MarEx "Daily News"

The Daily News can be found at http://www.maritime-executive.com.

August 1, 2005

Washington State wants Oil Industry to Provide More Oil Spill Response Vessels

Washington state regulators want more oil spill cleanup ships now, but petroleum companies want more time study the proposal. Washington's Ecology Department found that there are few spill response vessels able to clean up a spill of any real size. The state wants oil companies to address the problem now and not wait until new regulations go into effect in June, 2006.

The Western States Petroleum Association says it needs more time to review the suggestions by the Ecology Department. The state agency has been very critical about the oil industry's ability to respond and says the 1,000 gallon oil spill in Dalco Passage, which cost approximately $ 2 million, is a prime example of an ineffective spill response.

The state agency wants to use the massive fishing fleet in the region to assist with oil spill response, and fishermen are on board with the suggestion. To start a fishing vessel response program would initially cost $250,000, and the state believes that the oil companies should fund the proposal.

A similar initiative was put into play in the early 1990s, but it quickly ran out of funds and interest.

July 29, 2005

Twelve Die in Indian Oil Platform Fire

India's Oil and Natural Gas Corp. (ONGC) reports that its platform "Bombay High North" was destroyed in a fire off the country's west coast on Wednesday. Twelve people died, and 367 were rescued.

The accident occurred when a platform support vessel (PSV) lost control in rough seas and collided with the oil platform structure. Six divers remain trapped in the support vessel, and two people are reported missing.

The Bombay High, India's largest offshore field produces 14 percent of the oil the country consumes and accounts for 38 percent of all domestic production. The platform, "Bombay High North" produces 100,000 barrels per day out of the total production of the field's 260,000 barrels per day.

Oil Minister Mani Shankar Aiyar said that ONGC would be able to restore 70 percent of the platforms production within a month. An official for ONGC said that the platform will be replaced by the end of next year. The platform was insured for $195 million, but the new structure is estimated to cost approximately $300 million.

No oil spills have been reported, and any leaks would probably have been consumed by the flames.


July 28, 2005

Indian Supply Boat Hits Oil Rig

India's petroleum minister, Mani Shankar Aiyar, has told Parliament that yesterday's "Bombay High" accident was caused when one of the platform legs was hit by the supply ship "Samudra Suraksha."

The Oil and Natural Gas Commission-owned multi-supply vessel, operated by Shipping Corp of India, lost control while it was undertaking a medical evacuation, drifted and hit the platform. This caused a fire that engulfed the supply vessel and spread to the platform.

Aiyar said the platform was insured for $195M and the supply vessel for $60M under ONGC's offshore packaged insurance policy. ONGC chairman and managing director has launched an internal inquiry.

Regarding casualties, Aiyar said 12 persons had been confirmed dead so far, two of which have yet to be identified. These included six from ONGC and one each from the supply vessel and the chartered drilling rig.

The minister said that although the fire had caused a loss of 110,000 barrels of crude oil a day, he expected that 70% of the production would be restored in the next four weeks. Rescued workers have been taken to Mumbai in three ships.

July 27, 2006

Sentencing Announced in New York Ship Dumping Case

The oil tanker "Fair Voyager" owned by Fair Voyager Maritime SA, Liberian shipping company, and operated by a Greek operator, Fairdeal Group Management SA. Prosecutors have charged with dumping approximately 60 tons of sludge and 40 tons of oil contaminated bilge water into the sea outside New York Harbor between April and November, 2004.

In the latest developments in the case, the owner and operator pleaded guilty to six counts, including obstruction and perjury for attempting to conceal the dumping and obstruct a federal investigation.

The tanker was equipped with tanks to collect polluted waters that would be offloaded later and also had onboard systems that could purify oil-contaminated bilge water while the ship was at sea. Instead, under the direction of the tanker's chief engineer, the crew dumped approximately 60 tons of sludge and 40 tons of oil-contaminated bilge water directly into the sea.

The crew did that by attaching a pipe to bypass the existing system and dump sludge and contaminated water into the ocean. The staff removed and hid the pipe each time the tanker entered or exited a port. Prosecutors charge the ship's engineer concealed the dumping by falsifying the tanker's record book.

In one instance, the ship arrived in New York Harbor from Spain with a cargo of 36,000 metric tons of gasoline. When U.S. Coast Guard officials discovered the bypass pipe, the tanker's owners admitted their crew lied and attempted to conceal it.

The engineer and crew also made repeated and deliberate false statements to Coast Guard and Environmental Protection Agency investigators. Several crew members also lied to a federal grand jury investigating the dumping. Three crew members have previously pleaded guilty to conspiracy and are awaiting sentencing.

US District Court Judge Loretta Preska has ordered the owner and operator to pay a fine of more than $1 million, donate nearly half that to the National Fish and Wildlife Foundation, and serve a four year term of probation. The captain has pleaded guilty to lying and is awaiting sentencing; three crew members have also pleaded guilty to charges.

July 20, 2005

Unocal Rejects Chinese Buyout

Unocal's Board of Directors recommended that its shareholders accept a last-minute, $17 billion takeover bid from Chevron, rejecting a competing offer from China's third-largest oil company.
Chevron boosted its offer by $2 per share shortly before the Unocal Board met Tuesday night, raising its bid to $63 per share or more than $17 billion.

"Our increased offer has been driven by competitive circumstances, but even at this higher price it remains a compelling transaction for Chevron stockholders," Chevron Chairman and Chief Executive Officer David J. O'Reilly said in a statement released late Tuesday night. "We are pleased to have the continued support of the Unocal board of directors and look forward to closing the transaction in just three weeks."

Unocal's board of directors recommended the company's stockholders vote in favor of adopting the amended merger at their August 10th meeting.
The move appeared to be a blow to CNOOC, an affiliate of China National Offshore Oil Corp. But a spokesman said the company wasn't ready to abandon its bid.

"The situation with us is that we have what we consider a clearly superior full-cash offer on the table, and it remains there," said CNOOC spokesman Ray Bashford in Hong Kong. "We're willing to continue negotiations."

The CNOOC bid has sparked considerable opposition from lawmakers who have raised national security and other concerns.

CNOOC, which is 70% owned by the Chinese government, had offered $67 per share for Unocal last month after Unocal had already agreed to be acquired by Chevron.

CNOOC's bid of $18.5 billion was considerably higher than Chevron's original offer of roughly $60 per share in a combination of cash and stock based on Tuesday's closing price on Chevron stock. That bid was valued at around $16.6 billion.

The difference in the CNOOC and Chevron bids had grown as investors drove the price of Unocal shares above Chevron's offer price.

Shares of Unocal rose 17 cents to $64.99 at the end of regular trading on the New York Stock Exchange Tuesday. Shares of San Ramon-based Chevron rose 94 cents to $57.30.

After CNOOC made its bid for Unocal, members of Congress demanded a review of the offer by the Committee on Foreign Investment in the United States.

The group, led by Treasury Secretary John Snow, was created to monitor foreign investment activity in the United States with an eye on protecting national security.

Members of Congress have complained that CNOOC's bid for Unocal is part of a broader strategy by communist China to hoard energy supplies before they run out. Another concern is that the United States might unintentionally hand over technology or assets that have military value.
The House registered its discomfort last month by approving a resolution that asks the president for an immediate and thorough review if Unocal accepts CNOOC's offer.

Nine senators sent a letter Tuesday to President Bush urging a full investigation into CNOOC's proposed acquisition of Unocal.

Under the agreement between Unocal and Chevron reached last April, Chevron has the right to force a vote of Unocal shareholders. That vote is scheduled for the Aug. 10 meeting.

Chevron's revised offer is structured as 40% cash and 60% stock. Unocal stockholders may elect to receive for each share of Unocal stock either $69 in cash, 1.03 shares of Chevron stock or a combination of $27.60 in cash and 0.618 of a share of Chevron common stock. Chevron will issue approximately 168 million shares of Chevron stock and pay approximately $7.5 billion in cash, according to the joint statement issued by the companies.

Since CNOOC made its all-cash bid, Chevron has emphasized that its offer was superior because it had already cleared regulatory reviews. The CNOOC bid, by contrast, could take six months or more to be reviewed by U.S. and overseas agencies.

July 19, 2005

Thunder Horse platform, considered to be a new key oil production facility in the Gulf of Mexico (GOM), is tilting 20 to 30 degrees after Hurricane Dennis hit the GOM, but the company said it's too early to tell whether initial output will be delayed.

A BP spokesperson said a 10-ton winch that fell off the platform as it was being evacuated ahead of Hurricane Dennis last Thursday probably did not cause the tilt. The $1 billion platform had been expected eventually to boost U.S. Gulf of Mexico oil output by nearly 17 percent.

BP said it is too early to determine if inaugural oil and natural gas output, which had been expected later this year, would be delayed by the platform's listing. Thunder Horse's peak output was expected to be 250,000 barrels per day of oil and 200 million cubic feet of natural gas.

The BP offshore facility is considered the biggest hope for a small recovery in crude production in the United States, which has been falling since the 1970s. The GOM currently produces about 1.5 million barrels per day of oil, which is approximately 25 percent of U.S. total output.

BP says the winch that fell into the ocean was one of several being moved to the top of the platform to help stabilize it during Hurricane Dennis. Workers were aboard the platform within 36 hours after the equipment fell into the ocean and detected no tilt then. BP said excess water in the platform's ballast tanks could be the cause of the listing, because there is no major structural damage.

BP owns 75 percent of Thunder Horse, and Exxon Mobil owns the remaining 25 percent. The platform is self-insured.

BP is also building the Atlantis platform in the GOM, which is expected to produce 200,000 barrels per day of crude oil and 180 million cubic feet of gas after its start-up in the third quarter of 2006.

BP hopes to put a team of workers aboard the platform and right the platform. But first, remote sensors from a platform support vessel are investigating the submerged part of the facility to determine the damage.

July 18, 2005

Tanker Collision Kills Five off Japan

Five bodies were found yesterday inside an oil tanker, which was still on fire off the western coast of Japan two days after a collision with another tanker, the Japanese Coast Guard said.
They were believed to be the five missing crew members of the 697-ton "Kyokuyo Maru," which had collided with the chemical tanker "Nikko Maru" on Friday, some 25 kilometres off off Owase City in Mie prefecture, which is 350 km south-west of Tokyo.

The recovery raised the death toll from the accident to six, with one person injured. All five people on board the 499-ton chemical tanker were safely evacuated.

'We found five people inside the tanker and all were confirmed dead,' a Coast Guard spokesman said, adding that it had yet to identify the five. 'We will end rescue operation after removing all the bodies from the tanker as we believe no more people were trapped inside the ship,' he said.

Rescue operations were hampered as the blaze raged through the ship for two days.

The "Kyokuyo Maru" had been heading for Ehime in western Japan from Mie, carrying 12,580 barrels of benzene, while the "Nikko Maru" was bound for Chiba, eastern Japan, from Okayama, western Japan, with a load of 1,000 kiloliters of creosote oil.

Hisao Ueno, the 53-year-old chief mate of the chemical tanker, was arrested on Friday on suspicion of professional negligence. He has been sent to prosecutors for questioning, according to media reports. There was thick fog in the area at the time of the accident. Officials were investigating the cause of the collision.

July 15, 2005

Two Ship Collide off Japan?Tanker Bursts into Flames

Two ships, one a tanker carrying gasoline, collided in dense fog off western Japan today, leaving one crew member dead and five missing, Japanese coast guard officials said.

The collision between the 697-ton tanker "Kyokuyo Maru" and the 499-ton freighter "Nikko Maru" took place around 4 a.m. (1900 GMT) off Cape Mikizaki, about 320 km west of Tokyo.

Neither vessel sank but the "Kyokuyo Maru" was carrying gasoline and burst into flames. It was not immediately clear whether the gasoline had leaked into the surrounding water.