ILWU Members Approve Long-Awaited Labor Contract for West Coast Ports

Port of Los Angeles (APMT file image)

PUBLISHED AUG 31, 2023 9:15 PM BY THE MARITIME EXECUTIVE

 

The rank-and-file members of the International Longshore and Warehouse Union (ILWU) have voted to approve the tentative labor agreement negotiated by union leadership with the Pacific Maritime Association (PMA) in June. The vote marks the end of a year-long period of uncertainty for shippers and West Coast ports, particularly the primary gateway ports of Los Angeles and Long Beach. 

“The negotiations for this contract were protracted and challenging,” said ILWU International President Willie Adams in a statement. “I am grateful to our rank and file for their strength, to our negotiating committee for their vision and tenacity, and to those that supported giving the ILWU and PMA the space that we needed to get to this result.”

The on-again, off-again talks proceeded slowly and continued long after the expiration of the previous labor contract. The deliberations were marked by several local ILWU labor actions in LA and Seattle, raising concerns that a broader strike could occur. In June, PMA and ILWU finally hammered out a deal with the assistance of acting U.S. Secretary of Labor Julie Su, who stayed with both sides in LA for three days as they talked through the final details.

ILWU did not release the details, but said that the new deal would provide good-paying jobs while improving wages and pensions. According to Reuters, the improvements include a 32 percent pay increase for ILWU members over the course of the next six years. PMA reports that the average earnings for full-time ILWU longshoremen are currently about $200,000 per year, so the raises would bring average dockworker wages to about $260,000 per year by 2029 (not including union clerks and foremen, who earn more.) Employer-paid benefits packages add another $100,000 per year, including 401k, guaranteed-benefit pensions and health insurance coverage. 

After reaching this tentative deal with PMA, the ILWU leadership took it back to their 20,000 members for ratification. Each of the union's 29 locals up and down the West Coast considered the contract and took a vote. On August 31, the ILWU's balloting committee said that 75 percent of the union voted in favor of the new labor agreement. 

The last major dispute between the ILWU and the PMA occurred in 2014-2015, and it resulted in protracted slowdowns and heavy congestion at LA and Long Beach. This time, to hedge against the risk of another long labor action, cargo owners and shipping lines began diverting increasing volumes to ports on the East Coast and Gulf Coast - improving the numbers for ports like Savannah and Houston, but cutting into the market share for LA/Long Beach. 

Now that a new labor agreement is in place, the twin San Pedro Bay ports plan to work hard to bring volume back to the West Coast. 

"We've got to go back out there now and bring some strategy and value to the marketplace, because about 15 percent of our cargo has moved away from us," Port of LA chief Gene Seroka told Bloomberg in June. "We've got to recalibrate this and have an all-out industry push to bring this cargo back." 

The Market Thinks There Will Be A Sanctions-Easing Deal With Iran

MARKETS ARE NEVER WRONG

By Alex Kimani - 

Prospects of reviving the Iran nuclear deal have swung dramatically, from near certain in March 2022 to almost nil by the end of the year and somewhere in the middle currently. Although prospects of a deal being signed any time soon appear dim, relations between Washington and Tehran have warmed up considerably, with the Biden administration unblocking frozen assets and possibly even allowing Iran’s enrichment of uranium. 

The U.S. administration might not admit it openly, but it has looked the other way and allowed Iran oil sales to hit record highs--obviously happy to keep the markets flooded in a bid to keep oil prices low.

Iranian crude exports exceeded 1.5 mb/d in May, the highest level since 2018 despite the country still being under U.S. sanctions. Tehran says it has boosted crude output to above 3 million bpd, again the highest since 2018. All that oil from Iran is certainly playing a part in keeping the markets looser than what Saudi Arabia and OPEC might hope for.

Earlier, reports emerged that the U.S. and Iran are making progress after resuming talks on a nuclear deal, a move that could ease sanctions on Iran's oil exports. Israel's Haaretz newspaper reported that the talks are moving forward more rapidly than expected, with the possibility of a deal being struck in a matter of weeks. Deal terms are likely to include Iran ceasing its 60% and higher uranium enrichment activities in return for permission to export as much as 1M bbl/day of oil.

A successful nuclear deal could change the oil markets, with former Iran oil minister Bijan Namdar Zanganeh saying that his biggest dream has always been to increase Iran’s oil output to six million barrels per day; earn $2 trillion through oil exports over the next two decades and use the income to invest in the country’s development. 

Iran’s current production is considerably lower than the 2018 peak at 3.7 mb/d. Boosting production from the current level to anywhere close to 6mb/d could, however, take several years at the very least due to years of underinvestment.

By Alex Kimani for Oilprice.com

UN Experts Claim Saudi Aramco May Be Violating Human Rights With Oil Production

By Irina Slav - Aug 28, 2023

According to UN human rights experts, Saudi Aramco is threatening human rights by expanding its oil production due to “the adverse impacts on human rights caused by activities such as the exploitation of fossil fuels which contribute to climate change.”

The concern was expressed in a letter authored by a group of unnamed UN human rights experts and sent to the Saudi state energy giant.

Reuters noted in a report that the letter did not spell out in detail what the adverse impacts of oil production on human rights was, but the Financial Times said that Aramco was the world’s biggest corporate CO2 emitter.

The latter statement is contradicted by this rating of the world’s biggest emitters, which was compiled by the Carbon Disclosure Project. According to the CDP, the biggest emitter in the world is China Coal, which accounts for 14.3% of total global emissions.

In that rating, Saudi Aramco is second, with 4.5% of global emissions.

What’s more interesting in the FT report, however, is the fact that the UN experts had also contacted the banks that Aramco works with, including Citi and BNP Paribas, to warn them that their Saudi clients may be violating human rights laws.

There was a hint of a threat in the letter to the banks, as it said that if the lenders were aware of Aramco violating human rights and failed to act on this awareness, “it can be viewed as enabling the situation”, the FT reported.

“Businesses should avoid infringing on human rights by taking proactive steps to identify, prevent, mitigate and address adverse impacts with which they are involved, including impacts resulting from climate change,” the UN officials said.

Energy Intelligence’ OPEC correspondent Amena Bakr noted that the authors of the letter to Aramco and its banks had given no reason why they had only targeted the Saudi energy giant.

By Irina Slav for Oilprice.com

Eni Begins Oil And Gas Production Offshore Cote d’Ivoire

By Tsvetana Paraskova - Aug 28, 2023

Italy’s energy major Eni said it started on Monday oil and gas production from an offshore field in Cote d’Ivoire in West Africa less than two years after the discovery.

Production at the Baleine field, currently the largest oil and gas discovery in Ivorian sedimentary basin, started via a refurbished and upgraded Floating Production Storage and Offloading (FPSO) unit capable of handling up to 15,000 barrels per day of oil and around 25 Mscf/d of associated gas. With a second and third phase of development, the field will see production rise to 150,000 bpd of oil and 200 Mscf/d of gas, the Italian company said.

The gas production from the Baleine field will be delivered onshore through a newly constructed pipeline, enabling Cote d’Ivoire to meet its domestic electricity market demands, facilitate energy access, and strengthen its role as a regional energy hub for neighboring countries, Eni noted.

Europe and Eni are also increasingly betting on Africa to import large volumes of pipeline gas and LNG to replace pipeline gas supply from Russia, which was Europe’s top gas supplier before the Russian invasion of Ukraine.

Eni has been particularly active in securing more natural gas supply for Europe from Africa and has fast-tracked projects in Africa to meet Europe’s gas demand in the absence of Russian pipeline deliveries.

In April, Eni launched the construction works for the first natural gas liquefaction project in the Republic of the Congo, which is expected to supply LNG to Europe.

Early this year, Eni’s chief executive Claudio Descalzi told the Financial Times in an interview that Europe should look to Africa for a “south-north” energy axis that would deliver gas from Africa to the EU.

At the announcement of the 2022 results in February, Descalzi said, “During the year, we were able to finalize agreements and activities to fully replace Russian gas by 2025, leveraging our strong relationships with producing states and fast-track development approach to ramp-up volumes from Algeria, Egypt, Mozambique, Congo and Qatar.”  

The U.S. Says Iraqi Kurdistan’s Oil And Gas Are Important Supply

By Charles Kennedy - Aug 28, 2023, 

The United States considers Kurdistan’s oil and gas industry an important source of supply, the newly appointed US Consul General to Erbil said on Monday.

Mark Stroh, who was recently appointed as the new US Consul General to the capital city in the Kurdistan region, met with Kurdistan’s Minister of Electricity, Kamal Mohammad Saleh, to discuss the energy and oil industries, according to a readout from the meeting reported by Shafaq News.

Last week, Stroh met with the Kurdistan Regional Government’s Prime Minister, Masrour Barzani. Stroh highlighted the U.S. commitment “to deepening cooperation and fostering strong bilateral ties with the Kurdistan Region,” the Kurdistan Regional Government (KRG) said in a statement.

During Monday’s meeting with Kurdistan’s Minister of Electricity, the US Consul General discussed issues related with the energy and oil industry and expressed hopes that the federal government of Iraq and the semi-autonomous region of Kurdistan would manage to work together and ratify the new hydrocarbon law.

The two officials also discussed the ongoing half of crude oil exports from Kurdistan via a pipeline through Turkey and the Turkish port of Ceyhan on the Mediterranean.

Turkey is in the process of brokering a deal between the central Iraqi government and the authorities of Kurdistan on sharing the revenues from crude oil production in the northern Iraqi region. The deal, according to Bloomberg, which cited unnamed Turkish officials, would help resume the operation of the pipeline that takes the crude from Kurdistan to the Turkish port of Ceyhan.

Kurdistan’s crude oil exports were halted on March 25 by the federal government of Iraq. The halt came after the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan.

Iraq, OPEC’s second-largest producer after Saudi Arabia, is currently exporting oil only via its southern oil export terminals. Around 450,000 bpd of exports from the northern fields and from Kurdistan continue to be shut in due to the dispute. 

Turkey Tries To Broker Revenue-Sharing Deal On Kurdish Oil

By Charles Kennedy - Aug 28, 2023

Turkey is in the process of brokering a deal between the central Iraqi government and the authorities of the semi-autonomous Kurdistan region on sharing the revenues from crude oil production in the northern Iraqi region.

The deal, according to Bloomberg, which cited unnamed Turkish officials, would help resume the operation of the pipeline that takes the crude from Kurdistan to the Turkish port of Ceyhan.

Kurdistan’s crude oil exports were halted on March 25 by the federal government of Iraq. The halt came after the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan.

Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq. The ICC ruled that Turkey owned Iraq damages to the tune of $1.5 billion.

The suspension of oil flows out of northern Iraq and Kurdistan via Ceyhan forced companies to either curtail or suspend production because of limited capacity at storage tanks. At the time, this pushed oil prices higher for a while.

Iraq, OPEC’s second-largest producer after Saudi Arabia, is currently exporting oil only via its southern oil export terminals. Around 450,000 bpd of exports from the northern fields and from Kurdistan continue to be shut in due to a dispute over who should authorize the Kurdish exports.

Since then, attempts to reach a final agreement and restart the pipeline have not really stopped but they have also failed to produce any specific results. According to Turkey, the damages are an internal Iraqi matter that Baghdad and Erbil should settle. Baghdad, on the other hand, wants Turkey to collect the dues from Erbil. Erbil, finally, has laid a claim to all oil export revenues for crude produced in Kurdistan.

By Charles Kennedy for Oilprice.com

China’s Sinopec Chooses Aramco Gas Project Over Shell Singapore Refinery

By Alex Kimani - Aug 28, 2023

China’s giant refiner Sinopec Corp. has said it will not acquire Shell Plc’s (NYSE:SHEL) refinery or petrochemical plant in Singapore but will instead invest in Saudi Aramco’s Jafurah natural gas project alongside TotalEnergies (NYSE:TTE). Sinopec engages in the oil and gas and chemical operations in Mainland China, Singapore, and internationally. The company explores and develops oil fields, produces crude oil and natural gas, processes and purifies crude oil, and manufactures and sells petroleum products. Last year, Sinopec was among several Chinese companies that delisted from the NYSE.

Saudi Aramco is currently in a "listening phase" on proposals from refining giant Sinopec andTotal for a slice of a shale gas development project worth about $10 billion. Saudi Aramco has said it expects the giant gas field to produce about 2 billion cubic feet of gas per day by 2030, at a total cost of $24 billion.

Last year, Saudi Aramco announced that it was kicking off the biggest shale gas development outside of the United States. Saudi Aramco said it plans to spend $110 billion over the next couple of years to develop the Jafurah gas field, which is estimated to hold 200 trillion cubic feet of gas. The state-owned company hopes to start natural gas production from Jafurah in 2024 and reach 2.2 Bcf/d of sales gas by 2036 with an associated 425 million cubic feet per day of ethane. 

Aramco later announced that instead of chilling that gas and exporting it as LNG, it will instead use it to make much cleaner fuel: Blue hydrogen. The company said that its immediate plan was to produce enough natural gas for domestic use to stop burning oil in its power plants and convert the remainder into hydrogen. Blue hydrogen is made from natural gas either by Steam Methane Reforming (SMR) or Auto Thermal Reforming (ATR) with the CO2 generated captured and then stored. As the greenhouse gasses are captured, this mitigates the environmental impacts on the planet.

By Alex Kimani for Oilpirce.com

First-Ever Gulf Coast Wind Auction Could Be A Boon For U.S. Green Hydrogen

By Michael Kern - Aug 28, 2023

In a groundbreaking move, the Biden administration is set to hold its first-ever offshore wind auction in the Gulf of Mexico this Tuesday. Unlike previous offshore wind auctions concentrated in the Northeast, this one aims to fuel a green hydrogen supply chain for the Gulf Coast's extensive industrial sector.

According to Cheryl Stahl, principal project manager at DNV, the Gulf Coast offers a unique opportunity for innovation. 

"When we get to the Gulf, (offshore wind) will start becoming much more disconnected from the grid," she said. "The Gulf gets to be sort of a breeding ground for innovative solutions."

The Bureau of Ocean Energy Management (BOEM) will auction three areas off the coasts of Louisiana and Texas. John Filostrat, a BOEM spokesperson, emphasized that the Gulf "is uniquely positioned to transition to a renewable energy future, including the development and implementation of the production and use of green hydrogen."

Big players like Shell, Invenergy, and TotalEnergies are among the qualified bidders. 

These companies have previously highlighted the Gulf's potential for green hydrogen production, leveraging its existing port and pipeline infrastructure.

However, the Gulf auction faces challenges. Unlike the Northeast, states like Texas and Louisiana lack legal mandates for clean energy. They also have slower average wind speeds, higher hurricane risks, and lower retail power prices. 

Alon Carmel, a partner at PA Consulting, noted that "it's harder to justify an investment decision" in the Gulf, but tax credits for hydrogen could make the venture more appealing.

Lacy McManus of Greater New Orleans Inc sees the existing petroleum industry as a potential market for green hydrogen. 

"They want to start replacing these gray hydrogen feedstocks and fuel sources with green," McManus said. "Wind provides that at the scale and capacity that we need in the industrial sector."

The Gulf Coast offshore wind auction is a bold step toward a green hydrogen future, despite the region's challenges. It's a move that could redefine the Gulf as not just an oil and gas hub, but also a center for renewable energy innovation.

By Michael Kern for Oilprice.com