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(edited)

On 7/19/2019 at 5:57 PM, Falcon said:

Keep the Tanker.  No British citizens on board.

The tanker is insured.  Unless there is a war risk exclusion clause, the owners simply file a claim and go collect their cash from the insurance company.  There is a surplus of tankers on the open market today, so the removal of one will firm up cargo prices just a tad  (assuming none others are taken out of mothballs).  The real hit is in the hull and cargo insurance charges, which will continue to rise as the insurers continue to perceive risk in their insurance. 

From the insurers' viewpoint, it is better for a ship to be seized than to be sunk.  A sinking is an irrevocable total loss.  A seizure implies that, eventually, the vessel will be returned, the insurer can sell it and recoup the larger part of the losses.  Meanwhile, the risk premiums tacked onto other policies will more than make up for the loss of one ship. 

The Iranians cannot seize a lot of ships - say, ten or twenty.  The logistics prevent that.  Where do you park them? Rafted together offshore?  That invites a SBS assault, with tug boats and frigates, and those ships get towed out of there.  To stop that, Iran would have to launch their WIG fleet of fast airboats. That will result in heavy shooting.  Also the destruction of the WIG navy base.  I don't see that happening.  Notwithstanding the crazies, the taking of that tanker by the speedboat fraternity was a carefully calculated move, intended to avoid risk.  They only snatched a lone tanker where there were no British ships nearby.  Although the IRGC looks aggressive, that move was really not at all. Strictly politics, it was a political play, not a military one.

Edited by Jan van Eck
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1 hour ago, Jan van Eck said:

The tanker is insured.  Unless there is a war risk exclusion clause, the owners simply file a claim and go collect their cash from the insurance company.  There is a surplus of tankers on the open market today, so the removal of one will firm up cargo prices just a tad  (assuming none others are taken out of mothballs).  The real hit is in the hull and cargo insurance charges, which will continue to rise as the insurers continue to perceive risk in their insurance. 

From the insurers' viewpoint, it is better for a ship to be seized than to be sunk.  A sinking is an irrevocable total loss.  A seizure implies that, eventually, the vessel will be returned, the insurer can sell it and recoup the larger part of the losses.  Meanwhile, the risk premiums tacked onto other policies will more than make up for the loss of one ship. 

The Iranians cannot seize a lot of ships - day, ten or twenty.  The logistics prevent that.  Where do you park them? Rafted together offshore?  That invites a SBS assault, with tug boats and frigates, and those ships get towed out of there.  To stop that, Iran would have to launch their WIG fleet of fast airboats. That sill result in heavy shooting.  Also the destruction of the WIG navy base.  I don't see that happening.  Notwithstanding the crazies, the taking of that tanker by the speedboat fraternity was a carefully calculated move, intended to avoid risk.  They only snatched a lone tanker where there were no British ships nearby.  Although the IRGC looks aggressive, that move was really not at all. Strictly politics, it was a political play, not a military one.

And again, nobody got killed. Everyone is studiously avoiding that 'line in the sand'.

Jan, if there is a surplus of tankers on the market, won't that make it difficult for the insurers to eventually sell the ship and recoup their cost?

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12 minutes ago, Douglas Buckland said:

And again, nobody got killed. Everyone is studiously avoiding that 'line in the sand'.

Jan, if there is a surplus of tankers on the market, won't that make it difficult for the insurers to eventually sell the ship and recoup their cost?

Yes, it will.  Ultimately, the value of a ship is its scrap value.  Tanker scrapping is typically done in South Asia.  The typical outlet for the scrap steel is in the manufacture of re-bar.  The market for re-bar is in concrete construction in China.  Thus the prospects of apartment construction and infrastructure building in China directly affects the economic prospects of the scrappers and in turn the shipowners that are scrapping tonnage. 

Selling the ship into a crowded market is difficult.  It would force the owner (here, the insurer) to drop the asking price to the point where some Buyer could add it to their fleet and charter it out at a fee lower than that of rivals - thus forcing a rival to lay up one of their ships.  The ship charter market is totally cutthroat, and it swings wildly between over-supply and shortage. The charter fees can go from less than break-even to huge profits, dependent on newbuild orders hitting the water and the demand cycle.  It is not for the faint of heart.

I predict the insurers, if they find the recovered ship to be in deteriorated condition, will simply sell it for scrap and write it off.  That is the nature of the insurance business.  (A ship that just sits without running starts to rust out, due to moisture building up inside. Also, engine cylinder liners will rust up, that sort of thing.  Gets expensive to get back into service.)

 

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55 minutes ago, Jan van Eck said:

Yes, it will.  Ultimately, the value of a ship is its scrap value.  Tanker scrapping is typically done in South Asia.  The typical outlet for the scrap steel is in the manufacture of re-bar.  The market for re-bar is in concrete construction in China.  Thus the prospects of apartment construction and infrastructure building in China directly affects the economic prospects of the scrappers and in turn the shipowners that are scrapping tonnage. 

Selling the ship into a crowded market is difficult.  It would force the owner (here, the insurer) to drop the asking price to the point where some Buyer could add it to their fleet and charter it out at a fee lower than that of rivals - thus forcing a rival to lay up one of their ships.  The ship charter market is totally cutthroat, and it swings wildly between over-supply and shortage. The charter fees can go from less than break-even to huge profits, dependent on newbuild orders hitting the water and the demand cycle.  It is not for the faint of heart.

I predict the insurers, if they find the recovered ship to be in deteriorated condition, will simply sell it for scrap and write it off.  That is the nature of the insurance business.  (A ship that just sits without running starts to rust out, due to moisture building up inside. Also, engine cylinder liners will rust up, that sort of thing.  Gets expensive to get back into service.)

Ah yes, the Ship scrap business

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1 hour ago, Jan van Eck said:

Yes, it will.  Ultimately, the value of a ship is its scrap value.  Tanker scrapping is typically done in South Asia.  The typical outlet for the scrap steel is in the manufacture of re-bar.  The market for re-bar is in concrete construction in China.  Thus the prospects of apartment construction and infrastructure building in China directly affects the economic prospects of the scrappers and in turn the shipowners that are scrapping tonnage. 

Selling the ship into a crowded market is difficult.  It would force the owner (here, the insurer) to drop the asking price to the point where some Buyer could add it to their fleet and charter it out at a fee lower than that of rivals - thus forcing a rival to lay up one of their ships.  The ship charter market is totally cutthroat, and it swings wildly between over-supply and shortage. The charter fees can go from less than break-even to huge profits, dependent on newbuild orders hitting the water and the demand cycle.  It is not for the faint of heart.

I predict the insurers, if they find the recovered ship to be in deteriorated condition, will simply sell it for scrap and write it off.  That is the nature of the insurance business.  (A ship that just sits without running starts to rust out, due to moisture building up inside. Also, engine cylinder liners will rust up, that sort of thing.  Gets expensive to get back into service.)

 

What we found after cold stacking a rig was bearing failure in almost every system!

It seems the bearings (ball, needle, thrust, etc...) continually vibrate at the same spot in the race, wearing a miniscule groove. When you put the system under load... the bearing fails. It is a nightmare!

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Okay, that has no bearing (pun intended) on the discussion, just some interesting trivia...😆

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(edited)

37 minutes ago, Douglas Buckland said:

What we found after cold stacking a rig was bearing failure in almost every system!

It seems the bearings (ball, needle, thrust, etc...) continually vibrate at the same spot in the race, wearing a miniscule groove. When you put the system under load... the bearing fails. It is a nightmare!

The big problem these days is not mechanical it’s the technology, nowadays most of the mechanical systems are controlled by PLCs herewith lies the problem PLCs like to remain hot, this is the main reason these days for warm stacking. A cold stacked Deepwater drilling rig can cost as high as 100 Million to restart, depending as to what level it was stacked.

Best to keep an engine online and systems hot.

Edited by James Regan
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38 minutes ago, James Regan said:

The big problem these days is not mechanical it’s the technology, nowadays most of the mechanical systems are controlled by PLCs herewith lies the problem PLCs like to remain hot, this is the main reason these days for warm stacking. A cold stacked Deepwater drilling rig can cost as high as 100 Million to restart, depending as to what level it was stacked.

Best to keep an engine online and systems hot.

Pay now or pay later – the art of rig stacking and reactivation

... Finding the balance

As current ultra deepwater market utilization is at extreme lows and the outlook for new contracts is bleak, rigs have been and will continue to be stacked for long periods of time.  Warm stacking drillships and semisubs is expensive, and can run into the $40,000–60,000 range per day compared to operating costs when drilling of around $150,000 per day.  These costs – combined with the financial costs of sitting on assets that cost over $600 million to build – create a challenging situation for owners as rigs remain idle over time.  ...

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50 minutes ago, James Regan said:

The big problem these days is not mechanical it’s the technology, nowadays most of the mechanical systems are controlled by PLCs herewith lies the problem PLCs like to remain hot, this is the main reason these days for warm stacking. A cold stacked Deepwater drilling rig can cost as high as 100 Million to restart, depending as to what level it was stacked.

Best to keep an engine online and systems hot.

Another 'deepwater' problem is trying to find experienced electricians and DP operators.

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2 minutes ago, Tom Kirkman said:

Pay now or pay later – the art of rig stacking and reactivation

... Finding the balance

As current ultra deepwater market utilization is at extreme lows and the outlook for new contracts is bleak, rigs have been and will continue to be stacked for long periods of time.  Warm stacking drillships and semisubs is expensive, and can run into the $40,000–60,000 range per day compared to operating costs when drilling of around $150,000 per day.  These costs – combined with the financial costs of sitting on assets that cost over $600 million to build – create a challenging situation for owners as rigs remain idle over time.  ...

@Tom Kirkman I have recently been at the pointy end on a three year old state of the art UDW DrillShip, it had done three wells and was stacked well for 6 months, took the rig to Malaysia for your buddies and it was a nightmare to reactivate.

Apart from the lost revenue and port costs, fuel, salaries, maintenance and then rig intake ie transit and customs etc etc it really does show a bold IOC that will take a unit across the globe and risk start up.

But it’s obviously still very profitable and necessary that our industry keeps turning to the right, these is no alternative that can provide the requirements of carbon based fuels at this time or the distant future, sure cherry picked segments will have a solution but in general we need to protect our assets to assure our future with logic and bom senso.

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1 minute ago, Douglas Buckland said:

Another 'deepwater' problem is trying to find experienced electricians and DP operators.

They are all on tankers being hyjacked,,,

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11 hours ago, Falcon said:

Iran Oil exports dropped 2 mm bbls/day to 500K bbls in last 15 months. 

Great for world oil producers.

Iran keep the sanctions. You don't need the $130 million a day.

Keep the Tanker.  No British citizens on board.

The IRANIAN'S tanker hostages taking MADE JOHN BOLTON'S AND NETANYAHU'S DAY. 

Looks like Trump is getting close to a "go" . If he starts it . . . he will finish it.  

Iran US is going on summer vacation.  See ya in 6 weeks.  US will talk with you then . . . . . only if you want.

6 weeks: that's 42 days X $130 million = $5,460,000,000. lost oil revenue.

Not bad over $5 Billion lost revenue.

TIMING IS GREAT !

Cactus II Pipeline on schedule $670 K bbls/day in Corpus Christi for export .  The Epic pipe coming up next. Getting close to commence line fill. Epic will provide 900K bbls/day for export.  

 

 

Great! Let's pump even more oil on the market while we supposedly are over supplied! That should have a positive effect on the price! (Sarcasm...)

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(edited)

On 7/20/2019 at 5:58 AM, Douglas Buckland said:

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Edited by Falcon

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52 minutes ago, Falcon said:

I think could be good for WTI .  Notice the gap btw WTI and Bent closing from $10 weeks ago to $7 today.  With exports will close to $3 or $4.  WTI will move up closer to Brent.

That doesn't make any sense at all!

Regardless what the 'gap' is, it is going to be between two lower price benchmarks'

An expanding glut/global over-supply can only drive Both benchmarks DOWN!

Why is this so hard to understand!

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(edited)

On 7/20/2019 at 9:00 AM, Douglas Buckland said:

 

Edited by Falcon
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(edited)

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Edited by Falcon
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17 hours ago, Jan van Eck said:

The tanker is insured.  Unless there is a war risk exclusion clause, the owners simply file a claim and go collect their cash from the insurance company.  There is a surplus of tankers on the open market today, so the removal of one will firm up cargo prices just a tad  (assuming none others are taken out of mothballs).  The real hit is in the hull and cargo insurance charges, which will continue to rise as the insurers continue to perceive risk in their insurance. 

From the insurers' viewpoint, it is better for a ship to be seized than to be sunk.  A sinking is an irrevocable total loss.  A seizure implies that, eventually, the vessel will be returned, the insurer can sell it and recoup the larger part of the losses.  Meanwhile, the risk premiums tacked onto other policies will more than make up for the loss of one ship. 

The Iranians cannot seize a lot of ships - day, ten or twenty.  The logistics prevent that.  Where do you park them? Rafted together offshore?  That invites a SBS assault, with tug boats and frigates, and those ships get towed out of there.  To stop that, Iran would have to launch their WIG fleet of fast airboats. That will result in heavy shooting.  Also the destruction of the WIG navy base.  I don't see that happening.  Notwithstanding the crazies, the taking of that tanker by the speedboat fraternity was a carefully calculated move, intended to avoid risk.  They only snatched a lone tanker where there were no British ships nearby.  Although the IRGC looks aggressive, that move was really not at all. Strictly politics, it was a political play, not a military one.

What are the pros and cons of these tankers having a viable defense force aboard? Is it too expensive, too risky to the ship? 

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(edited)

10 hours ago, Douglas Buckland said:

Great! Let's pump even more oil on the market while we supposedly are over supplied! That should have a positive effect on the price! (Sarcasm...)

It is actually an economic war. We are weakening all nations that are overly reliant on oil and natural gas income by maximizing our own production. That includes Russia and the Middle East. It benefits China and all other countries that are not big producers themselves. That is the big picture. 

The Russian economy is barely above that of Spain.

https://markets.businessinsider.com/news/stocks/russia-economy-facts-2019-4-1028116037#russia-loses-700-people-every-day1

https://www.visualcapitalist.com/map-sums-economy-middle-east/

This One Map Sums Up the Economy of the Middle East

https://www.visualcapitalist.com/map-countries-most-oil-reserves/

Map: The Countries With the Most Oil Reserves

 

Edited by ronwagn
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18 minutes ago, ronwagn said:

What are the pros and cons of these tankers having a viable defense force aboard? Is it too expensive, too risky to the ship? 

The insurance companies won't let them. It's the same logic that allows shoplifters to take their ill gotten goods out the door without pursuit. Or gets 7-11 cashiers fired if they defend themselves with a gun against an armed robber. They'd rather pay off pirates in Somalia and increase rates for EVERYONE, which makes them tons more profit overall. 

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5 minutes ago, Ward Smith said:

The insurance companies won't let them. It's the same logic that allows shoplifters to take their ill gotten goods out the door without pursuit. Or gets 7-11 cashiers fired if they defend themselves with a gun against an armed robber. They'd rather pay off pirates in Somalia and increase rates for EVERYONE, which makes them tons more profit overall. 

Reminds me of why gun attacks almost always occur in areas with the most restrictions on law abiding citizens carrying guns for self defense. Major attacks follow the same pattern. 

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1 hour ago, ronwagn said:

What are the pros and cons of these tankers having a viable defense force aboard? Is it too expensive, too risky to the ship? 

The Arab States are very leery of having foreign armed mercenaries loose on their soil, on shore leave.  there is a special armed-guard service operating I think out of Bahrain, but the guns and men have to stay on board an "accommodation ship" anchored out in the Gulf, they cannot come on shore.  I forget the details; possibly there is some shore leave for unarmed guards.  The drill is that the guards go on board with their guns in the Gulf, then sail out and around to the red Sea and the Suez.  The guards are there to shoot off Somali pirates in the Gulf of Aden.  So, general answer:  no, not expensive, but the various Governments get nervous about some mercenary force getting side-tracked and overthrowing them!

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1 hour ago, ronwagn said:

Reminds me of why gun attacks almost always occur in areas with the most restrictions on law abiding citizens carrying guns for self defense. Major attacks follow the same pattern. 

I now live in a State with NO gun laws, no carry permits, no purchase restrictions, nothing, and it is the lowest-crime State in the USA.  (Admittedly, that in itself is not perfection, as the USA itself is a violent place, but hey, it is a lot better than being knifed in Hamburg or Rotterdam or London, let's be fair here.)

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1 hour ago, Ward Smith said:

The insurance companies won't let them.

I never head that, Ward.  My understanding is that the ship cannot tie up in port to load with guns on board, and they would get confiscated by the police and the holders would be arrested.  The largest concern of the locals is some merc overthrow attempt, as happened in the Comoros Islands, as I recall.  Merc forces make those unstable autocratic governments nervous. 

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