Category Archives: South Korea

South Korea, is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People’s Republic of China (Mainland China) to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China (Taiwan) to the south. Its capital is Seoul, which is also its largest city.

South Korea: Seadrill Confirms Samsung Drillships Contracts

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South Korea’s Samsung Heavy Industries on Friday announced that it had received contracts for the construction of two drillships without revealing who the costumer was. Today, Seadrill, a Norwegian/Bermudan offshore drilling contractor confirmed the deal.

The construction of the drillships is scheduled for completion in the second and third quarter 2014. Total project price per drillship is estimated to be under US$600 million, which includes a turnkey contract with the yard, project management, drilling and handling tools, spares, capitalized interest and operations preparations. Seadrill has also a fixed price option to order an additional drillship for delivery in 2014.

The drillships are of the same design as the three previous dual derrick drillships that Seadrill ordered at Samsung late 2010 and early 2011, with increased water depth, technical capabilities and accommodation capacities. These dynamic positioning drillships will have a hook load capability of 1,250 tons and a water depth capacity of up to 12,000 feet targeting operations in areas such as the Gulf of Mexico, Brazil as well as West and East Africa. In addition, these units will be outfitted with seven ram configuration of the Blow out Preventer (BOP) stack and with storing and handling capacity for a second BOP.

Chairman of Seadrill John Fredriksen says:

Our long relationship with Samsung has given us access to a proven rig design and favourable delivery slots. In combination with attractive global yard prices, this has created an opportunity to continue to organically build Seadrill with very compelling economics. Seadrill will have five new ultra-deepwater rigs scheduled for delivery in the period 2013 – 2014 and four existing units coming off current contracts in the same period. There has already been specific discussions regarding chartering of part of this capacity. We believe the open ultra-deepwater exposure position will serve Seadrill well and create a unique exposure to one of the fastest growing and most profitable energy businesses in the world. We also believe that this open exposure can be used to further strengthen our relationship with fast growing and dynamic oil companies. The recent increase in daily rates for drilling rigs will generate excess cash that can be used for a balanced combination of organic growth and a strong long-term dividend distribution. It is likely that Seadrill’s commitment to tender and ultra-deepwater new buildings will be further increased in the weeks to come.

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South Korea’s Samsung Wins USD 1.1 bln Order for Two Drillships

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Samsung Heavy Industries (SHI), one of South Korea’s “Big Three” shipbuilding companies says it has received an order for the construction of two drillships.

The order’s estimated value is approximately USD 1.1 billion and it comes from a “large-scale” American corporation. According to the contract details posted on the Korea Exchange (KRX), SHI will make the deliveries no later than August 31, 2014.

This has been a fruitful month for Samsung Heavy Industries. On February 13, the company announced it had received the order from INPEX for the construction of an offshore central processing facility (CPF) for the Ichthys LNG project in Australia.

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South Korea: Pacific Drilling Extends Option for its 7th Drillship

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Pacific Drilling S.A.  has reached an agreement with South Korea’s Samsung Heavy Industries to extend until February 17, 2012 an option to construct a seventh ultra-deepwater drillship.

Under the revised terms of the option agreement, the delivery of the drillship will be no later than May 17, 2014. The commercial terms of the option agreement are unchanged.

Pacific Drilling is  a growing offshore drilling company that provides global drilling services to the oil and natural gas industry through the use of ultra-deepwater drillships. Pacific Drilling’s fleet of six ultra-deepwater drillships will represent one of the youngest and most technologically advanced fleets in the world. The company currently operates four recently delivered drillships and has two additional drillships on order at Samsung.

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UK: Largest Contract in Odfjell Drilling’s History

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Odfjell Drilling has been awarded a significant pre-contract award with BP for the provision of a new build, semi-submersible drilling unit for use in the UK’s West of Shetland region. The contract value is approximately $1.2 billion, excluding options, and represents the largest contract in Odfjell Drilling’s 40 year history.

The new unit will be involved in drilling in the Schiehallion and Loyal fields and will form a key part of the Quad 204 development. The full contract, which is subject to approval by the Quad 204 Partnership, will have a fixed duration of 7 years and is due to start in Q4 2014.

In July 2011 BP announced a decision to progress a major re-development of the Schiehallion and Loyal oil fields to the west of the Shetland Islands.

Schiehallion and Loyal have produced nearly 400 million barrels of oil since production started in 1998 and an estimated 450 million barrels of resource is still available. The investment of circa £3 billion in the re-development of the fields will take production out to 2035 and possibly beyond.

President & CEO of Odfjell Drilling, Simen Lieungh states:

“This contract award from BP is of great importance and represents a solid contribution to the company’s further growth and is a recognition of Odfjell Drilling’s status as a reputable international drilling contractor. We have a track record of delivering new build units on time and on budget and this new build for BP will be the fifth new deep water unit for the company. We highly value our relationship with BP and look forward to developing this relationship further in the future.”

Jim Cowie, BP Vice President for Wells, said: “The Quad 204 partnership is making this major investment in its drilling capability in response to high future demand West of Shetland and a desire to invest in the latest equipment that can help deliver its business plans. This is an exciting development and one which builds on BP’s recent announcements concerning its investments in the North Sea. Odfjell Drilling is a safe, efficient and innovative drilling contractor that is performing well for BP in the North Sea and with Deepsea Stavanger offshore Angola.”

Fifth deepwater unit delivery

The new state of the art Sixth generation rig will be built in South Korea by Daewoo Shipbuilding & Marine Engineering (DSME).

“The new rig for BP is of the enhanced GVA7500 harsh environment design and will be a sister rig of the Deepsea Atlantic and Deepsea Stavanger previously delivered to us by DSME. We are pleased to continue our collaboration with DSME, says Mr. Lieungh.”

Construction engineering has commenced and keel laying is scheduled for March 2013.

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DOE sees rationing as US acts vs Iran

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BY JOHN LOURENZE POQUIZ

The Department of Energy is readying its contingency plan in the event that the problem in Iran escalates and results in a local fuel supply shortage.

Energy Undersecretary Jose Layug said that the DOE is looking at mechanism where the government would ration fuel consumption in the event supplies become tight.

“We are reviewing our contingency plan. Part of that is cutting down consumption,” Layug told Malaya Business Insight.

“We would have a mechanism where people would be given allocations on the oil they consume. It’s a form of rationing,” he added.

Layug said that the Philippines sources only less than 1 percent of its requirements from Iran.

He said, however, local fuel supply would be threatened if the Strait of Hormuz, which is adjacent to Iran, would be blocked.

The strait is the only passage for ships carrying petroleum from major oil-exporting countries on the Arabian peninsula.

Layug said that because of the supply threats, world oil prices have been going up in past weeks, influencing local pump prices.

“In terms of Iran, (we source a) very small (amount). Less than 1 percent. But more importantly, ever since Iran test-fired its missiles (last week), the international market has gone up,” he said.

“In fact, for the past few weeks, the major reason for the price hikes is Iran. Prices in the international market have gone up,” he added.

Last week, oil firms raised the prices of their unleaded and premium gasoline products by P0.90 per liter. The price of regular gasoline went up P0.60 per liter, while diesel rose P0.30 per liter.

The sanctions approved by President Barack Obama on New Year’s Eve have highlighted the importance of Iranian oil supplies to East Asia’s energy-hungry economies. They have led to a clash of interests between Washington and key commercial and strategic partners over efforts to stop Iran’s nuclear program.

China, the biggest buyer of Iran’s oil, has publicly rejected US sanctions aimed at Tehran’s energy industry, while American allies Japan and South Korea are scrambling to find a compromise to keep critical supplies flowing.

Beijing is buying less Iranian crude this month, but analysts say China is unlikely to support an oil embargo. Instead, they say, the smaller purchases might be a tactic aimed at obtaining lower prices as the West squeezes Tehran.

“We are considering our response and are closely discussing the matter with the US,” a Japanese Foreign Ministry official, Kazuhiro Kawase, was quoted by The Associated Press as saying Friday.

A South Korean foreign ministry spokesman said this week Seoul is in talks with Washington aimed at “minimizing the negative impacts” of sanctions. South Korea imports 97 percent of its oil and depends on Iran for up to 10 percent of its supplies.

China’s foreign ministry rejected the sanctions this week and called for negotiations, leaving unclear whether Beijing might defy Washington, straining relations between the world’s biggest and second-biggest economies.

“Sanctioning is not the correct approach to easing tensions,” said a ministry spokesman, Hong Lei. “China opposes the placing of one’s domestic law above international law and imposing unilateral sanctions on other countries.”

US Treasury Secretary Timothy Geithner is due to visit Beijing and Tokyo next week for talks that officials say will include the sanctions.

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Alaska export plan collapses

US energy body vacates order for Yukon Pacific to export LNG to Asia.

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Yukon Pacific is no longer planning to export LNG from the North Slope of Alaska.

Rachael Meredith in London  
03 January 2012 11:44 GMT

CSX Corporation subsidiary Yukon Pacific is officially pulling out of plans to export LNG from the North Slope of Alaska to Japan, South Korea and Taiwan.

The US Department of Energy has vacated an earlier order to allow the outfit to export up to 350 million tonnes of LNG for a 25 year term.

Yukon said it is no longer pursuing efforts to export LNG and “is in the process of concluding its business affairs”.

The company first received consent to ship LNG from Alaska in 1989. It had planned to build a gas pipeline parallel to the trans-Alaska oil pipeline, with the option of constructing an LNG facility at Valdez.

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Ophir Begins with Drilling Operations Offshore Tanzania

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Ophir announces the start of its 2012 drilling programme in Tanzania with the drillship Odfjell Metro-1. The first three wells in the programme will be Jodari-1, Mzia-1 (previously named 1W) and Papa-1 (previously named 3A).

The Metro-1 is a state-of-the-art drillship capable of drilling in water depths of up to 3,000m. The rig has a dual derrick with a main work centre and an auxiliary work centre to facilitate a number of simultaneous operations. Both work  centres are equipped for drilling. The Metro-1 was built at the Hyundai Heavy Industries yard in Ulsan, South Korea and a detailed series of acceptance tests have been performed ahead of mobilisation to Tanzania.

The Jodari-1 and Mzia-1 wells are both located in Block 1. For efficiency reasons the Mzia-1 top hole section will be drilled first, as part of a batch drilling programme, then the rig will move to drill Jodari-1 in its entirety, before returning to Mzia-1 to complete the bottom portion of the well.

The Mzia-1 well spudded in 1,500m of water on 1 January 2012 and drilling of the top hole section is expected to take 7 to 10 days. Thereafter the Jodari-1 well will spud in a water depth of 1,155m and drill to total depth of c 4,600m subsea in an estimated 40 days. The Jodari prospect contains multiple stacked targets in both the Tertiary and Cretaceous sections with the former having seismic flat spot and amplitude fit to structure. Jodari is modelled by Ophir to contain mean resources of 2.2Tcf in the stacked targets.

Ophir holds 40% of Blocks 1, 3 and 4 and has now fully handed over operatorship to 60% partner BG International, who will manage the programme with the Metro-1.

Ophir CEO, Nick Cooper said: “2012 has the potential to be transformational for Ophir. We are pleased to start the year by kicking off our Tanzanian drilling programme and also to see drilling and seismic operations gearing up across our other key assets. Ophir plans to drill at least 9 wells across our portfolio in 2012.”

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World Demand for High Value-Added Vessels Increase

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The new orders gained by China shipbuilding industry in 2010 worth USD 36.3 billion, accounted for 38% of the global market exceeding the 37% taken by South Korea. From January to September 2011, the China’s new orders fell by 40% and the new orders obtained by South Korean shipyards valued USD 43.6 billion regaining its first place in the world.

Japanese and South Korean companies are directed towards high value-added ships, especially seismic vessel, drillship, FPSO and LNG Carrier. The long-term instability in the Middle East and the increasing scarcity of oil resources in shallow water are affecting the increase in demand for these vessel types.

90% of the orders for seismic vessels, usually priced at more than USD 600 million, are obtained by South Korean companies, the rest belongs to Japanese companies.

South Korean companies have been dominating the drillship market. Samsung Heavy Industries established Estaleiro Atlantico Sul (EAS) with local construction giants Queiroz Galvao and Camargo Correa. Petrobras recorded an order for seven drillships with EAS in February 2011, with a contract value of approximately USD4.63 billion, what accounts for the largest drillship project ever. Samsung Heavy Industries has more than 60% of drillship orders.

It has been anticipated that in late 2012 or early 2013, China shipbuilding industry will face a severe crisis. The global dry and bulk cargo and container shipping markets will see a downturn and severe excess capacity till 2016.

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