Wednesday, April 21, 2021

Tag: Global Economy

The most famous ship accidents .. How much were the costs and compensation?

Ever given: Claims $ 900 million in compensation
The “Ever given” ship stranded in the Suez Canal caused disruption of navigation for six days until it was finally floated. Egypt seized the ship, demanding the owner company pay 900 million dollars in compensation, amid continuing talks between the two sides. The Suez Canal Authority had said that it lost between 12 and 15 million dollars a day as a result of the accident. The cost of disrupting navigation on global trade ranges from 6 to 10 billion dollars, according to “Allianz” Insurance.


CSCL Indian Ocean: Tens of millions
CSCL Indian Ocean is one of the largest container ships in the world, with the capacity to transport nearly twenty thousand containers. In 2016, it was stuck at the bottom of the Elbe River in the German city of Hamburg, despite the appropriate height of the river due to the flood, and rescue ships were unable to liberate it until several days later. The ship’s operator’s insurance company has paid for the re-liberation costs of tens of millions of euros.

MSC Chitra: Controversy over $ 66M
After colliding with another ship, the MSC Chitra on August 8, 2010, seriously tilted off the coast of Mumbai, causing the loss of about 300 cargo containers. But the ship did not sink, and months later it was sunk in international waters. The port management authorities demanded the owner company to pay compensation amounting to about 5 billion rupees (about 66 million dollars) due to the pollution it caused, as tons of oil products leaked from it. The dispute over compensation continues until now.

Rena: In compensation, $ 38 million
Not much was left of the cargo ship “RINA” in October 2011 after colliding with coral reefs off the coast of New Zealand, as it quickly split into two and separated from each other. Nothing was left of the ship except its bow after the rest of the parts were sunk with the containers it was carrying. In 2012, the ship’s owner agreed to pay compensation of $ 38 million to the company that removed the ship’s waste from the water.

MSC Naples: approximately $ 165 million
In 2007 the cargo ship MSC Naples lost part of its cargo after it ran aground off the coast of southern England. This resulted in the beautiful “Sidmouth” beach in Devon becoming a landfill. The beach cleaning and disposal work took more than two and a half years, and the damage amounted to 120 million pounds (about $ 165 million) paid by the owner company and the insurance company.


Iraq rejects a Chinese offer to buy Exxon Mobil’s stake in West Qurna

The director-general of reservoirs at the Iraqi Ministry of Oil, Muhammad Al-Aboudi, confirmed that the ministry was in talks with American companies to agree to buy Exxon Mobil’s share in one of the country’s largest fields, indicating that it had rejected a Chinese offer for this purpose.

In statements to Al-Sharq, Al-Aboudi said that a Chinese company submitted a request to buy Exxon Mobil’s 32.7% stake in the field, but the Iraqi government refused and demanded a two-month delay before accepting any offer submitted by other Chinese companies.

According to Al-Aboudi, this is due to the Ministry of Oil’s desire that the alternative to the American company is Western or American companies so that dealing with Chinese and Russian companies is not restricted to the field.

He pointed out that the withdrawal of “ExxonMobil” will not in any way affect the work in the field or its production capacity. It is likely that the ministry will buy the company’s share and assign a local company to work in the field.

This announcement comes at a time when Iraq suffers from an economic crisis imposed by the Corona pandemic, and the decisions of the Organization of Petroleum Exporting Countries (OPEC) and its allies, calling for a reduction in oil production.

$ 12.4 billion deal for Saudi Aramco pipelines with EIG consortium

Saudi Aramco has signed a deal with a consortium led by EIG Global Energy Partners (AIG), with investment returns estimated at $ 12.4 billion.

Under the deal, a recently established Saudi Aramco subsidiary, the Aramco Crude Oil Supply Company, will lease the rights to use Saudi Aramco’s concentrated crude oil pipeline network for a period of 25 years.

Aramco will control 51% of the new company, while the consortium led by EIG will retain a 49% stake. Aramco will retain full ownership of the pipeline network with operational control.

According to the agreement, the deal will not impose any restrictions on the company in terms of the amount of actual production of crude oil, which is subject to the production decisions made by the state, and in return, Aramco Crude Oil Supply Company will receive a tariff paid from Saudi Aramco for the quantities of concentrated crude oil that flow through The network and that tariff is linked to a minimum volume of these quantities.

Saudi Aramco’s president and chief executive officer, Eng. Amin Al-Nasser said the deal would strengthen the company’s capital structure and maximize shareholder returns.

Aramco Group’s net profit is down 44 percent due to lower oil prices

With the decline in crude oil prices and the decline in global demand due to the Corona epidemic, the net profits of Saudi Aramco Group in 2020 decreased by 44.4% compared to 2019, reaching 41 billion euros.

The net profit achieved by Aramco reached 41 billion euros in the year 2020, which represents a 44.4% decrease from the year 2019, due to the decline in crude oil prices with the decline in global demand due to the Covid-19 epidemic. Aramco has revealed a successive decline in profits since it began announcing its performance results in 2019.

The Saudi group indicated in a statement that it “achieved a net income of 184 billion Saudi riyals (49 billion dollars, 41 billion euros) in 2020,” compared to 88.2 billion dollars (73.8 billion euros) in the previous year. And the group considered that it went through “one of the most difficult and challenging years of this era.”

It pointed out that “the revenues of the sector were affected by a sharp decline in crude oil prices, a decline in its sales, and low-profit margins in the refining and chemical business.”

But compared to other companies in the sector, which also recorded large losses, the group, which floated its shares on the stock exchange in 2019, said that it “demonstrated its strong financial resilience in the most difficult period in the energy sector.”

This situation has put pressure on public finances as Riyadh seeks ambitious billions of dollars in projects to diversify the oil-dependent economy. Saudi Arabia, the world’s largest crude oil exporter, was hit last year by sharp price cuts and sharp production cuts.

In recent weeks, the price of crude oil rose to more than sixty dollars a barrel. However, analysts indicate that the Saudi giant is preparing for a possible new wave of the spread of the Coronavirus that may jeopardize the timid global economic recovery and a further decline in global demand for crude oil.

With the increase in the pace of pollination campaigns globally, the giant Saudi group said it was looking forward to a rise in oil demand, especially in Asia and other parts of the world.

Analysts say that the company’s debt levels rose last year as it provided generous dividends to its shareholders despite the decline in its profits.

The company confirmed that it had fulfilled its obligation to pay dividends of $ 75 billion to shareholders in 2020, an amount that basically exceeds the declared profits.


It should be noted that Bloomberg reported in June that Aramco had cut hundreds of jobs in an attempt to reduce costs. Aramco was listed on the Saudi stock exchange in December after the world’s largest initial public offering (IPO), valued at $ 29.4 billion, against the sale of 1.7 percent of its shares.

Floating the delinquent Suez Canal ship after disrupting the shipping lane for about a week

The Egyptian Suez Canal Authority announced the start of the floatation of the giant container ship EverGiven after its delinquency caused the suspension of movement in the shipping lane for about a week, which had negative effects on global trade.

The ship’s course was significantly modified by 80% and its distance from the shore by 102 meters instead of 4 meters, according to an official statement of the Authority, while oil prices decreased immediately after the announcement of the ship’s float by more than 2%.

Sisi confirms the end of the crisis
The Egyptians succeeded in ending the crisis of the delinquent ship in the Suez Canal despite the enormous technical complexity that surrounded this process from every side, according to Egyptian President Abdel Fattah El-Sisi in a post on the social networking site Facebook.

By returning matters to their normal course, with Egyptian hands, the world reassures the path of its goods and needs that are passed through this central shipping artery, Sisi added, thanking everyone who contributed technically and practically to ending this crisis.

30% of global trade containers and 1.74 million barrels of oil per day pass through the Suez Canal

The Suez Canal is currently capturing the world’s attention, after the traffic in it stopped, due to the delinquency of a huge container ship while crossing the new branch of the canal, as part of the southern convoy on its journey coming from China, bound for the Dutch city of Rotterdam.

The severe storm, which hit the country last Tuesday morning, caused the crew of the Evergiven Panamanian ship to become invisible, with winds reaching 40 knots, which made the crew lose control of it, hit the bottom, and veered off course.

A long column of 185 ships, loaded with thousands of tons of petroleum, grains, and other goods, formed around the waterway of the canal, according to Bloomberg, in addition to dozens of containers stopping in the Mediterranean, which led to a decline in global trade movement, as the Egyptian Canal acquired 10 % To 12% of the volume of international trade flows, according to data from the Suez Canal Authority.

The rescue efforts, which continued for the third day in a row, did not succeed in disqualifying the ship loaded with about 224 thousand tons of oil and other products, despite the use of 8 gigantic locomotives, the largest of which reached about 160 tons, which dampens the hopes of international shipping companies, which seem to be You will have to resort to the more difficult option, which is to pass around Africa through the Cape of Good Hope Road, and the high cost it carries, according to experts.

What does the Suez Canal stop oil shipments mean?
1.74 million barrels per day out of 39.2 million barrels per day of imported crude oil by the sea used the Suez Canal in 2020, according to the company, “Kepler”, for tanker traffic data.
Crude oil and refined products flow in both directions in the 193 km long Suez Canal. In 2020, Europe imported 550,000 barrels per day of crude from sources east of Suez, most of it through the canal, according to Kepler’s figures.

South and East Asia imports through the canal reached 1.27 million barrels per day in June 2020, but deliveries subsequently declined to 310,000 barrels per day in November.
9%, or 1.54 million barrels per day, of global refined product imports, crossed the Suez Canal last year, according to Kepler. Naphtha, a feedstock for the plastics industry, makes up a large portion of the refined product supply that uses the canal.

Two distillate tankers loaded with diesel and aviation fuel were waiting for Thursday to sail towards the Mediterranean, while two tankers were waiting for Nafta to set sail east.

the Suez Canal is trying to rescue a container ship that has obstructed navigation

The Suez Canal Authority is working to rescue and float the giant Panamanian container ship EVER GIVEN, which ran aground on Wednesday morning and caused the disruption of shipping traffic.

Lieutenant-General Osama Rabie, head of the Suez Canal Authority, said in a statement that the rescue units and the authority’s tugs are continuing efforts to rescue and float the ship that ran aground during its passage to the Suez Canal within the southern convoy on its journey coming from China and bound for Rotterdam.

The head of the authority confirmed that the navigation movement has returned and organized again in the canal, seeking by the authority to ensure the regularity of navigation and serve the global trade traffic.

According to a statement issued by the Suez Canal Authority, the accident occurred on Tuesday morning, mainly due to the lack of visibility resulting from bad weather conditions, given that Egypt was passing through a dust storm, as the wind speed reached 40 knots, which led to the loss of the ability to steer the ship, and then its stranding .

OPEC may be forced to extend the production cut until the end of the first half of 2021

The supply of oil stocks may decline, but despite this, the world’s major producers will not yet be able to ease their grip on production, as the recovery witnessed this year will be less than two-thirds of the lost demand in 2020, and the need for production restrictions will remain for many months.

The three major oil agencies in the world (the International Energy Agency, the US Energy Information Administration, and the Organization of Petroleum Exporting Countries) are close to a consensus that the global growth in oil demand on an annual basis in 2021 may reach 5.5 million barrels per day, close to the levels expected. When the International Energy Agency began publishing detailed forecasts for this year last July.

At the time, its outlook was pessimistic, expecting growth of 1.5 million barrels per day less than its peers, but the Energy Information Administration and OPEC have repeatedly reduced their forecasts since.

Demand rose below expectations
Despite the boost given to demand in the winter due to cold weather across most of the Northern Hemisphere and the acceleration of economic activity with the distribution of vaccines, previous expectations of strong growth in demand in the first quarter were dispelled.

Currently, all three agencies believe that global oil demand in the current quarter will not change much from the same period directly last year before the epidemic actually hits oil consumption.

Unsurprisingly, demand is expected to show strong growth on an annual basis in the second quarter, but despite the increase in demand by about 12 million barrels per day, the recovery will still be equivalent to only about three-quarters of the lost demand in the same period last year, and the three agencies see 60% restored. To 65% of last year’s losses, and the range widens to between 60% and 75% in the fourth quarter.

Supply expectations varied
On the supply side, the agencies are moving in different directions. While the International Energy Agency and the Energy Information Administration lowered production expectations from outside OPEC in the first quarter by more than 500 thousand barrels per day due to the impact of the winter storm, “Uri” on US production, OPEC raised its estimates by 230 A thousand barrels.

However, looking at the entirety of 2021, the IEA forecast is not in line with its two peers, and it is the only one of the three that does not see a response from the US shale oil sector to the oil price increases that pushed WTI above $ 60 a barrel until the end of the year.

The Energy Information Administration raised its expectations for non-OPEC supply in the second half of 2021 by 500 thousand barrels per day, while OPEC strengthened its expectations by more, and both believe that producers in the US shale oil sector will respond to the high prices with more investment and production.

The International Energy Agency is the only one that expects an increase in the world’s need for OPEC crude this year, at 27.32 million barrels per day, currently, an increase of 210,000 barrels per day over last month’s expectations.

In contrast, the Energy Information Administration lowered its estimate of the amount of crude that OPEC should pump to balance supply and demand by 310 thousand barrels per day to 27.23 million barrels, while OPEC lowered its expectations by 25 thousand barrels per day to 27.26 million barrels.

Gold reaches its highest level in a week as yields and the dollar decline

Gold prices rose on Thursday to their highest in more than a week, after weaker inflation data in the United States halted advances in Treasury and dollar yields.

And gold won in spot transactions 0.4 percent to 1733.46 dollars an ounce, after reaching its highest level since the third of March at 1734.55 dollars earlier.

US gold futures rose 0.6 percent to $ 1732.20.

Record US bond yields remained weak, while the dollar fell after Wednesday’s consumer price index data did not change expectations that inflation would exceed the central bank’s target of 2 percent.

The recent high yields threatened the status of gold as a hedge against inflation, as it means a higher opportunity cost of owning the metal that does not generate a return.

Investors are now looking to the European Central Bank’s policy meeting later today to see if policymakers will take any action to curb the rise in yields.

A bill to mitigate the repercussions of Corona in the United States, worth $ 1.9 trillion, finally won approval on Wednesday and is expected to give a strong impetus to the economic recovery.

As for the other precious metals, silver increased 0.5 percent to $ 26.30 an ounce. Palladium fell 0.1% to $ 2,303.11, while platinum gained 1.1% to $ 1,216.32.

Vaccine rollout, U.S. stimulus boost global economic outlook – OECD

The global economic outlook has brightened as vaccine rollouts gain speed and the United States launches a vast new stimulus package, the OECD said on Tuesday, hiking its forecasts.

The world economy is set to rebound this year with 5.6% growth and expand 4.0% next year, the Organisation for Economic Cooperation and Development said in its interim economic outlook.

That marked a sharp increase from its last outlook in early December when the Paris-based policy forum forecast global growth of 4.2% this year and 3.7% next year.

People wait in a line stretching inside the Jacob K. Javits Convention Center on midtown Manhattan’s west side, to receive a dose of the coronavirus disease (COVID-19) vaccine at the site which has been converted into a mass vaccination center in New York City, New York, U.S., March 6, 2021. REUTERS/Jeenah Moon

“Not vaccinating fast enough risks undermining the fiscal stimulus that has been put in place,” OECD chief economist Laurence Boone told an online news conference.

Singling out Europe for its slow rollout, she said government money injected into the economy risked ending up in consumers’ savings if they cannot soon return to more normal lives.

Global gross domestic product was seen returning to pre-pandemic levels by the middle of this year, albeit with large divergences between countries.

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