESPO, are also worth more than Urals.