Uncertain outlook in the LPG trades

London: The strength of most shipping markets in the months ahead will depend on demand – for iron ore, coal and other raw materials in China and India.

However, the liquid petroleum gas (LPG) business is based on different fundamentals, with its core business closely associated with supply, as well as demand – liquid petroleum gas is a by-product of crude oil production, refining and gas processing. In a recent report, Clarkson describes the LPG business as a “mysterious segment” of shipping. Its owners – in contrast to many others – have not been enjoying super-profits carrying some of the world’s most basic cargoes, as in the dry bulk market; instead, they have been shipping some of the most sophisticated products, at temperatures as low as minus 100° C, and at modest returns. There are only 1,100 LPG tankers in total, according to Clarkson statistics, and half of them are small vessels of less than 5,000 metres_ and the fleet of very large gas carriers (VLGCs) comprising just 120 vessels. The sector demonstrated only modest growth of less than 4% p.a. in the years leading up to 2000. However, with renewed interest in LNG production, providing associated gases as by-products, there has been a spell of new investment in LPG carriers and a significant volume of tonnage is now being delivered.

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Japan’s Idemitsu eyes doubling oil exports

Idemitsu Kosan Co Japan’s No. 3 oil refiner, said on Monday it aimed to roughly double its oil product exports in the next few years to compensate for declining domestic demand.

 

The firm’s annual oil exports are likely to hit 2 to 3 million kilolitres (12.6-18.9 million barrels, or about 35,000-52,000 barrels per day) in the “next two or three years,” Seiji Fukunaga, Idemitsu director and general manager of the petroleum and coal marketing department, told Reuters. Idemitsu now forecasts oil exports of 1.5 million kl for the year ending in March, up from 1 million kl the year before.”In the future, there is a possibility that exports may reach 5 to 6 million kl,” he told reporters. Japanese refiners have been ramping up exports of gas oil and jet fuel amid a steady drop in domestic oil demand as the population peaks and the shift to electricity, gas and more fuel-efficient cars and machinery accelerates. Domestic oil sales fell 2.4 percent in the year ended March, and government data showed last month that Japan’s oil demand fell to its lowest in 19 years for the month of July as surging oil prices hit gasoline and kerosene use hard. ID:nT86036]. Fukunaga also said Idemitsu was looking to export more products including gasoline to Mexico and other countries possibly on a term basis, after announcing last week its first term contract to sell 200,000 kl per year of diesel to the Central American nation. Idemitsu is set to increase its oil export capacity to 3 million kl per year by the end of this month, triple the capacity of a year ago.

 

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USCG Issues Marine Safety Alert

The Coast Guard strongly reminds the towing industry of its responsibility to properly man their vessels with adequate numbers of qualified and licensed crewmembers.

Recently, a collision on the Mississippi river near downtown New Orleans between a Cargo Ship and a loaded oil barge being pushed by an Uninspected Towing Vessel (UTV) resulted in a major oil spill, significant environmental damage, a costly oil spill cleanup response, closed “The River” for six straight days, and caused significant economic loss to the local Louisiana economy. The Commander, Eighth Coast Guard District, convened a formal investigation into the incident. While the investigation continues, the preliminary findings of this inquiry have revealed that the tug was operated solely by an individual who held a Coast Guard Apprentice Mate (Steersman) license and who was not authorized to independently direct its movement. An apprentice is strictly prohibited from operating a towing vessel unless in the presence of a properly licensed Master or Mate (Pilot). Failure to properly man a vessel may result in significant penalties and fines, not to mention other, possibly more significant and costly civil litigation. Possible enforcement actions include issuing civil penalties, taking mariners who hold a Coast Guard issued credential (e.g. a license or merchant mariner’s document) to a suspension and revocation hearing in order to suspend or revoke that credential, and/or refer a violation to the United States Attorney for criminal prosecution. The Coast Guard may also shut down the operation of vessel or facility, or prohibit a vessel from entering a particular port or place until such time a specific violation is corrected.

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