It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Sunday, February 12, 2023
Vale Indonesia breaks ground on $2.5 billion ferronickel smelter
Reuters | February 10, 2023 | Image courtesy of PT Vale Indonesia.
Nickel miner PT Vale Indonesia broke ground on a 37.5 trillion rupiah ($2.48 billion) ferronickel smelter Sulawesi island on Friday, an Indonesian senior minister said.
The Bahodopi project will produce ferronickel with 73,000 to 80,000 tonnes of nickel content per year, Vale has said.
“I hope this will be followed by the laying of the next stones. God willing, it can be completed in 2.5 years,” Coordinating Minister of Economic Affairs Airlangga Hartarto said in a statement.
The smelter, which would employ up to 15,000 workers during construction phase is a joint project between Vale and its partners, China’s Shandong Xinhai Technology Co. Ltd and a unit of China Baowu Steel Group Corp. Ltd.
In Pomalaa, another area of Sulawesi island, Vale and its partners are developing a plant to produce 120,000 tonnes per year of mixed hydroxide precipitate, a material extracted from nickel ore that is used in batteries for electric vehicles.
($1 = 15,130.0000 rupiah)
(By Bernadette Christina; Editing by Jason Neely)
SO MUCH FOR Va. YOUNGKIN'S CHINA TANTRUM
Ford plans to build EV battery plant in Michigan with Chinese partner
Ford Motor Co. and Contemporary Amperex Technology Co. Ltd. plan to build a battery plant in Michigan, according to people familiar with the matter, capping a months-long search that became mired in geopolitical tensions between the US and China.
The multibillion-dollar facility, to be located about 100 miles west of Detroit, is expected to create about 2,500 jobs, said the people, who asked not to be identified because the plans aren’t yet public. The agreement could be announced as soon as next week, they said.
Ford is moving ahead with the project despite uncertainty around how the US Treasury Department will interpret requirements in President Joe Biden’s signature climate package, the Inflation Reduction Act. The law is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked materials in their batteries.
“We’ve said that we’re exploring batteries based on CATL’s technology for Ford vehicles and that we plan to localize” production in North America, Ford said in an emailed statement. The company didn’t specify whether it had picked a location or determined other details of the project’s scope.
CATL didn’t immediately respond to an emailed request for comment outside business hours in China.
Ford shares fell 5.6% in New York Friday to close at $12.73. They are up 9.5% this year.
The US carmaker and China’s CATL, the world’s biggest maker of batteries for electric vehicles, have been weighing a novel ownership structure under which Ford would own 100% of the plant, including the building and the infrastructure, Bloomberg reported last year. Ford workers would build the batteries, while CATL owns the technology to create the cells, according to the people familiar.
Such an arrangement may allow the facility to qualify for lucrative production tax credits under the Inflation Reduction Act while requiring no direct financial investment from CATL.
The site for the new factory, near the small town of Marshall in southwestern Michigan, has room to grow, potentially bringing more jobs and a larger investment, according to the people familiar.
The companies also considered Virginia as a possible home for the plant, Bloomberg has previously reported. That option was nixed when Virginia Governor Glenn Youngkin, a potential Republican contender for the White House in 2024, yanked his state out of the competition, calling CATL a “Trojan horse” for China that would undermine policy efforts to strengthen the US auto industry. Macaulay Porter, press secretary for Youngkin, declined to comment Friday.
Michigan Governor Gretchen Whitmer has staked out a different position from her counterpart, calling Youngkin’s move “a political determination,” the Detroit News reported last month. Whitmer has been fighting to attract more EV battery investment after losing out to Tennessee and Kentucky on Ford’s historic $11.4 billion Blue Oval City investment in 2021.
Ford announced in July it will begin using less expensive lithium iron phosphate battery packs from CATL on its Mustang Mach-E models this year and F-150 Lightning pickups in early 2024, which will boost output of those popular vehicles. Ford has said it has a plan to source 40 gigawatt hours of those batteries annually in North America in 2026, but would initially import them from China.
Ford is investing $50 billion broadly to develop and build electric vehicles and plans to produce 2 million a year by the end of 2026. The Dearborn, Michigan-based automaker was the No. 2 seller of EVs in the US last year, well behind Tesla Inc., which controls almost two-thirds of the American market.
(By Gabrielle Coppola, Keith Naughton and Ed Ludlow, with assistance from Craig Torres)
Jan 22, 2023 ... Virginia Gov. Glenn Youngkin has a message for as it reportedly searches for a site to build a $3.5 billion battery plant that would create ...
CRIMINAL CAPITALI$M Trafigura tells its banks they aren’t exposed to nickel fraud
Bloomberg News | February 10, 2023 | Trafigura’s Singapore office. Credit: Trafigura via Flickr
Trafigura Group is briefing lenders that none of its banks have direct exposure to the nickel deals at the center of what the commodity trader is calling a systematic fraud perpetrated against it.
Trafigura has recorded a $577 million impairment after discovering that metal cargoes it bought didn’t contain the nickel they were supposed to, and has begun legal action against the companies involved, Bloomberg reported on Thursday.
The deals — which involved buying nickel in containers already on board ships, and then selling it on when the vessels reached their destination — were not financed by any letters of credit or other transactional financing from banks, according to people familiar with the matter.
Still, the saga serves as a reminder of the risks involved in financing commodities trading, which has a long and rich history of tricks and scams. In modern times, the industry’s continued dependence on physical documents that can be faked has made it particularly susceptible to fraud.
Trafigura is one of the largest among a group of mostly private companies responsible for buying, selling and shipping natural resources around the world. The industry is heavily reliant on bank credit to finance its activities: Trafigura had total credit lines of $73 billion at the end of its last financial year, with a network of about 140 banks around the world.
Traders use various different types of bank financing to fund their operations. In some types of transactional financing, banks guarantee individual payments or take security over individual cargoes, meaning they can be exposed to losses in cases of fraud.
Trafigura still expects its overall profit for the six months through March will be higher than the previous year even after the impairment, but the discovery of the fraud is an embarrassing setback for the company that has grown rapidly over the past decade to become a dominant force in trading both energy and metals.
(By Jack Farchy and Alfred Cang) Trafigura’s nickel nemesis was already notorious in metal circles
When news broke that Trafigura Group faces more than half a billion dollars in losses from what it described as a “systematic fraud,” the biggest surprise for many market insiders wasn’t the commodity trader’s missing nickel cargoes. It was that one of the industry’s largest players was still doing business with a man that others had long since backed away from.
Indian businessman Prateek Gupta and his companies, against whom Trafigura secured a $625 million freezing order this week, have a checkered history in the trading world.
Merchant Gunvor Group and trade finance fund TransAsia Private Capital Ltd. lost money in earlier dealings with Gupta’s companies, public filings show. Others, including banks and counterparties, became uncomfortable at times with the group’s trading activities, according to several people who either worked at the group or did business with it. Last year, India’s federal police announced it’s investigating allegations of fraud against Gupta himself.
Ian Milne, a former commodity trade finance executive at Rabobank and HSBC Holdings Plc who worked at TransAsia for two years in 2018 to 2020 trying to recover debts from Gupta’s companies, said he “had to rub my eyes a couple of times” when he saw the news this week.
“It’s very well known in the market that these guys have a highly dubious reputation,” Milne said in an interview. “Most people haven’t dealt with them for many years.”
Trafigura’s losses have shocked the commodity trading world, demonstrating that even one of the largest companies isn’t able to avoid the kind of blowups and risks that have plagued the industry in recent years, and raising questions about the whole sector’s risk management.
Bloomberg made multiple attempts by phone and email to reach Gupta and companies owned by, or otherwise linked to him for comment on Friday but did not receive any response. Trafigura said that it began investigating after identifying a number of red flags.
“This was a systematic fraud perpetrated after a long and legitimate business relationship dating back to 2015 that involved misrepresentation and widespread falsification of primary and supporting documentation,” a spokeswoman said. “Any fraud is an opportunity to review and tighten systems and procedures and a thorough review is underway.”
Gupta was born in 1979 into a commodity trading family. His father Vijay was a steel trader who represented Brazilian and Spanish companies importing iron and steel products into India in the 1980s and 1990s, according to a company obituary. When he died in 2009, Prateek took over the running of the family company, Mumbai-based Ushdev International Ltd., with his mother Suman as chair. At its peak in the early 2010s, the company had a market capitalization of about $250 million.
In person, Gupta is charming and rarely flustered, say several people who’ve done business with him.
“He has a very laid-back style. Whatever the problem is, he’ll say it’s not really a problem, it’s all going to be solved,” said Milne, who now works for MonetaGo, which builds technology to help banks and others avoid trade-finance frauds.
Over the years, Ushdev branched out into developing wind power assets, but it still focused on metal trading. Gupta added entities in Singapore, Malaysia, Dubai, the UK and Switzerland, including TMT Metals and companies under the banner of UD Trading Group.
In a 2011 interview published by Indiainfoline.com, he described his business as India’s third-largest metal trading company and said it had been doubling in size over the previous years.
“The metal business is back to back business,” he said. “We don’t face any kind of downside.”
For some in the industry, the Gupta companies’ trading activity raised question marks, said the people familiar with the matter. The companies would sometimes buy and sell large volumes of metal for little apparent commercial purpose, some of the people said.
‘Carousel fraud’
Jonas Rey, chief executive officer of Athena Intelligence, a corporate intelligence company in Geneva that provides support to trade finance entities, said he investigated entities including TMT on behalf of several clients.
“We provided intel to multiple clients on TMT’s involvement in what we called a carousel fraud,” he said. “You have one cargo in the middle, you create 10 companies around it, and they sell the cargo to one another. One cargo gets financed 10 times. It’s like a financial musical chair. Eventually everything comes crashing down.”
Several companies came to regret their dealings with Gupta. Gunvor was left with exposure to Ushdev in the tens of millions of dollars when it got into financial trouble, according to company filings and people familiar with the matter. The exposure only led to a relatively small loss for Gunvor as it claimed on its insurance. Still, it was a blow that coincided with Gunvor’s decision to close its metal-trading desk in 2016.
A list of creditors published when Ushdev went into insolvency in 2018 showed that Gunvor was its largest non-bank creditor with an exposure of 3 billion rupees (about $45 million at the time).
A Gunvor spokesman declined to comment.
TransAsia is still embroiled in legal disputes with Gupta companies over alleged unpaid debts linked to its financing of trade in metals including copper. In one instance that’s been made public in Singapore courts, the trade finance fund claims that Gupta’s UD Trading Group Holding owes it $63 million. UD Trading has in the past said it doesn’t believe it’s liable for the debt.
Last July, the Central Bureau of Investigation – India’s equivalent of the FBI – said it had opened an investigation into Prateek and Suman Gupta, as well as Ushdev, over alleged fraud after a complaint made by State Bank of India. The CBI said in a press release it had conducted searches in three locations which had led to the “recovery of incriminating documents/articles.”
For Trafigura, the saga will raise difficult questions over how it vets its business partners.
“The postmortem will probably be ruthless internally,” said Jean-Francois Lambert, a consultant and former trade finance banker. “Traders and risk management will be challenged.”
(By Jack Farchy and Archie Hunter, with assistance from Alfred Cang, Swansy Afonso, Shruti Srivastava, Joe Deaux and Mark Burton)
Comparing the metal values of the world’s biggest sports trophies
Jackson Chen | February 10, 2023 The famed Vince Lombardi trophy. Credit: Tiffany & Co.
The ultimate prize of any major sporting event — trophies — are widely regarded as the biggest (to some, maybe the only) barometer of success for an individual athlete or collective team.
This Sunday, all eyes will be on the Vince Lombardi Trophy, which is reproduced annually and awarded to the Super Bowl winner of each NFL season.
Despite its global recognition and prestige in North American sports, the Vince Lombardi Trophy may not be worth as much as we’d think in terms of melted value.
Produced by Tiffany & Co., the trophy uses 3.2 kg of solid sterling silver, equating to around $2,000 based on recent metals prices, according to analysis by Refinitiv Metals.
However, this value is meager compared to some of the other well-recognized trophies that some of the world’s greatest athletes have laid their hands on.
“While its widely recognized that the value of a trophy is derived from what it symbolizes in terms of achievement and success, those that follow the NFL may be surprised to learn of its relatively low melt-value compared to other iconic trophies,” said Federico Gay, analyst at Refinitiv Metals.
As some might expect, the “the most valuable trophy” title belongs to the world’s biggest sporting event: the FIFA World Cup. This trophy is made of 6.175 kg of 18-carat gold, which means it contains 4.93 kg of pure gold worth some $260,000 at recent prices, far exceeding any other trophy, based on Refinitiv calculations.
The UEFA Champions League, perhaps the most prestigious competition in club football (or soccer in North American parlance), awards its winner a trophy that contains 7.5 kg of sterling silver. This means the “Ol’ Big Ears” (the nickname for the Champions League trophy) is actually worth much less than its equivalent for the Europa League, a lower-tier competition.
Shifting back to American sports, the most expensive trophy in the US is awarded at the Indianapolis 500 car race, which is the largest single-day sporting event in the world. The Borg-Warner Trophy is made from 69 kg of pure silver sterling, with a melt value of over $40,537.
The next valuable US trophy is the Woodlawn Vase, which is awarded to the winning owner of the Preakness stakes at Pimlico Racecourse. This trophy is made of solid sterling silver weighing over 11 kg, with a melt value of over $10,633.
(Click here for a detailed analysis by Refinitiv Metals Research.)
Teck fined over $11 million for failing to build water treatment facility in British Columbia
Staff Writer | February 10, 2023 | Teck’s Fording River metallurgical coal operation in B.C. Credit: Teck Resources
The government of British Columbia has fined Teck Coal Limited C$15.4 million for exceeding pollution thresholds and failing to build an active water treatment facility on time at its Fording River Operations in southeastern BC.
The Ministry of Environment and Climate Change Strategy had ordered Teck Coal to design, construct and operate the active water treatment facilities (AWTF) or alternative water treatment technology as approved by the director, to be operational by the December 2018 deadline in its permit.
“The permittee must employ best achievable technology in the development of these treatment facilities. Phosphorus treatment must be included if necessary, to ensure BC Water Quality Guidelines for chlorophyll -a for freshwater aquatic life in streams is met,” the Ministry said.
“The permittee must ensure that all necessary active water treatment works or alternative water quality mitigation works are designed, constructed and operated insufficient time and at sufficient capacity to meet targets and timeframes for water quality consistent with the ABMP,” it noted.
This is the latest environmental infraction for Canada’s largest diversified miner at its operations in the Province.
Last month, Teck was fined C$2.2million ($1.6m) for an acid spill into Columbia River at its Trail smelter operations. A Rossland provincial court judge made the order after the company pleaded guilty to two charges laid under the federal Fisheries Act and one charge laid under the provincial Environmental Management Act. The charges resulted from an effluent release in February 2019.
ECCC enforcement officers investigated and determined the discharge of approximately 2.5 million litres of effluent into the river just north of the US border resulted from numerous operational errors.
In March 2021, Teck Coal Limited resolved charges under the Fisheries Act relating to 2012 discharges of selenium and calcite to a mine settling pond and to the Fording River from its Fording River and Greenhills steelmaking coal operations in the Elk Valley region of British Columbia. Teck Coal paid a penalty of C$30 million for each offence, totalling C$60 million.
China is Putting New Energy and Investment Into Tidal Power
The ebb and flow of the tide powers a turbine while the sun shines on solar panels. In May 2022, China’s first combined tidal and solar power station started feeding electricity to the grid, and the media waxed lyrical: “The sun and moon work together to generate power both above and below the waves.” This is a new model for power generation in China and marks an important step forward for integrated ocean energy. It is expected the electricity generated will power 30,000 homes.
With the need to achieve a global energy transition ever more pressing, the ocean and its vast and widespread energy are getting more attention.
The EU, US, Australia and China have all put policy frameworks in place to promote development of ocean energy. The EU has moved fastest. In terms of generating capacity, the bloc accounted for two-thirds of new tidal installations worldwide in 2021, and half of all wave energy.
According to estimates from the International Renewable Energy Agency (IRENA), generation capacity from ocean energy installations could reach 3 gigawatts (GW) in the next five years, then 70 GW in 2030 and 350 GW in 2050 – the equivalent of over 100 Three Gorges Dams.
That might seem a drop in the ocean given China’s total installed power generation capacity of 2,000 GW. But ocean energy is being seen as key for energy security, relieving coastal and island energy shortages, and boosting international competitiveness in marine tech. China has, therefore, put top-level plans in place to encourage research and utilisation in the field. According to a 2019 report from the Ministry of Natural Resources’ National Ocean Technology Centre, by the end of 2018 China had 7.4 MW of ocean-based generating capacity, which had produced a total of 234 GW hours of electricity since being installed.
There are ocean energy installations scattered along China’s coast. But the overall amount of energy available for exploitation is low. Below we will explore in detail the development of the five types of ocean energy and their future prospects in China. In short, tidal barrages are already in commercial use, while tidal stream generation, after almost ten years of development, is in the early stages of commercialisation. Wave power installations are undergoing sea trials. China’s technology in these fields is among the best in the world. In March, the country’s first megawatt-scale tidal stream station was hooked up to the grid in Zhejiang and is expected to generate at least 1 GWh a year. Meanwhile, ocean thermal energy is undergoing scale-model tests and salinity gradient energy is being tested in laboratories.
However, Wu Lixin, head of Qingdao National Laboratory for Marine Science and Technology, and vice president of the Ocean University of China, says China still lacks strategic plans and policy support for ocean energy, while construction and generation costs remain high. To accelerate growth, he calls for mid- and long-term development plans, regulation and funding.
Tidal barrages
Tidal barrages work much like hydropower dams. A dam-like structure is used to retain tidal waters and the differences in water level are then used to drive turbines. This is currently the most commercially viable form of ocean energy and has been in use for decades. France’s Rance Tidal Power Station, an early tidal barrage, has been in operation since 1966.
In China, tidal barrages can be traced back to the 1950s. Over the past seven decades, China has built over 100 small-scale tidal barrages, but due to technical problems, planning issues and operational factors only two are still running, in Jiangxia and Haixia, both in Zhejiang province. The Jiangxia Experimental Tidal Power Station has been expanded and upgraded several times and is now the world’s fourth largest, with a 4.1 MW capacity.
Unfortunately, China’s coasts tend to see only small differences in water levels between high and low tide, which reduces efficiency. Between 2009 and 2015, China carried out initial feasibility studies at a number of locations suitable for tidal barrages between 10 and 99 MWs. It found the “factory gate” cost of electricity would be between 1.386 yuan and 2.6 yuan per kilowatt hour. This was similar to costs seen internationally, but higher than hydropower or solar. In 2021, wind and solar power in China was generating electricity for no more than 0.50 yuan per kilowatt hour.
However, new tech could make up for the limitations of tidal barrages. Combined tidal and solar generation can’t reduce costs yet but can increase stability of supply. Meanwhile, researchers in the UK, Holland and Australia are working on “open barrages” which will not block waterways and so would have less environmental impact.
In May 2022, China’s first combined tidal and solar power station started feeding electricity to the grid, in Wenling, Zhejiang province (Image: Alamy)
Tidal streams
Unlike tidal barrages, tidal stream generation relies not on differences in water levels between high and low tide, but on tidal water flowing in and out. They work in a similar way to wind turbines, converting flow into electricity.
In 2003, the world’s first tidal stream installation, a 300-kilowatt turbine, was placed in the waters off Lynmouth in the UK. The technology has been improving ever since. In 2015, the UK, Switzerland and other partners started work on the world’s largest tidal stream power station, Meygen, in Scotland’s Pentland Firth. A year later, it had a generating capacity of 6 MW. Eventually it is slated to have a capacity of 398 MW, almost 100 times the output of China’s Jiangxia site. That success spurred the tidal stream market and shifted the technology from pilot projects to commercial operation.
Globally, tidal stream is now the focus for commercial ocean energy generation. A report from the European Commission’s Joint Research Centre listed ten emerging ocean energy technologies. Of those, four were tidal stream technologies and three are relevant to the field of ocean power generation.
China has been researching tidal stream generation since the 1980s and is one of the few countries to have mastered its use at scale. One project near Xishan Island, Zhoushan, Zhejiang has been creating electricity since 2016. In March 2022, a 1.03 MW turbine was added – reportedly the world’s largest individual tidal stream unit.
As of 2021, China ranked second globally for installed tidal stream generation, behind the UK. The prospects for commercial operation see bright.
The country does have plenty of resources to exploit. According to 1988 mapping, China had 13.95 GW of tidal energy generation potential in its waters. But that estimate would have been limited by the technology and survey techniques of the time, and the real number is likely to be larger. The province of Zhejiang is particularly rich in tidal stream potential, with 40% of the national total. In particular, Hangzhou Bay and the islands of the Zhoushan archipelago are world-class sites and it is fair to say China has a natural advantage here.
Wave power
The wind makes the waves, and their energy can be harnessed to drive generators. But capturing energy from waves is less efficient and less stable than doing so from tides.
Significant investment by countries including the UK, US, Australia and China has led to rapid development, but many different methods are used and the technology is mostly still in the demonstration stage. There is still some way to go before sea trials and commercial application.
Some technologies have progressed more rapidly through the research and development, sea trials and commercialisation stages. In the US, Ocean Power Technologies’ PowerBuoy uses a direct drive generator; while Denmark has the Wave Dragon overtopping device. These have all undergone extensive sea trials and are being hooked up to the grid.
Because China has a long coast, it has a lot of wave power resources to exploit. Geographical factors and monsoons make Zhejiang, Guangdong and Fujian particularly suitable. But wave intensity – wave power by area – is relatively low. Even China’s most wave-intense sites are only a tenth as powerful as the global average. That makes it hard to scale up devices and bring costs down.
Wu Bijun, an ocean energy researcher at the Guangzhou Institute of Energy Conversion, has said in a media interview that there are also challenges associated with protecting installations from typhoons as well as increasing efficiency.
Wu and his research team have focused on oscillating water column systems, which are relatively simple, safe, reliable and efficient. One such device developed in Scotland features a partly-submerged concrete structure that’s open at the bottom. As the sea oscillates up and down, it forces air through a turbine.
In 2019, tests by the National Ocean Technology Centre saw conversion efficiency of 50.73%. Such devices could be used to power marine instrumentation, marine ranches or islands.
Thermal and salinity gradients
The possibility of generating power from thermal and salinity gradients is also being investigated, but commercial use remains a way off.
Ocean thermal energy conversion (OTEC) harnesses the temperature difference between the sun-warmed surface and colder deeper waters. This technique was initially proposed in the 19th century, while the first OTEC installation was built early in the 20th century, in Cuba. The 21st century has seen renewed interest in OTEC systems, thanks to improvements in heat circulation technology and on-land thermal gradient systems.
This form of ocean energy has more potential in Chinese waters than any other. According to calculations by Wang Chuankun, a researcher at the State Oceanic Administration’s Second Institute of Oceanology, and others, developing 1% of the potential (about 360 GW) would generate more power than all of China’s PV solar installations. But China only started research in this field in the 1980s and systems are still undergoing sea trials.
Salinity gradient systems, meanwhile, are even more recent and high cost. This technology remains in the proof of concept and lab test stage. Salinity gradients are found between seawater and freshwater, or two bodies of seawater with different levels of salt. This most commonly means where rivers flow into the sea.
In 2009, Norway’s Statkraft built a 10-kilowatt demonstration system. Seawater and freshwater are filtered and placed on either side of a membrane, creating an osmotic gradient. Water molecules from the freshwater side cross the membrane, creating pressure which can be used to drive turbines.
Interest in this technology is increasing around the world, particularly for the manufacturing of hydrogen from seawater and in deep-water aquaculture. Liu Weimin, a researcher at the First Institute of Oceanology who studies ocean renewables, has written that thermal gradient technology is suitable for remote islands in tropical waters, both in terms of potential resources and feasibility. The power generation could be combined with sea water air conditioning and desalination, he added.
Conclusions
China has funded over 100 ocean energy research projects since the 1980s. Currently, hundreds of researchers are working on these issues, with notable results. Costs remain the main obstacle, but as development of the coasts, islands and ocean continues, we will better know where to place such projects.
According to Li Wei, chief ocean energy researcher at Zhejiang University’s Ocean Academy, ocean energy can be located close to island power users. As the diesel-fuelled power generation currently used on islands can cost between 2 and 6 yuan per kilowatt hour, ocean energy is already a viable alternative. Also, offshore and underwater facilities have a pressing need for ocean-generated energy.
As Li Wei says, ocean energy is a triple-win for China’s strategic goals on carbon neutrality, renewable energy and high-end manufacturing. “We’ve got a good research foundation and conditions for commercialisation, representing a major opportunity.”
Han Qing is a former environmental journalist for Jiemian and Beijing News, with a focus on climate and biodiversity.
This article appears courtesy of China Dialogue Ocean and may be found in its original form here.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
Study: UK Offshore Methane Leakage is Five Times the Official Estimate
Climate-warming methane emissions from offshore oil and gas production in the UK are likely far higher than the British government's estimates, according to a new study from Princeton University's Center for Policy Research on Energy and the Environment (C-PREE).
Methane, marketed as natural gas, has a global warming potential about 80 times higher than CO2 over the first 20 years of its lifespan. It is emitted during oil and gas production, transportation and processing, and is also produced in quantity by livestock and by landfills. It is the second-largest contributor to global warming after carbon dioxide, but it breaks down on a relatively short timeline - so cutting methane emissions is a quick way to slow down global warming in the short term. In recognition of its importance, over 100 nations have pledged to cut methane emissions by 30 percent by 2030.
According to a new study by researchers at Princeton University and Colorado State University, the UK's current methods for estimating methane emissions from the offshore oil and gas sector are "systematically and severely" undercounting the true level. The study finds that up to five times more methane is released into the atmosphere on the UK Continental Shelf than the government currently reports.
The study covered all stages of offshore E&P, and it took a close look at the UK's standard emissions factors for various activities, like flaring, processing, onboard power generation and pipeline transfer. The research team found that the UK's estimates rely on emissions factors that would tend to underrepresent the true values. Some are outdated; some come from industry research that is not available to the public; and some are generic values from global averages. Few can be adjusted to account for weather conditions or procedural changes that could affect each activity's emissions levels. The government estimation method also leaves out leakage from idle rigs.
Riddick and Mauzerall created an updated estimation technique based on factors from the scientific literature, as well as direct boat-based measurements of methane concentration in the air around North Sea platforms. Their final result suggests that emissions are five times higher than the UK government's estimates.
Many other nations use similar methods of counting, so "this severe underestimation is likely not confined to the UK alone," the authors suggested.
“We hope our work will facilitate improved emission estimates and reductions not only from the UK but also from other countries producing methane from oil and gas extraction,” said Denise Mauzerall, a co-author and core faculty member of the Center for Policy Research on Energy and the Environment at Princeton University.
Denmark Awards First CO2 Storage Licenses Seeking to Build Industry
Denmark selected projects from Total Energies, INEOS E&P, and Wintershall DEA to receive the country’s first full-scale CO2 storage permits for projects in the North Sea. The recommendation from the Ministry of Climate, Energy and Utilities marked the conclusion of the first of an annual tender for licenses for the exploration of full-scale CO2 storage on the Danish continental shelf as the country looks to the development of a new industry that will contribute to meetings its goals to reduce emissions.
The licenses pave the way forward for Denmark as an important puzzle piece in realizing the growing demand for CO2 storage capacity in Northern Europe the agency said in announcing that it had completed evaluating the applications. The Danish Energy Agency (DEA) reported it received two applications in the first round of licenses for CO2 storage in the Danish North Sea and that they had both met the requirements evaluated the technical and financial capacity as well as the technical content of the work programs presented by the companies in their applications. The final awarding of two licenses to TotalEnergies and one to the partnership between INEOS and Wintershall DEA will take place after a report is presented to the Climate, Energy and Utilities Committee of the Danish Parliament.
“Granting the first exclusive permits for full-scale CO2 storage in the North Sea is an important step into the future. CO2 capture and storage is an important element in the green transition. Today’s licenses are the result of effective implementation of the first Danish political agreements on CCS," says Kristoffer Böttzauw, DEA’s director.
Denmark believes that there are strong opportunities for this developing industry. The Geological Survey of Denmark and Greenland (GEUS) has previously demonstrated that the Danish subsurface is particularly suitable for CO2 storage, both offshore and onshore, thus enabling the opportunity for Denmark to serve as a commercial hub for CO2 storage from all of Europe. They estimated that the Danish subsurface theoretically can store up to 22 billion tons of CO2. They said that would be equivalent to between 500 and 1000 years of total Danish emissions at current levels.
All the licenses contain the necessary geological structures that are suited to serve as permanent CO2 storage locations in the future. Under Danish regulations, permissions can initially be granted for exploration for up to six years, during which the exploring company has exclusive rights to the area. If a suitable location for CO2 storage is found, the permit can be extended for up to 30 years for storage operations. The specific storage projects must be approved by the DEA.
Denmark highlights that full-scale storage of CO2 offshore is a known technology that has been in operation in Norway since 1996. In Denmark, the technology will be tested in connection with Project Greensand, which is a pilot and demonstration project by INEOS E&P funded by the EUDP. Test licenses have previously been granted with the first injection programs being conducted in the first months of this year.
By 2025, INEOS and Wintershall expect that they can commence full operations at the Greensand project. Initially, they expect to inject up to 1.5 million tons of CO2 annually and by 2030 increase to an annual capacity of eight million tons. TotalEnergies' Bifrost project is expected to be operating by 2027 with an initial capacity of up to three million tons and expanding by 2030 to inject up to five million by 2030.
Nordsøfonden, the Danish national oil and gas company, will represent the interest of the state and participate with a share of 20 percent in each of the new licenses.
The commercial shipping industry is grappling with growing condemnation after the number of abandoned seafarers continued to surge, hitting a new high of 103 in 2022. The trend is growing with the number of seafarers abandoned fast approaching the 10,000 mark in a span of two decades with just over 700 vessels involved according to a new report from the ESG platform RightShip.
Just a day after four seafarers were forced to seize a cargo ship off the port of Dakar in Senegal after months without pay and mounting danger to their lives, RightShip is reporting that 2022 saw the highest number of seafarers’ abandonment with 103 cases reported involving 1,682 seafarers. Equally concerning is that the growth is part of an ongoing trend over the past five years. In 2021, the number of reports stood at 94, up from 77 in 2020, 51 in 2019, and 50 in 2018. It has been five consecutive years of increases coming up from a low of mostly under 20 cases a year between 2000 and 2016.
The group reports that abandonment rates remained high in 2022 despite the resumption of access to global ports and the smoother movement of cargo as the disruptions created by COVID-19 eased. However, the fact that especially smaller shipping companies are still recovering from the pandemic’s impact as well as the collapse of freight rates in some segments while costs skyrocketed means that smaller ship owners and managers are still struggling financially and cannot meet their financial and welfare obligations to seafarers.
According to RightShip, the financial cost is mounting with the group estimating that over the past 20 years, unpaid wages to seafarers amounted to nearly $40 million. They noted that the current upward trend is similar to 2009, immediately after the global financial crash, when due to deep financial problems in the maritime markets when vessel and freight prices plummeted cases jumped to 65 in one year.
They also contend that the 2017 Maritime Labour Convention (MLC) rules, which empower seafarers abandoned and unpaid for two months to claim their wages via mandatory insurance, have also contributed to the rising cases. The rules compel shipowners to have insurance to assist seafarers if abandoned.
“When seafarer abandonment still happens, it is largely down to the ruthlessness of capitalism. Wanting to eliminate the issue means putting in place your best management practices to stop it. You can do this,” said Steen Lund, RightShip CEO.
The International Maritime Organization (IMO) defines abandonment as when a shipowner can’t cover the cost of a seafarer’s repatriation or fails to pay wages and provide maintenance and support for at least two months. RightShip, however, highlights that the consequences can be far more dire. The reality they report is that crewmembers are being left without food, water, supplies, or medicine and are often cut off with little ability to communicate.
According to the report, a total of 106 countries across the globe and 85 flag states have been involved in the abandonment cases with the United Arab Emirates being the worst offender with 89 cases. It is followed by Spain at 45, Turkey at 37, Iran at 34, and Italy at 25. RightShip’s data also shows that the most people abandoned by nationality are from India, with 1,491 seafarers. Ukraine and Russia are also recording a hike in the number of abandonment due to the current conflict.
General cargo ships at 31.2 percent, bulk carriers at 8.2 percent, and chemical product tankers at 7.2 percent have been identified as the worst offenders topping the list of 60 vessel descriptions cited as being involved with abandonment. In terms of age, vessels between 26 and 30 years constitute 16.7 percent of the total 703 abandoned vessels.
RightShip contends that with abandonment cases rising each year, the pressure is increasing for the IMO to come up with solutions that align with the MLC and go further to help seafarers. They note that the rising number of cases has led to a backlog of cases before the IMO. They report that a total of 247 cases are awaiting resolution. For 2022, 34 remain open, 17 are in dispute, and 41 were resolved.
RightShip wants to drive meaningful change calling for a better sharing of data while also citing the new efforts from the joint International Labor Organization–IMO Tripartite Working Group. RightShip has also launched its Crew Welfare Self-Assessment as a tool for companies to access and improve their crew welfare standards while they also call on charters to review a ship and owner's records and factor that into their business plans.
Seafarers Seize Ship Over Owed Wages and Owner Neglect
Four seafarers, with assistance from the International Transport Workers’ Federation (ITF), have seized a cargo ship off the port of Dakar in Senegal after months without pay and mounting danger to their lives.
The four crew of the MV Onda (IMO 8912467) had been battling to have the engine of their vessel repaired. Port authorities have ignored their requests for help for more than a year.
Acting on behalf of the four crew, the ITF went to a Senegalese court to have the ship legally seized, as its ongoing position near a busy shipping lane left crew and others vulnerable to collision at night, with no engine to power the vessel’s warning lights.
The vessel remains seized until the owners pay the more than USD $84,000 owed in wages to the beleaguered crew. Seizing the vessel means the ship cannot be used by its owner until the debts are settled.
The ITF is also claiming costs from the owners as they left the ship at anchor for lengthy periods without providing adequate provisions for the crew, as a shipowner is obliged to under the Maritime Labour Convention and most seafarer contracts. The ITF has stepped in on several occasions to ensure the seafarers did not starve.
The ITF has confirmed that Mr Nguetsop Pierre Robinson, of Cameroon, has presented himself to the crew as the new owner of the ship. He has attempted to trick the crew into putting the vessel back into operation in exchange for empty promises that they will be paid at some point in the future. The crew have been advised that they stand very little chance of recovering what they’re owned if they accept this kind of deal.
In late January, the lawyers of the owner made a new approach, upping their offer to get the Onda moving. In trying to cut a deal with the Master of the vessel to get the vessel moving, they offered him a paltry USD $33,000. Well short of the $55,000 in wages the captain is owed. With his consent, the ITF rejected this insulting offer on behalf of the captain.
Senegal violates international law
However, the crew find themselves in limbo because they cannot leave the ship to go home while the dispute continues and port authorities have refused help despite clear obligations under the Maritime Labour Convention (MLC 2006) which Senegal has ratified. The MLC is also known as the 'Seafarers’ Bill of Rights'.
However, the authorities in Dakar refused to allow the ship into the port, claiming the port was too busy. The officials have persistently ignored requests from the ITF to intercede on behalf of the seafarers. They are effectively violating the terms of the MLC which gives them a clear responsibility to protect seafarer welfare when neither owner nor flag State steps in. In this case, the owners allowed registration of the ship to lapse some time ago, meaning there is no flag State.
Video footage from French journalist Hugo Clement of TV Station France 5, who visited the ship in the last few weeks, shows it in an unsafe state of repair with dangerous control systems and unusable life boats. As the ITF reported last year, the ship is in a busy anchorage and has intermittently been left without lights at night putting the crew, and the crews of any ship that might collide with the Onda, in peril.
“The Onda has been described as a ghost ship,” said Steve Trowsdale, Inspectorate Coordinator at the ITF, “left to its fate by the owners and authorities. Both have completely neglected their responsibilities to look after the crew. They seem not to care that four human beings have been left to rot with inadequate food and water and no way off the ship.”
“The ITF has seized the ship and is demanding that the owners pay the crew what they are owed, together with expenses the ITF has incurred, and the cost of getting the seafarers home. If they don’t respond, the next stage will be to go back to court to have the ship auctioned off to recoup this money," said the ITF's Trowsdale.
"The owners have been put on notice. These seafarers have suffered for long enough. I will have no hesitation in taking that step if they do not respond promptly," he said.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
