Nuclear tax credits underpin growth, says Constellation

27 February 2024

Federal nuclear production tax credits are providing the foundation for the USA's largest producer of carbon-free energy to continue to invest in growth opportunities, Constellation Energy said in its 2023 results announcement and 2024 earnings forecast.

Constellation recently marked its second anniversary as a standalone company since the separation of Exelon Generation's regulated utility and competitive energy businesses (Image: Constellation)

"The most valuable commodity in the world today remains clean energy that can be depended on in every hour of every day, and no US company is better positioned to deliver on that promise than Constellation, which has more clean, reliable nuclear capacity than all other US competitive generators combined," Constellation President and CEO Joe Dominguez said. "State and federal policies, bipartisan political support, public opinion surveys and increased customer demand for reliable and clean energy all point to strong and growing support for nuclear energy to power our economy for decades to come … we see a growing landscape of opportunities to continue building our business and lead the clean energy transition."
 
The wide-ranging Inflation Reduction Act (IRA), signed into law by President Joe Biden in August 2022, includes support for existing and new nuclear capacity. Constellation said nuclear production tax credit (PTC) in the act is providing a stable foundation that will allow it to continue investing in growth opportunities, including by adding clean energy generation to its fleet through measures including uprates, licence extensions and asset acquisitions while also returning capital to shareholders. "The PTC provides revenue visibility and also preserves Constellation’s ability to capture upside from tightening power market conditions," the company said.

Earlier this month, Constellation filed an application with the Nuclear Regulatory Commission for a 20-year licence renewal for the Clinton plant in Illinois, which would allow the single-unit boiling water reactor to continue providing energy to the region until 2047.

The company said it was targeting long-term base earnings per share growth of at least 10% through the decade "backstopped" in part by the nuclear production tax credit. Monetising the value of the "reliable, carbon-free nuclear power" generated at Constellation's Clean Energy Centers through hourly carbon-free matching solutions, behind-the-meter opportunities such as data centres or hydrogen, government clean energy procurements or higher market prices offer further opportunities for it to grow its base earnings, it added.

The company's nuclear fleet in 2023 "continued to achieve unmatched reliability, allowing us to deliver carbon-free energy to our customers in all hours of the day under some of the harshest weather conditions in decades," Dominguez said. "We took a disciplined approach to growing our business in 2023, completing our acquisition of a partial stake in the South Texas Project nuclear plant, repowering our wind assets, taking steps to extend the life of our nuclear plants and investing in new equipment to increase their output. We are delivering our hourly-matched carbon-free energy product to top sustainability leaders, and our results reflect growing acknowledgement by our customers that nuclear energy delivers unique value that can’t be matched anywhere in the marketplace."

Constellation's nuclear assets generated a total of 174,047 GWh in 2023, up from 173,350 GWh in 2022.

KHNP, Centrus enhance cooperation in fuel supply

27 February 2024

Korea Hydro & Nuclear Power (KHNP) has signed a Letter of Intent with US nuclear fuel and services company Centrus Energy to ensure a stable supply of nuclear fuel. It follows the signing of a memorandum of understanding between the two companies in April last year.

The signing of the Letter of Intent (Image: KHNP)

The Letter of Intent (LOI) outlines substantive business objectives to enhance uranium resource security and nuclear cooperation between KHNP and Centrus, KHNP said. Through this, KHNP aims to diversify the supply of enriched uranium used as nuclear fuel to enhance fuel supply stability. Additionally, KHNP expects to strengthen nuclear cooperation between South Korea and the USA by establishing strategic relationships with Centrus.

"As a result of cooperation with Centrus, KHNP has opened the possibility of securing fuel for future reactors as well as for existing commercial reactors," KHNP said.

"Through the signing of this LOI, both parties will engage in concrete discussions regarding stable nuclear fuel supply and plan to continue exploring business opportunities in the nuclear sector by expanding the future nuclear fuel supply chain," KHNP CEO Hwang Joo-ho said.

On 25 April 2023, KHNP signed a memorandum of understanding (MoU) with Centrus, through which the two companies planned to enhance mutual cooperation for a stable fuel supply while exploring opportunities for expanding their businesses.

At the time of signing the MoU, KHNP said it would "increase the stability of fuel supply and demand by diversifying suppliers of enriched uranium used as nuclear power plant fuel and contribute to strengthening Korea-US nuclear cooperation by establishing a strategic partnership with US enrichment companies. This is an important achievement that strengthens supply chain cooperation with allies in a situation where resource security has become more important than ever amid recent geopolitical instability and global supply chain crisis".

KHNP operates South Korea's 26 power reactors, which with a combined capacity of some 26 GWe generate about one-third of the country's electricity.

In December, KHNP launched its new Innovative SMR (i-SMR) - an integrated pressurised water reactor type nuclear power plant with an electrical output of 170 MWe. It is being developed according to a development roadmap, with the goal of completing the standard design by the end of 2025 and obtaining standard design approval in 2028.

In November last year, Centrus Energy produced the USA's first 20 kilograms of high-assay low-enriched uranium (HALEU). Some of the advanced reactor technologies that are currently under development use HALEU fuel - enriched to between 5% and 20% U-235 - which enables the design of smaller reactors that produce more power with less fuel than the current fleet, as well as systems that can be optimised for longer core life, increased safety margins, and other increased efficiencies. At present, only Russia and China have the infrastructure to produce HALEU at scale.

Argentina's RA-10 research reactor aiming for 2026 operation

27 February 2024

The RA-10 multipurpose research reactor is now about 80% completed, with its reflector tank set to be installed as construction enters its final phases, Argentina's Foreign Minister Diana Mondino was told during a tour of the facility.

(Image: Argentina's Ministry of Foreign Affairs)

Mondino, who assumed office in December after the election of Javier Milei as Argentina's President, praised the progress taking place at RA-10, and also the neighbouring CONUAR nuclear fuel plant. She said the foreign ministry would continue to support the nuclear sector's export efforts, noting "the opportunities that open up for Argentine, if they are well managed and if we manage to demonstrate quality".

Manager of the RA-10 project, Herman Blaumann, gave an update on progress, saying that it was now 80% complete: "The civil work is already finished and in terms of supplies and installations the progress is 75%. This week the reactor's reflector tank will arrive ... the installation of which is another key step in the work."

He also said that the aim was to fill the reactor pool in December, and then in July 2025 pre-operational tests will begin before it becomes operational in 2026.

Argentina's National Atomic Energy Commission (CNEA) says the RA-10 - a 30 MWt open-pool research reactor - will be used for the production of medical radioisotopes, including the capacity to cover 20% of the world demand for molybdenum: "Technetium is obtained from molybdenum, and widely used in nuclear medicine ... it will also be possible to produce other radioisotopes that are not made in the country today and that are widely used in the world, such as lutetium, which is applied to treat prostate cancer and other pathologies, as well as others for use in agriculture and the industry".

The RA-10 project was approved by the government and was officially started by CNEA in June 2010. Argentina's Nuclear Regulatory Authority granted a construction licence for RA-10 in November 2014. The civil works for the reactor began in 2016. Nuclear technology firm INVAP is involved in the design and construction of the reactor facility and related installations, playing the role of main contractor. The assembly of the RA-10 pool - which will house the core of the reactor - was completed in August 2018.

The RA-10 will replace the RA-3 reactor on the same site. This 10 MWt pool-type reactor began operations in 1967. As well as producing radioisotopes it will also provide new research and training opportunities and will have associated facilities such as the Argentine Neutron Beam Laboratory (LAHN) and the Laboratory for the Study of Irradiated Materials (LEMI).

CNEA says that more than 80 companies in Argentina are involved in the work, with the minister also told about the hopes for RA-10 "production of silicon doped by neutron transmutation, a very high quality raw material for the development of advanced electronic applications. And it will produce sources of industrial iridium for the evaluation of the integrity and quality of large constructions and components".

Meanwhile, there was also a key moment this week with the passing of tests of the reflector tank, manufactured by INVAP and designed by CNEA, for the new reactor. INVAP Vice President Felipe Albornoz said it was an important milestone "being able to finish a component that is the heart of the RA-10 reactor, along with the reactor core. All the rest of the facility is built around these components and being able to imagine it, design it and then manufacture it in our country, with our people in Bariloche, is a reason for pride and a reason for celebration".

CNEA President Adriana Serquis said it is an important moment "both for what it means and a new milestone for the nuclear development of our country, as well because it will provide us with new capabilities that are highly required internationally, whether in the area of ​​medicine, with the production of radioisotopes, and the facilities for the production of silicon, the testing of materials and the enormous advance for the area of ​​science and technology in the use of neutrons".

The reflector tank weighs 2540 kilogrammes, is 2 metres in diameter and 1.4 metres tall. Its installation will allow the assembly of the reactor pool internals.

Blaumann said: "The project is approaching its final stage. The reflector tank is the most complex component of the reactor and at the same time critical for all its applications to be developed."

Paks II suppliers event outlines opportunities for companies

27 February 2024

The information session for those interested in gaining contracts with the Paks II nuclear power plant construction project was attended by 350 people from 180 companies, including 150 from Hungary.

(Image: Paks II)

The Paks II project was launched in early 2014 by an intergovernmental agreement between Hungary and Russia for two VVER-1200 reactors to be supplied by Rosatom, with the contract supported by a Russian state loan to finance the majority of the project. The construction licence application was submitted in July 2020 to construct Paks II alongside the existing Paks plant, 100 kilometres southwest of Budapest on the banks of the Danube river. The construction licence was issued in August 2022 and a construction timetable agreed last year which set out plans to connect the new units to the grid at the beginning of the 2030s.

The 2014 goal of the project was for 40% of the project to go to domestic companies, and the Russian side undertook to select 55% of suppliers in accordance with European Commission regulations.

Gergely Jákli, chairman and CEO of Paks II, told those attending that the expansion of nuclear capacity in Hungary was needed to improve security of supply, and to meet the European Union's climate change targets and said a significant market would open up for companies taking part in the project, because of the widespread plans for life extension projects - and new nuclear - in other countries around Europe and further afield.

Those attending were given information on the likely opportunities and requirements for suppliers, including nuclear qualifications, and the procedure for contracting and performing works at the site.

Vitaly Polyanin, from Rosatom's Atomstroyexport (ASE) and director of the Paks II construction project, said: "Currently, intensive preparations are under way for the pouring of the 'first concrete', which could take place in 2024. The Hungarian branch of ASE will do everything for maximum localisation and participation of all interested companies in the project."

The existing four units at Paks are VVER-440 reactors that started up between 1982 and 1987 and they produce about half of the country's electricity. Their design lifetime was for 30 years but that was extended in 2005 by 20 years to between 2032 and 2037. In December 2022, the Hungarian Parliament approved a proposal to further extend their lifespan, which means the plant could keep operating into the 2050s.

Paks II is the first Russian nuclear power plant construction project in the European Union, with Hungary deciding to press ahead with the project despite wider European Union sanctions imposed on Russia.

Researched and written by World Nuclear News

Anti-Oil Activists Shift Focus to Insurers

By Irina Slav - Feb 26, 2024

• Big oil has been one of the main recipients of critique from activists.
• 
  
• Now, activists have also started attacking proxy industries such as banks, which lend to the oil and gas industry.
• 
  
• Despite the pressure, insurers have not started fleeing the oil and gas industry.

Big Oil and its allegedly exclusive role in bringing about apocalyptic climate change has been the ultimate villain in the eyes of climate activists. Calls for a forceful death of the industry have become the norm, and protests against oil and gas production are an everyday occurrence in the West.

But activists are not only targeting their ultimate villain directly. They are also attacking proxy industries such as banks, which lend to the oil and gas industry. The offensive is yielding results: bank after bank pledges an end to funding for new oil and gas projects. Besides banks, however, there is another major pressure point activists are targeting: insurance.

Last summer, a group of climate activist organizations organized protests against nine insurance companies, calling on them to refuse to provide coverage for the Eastern African Crude Oil Pipeline project.

The EACOP has, since its inception, been a huge problem for environmentalists, who have cited the inevitable increase in emissions from the production and transportation of oil along the new piece of infrastructure and the risk of spills. To prevent all this, they chose to pressure the insurers of the project. And it worked.

A total of 28 insurance companies so far have declared they would not partake in the insurance of EACOP, the East African reported earlier this month. The reason for this unwillingness to work with the oil industry—climate activist pressure

As a result of that pressure, EACOP is, per the above report, hanging in the balance because there are not enough local insurers that can shoulder the burden of such a massive project. Chinese insurers are an option, but they are in no hurry to decide. In the meantime, Uganda's oil sits in the ground.

From the perspective of the activists, this is a small win in a sea of losses. Euronews reported this month that U.S. insurers continue to provide coverage to the oil and gas industry, citing 2019 numbers from a survey done by a slew of climate advocacy organizations. The survey showed that U.S. insurers held oil- and gas-related assets worth $536 billion as of that year, and the number for the next four years was likely to be similar, according to them. The solution to this perceived problem? Protests.

Radical environmentalists from Extinction Rebellion are currently launching a week-long series of protests targeting the insurance industry in London in a bid to get their message across. The message: stop "enabling" the oil and gas industry.

"If fossil fuel companies have no insurance for their massive projects, the entire financial risk falls on their shoulders, so if something goes wrong, they are liable for whatever happens," one Extinction Rebellion member explained to Euronews.

The explanation echoed an earlier one offered by 23 climate NGOs in a letter to a group of large insurers last year. "Insurers, as society's risk managers, have a special responsibility to act and the power to drive change: without insurance most new fossil fuel projects cannot go ahead and existing ones cannot continue to operate," the climate activists wrote at the time.

Despite the pressure, insurers have not started fleeing the oil and gas industry—yet. Indeed, many of the largest ones are also among the biggest insurers of oil and gas projects, according to an annual survey by yet another climate activist group, Insure Our Future.

Eight of the ten top individual insurers of oil and gas, the survey found, were from the West, with one insurer from China and Russia each also making the top 10 list. That included names such as Allianz, AXA, Zurich Re, and Chubb and AIG from the U.S.

In fact, according to the same group—Insure Our Future—80% of insurers and 53% of reinsurers do not have any restrictions on their business with the oil and gas industry. On the plus side, from the group's perspective, insurers have shrunk the business they do with coal producers, which has made it harder for the latter to secure coverage for new projects.

Yet it appears that this is nowhere near enough—neither the mass unwillingness among insurers to provide coverage for EACOP nor companies' pullout from coal. "Insurers have demonstrated that they can accelerate the shift away from fossil fuels through their coal exit policies," Insure Our Future said last November in a report cited by Bloomberg. "They urgently need to adopt similar policies for oil and gas."

If developments around the EACOP project are any indication, this might eventually happen, not least because there is a persistent argument that the insurance industry is suffering losses from increasingly frequent extreme weather that is caused by the use of the hydrocarbons that their clients from the oil and gas industry produce.

Insurers appear to believe that argument, which means they are halfway there when it comes to withdrawing from oil and gas. It may yet be a while before they start refusing coverage, but it is a distinct possibility, as losses from some severe weather events, such as thunderstorms, remain on a steady upward trajectory.

Cruise Looks To Relaunch Robotaxi in Texas After San Francisco Controversy

By ZeroHedge - Feb 26, 2024

• Cruise executives are in discussions with officials in Houston and Dallas, among other metro areas, about relaunching robotaxi testing with safety drivers on public roads.
• 
  
• The decision on which metro areas to restart operations in has yet to be made, and Cruise aims to rebuild trust with regulators and the public before deployment.
• 
  
• Cruise's suspension followed a pedestrian accident in San Francisco, leading to regulatory scrutiny, license revocation, executive changes, and layoffs, while other self-driving cars faced attacks in the area.

General Motors Co.'s Cruise autonomous driving unit is preparing to resume robotaxi testing with safety drivers in Houston and Dallas metro areas in the coming weeks, following the nationwide grounding after one of its robotaxis ran over a pedestrian in San Francisco in October, according to Bloomberg News. 

People familiar with the conversations say Cruise executives and officials in several metro areas, including the two Texas cities, are discussing the return of the robotaxi with safety drivers on public roads. Before the accident last year, the company had hundreds of robotaxi operating across San Fran, Austin, Houston, and Phoenix. 

"We have not set a timeline for deployment," Cruise spokesman Pat Morrissey wrote in a statement. 

Morrissey continued: "Our goal is to relaunch in one city with manually driven vehicles and supervised testing as soon as possible once we have taken steps to rebuild trust with regulators and the public. We are in the process of meeting with officials in select markets to gather information, share updates and rebuild trust."

Cruise's collapse in public trust came last October when one of its robotaxi dragged a pedestrian in San Francisco. 

This sparked claims by regulators that Cruise execs withheld key footage and details about the incident.

And the fallout resulted in California pulling Cruise's license to operate the taxis. The company also fired top executives and laid off 25% of its workforce. A new chief safety officer was recently brought on board. 

The people added Cruise's decision on which metro areas to restart robotaxi operations has yet to be made. 

Meanwhile, crowds in downtown San Fran destroyed a Waymo self-driving car earlier this month. 

This comes after several attacks on self-driving cars in the metro area.

By Zerohedge.com

Red Sea Disruptions Spark Oil Tanker Shortfall

By ZeroHedge - Feb 27, 2024

• Only two new supertankers are expected to join the global fleet in 2024, the lowest number in forty years.
• 
  
• Houthi attacks on commercial shipping and airstrikes by the US and UK have forced tankers to navigate around Africa, leading to longer sails and tighter capacity on the seas.
• 
  
• Tanker rates have surged, and the tanker order book is expected to remain extremely low in the coming years, exacerbating the shortage.

The Red Sea shipping crisis has been an explosive mess for the international shipping community and the global economy. With oil tankers increasingly steering clear of the southern Red Sea and the Bab el Mandeb Strait, shipping capacity has rapidly tightened, pressuring daily rates higher. 

Bloomberg reports only two new supertankers will join the global fleet in 2024, the fewest additions in forty years and about 90% below the yearly average over the last two decades. 

"The impact of the diversions can be seen every day in shipping in general, and I would say crude oil and product tanker shipping," specifically, Alexander Saverys, CEO of Euronav NV, one of the largest tanker owners in the world, told investors during an earnings call earlier this month. 

Saverys said low deliveries and an aging global fleet are a perfect recipe for a positive outlook on tankers. 

We have stated that Houthi attacks on commercial shipping are the "next supply-driven inflation shock." As a result, a key Clean Tanker rate tracked by the Baltic Exchange has moved north of $100,000 per day due to the disruptions, caused longer sails, which tightens capacity on the seas. 

The US and UK airstrikes on Houthi militants in Yemen were one of the major drivers that sent tanker rates soaring in the second half of January. Many of these tankers, hauling fuels like gasoline and diesel, have been forced to navigate around Africa. 

Charts from the latest Goldman Oil Tracker (full report available to pro subscribers in the usual place) show flows through the Bab-El-Mandeb continue to deteriorate and remain down 1.8mb/d (or 27% on a 14DMA Basis) since disruptions started on December 18. 

Goldman also shows tanker rates have surged.

"The situation is tight in the tanker market, in particular for crude oil tankers," said Enrico Paglia, research manager at Banchero Costa, a shipping services firm. He warned, "It will be even tighter in the future."

Bloomberg noted, "The tanker shortage comes as the efficiency of the global fleet is faltering. In addition to many vessels sailing around southern Africa instead of through the Red Sea and Suez Canal, a burgeoning dark fleet means that many ships are only available to certain customers." 

Meanwhile, data from Banchero Costa shows the tanker order book will be extremely low in the next couple of years: Only five new tankers are expected to join the global fleet in 2025. That compares with 42 ships delivered in 2022. 

How long until the next tanker glut?

By Zerohedge.com

Video: Rubymar’s Position is Precarious as Ship Becomes Political Pawn

Rubymar in an undated video from Al-Jumhuriya TV (Youtube)

PUBLISHED FEB 27, 2024 12:27 PM BY THE MARITIME EXECUTIVE

Dramatic video of the crippled bulker Rubymar appeared on TV news reports in Yemen showing the increasingly precarious state of the vessel 10 days after it was struck by a Houthi-launched missile. Efforts to mount a salvage continue to be hampered by the instability of the region and the competing political interests while some reports suggest at the rate the vessel is settling it could be days before it loses sufficient buoyancy to remain afloat.

The video shows the 32,200 dwt bulker (564 feet/172 meters in length) having settled further at the stern. Images obtained by the BBC last week showed the stern deck just barely above the water but in the undated video, it has clearly slipped below the water level. U.S. Central Command warned on Friday that the vessel was still leaking fuel oil and taking on water.

The vessel is also reported to be drifting to the north in the Red Sea despite the earlier indications that it was anchored. It has traveled approximately 37 nautical miles since the reported position when it was struck according to data analyzed by the British news outlet Sky News. They are citing navigational warnings saying the vessel is unmanned and drifting.

 

 

The manager of the vessel Blue Fleet Group told Sky News it was working on plans for the salvage that would include an attempt to stop the fuel leak and tow the ship. They reported the U.S. Navy had offered assistance and said talks are ongoing to find a port willing to accept the ship. Reports have suggested the Rubymar flagged in Belize and linked to UK and Lebanese interests might be towed to Djibouti or Saudi Arabia.

The government of Yemen made statements on Monday saying it was working on the salvage. They said they would be willing to bring the ship to port. Yemeni Water and Environment Minister Tawfeeq Al-Sharjabi made the statement at a press conference in Aden according to the Saba state news agency. He expressed concerns over the environmental issues if the vessel is permitted to sink.

The Houthi leader, Muhammad Ali Al-Houthi, however, took to X (Twitter) writing on February 24, “It is possible to tow the sunken British ship in exchange for bringing relief trucks into Gaza. This is an offer that can be studied.”

Environmentalists are expressing concern citing the report from CENTCOM saying the cargo is 41,000 tons of fertilizer. They highlighted the 18-mile oil slick from the vessel while saying the fertilizer could spill into the Red Sea and worsen this environmental disaster. Earlier reports suggested the ship’s owner was hopeful to salvage the vessel and transfer the cargo to another vessel.

The ship appears to be in increasing danger while reports said salvage companies are concerned about attempting any efforts due to further threats from the Houthis. U.S. officials however have suggested a ceasefire might be put into place in Gaza to coincide with the start of Ramadan on March 10, assuming the vessel could stay afloat that many days without intervention.

Late yesterday, CENTCOM reported U.S. forces took out a range of weapons all ready to be launched following the larger U.S. and UK raids on Sunday. On Monday, U.S. forces destroyed three unmanned surface vessels (USV), two mobile anti-ship cruise missiles (ASCM), and a one-way attack unmanned aerial vehicle (UAV). In a followup on Tuesday, CENTCOM said that American and allied forces shot down another five UAVs over the Red Sea. 

surer who will cover the war risk while the vessel is holding station off Yemen.

U.S. and UK Sanction Iranians, Houthis and "Dark Fleet" Tankers

The U.S. and UK listed individuals and tankers involved in the Iranian oil trade and for supporting the Houthi (file photo)

PUBLISHED FEB 27, 2024 2:57 PM BY THE MARITIME EXECUTIVE

 

 

In a coordinated series of efforts, the United States and the United Kingdom each launched new sanctions against Iran and its commodities trade as well as for efforts supporting the Houthi militants in Yemen. The U.S. and UK jointly targeted the Houthi and their Iranian supporters while the U.S. also took action against two companies registered in Hong Kong and the Marshall Islands that own and operate a tanker used in the Iranian oil trade.

“Today’s action underscores our resolve to target efforts by the IRGC-QF (Iranian Islamic Revolutionary Guard Corps Quds Force) and the Houthis to evade U.S. sanctions and fund further attacks in the region,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson. “As the Houthis persistently threaten the security of peaceful international commerce, the United States and the United Kingdom will continue to disrupt the funding streams that enable these destabilizing activities.”

The joint U.S.-UK action sanctioned two individuals and three organizations that were reported to be providing financial or military support to the Houthis. Among the individuals being listed is Mohammad Reza Fallahzadeh, who since April 2021 has been reported to be the Deputy Commander of the IRGC Quds Force and responsible for multiple attacks as well as support for the Houthi. The UK also joined the U.S. which had previously listed Sa’id al-Jamal, an Iran-based financier who heads a network of front companies and vessels that generate revenue for the Houthis. Both countries also listed three units of Iran’s Quds Force.

The UK also listed Ali Hussein Badr Al Din Al-Houthi, the Houthi’s Undersecretary of the Interior and Commander of the security/police forces. The U.S. also designated Ibrahim al-Nashiri, a Houthi group member who supports the militant efforts.

As with the past efforts, the U.S. also singled out tankers involved in the Iranian oil trade. Today’s action listed the Artura, a crude oil tanker registered in Panama. Built in 1998, the vessel is 150,000 dwt and is reported to have been working for the network operated by Sa’id al-Jamal including operating ship-to-ship transfers and using multiple names including Sanan II. The U.S. traced the ship to a transfer to the Mehle (150,000 dwt) another tanker the U.S. sanctioned in January 2024. Cap Tees Shipping, the owner of the tanker, was also listed.

In a separate action, the U.S. also took action against companies in Hong Kong and the Marshall Islands that own and operate another tanker, the Panama-flagged Kohana (318,600 dwt). Built in 2003, the U.S. reports the tanker has been used to ship over $100 million in Iranian commodities to businesses in China.

The U.S. linked this tanker to operations orchestrated by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). The U.S. reports the vessel loaded a cargo for Iranian oil in late January 2024 and is on its way to China, where it intends to offload its cargo.

The UK’s Foreign Secretary David Cameron commented saying, “As I have made clear to the Iranian Foreign Minister, the regime bears responsibility for these attacks due to the extensive military support it has provided to the Houthis. All those who seek to undermine regional stability should know that the UK, alongside our allies, will not hesitate to act.”

To date, the UK reports it has more than 400 sanctions designations in place on Iranian individuals and entities, including those that seek to use malign influence regionally and internationally.

Fearing Long-Term Problems in Red Sea, Cruise Lines Change Plans

Virgin Voyages has canceled its entire 2024-2025 Australia cruise season, citing the problems in the Red Sea (Virgin Voyages)

PUBLISHED FEB 27, 2024 4:59 PM BY THE MARITIME EXECUTIVE

 

 

The cruise industry is starting to rethink its plans into 2025 as increasingly they believe the problems in the Red Sea will persist. It is a view shared by the commercial shipping industry, but with travelers making vacation plans cruise lines need to think longer term to reduce disruption to their schedules and inconvenience to their passengers.

“Based on the regional and government advice we have received, we remain very concerned about potential escalations in the Red Sea over the next 12 months,” Richard Branson’s Virgin Voyages wrote in a new announcement. “This significant and ongoing conflict puts unacceptable risks for safe passage through the region for our sailors (passengers), crew, and vessel (Resilient Lady). As a result, we have been left with no choice but to cancel our 2024/25 voyage season plans for Resilient Lady.”

While the cruise industry is working on a longer time horizon to aid travelers in their planning, the underlying concern is shared broadly. Reuters reports that Maersk's head of North America, Charles van der Steene is advising the carrier’s customers, "Be prepared for the Red Sea situation to last into the second half of the year and build longer transit times into your supply chain planning."

Virgin Voyages highlights that it recently had to reroute the repositioning of the cruise ship Resilient Lady after its inaugural season in Australia. Based on the uncertainties, the cruise line has decided to entirely cancel its 2024/2025 season in Australia, impart because of the potential problems with the repositioning cruises that would transit the Red Sea. The Resilient Lady will now complete her Mediterranean sailing season on October 20, 2024, and divert course sailing to San Juan, Puerto Rico for a replacement Caribbean season for the 2024-2025 winter season.

“To say that we are disappointed to have come to this tough conclusion is an understatement,” says Virgin Voyages. “These adjustments are happening now in order to minimize potential future disruption to our passengers' holiday plans knowing there is a high likelihood that changes would need to happen in the future…  We are currently working through options to return to Australia and the Asia Pacific region once regional repositioning opportunities become more tenable.”

Norwegian Cruise Line is taking a similar move writing to travelers with reservations and travel agents, “We have been monitoring the situation in the Red Sea and despite our best hopes that it would de-escalate, we have made the decision to alter published itineraries scheduled to transit through the region.”

The cruise line is canceling sailings for the Norwegian Dawn and the Norwegian Sky between October and December 2024. They appear to be planning to deadhead both ships into position in the Indian Ocean and Middle East reducing their published itineraries in November and December 2024.

MSC Cruises is also changing its 2024-2025 program for the cruise ship MSC Opera. Scheduled for the Red Sea and Middle East, the cruise ship will now spend the winter season in the Canary Islands. The cruise line announced it will be substituting a program of 7-night itineraries with six ports of call between November 2024 and March 2025.

Up to Four Subsea Cables Have Been Damaged Off Yemen

USN file image

PUBLISHED FEB 26, 2024 10:16 PM BY THE MARITIME EXECUTIVE

Just weeks after a warning about potential Houthi threats to subsea cables in the Red Sea, at least one fiber-optic line has been severed at a position off the coast of Yemen, and damage has been reported (but not confirmed) on three more. 

Until last year, the Red Sea carried about one-eighth of the world's shipping traffic. Less known is its importance to the functioning of the global internet. 16 small fiber-optic lines under the Red Sea handle about 17 percent of all international data traffic, including trunk lines connecting Europe with India and East Asia. Some of these lines are in relatively shallow water depths of as little as 300 feet, where they could be accessible to divers.

The Houthi movement is well aware of this opportunity. Earlier this year, a Houthi social media account posted a map of these cables, along with a note that the density of telecom infrastructure made Yemen "strategic." The internationally-recognized government of Yemen issued a warning of the potential Houthi threat to these subsea assets earlier this month, and has reportedly discussed it with telecom operators in the past. 

On Monday, Israeli news site Globes said that cables belonging to four major telecom networks - including the Asia-Africa-Europe 1 (AAE-1), TGN Atlantic, Europe India Gateway and the Seacom system - have been damaged in recent months. 

Seacom has confirmed that its cable between Egypt and Kenya was severed on February 24, though the firm told Bloomberg that it is still too early to know if this was a deliberate attack. 

Seacom warned that repairs could be delayed due to "instability in the area," and said that its team was working on a timeline for service restoration. The challenges will include finding a cable ship owner who is willing to operate within range of Houthi ballistic missiles, as well as an insurer who will cover the war risk while the vessel is holding station off Yemen

Houthi Red Sea Attacks Are Boon for Pirates as Ships Reroute

By Alex Kimani - Feb 25, 2024

• The Red Sea shipping crisis has forced ship operators to re-route.
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• Unfortunately, resurging attacks coming from notorious piracy hotspots have shipping companies worried about the new route.
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• It’s unlikely that surging piracy on African waters will persuade shipping companies to return to the Red Sea any time soon due to the even higher risk of facing Houthi attacks

Since November, Yemen's Houthi rebels have repeatedly attacked cargo ships passing through the strait of Bab al-Mandab that splits north-east Africa from Yemen on the Arabian Peninsula. The Iran-backed rebels have been targeting vessels with connections to Israel and Western countries, forcing dozens of shipping companies to take a 4,000-mile detour around the continent of Africa at significantly higher costs and extra shipping days.

Unfortunately, resurging attacks coming from notorious piracy hotspots have shipping companies worried about the new route. Arsenio Dominguez, secretary-general of the International Maritime Organization, has warned shipping companies to be on high alert for piracy after vessel seizures in the Gulf of Guinea and off the Somali coast. 

Dominguez has urged companies to return to the stringent security levels of the previous piracy crisis, “They need to be more in line with how they were back in 2008 to 2012 off Somalia. We’re having conversations to create awareness surrounding the Gulf of Guinea . . .  with the increased traffic in the region, we should avoid new escalation or increased incidents of piracy,’’ he said. 

One vessel hijacked in December remains off the Somali coast, while pirates briefly seized another bulk carrier the following month before it was freed by the Indian navy. 

On Friday, Houthi rebels attacked and set ablaze a cargo ship traveling through the Gulf of Aden. Last month, a tanker’s crew was kidnapped off Equatorial Guinea by pirates. On February 19, the crew of a dry bulk carrier sailing on Somali waters was forced to abandon ship after a missile attack. The ship’s Beirut-based owner says the vessel was listing and in danger of sinking. However, the shipping company is working with a salvage company to have the ship towed to Djibouti. Related: Red Sea Chaos To Have Limited Effect On LNG Prices

The Gulf of Guinea and Somalia’s Gulf of Aden were once considered some of the most dangerous piracy zones for oil companies and other seafarers with a wave of piracy peaking in 2018. What makes these places particularly vulnerable is a lack of sufficient equipment and manpower as well as the fact that attacks are mainly staged far off coastlines beyond countries' territorial jurisdictions. Further, the Gulf of Guinea is rich in oil and gas as well as a relatively well-trained militia that has honed its skills fighting in the Delta's secessionist movement. In the past, pirates operating in the Gulf of Guinea have targeted human capital instead of hijacking ships. 

The Gulf of Mexico remains another piracy blackspot due to its abundant oil and gas resources, although pirates there are mostly associated with local crime groups rather than cartels and prefer stealing valuable equipment and materials instead of targeting tankers and larger vessels.

Thankfully, the African menace was largely eliminated by the adoption of on-board security measures, including traveling with armed guards. Some coastal states have also adopted more rigorous anti-piracy action. 

Western, Israeli-Linked Ships Paying 50% Extra Insurance Premiums

It’s unlikely that surging piracy on African waters will persuade shipping companies to return to the Red Sea any time soon due to the even higher risk of facing Houthi attacks coupled with exorbitant insurance premiums being levied on ships plying the Red Sea. Underwriters have started charging ships linked to U.S, British and Israeli companies as much as 50% extra in war risk premiums to navigate the Red Sea due to the persistent threat of attacks. The war risk premiums for Red Sea voyages now hover at ~1% of the value of a ship, up from around 0.7% previously, with additional costs translating into hundreds of thousands of dollars for a seven-day voyage.

“The ships that have so far had problems, almost all of them have some element of Israeli or U.S. or U.K. ownership in there somewhere,” Marcus Baker, global head of marine and cargo with Marsh, has told Business Insurance. 

The Yemeni rebels have been relentless with attacks on commercial ships despite counterstrikes by the U.S. and British navies, and have vowed to continue doing so. “The Houthis persist in upholding their religious, moral, and humanitarian duties towards the Palestinian people and in defense of their beloved Yemen in the face of American-British aggression. Military operations will not stop unless the aggression stops and the siege on the Palestinian people in the Gaza Strip is lifted,’’ Houthi Brig. Gen. Yahya Saree said in a pre-recorded statement on Thursday