Will John Fredriksen's $11 Billion Gamble Pay Off? (Plus three more articles)
Charles Kennedy /Joao Peixe/James Burgess of Oilprice
John Fredriksen, the shipping magnate worth $13.2 billion is one of the most powerful, respected, and even feared men in the global oil and gas market. He controls the world's largest fleet of supertankers, the most valuable deep-water drilling company, and an armada of about 128 other vessels which transport minerals, grains, fish, LNG, etc.
He told Bloomberg that he still "works on gut feeling," and whenever his gut tells him to bet, his companies, Frontline 2012 and Seadrill, make the move.
Currently his gut is telling him to invest in rigs and tankers. He's investing $7 billion, via his company Seadrill, in 18 deep water rigs, and $4 billion in nearly 50 vessels designed to transport LNG, petroleum, propane, and other fuels, with the aim of increasing his dominance in the transport of all liquid fuels.
He said that whilst the petroleum growth forecasts and economy are currently unfavourable, they are too unpredictable to be the basis for any decisions. Instead he is making his investments due to the low prices of vessels. Singapore yards are selling deep-water rigs at $535 million apiece, more than 31% lower than in 2008, and Chinese and South Korean shipbuilders are asking only $80 million for their supertankers, half of their cost in 2007.
Fredriksen explains his thinking by confessing that, "basically, I'm a trader. I think as we are sitting here we are very close to the bottom of the market, and I like to be a buyer at the bottom. This is the game."
Other shipowners often follow Fredriksen's lead. When he announced in February that he was building new tankers for his fleet, his rivals raced out and placed orders for 21 of their own. Although he must be careful not to flood the market with too many ships, which could force the price of daily charter down to unprofitable levels.
Seadrill's investment is high risk, and could seal, or destroy Fredriksen's fortune. Some of the new rigs have already been taken on long-term leases by BP, however the companies $10 billion in debt used to finance the investments, is more than double its expected revenue for 2012. If the added number of vessels in the market drives down the charter rates, then Seadrill may find their debts in surmountable, as their profits dwindle.
His next investment will be in developing a fleet of fuel saving tankers, which could drastically cut the daily operating cost of a tanker by as much as 20 percent.
By. Charles Kennedy of Oilprice.com
MIT Develop Simple, Fast, Efficient Method of Cleaning Up Oil Spills
Researchers at the Massachusetts Institute of Technology (MIT) have proposed a new oil spill clean-up technique which is set to be simple, fast, and energy efficient.
MIT hope to use magnets to strip the oil from the water. The whole system will be highly efficient and all parts of the system are recyclable, including the oil extracted from the water.
The idea is simple. The spilled oil would be pumped out of the sea and onto a ship where it is mixed with a water repellent ferrofluid. Ferrofluids are a magnetic liquid which contain tiny nano-magnets in a suspension. The ferrofluid would basically magnetise the oil only, allowing a large set of magnets to separate the oil from the water with an incredibly high degree of efficiency. The ferrofluid can then be separated from the oil in another part of the process.
This method for cleaning oil from water not only achieves an excellent separation, but it also uses far less energy than conventional techniques, and as the whole process can take place on-board a ship there is no need for energy to transport the oil and water mixture to land to be separated.
By. Joao Peixe of Oilprice.com
Global Carbon Trading System on the Verge of Collapse
The Clean Development Mechanism (CDM) is the only global carbon trading system which is designed to create funding to give poor countries access to new energy technologies; and it is on the verge of collapse.
The UN's system has raised billions of dollars over the past seven years to develop renewable energy projects, such as wind farms and solar panels, in developing countries. Its survival is in jeopardy due to the failure of governments to commit to it for the future.
A UN panel reported yesterday that raising investment to help developing countries move away from carbon intensive energy sources would be virtually impossible if the CDM were to collapse. They urged governments to reassure investors by promising to support the system in the future, increasing their current emission targets, and even buying carbon credits themselves.
Joan MacNaughton, the vice chair of the UN panel, told the Guardian that, "the carbon market is profoundly weak, and the CDM has essentially collapsed. It's extremely worrying that governments are not taking this seriously."
Governments have a last chance to pledge themselves to the system when they meet in Qatar in December to discuss climate change.
By. James Burgess of Oilprice.com
Afghanistan's Natural Resources Could Spark Civil War
It is estimated that Afghanistan contains reserves of natural resources, such as oil, gold, iron ore, copper, lithium, etc., which could be worth trillions of dollars, and offers hope for the future to many of the country's poor villages which are situated near the resource deposits. The problem is that officials and industry experts are worried that the potential wealth to be made from the resources, has increased the level of corruption, violence, and intrigue in the country.
With the impending departure of NATO forces in 2014, security in Afghanistan is a major concern, and it is now feared that its mineral wealth could trigger a civil war. Powerful regional warlords are already trying to aggressively expand their territories to include areas with mineral wealth, and the Taliban has started making murderous attacks in areas where resource development is planned.
Western officials suspect the motives behind the rejection of a proposed mining law which was intended to attract foreign investment. The reason given was that it was too generous to Western interests, but some believe that the real reason was to keep foreign companies out.
In Bamian, a poor province rich in natural resources, 12 new security huts have been built across the hillside, a possible sign of the intent to start mining operations there, and also of the expected violence to come as a result.
Mohammad Amin, the chief geologist in the region of Bamian, admitted that "if the Taliban are able to make it to this part of the country, this project will be halted and nobody will be able to work." Unfortunately things are not looking good. The road from Kabul to Bamian is no longer safe for foreigners, and government officials and security forces travelling the region have been subject to a string of attacks.
By. Joao Peixe of Oilprice.com