Russia takes on OPEC challenge

Russia – the world’s second largest oil exporter – has signalled its willingness to work with OPEC this week to prop up crude prices through another round of production cuts to be announced at a meeting in Algeria.

‘But for all its talk of the need to protect its national interest amid declining revenues, Russia is unlikely to contribute meaningful reductions beyond already expected declines in the country’s production that are resulting from underinvestment. Led by Saudi Arabia, the Organization of Petroleum Exporting Countries is expected to announce that it will slash output by some 1.5 million barrels a day, as it seeks to bolster prices in the face of the continued weakening of global demand. The OPEC move would come on top of previous production cuts aimed at taking 1.5 million barrels of oil a day off the market. But the cartel is eager to see non-OPEC producers reduce their output, and Russia has taken up that challenge. But even with an announcement of a sizable cut this week, few analysts believe OPEC will be able to reverse the decline in crude prices, which have plunged from a record $147 (U.S.) a barrel in July to close Friday at $46.28 a barrel in New York, after falling as low as $40 the previous week. Prices won’t rebound until non-OPEC producers, including Russia and Canada, cut production in response to slumping prices, and global crude consumption revives, said Arjun Murti, oil analyst at Goldman Sachs. “We think the sharp, and sudden collapse on global oil demand exceeds OPEC’s ability to, on its own, balance markets and necessitates sharply lower crude supply,” Mr. Murti said. He projected crude prices will sink to $30 a barrel early next year, a level that would force Western oil companies to begin cutting back production.

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Talks on armed security teams to deter pirates

Dubai: Negotiations are underway on placing private armed security teams aboard ships passing through the pirate-infested Gulf of Aden (known in Arabic as Bab al Mandab), as leading regional supertanker and container ship operators reveal details of hijack attempts on their vessels.

‘Mohammad Souri, Chairman and Managing Director of the National Iranian Tanker Company, speaking during the opening session of the Seatrade Middle East Maritime conference taking place in Dubai, has revealed that five of his company’s ships have been chased and threatened but had escaped by outrunning the Somali pirates in their fast attack boats. At the same conference, Saleh Al Shamekh, President Oil and Gas of the National Shipping Company of Saudi Arabia (NSCSA), said some of his company’s vessels had also come under attack off the Somali coast but had escaped, in one case with the protection of an Indian Navy warship. When all ships currently on order are delivered, NSCSA will have a combine fleet of 52 ships. Al Shamekh said his company, like others, had ordered increased speeds for vessels and to stay further away from the Somali coast. In some cases, however, they are diverting vessels away from Bab al Mandab, which leads to the Suez Canal and the shortest route to Europe, in favour of the longer Cape of Good Hope route. Jorn Hinge, Chief Operating Officer of United Arab Shipping Company (UASC), also revealed two of their container ships had been attacked by the pirates without success. He spoke of the “total lawlessness” of Somali where the chance of pirates being caught was small while the rewards in terms of ransom were huge. UASC is the largest ocean carrier of dry cargo to the Middle East and jointly owned by Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.

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Keppel bins MPU project

Keppel Offshore and Marine has decided to terminate the MPU Heavy Lifter project and started the scrapping of the concrete hull.

‘After evaluating all possible options, Keppel will end the project, said the company in a statement. Keppel has secured the necessary rights and endorsements from third parties to dismantle and dispose of the concrete hull which has no commercial value. Dismantling work on the unit is expected to start in January and will be completed in about three months. The matter is not expected to have any material impact on the net tangible assets or earnings per share of Keppel Corporation in the financial years ending 2008 and 2009. The project, the construction of a heavy lifter for decommissioning work, was contracted with MPU Offshore Lift in December 2006 at €140 million ($191 million). Keppel stopped work on the project after MPU filed for bankruptcy in July.

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