President Obama’s fiscal year (FY) 2017 budget request for the Bureau of Safety and Environmental Enforcement (BSEE) provides critically needed resources to further strengthen BSEE’s regulatory and oversight capabilities for oil, natural gas and renewable energy development on the U.S. Outer Continental Shelf, promoting a culture of safety and environmental protection by ensuring compliance with Federal regulations.

The FY 2017 budget request is $204.87 million, a $196,000 increase above the FY 2016 enacted level, and includes $96.34 million in current appropriations and $108.53 million in revenue from rental receipts, cost recoveries, and inspection fees.

“The President’s proposed FY 2017 budget fully reflects the Administration’s continued emphasis on ensuring the safe and responsible development of the Nation’s offshore energy resources,” said Director Brian Salerno. “The President’s request supports BSEE’s efforts to build a robust culture of safety, with a strong focus on risk reduction to protect lives and the environment.”

“The Bureau uses a comprehensive program of regulations, compliance monitoring and enforcement, technical assessments, inspections, and incident investigations to mitigate and reduce risk,” Salerno said.

The FY 2017 budget also supports research and the development of new technologies and scientific investments to best manage the country’s offshore energy resources.

The request includes $190 million for offshore safety and environmental enforcement programs. BSEE is also working collaboratively with the Bureau of Ocean Energy Management to establish appropriate permitting and oversight processes for offshore renewable energy projects.

The FY 2017 proposal includes $14.9 million for Oil Spill Research, equal to the 2016 request level, to address key knowledge and technology gaps, focusing research on deep-water and Arctic environments. The Oil Spill Research program plays a pivotal role in initiating applied research to support decision making to prevent or mitigate oil spills, which is a critical component of the offshore permitting process. Funds are used to sponsor testing of new equipment or methods and also to support the bureau’s oil spill and renewable energy test facility, Ohmsett.

The President’s FY2017 budget request of $13.4 billion for the Department of the Interior reflects his commitment to responsibly managing energy development on public lands and offshore waters, conserving vital national landscapes across the Nation, meeting Federal trust responsibilities to Native Americans, supporting the next century of our Public Lands.

Additional details on the President’s FY 2017 budget request are available online.

The new fund, Statoil Energy Ventures, will invest up to USD 200 million (around NOK 1.7 billion) over a period of four to seven years.

Potential investment themes include offshore and onshore wind, solar energy, energy storage, transportation, energy efficiency and smart grids.

Image Courtesy: Statoil

The team initially consists of six investment professionals operating with a global mandate, initially based out of Statoil’s offices in London and Oslo.

The fund will take direct positions primarily as a minority shareholder in growth companies, preferably as a co-investor with other venture firms. Investment in selected fund will also be considered to gain a wider footprint.

The Statoil Energy Ventures team, focusing on growth-phase investments in renewable energy, will operate alongside Statoil’s existing venture entity, Statoil Technology Invest (STI), which focuses on early-phase investments in upstream oil and gas.

Statoil has a strong track record of successful technology implementations and financial return through exits. STI has since 2000 invested around USD 135 million, achieving a multiple of invested capital on realized deals of 2.5.

“We are pleased to announce Statoil Energy Ventures: One of the world’s largest corporate venture funds dedicated to renewable energy. The transition to a low carbon society creates business opportunities, and Statoil aims to drive profitable growth within this space. Through the new fund, we look forward to investing in attractive and ambitious companies and contribute to shaping the future of energy,” says Irene Rummelhoff, Statoil’s executive vice president for New Energy Solutions.

The fund is established as part of Statoil’s new business area New Energy Solutions, reflecting the company’s aspirations to gradually complement its oil and gas portfolio with profitable renewable energy and low-carbon solutions. The investments are included in Statoil’s overall investment outlook as presented on 4 February.

“Statoil Energy Ventures aims to be an attractive partner for growth companies. We offer a strong financial muscle and are ready to invest in three strategic areas: Supporting our current operations in renewables, positioning in renewable growth opportunities, and exploring new high impact technologies and business models. We look forward to engaging with ambitious entrepreneurs as an active investor and to build great companies,” says Gareth Burns, vice president in Statoil and managing director of Statoil Energy Ventures.

Aker Solutions will deliver a concept study on a new processing platform for future phases of the Statoil-operated Johan Sverdrup North Sea field, Norway's largest oil find in three decades.

The study includes design solutions for a tie-in of the platform and future satellites to the field center that is being developed in the project's first phase. The work will be carried out by Aker Solutions in Oslo and Stavanger and will be delivered in the summer.

"Johan Sverdrup is of major importance to Norway's oil industry and we're very pleased to expand our involvement through work on future phases," said Valborg Lundegaard, head of engineering at Aker Solutions. "We've worked closely with Statoil to bring down costs and increase the overall efficiency of the development and will continue to push for further improvements."

The study is being carried out under the framework engineering agreement awarded to Aker Solutions for Johan Sverdrup in 2013. The company is in the second year of a five-year engineering, procurement and management assistance (EPMA) assignment for the topsides of the first phase's processing and riser platforms and the overall design integrity of the field. At its peak this work is expected to involve more than 1,000 employees at engineering hubs in Oslo, London and Mumbai.

Johan Sverdrup is estimated to hold 1.7 billion to 3 billion barrels of oil equivalents. It's expected to produce 550,000 - 650,000 barrels of oil equivalents a day when fully developed, equal to about a quarter of current domestic output. Production is slated to start in late 2019 and is predicted to last for about 50 years. The first development phase will consist of four platforms linked by bridges.

Statoil is operator for the development, which spans three licenses. Other partners include Lundin Norway, Petoro, Maersk Oil and Det norske oljeselskap.

Seatronics Ltd, an Acteon company and part of its survey, monitoring and data business, has announced the recruitment of Janelle Pence as vice president for the USA region.

Pence will be responsible for managing and developing Seatronics’ business with a particular focus on developing long-term partnerships with the remotely operated vehicle (ROV) and survey community in the Gulf of Mexico.

Pence has more than 14 years of experience in the offshore oil and gas industry, with a substantial focus on subsea development. She has held leadership positions in business development, commercial management, strategic planning and general administration with both Subsea 7 and Ceona, and holds a BBA in marketing from Texas A&M University and an MBA from Rice University in the USA.

Phil Middleton, group managing director, Seatronics, said, “Janelle is a perfect fit for the Seatronics business. She possesses a solid commercial background and a track record of displaying strong leadership. With previous roles located in the USA, Brazil and France, she has amassed considerable knowledge in both local and international energy markets. We all look forward to working with her as we to develop new business opportunities and grow our service offering in the Gulf of Mexico.”

Pence said, “It is a privilege to join a market-leading company like Seatronics. By working closely alongside the talented Seatronics team, I am confident we will continue to deliver and expand on our capabilities in the USA, and grow additional long-term relationships in the Gulf of Mexico.”

ABB, a leading power and automation technology group, will supply the power, propulsion and energy storage solution for two of the most innovative vessels operating in the offshore oil and gas sector. The specialized vessels require an advanced propulsion and power generation system to perform its operation. The new Azipod D will help the vessels safely achieve millimeter precision at open sea.

The Azipod D is the latest generation of ABB’s award winning podded electric propulsion system. The vessels will each feature two 4.2 megawatt units. A hybrid cooling system using combination of direct seawater cooling and internal air cooling increases electric motor performance by up to 45 percent. Overall, the Azipod units will have a substantial impact on the ships fuel efficiency. Maneuverability and station keeping is the key for the vessels and the Azipod propulsor’s 360 degree steerable propeller makes it ideal for their requirements.

The Onboard DC Grid will cut fuel consumption by up to 27%. It allows the ships’ four 3600kW generators, also supplied by ABB, to operate at variable and optimum speed. The vessel is also equipped with batteries, which will further optimize use of the power plant and reduce energy consumption.

“The solutions we are providing will make these ships incredibly flexible and efficient to operate,” says Juha Koskela, Managing Director of BU Marine and Ports. “The Azipod D, Onboard DC Grid and energy storage are cutting edge technologies which match the demanding conditions often experienced in the offshore sector.”

In line with the high technology equipment onboard, the ships will also be equipped with ABB’s Remote Diagnostic Service. This system will connect the vessels to ABB’s shore side technical support centers where the technicians can monitor the performance of the vessel and ensure necessary support.

The vessels will measure 90 meters by 20 meters and is designed to accommodate 36 persons onboard. They are designed by the Arendal, Norway based firm Cefront Technology, and will be built by COSCO. The vessels are designed to operate globally.

Despite current low oil prices, the oil and gas industry in the Falkland Islands is continuing to go from strength to strength as its first project, Premier Oil’s Sea Lion, moves closer to commercialization, according to an analyst with research and consulting firm GlobalData.

Adrian Lara, GlobalData’s Senior Upstream Analyst covering the Americas, says that governmental changes in Argentina add to the favorable conditions supporting the Falkland Islands’ industry’s advance towards its first oil.

Lara comments: “During the previous Kirchner administration, the government discourse was one of sovereignty dispute. Companies operating in the territory were denied access to participating in Argentina. International oil companies with significant operating assets in Argentina, such as Total or Chevron, avoided damaging their working relationship with the government.

“In April 2015, a federal judge ordered the seizure of assets of companies drilling in the territory including Premier Oil, Rockhopper Exploration, Falkland Oil and Gas Ltd, Noble Energy and Edison International Spa. The new Argentinian government has indicated a clear position of enacting market-friendly reforms including rolling back regulations, re-accessing international financial markets and encouraging foreign direct investment.”

While only 15% of the total available blocks in the Falkland Islands have been awarded, farming into existing licenses has been the primary strategy for participation in the basin. With an extensive list of prospects identified in licensed blocks, farm-ins will continue to be the main entry tactic for new companies.

The analyst adds that the current landscape supports maturing existing prospects rather than developing new opportunities, with Sea Lion the most successful discovery in the region maturing towards commercial viability to date.

Lara continues: “The development strategy presented for Sea Lion is through use of a Floating Production Storage and Offloading vessel (FPSO), which adds flexibility and for which leasing costs have halved. The front-end engineering and design for the FPSO has been awarded to SBM Offshore.

“GlobalData estimates a rate of return of 8% under a flat US$40 oil price, and a breakeven price of US$36.85. Under the assumption of an escalating oil price, returning to US$60 in 10 years, the rate of return improves to 15%.”

The analyst concludes that while development in the Falklands will not carry the publicity of the recent Liza discovery in Guyana by ExxonMobil, the sector is moving forward at a steady pace and first oil is expected at Sea Lion within the decade.

Egil Haugsdal follows Geir Håøy as President of Kongsberg Maritime. Haugsdal holds extensive leadership experience from KONGSBERG, and currently heads Kongsberg Oil & Gas Technologies. He has previous experience from KONGSBERG as Executive Vice President of Business Development and as President of Kongsberg Protech Systems.

“I am delighted with the confidence I have been given. After seven years as part of KONGSBERG’s corporate management team I know both the company and the strategy well. Kongsberg Maritime is a solid company with leading international positions, and I look forward to further development of the company together with skilled employees in Norway and internationally,” says Egil Haugsdal.

“I am pleased that I will be handing over the role of President of Kongsberg Maritime to Egil Haugsdal. After several years of cooperation in the corporate management team I have developed great respect for Egil’s capacity and experience. Egil has achieved good results and knows Kongsberg Maritime well,” says Geir Håøy, current President of Kongsberg Maritime.

“Egil has had a key role in the restructuring of the Group’s oil and gas businesses, and I am very pleased that he now will assume the responsibility of heading KONGSBERG’s largest business area, Kongsberg Maritime. We are entering times characterized by both great opportunities, but also challenging market conditions. Egil knows KONGSBERG and our industries very well, and I am confident that his more than 30 years of industrial experience, the last 20 in KONGSBERG, makes him the right person to lead Kongsberg Maritime going forward,” says CEO of KONGSBERG, Walter Qvam.

Egil Haugsdal will assume his new position as President of Kongsberg Maritime after a short period of overlap with Geir Håøy. As previously announced, Geir Håøy will assume the position of CEO of KONGSBERG in June 2016.

The Offshore Technology Conference (OTC) has named the Dynamic Positioning Committee of the Marine Technology Society the recipient of its prestigious 2016 Distinguished Achievement Award for Companies, Organizations and Institutions. The Dynamic Positioning Committee will be honored at the OTC Awards dinner on Tuesday May 3, 2016.

The Internationally acclaimed Distinguished Achievement Award recognizes major technological, humanitarian, environmental and leadership contributions to the industry. This is only the second time in the 45-year history of the OTC that the award has been bestowed on an organization.

“We are very honored to receive this award,” states Pete Fougere, Chair of the Dynamic Positioning Committee. “This industry recognition adds great momentum to our mission. We will continue to dedicate our efforts to developing and providing resources to the DP Community that translate into sustained, incident-free DP operations throughout the world.”

Now in it is 20th year, the Dynamic Positioning Committee was established in 1996 to facilitate the incident-free execution of DP operations and improve DP reliability, by creating a forum for discussion and knowledge sharing, education, and the establishment of guidelines. The Committee operates as a nonprofit, and is made up of volunteers from a wide range of companies, including offshore operators, Marine Class Societies, ship owners, DP vendors, DP professionals, and regulators. Specialized subcommittees address specific DP-related areas and establish guidelines, including DP operations, DP design, Equipment Testing and Thrusters. The Committee’s publications and online resources are provided to the DP community free of charge.

Some of the Committee’s achievements over the past 20 years include:

The hosting of an annual conference, attended by leading Dynamic Positioning experts from academia, government and industry. Recognized as the world’s leading conference on DP and DP related issues and technology, the conference has become an international hub for the exchange of ideas and technological know-how.

The establishment of the world’s most comprehensive single source electronic library of information on Dynamic Positioning, freely accessible to industry professionals through the Committee’s website.

The publication of some 30 peer-reviewed Guidance Documents, covering Design, Operations, People Management and Technical and Operational Guidance. These documents are used extensively by the DP Community and have also been referenced in the development of the United States Coast Guard’s DP regulations. The disciplined application of these guidance documents has resulted in a measurable improvement in the delivery of predictable, incident-free DP operations everywhere.

Cooperation with other associations, including the International Marine Contractors Association (IMCA) and the Center of Offshore Safety, with a view to the further sharing of knowledge and the exchange of ideas.

The documentation and analysis of DP incidents and the online publication of LFIs (Learnings From Incidents) is designed to enable DP vessels to avoid repeat incidents resulting from the same root cause.

About the OTC

The Annual Offshore Technology Conference attracts around 100,000 participants each year from some 130 countries, providing a forum to sharing ideas and opinions aimed at advancing scientific and technical knowledge for the safe, environmentally friendly and sustainable development of offshore oil and gas resources.

Aker Solutions and Total have agreed to collaborate on research and innovation to develop new cost-effective subsea field technology.

The initial four-year technical collaboration agreement will build on earlier cooperation and bring both companies closer in developing technologies that will reduce costs and increase value at subsea oil and gas fields. The partnership will this year explore a wide range of issues, including further evolution of subsea processing and compression systems to boost cost-efficiency of deepwater gas production, development of electric subsea controls and optimization of flow-measurement technologies. Further scope of the collaboration will be defined over the next months.

"This joint effort reinforces our common interest in finding more effective solutions to maximize value from subsea field developments," said Hervé Valla, chief technology officer at Aker Solutions. "It allows us to work more closely with Total to solve technical challenges faced by the industry today and to reduce the time needed to bring subsea technology to the market."

Total has been a strategic customer of Aker Solutions for many years including on subsea projects such as the Kaombo and Dalia developments in Angola and Moho Nord in Congo-Brazzaville. The companies have worked closely on solving specific project challenges and designing solutions to enable future developments. This includes collaborating on subsea boosting solutions and subsea plant for deepwater application as part of Total's deep offshore research and development program.

NYC-based PIRA Energy Group reports that oil prices have continued declining under the weight of growing oversupply. In the U.S., a sharp decline in crude imports minimizes commercial stock build. In Japan, crude runs rose while imports rebounded such that stocks built. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Asia-Pacific Oil Market Forecast

Oil prices have continued declining under the weight of growing oversupply. In addition to the physical surplus, the macroeconomic environment has become more unsettled with increased downside risks now being factored into the pricing of "risk assets". Refining margins, which had been healthy, have now come under pressure, thus ultimately pushing back on crude demand which compounds the growing pressure to find a home for crude supply. Containing the surplus will require filling up the least economic onshore storage and using floating storage which will deepen contango structure, weighing on prompt prices.

Atlantic Coal-Gas Switching: Temporary or Structural?

Gas and power markets on both sides of the Atlantic are headed down similar paths in 2016. Storage surpluses are building, gas supply cuts are slow to emerge, and the development of greater gas use in the power sector will offer concrete stages of growth in the weeks and quarters ahead. While European spot and contract prices are still roughly twice the level of Henry Hub prices, both gas markets are competing for coal demand in a manner that suggests more than just a temporary emergence of substitution. Given the price difference, the U.S. market is much farther down the road, but a more structural change is under way within the power sectors of both North America and Europe that will be increasingly linked once LNG exports begin to add to gas demand in the U.S. and gas supply in Europe.

Load Weakness Continues, Renewable Build Grows

Eastern Interconnect weather-adjusted daily average peak loads fell by 1.3% in January. Load growth continued in ERCOT and several Southeast balancing authorities. Spot on-peak power prices increased m/m in most markets with the strongest gains in the Northeast (greater than 60%) as gas basis widened seasonally. On-peak energy prices increase year-on-year in most markets during 2H16 as gas prices move higher. Growth in wind, new TVA nuclear unit and modest forced coal burn limit gas burn gains during 1H16. Eastern coal generation falls by 1.2% in CY16 with a strong second half recovery.

Friday Rally Not Enough to Prevent Week-on-Week Slide for Coal

Despite a notable rally on Friday, coal prices again finished the week down from the end of the prior week. For most of last week, downward pressure on coal pricing came from a variety of sources, including steep declines inequity markets, weaker oil/gas pricing, and lower dry bulk freight rates. Looking forward, coal pricing generally, and FOB Newcastle (Australia) prices specifically, will heavily depend on China’s domestic consumption and import demand. This situation will be cloudy over the next 30-60 days due to the impacts of the Chinese Lunar New Year, and the corresponding lack of clarity in energy data.

Weak Asian LPG Prices Squeeze Global Export Economics

Cash propane cargoes arriving in the Far East in late March were assessed 3% lower near $320/MT. With Saudi Aramco propane CP futures currently expecting a contract price reduction of $5-$10 in March, and spot VLGC freight to Asia near $45, next month’s arbitrage economics look questionable at best. This winter’s milder conditions continue to hamper regional demand, just as the world’s LPG exporters increasingly look to the region to absorb higher flows. Cash butane prices were called 3.6% lower near $345/MT.

Global Equities Again Move Lower

Global equities again broadly fell back on the week. In the U.S., most of the tracking indices lost ground, though the defensive indicator, along with retail and consumer staples managed to post gains. The weakest performer was banking. Internationally, all the tracking indices lost ground. China was closed for their New Year, but Japan, India, and Hong Kong posted significant losses, along with Latin America.

U.S. Ethanol Assessments Strengthened to the Highest Level in about Seven Weeks

U.S. ethanol assessments strengthened to the highest level in about seven weeks. Assessments were boosted by prospects for higher exports, and prices gained despite rising stocks and lower oil and corn values. Production has dropped during the last few weeks, tightening the supply/demand balance. Manufacturing margins were sharply higher, surging as the weekend approached.

Major Contraction

Agri-giant Bunge confirmed this week what ADM said a few weeks ago; 2016 will be challenging. Other agri-related companies like The Anderson’s from Ohio, and Green Plains Energy from Nebraska had their equities decimated this week as earnings sank and major layoffs ensued. Processors of agricultural products are now starting to feel the pain that farmers are all too familiar with after 2015.

California Carbon Declines; Awaits Auction Court Decision

Going into this month’s allowance auction, benchmark contract prices declined again, reflecting oversupply and a lack of concrete long term cap and trade policy signals. Clarity on potential market drivers will begin to emerge in 2016, including the Scoping Plan Update and a verdict on the allowance auction lawsuit, expected any day. PIRA believes auctions would continue, even with an adverse decision, pending appeal to the CA Supreme Court. Otherwise, transportation sector emissions are expected to grow this year, while large declines anticipated for the power sector.

Sharp Decline in Crude Imports Minimizes U.S. Commercial Stock Build

Total commercial stocks built this week to a new record high stock level. With a larger stock build last year, the surplus narrowed to 160 million barrels. A decline in crude imports and another sharply lower domestic crude supply reading were reflected in the first crude stock draw since January 1, narrowing the crude surplus.

New Supply Regime Less Concerned with Adjusting to Weather Deviations

No reason can be seen in the fundamental outlook to expect anything but a further deterioration in spot prices for the balance of the quarter. A few colder than normal days next week and heavy snowfall across portions of the Alps are not going to be enough to turn around prices, which continue their slow deterioration in the face weaker gas demand outside the power sector. Residential/commercial use is clearly the dominant demand center for gas at this time of the year. On average, this week should be the coldest of the year, but nothing could be further from the truth at this point. Storage withdrawals remain well below normal and point toward an upcoming entrance to injection season where stocks will be above the five year average on April 1 despite showing significant deficits going into the previous winter.

No Bottom in Sight for Carbon, but Floor for German Power Approaching

EUA prices continued to fall through early February, and, in spite of Friday's rebound, they are at their lowest level since mid-2013. PIRA believes that downside risks for carbon prices remain: greater supply, a lack of policy action in 2017-2018, reduced demand from forward hedging, and lower gas prices that encourage fuel switching away from coal. There is no doubt that lower carbon compliance costs are a relief for high-emitting units, but in January and February thus far, German lignite units have been ramping down heavily in response of lower prices, suggesting some supply discipline has been emerging.

U.S. Supreme Court Stays Clean Power Plan

The Supreme Court voted 5-4 to stay implementation of the Clean Power Plan (CPP). No compliance efforts need be undertaken until legal review is completed. Efforts to develop CPP compliance approaches have now lost urgency. PIRA had not expected the CPP would survive as written and it was not in our reference case forecast. This decision is unlikely to change California's GHG approach, but it may make RGGI less ambitious in its current program review. Without a replacement for the CPP, prospects for another extension of the renewable tax credits improve.

Japanese Crude Runs Rose, Imports Rebounded Such that Stocks Built

Crude runs rose 103 MB/D on the week, while crude imports rebounded such that crude stocks built 4.4 MMBbls. Finished products drew 1.35 MMBbls, largely on a draw in kerosene stocks and supported by smaller draws for gasoline, gasoil, and fuel oil. Major product demand was higher with gains primarily in gasoil and gasoline. Refining margins continue to weaken from peak levels with gasoline and naphtha cracks falling sharply from lofty levels and fuel oil also easing. Margins, on balance, are still deemed acceptable but off significantly from earlier levels.

High Winter Stocks Warrant Low Prices — for Now

Following a price “correction” from a high north of $2.30 to a dip below $2.00, traders established a tighter range with the front-month contract retracing Monday’s rally on subsequent warmer forecast changes and an anemic inventory release.

Stay of Clean Power Plan Bearish for RGGI

With weakened prospects for carbon pricing for RGGI’s neighbors, the Supreme Court’s stay of the Clean Power Plan is bearish for RGGI pricing expectations, and RGGI allowance prices have declined in response. However, the RGGI program review, to be completed this year, will ultimately set post-2020 caps for the program, determining its stringency.

Negative Interest Rates Are Driving Market Nervousness

The Bank of Japan introduced a negative interest rate on bank reserves two weeks ago. While this move was intended as economic stimulus, it has instead turned out to be a destabilizing influence for financial markets. The prospect of competitive monetary easing by central banks has become more real, as different countries will begin to test how negative policy interest rates can feasibly go. Further, the BOJ action has highlighted the possibility that Japan is nearing the limit of quantitative easing. Key data releases for the U.S. were encouraging, but manufacturing data from Europe and India disappointed.

U.S. Ethanol Stocks Reach All-Time High

U.S. ethanol inventories spiked to a record 22.96 million barrels last week, surpassing the previous peak set in March 2012 by 243 thousand barrels. Stocks are 1.8 million barrels higher than they were at this time last year. Ethanol production increased to 969 MB/D from 959 MB/D during the preceding week, breaking a string of three consecutive weekly declines. The manufacture of ethanol-blended gasoline soared to 8,632 MB/D after having plummeted to 8,155 MB/D in the prior week because of higher overall gasoline output.

China Rally?

Global equity and commodity rallies (ex-gold) are being attributed to Chinese Central Bank currency support which continued after the conclusion of their New Year’s celebrations. A fundamental grain/oilseed problem continues to exist in China however, which could make this most recent “risk on” opinion in ags short-lived.

Financial Stress Remains Elevated

The S&P 500 fell Friday to Friday and on a weekly average basis, though Friday produced a large short covering rally ahead of the holiday weekend. All of the other indicators, such as volatility, high yield debt and emerging market debt, also worsened on the week. The U.S. dollar generally fell in value, particularly against the euro, yen, eastern European currencies and some of the Asian currencies. Commodities had a mixed week with some downward bias still remaining.

U.S. and Brazil Total Fuel Ethanol Exports Up in 2015

The U.S. shipped 799 million gallons of fuel ethanol in 2015, down 1.3% from 809 million gallons in 2014.Brazil exported 493 million gallons of ethanol in 2015, up 33.6% from 369 million in the preceding year.

Proposed Increase in Russian Taxes Would Significantly Reduce Operator’s Margins

PIRA estimates that a recent proposal to increase Mineral Extraction Tax (MET) in 2016 would cut operator’s margins by 40% and reduce drilling activity. The proposal would reduce by half the current $15/Bbl MET tax free allowance and would bring an additional $12 Billion in revenue to the government. On a yearly average, PIRA estimates Russian production to be slightly up in 2016 (140 MB/D decline January to December 2016) and decrease by 170 MB/D in 2017. Our forecast already anticipates a more burdensome tax regime in 2016 but we will continue to monitor the situation and revise our forecast as needed.

Plainly Spain: Europe's Number 1 Gets Knocked out of Position by UK

Having been nudged out of its place as the number one buyer of LNG in Europe, Spain will still play a critical role in balancing Atlantic Basin supply due to the considerable amount of contracted LNG in its portfolio (see chart below); contracted LNG that it has underlifted for many years. With limited pipeline access to the rest of Europe, Spain has quickly re-invented its role in the LNG market by re-exporting, diverting, or reselling to the wider spot market, in essence providing a key connection between the Atlantic Basin and Asian markets in a way that no pure portfolio player has been able to do thus far. It has been a lucrative business as well, but its role is fading now that both LNG producers and many buyers have taken to tendering unwanted volumes. The fact that LNG deliveries to the U.K. have surged past Spain is indicative of a supply push to Europe that is just beginning on the part of other Atlantic Basin and Mideast suppliers.

UK Gas Prices Set to be Reduced

British Gas and EDF Energy have announced they are cutting their gas prices, the last of the big six energy suppliers to do so. British Gas unveiled a 5.1% price reduction, followed swiftly by EDF's announcement of a 5% cut. British Gas's price change takes effect on 16 March, while EDF's kicks in eight days later. The moves benefit customers on a standard domestic gas tariff. Britain's big six energy suppliers have been under pressure to pass on savings to customers after a 57% drop in wholesale gas prices since this time last year. E.On was the first to announce a cut this year of 5.1%, followed by similar reductions by SSE, Scottish Power and Npower.

Euro Carbon Sensitive to Natural Gas Prices; Subject to Downward Price Triggers

EU ETS oversupply conditions have not changed: higher auction volumes, upcoming 2016 free allocations, and incentives for industrial sales. Weak structural demand is accompanied by low gas prices, reducing coal-fired generation competitiveness. EUAs are nearing parity with implied carbon values and will more closely track natural gas price movements. We do not currently expect near-term policy support for prices. A downward price trigger, like a cancelled auction, could have a sustained negative market impact.

February Weather: U.S., Europe and Japan Warm

At midmonth, February looks to be 6% warmer than the 10-year normal for the three major OECD markets with oil-heat demand weaker than normal by 279 MB/D. However, the three major regions are roughly 12% warmer on a 30-year-normal basis.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Click here for additional information on PIRA’s global energy commodity market research services.

The UK subsea sector will have the opportunity to further bolster its international profile next month at the largest oil and gas exhibition in Australasia.

Industry body, Subsea UK, will be seeking to establish stronger links between Australian and British businesses to exploit the significant oil and gas developments at this year’s Australasian Oil & Gas Exhibition and Conference (AOG). The event, which takes place from 24-26 February 2016, will explore how new technology and better cooperation will help to drive the industry forward.

Celebrating its 35th year, AOG 2016 will have ‘collaboration’ as its theme, with over 100 experts from leading companies providing input on how industry, government and key stakeholders should continue to work closely together to reduce costs and improve productivity.

With a string of world class Australian LNG projects making the transition from the construction to operational phase, the UK subsea sector is well positioned to support province in meeting its target to become the world’s leading exporter of LNG by 2018.

Under the Subsea UK banner, two British companies, Schoolhill Hydraulic Engineering and James Fisher Excavation will get the chance to showcase their products and services to oil and gas companies, service providers, engineers, technical professionals and suppliers.

Subsea UK is once again supporting the Subsea Australasia Conference at the event, which will include a session chaired by Neil Gordon, chief executive of Subsea UK, on innovation, field development and the changing outlook for the global subsea sector.

Mr. Gordon commented: “Australia boasts an outstanding economic track record. As the fifth largest economy in the Asia-Pacific region, and the 13th largest economy in the world, the country is viewed as a dynamic and stable market which presents a pool of opportunities for the UK subsea sector.

“A recent report from the International Energy Agency (IEA) revealed that Australia and the Asia Pacific region have much to be positive about in the longer term, with LNG projects predicted to create thousands of jobs, export income and new revenues.

“It’s important that UK companies take full advantage of these opportunities, casting their nets further than the North Sea to explore ways of exporting their technology and expertise. As the industry body for the UK subsea sector, we will be representing all 320 of our members at the event and looking at ways in which we can help them break into the Australasian market.”

Expected to attract over 500 exhibiting companies from 25 countries, the conference is the largest event of its kind in the southern hemisphere and offers delegates an opportunity to debate key issues, encourage new ways of thinking and explore future subsea developments.

Each year, the conference highlights and defines the issues and challenges of subsea exploration and development on a national and international level. The 2016 conference program will include international keynote presentations, case study presentations, technical updates, one-to-one meetings and panel discussions over the three-day event.

“UK companies have the skills, technology and experience to meet demand for subsea expertise in the Americas, Africa and, increasingly, in the Asia Pacific region. Working in partnership with UKTI, Subsea UK is leading the delegation to AOG to showcase British subsea excellence,” Mr. Gordon added.

Fugro and technology partner Areté Associates have successfully delivered near real-time, synoptic, surface current data to characterize Loop Current and Loop Current eddy conditions in the US Gulf of Mexico during a period of intense current conditions.

The new ROCIS (Remote Ocean Current Imaging System) was deployed on its first operational project, in the US Gulf of Mexico. Over the course of the five-month program, Fugro surveyed currents over a distance of more than 125,000 kilometers - the equivalent of 3 times around the world.

ROCIS is an airborne system for mapping surface current conditions over a wide area of ocean for current-sensitive offshore operations

ROCIS is the first commercially available system of its kind and represents a step change in technology for mapping surface current conditions over a wide area of ocean for current sensitive offshore operations.

Optimizing recent advances in remote sensing and aerial survey, Fugro and Areté Associates developed a system that uses a combination of digital camera technology and highly accurate positioning systems, together with advanced algorithms, to derive surface currents from wave spectra measurements. It can be installed on a suitable survey aircraft, together with an inertial navigation system augmented by Fugro’s Starfix® satellite positioning system.

Current data are reviewed in real-time on board the aircraft, providing continuous assessment of data quality and the location of strong currents. Within an hour of the aircraft landing the system produces a “quick-look” map of the currents over the area while processed data files are available a few hours later. During the program ROCIS data supported day-to-day operational planning and enhanced the accuracy of 3D hydrodynamic current forecast modelling.

The key technical benefits of ROCIS are the near synoptic, wide area, high resolution, high integrity surface current measurements that allow sub-mesoscale circulation to be measured and monitored. During a four-hour flight the system can survey ocean currents at 250-meter intervals over a track of 900-1,100 kilometers.

To map currents over a similar distance using traditional methods would take a combination of four vessels 24 hours. Given sufficient daylight hours, two ROCIS flight missions can be conducted each day.

ROCIS services can be provided to single or multiple clients to monitor offshore current conditions over specific locations or a broad area. The system can also provide support in emergency situations such as oil spill and search and rescue, as well as in oceanographic research programs.

Fugro and Areté Associates are working on further development of the ROCIS system and services, including the use of expendable probes and the incorporation of additional airborne sensors. In 2016 Fugro will add a second ROCIS unit to further enhance its support of offshore operations.

ROCIS is showcased amongst Fugro’s innovations in the 2016 #AskFugro program.

Drawing on over 30 years experience of supplying high quality cranes for offshore applications, Protea has recently unveiled an all new service crane targeted at the offshore wind industry.

The compact 2t SWL crane is an ideal lifting solution for light lifting and handling operations on unmanned platforms such as offshore wind turbines. Its innovative and compact design features extra high grade steel to increase strength whilst reducing weight and high quality, low maintenance components to ensure a long and reliable service life.

“Protea has prior experience of the offshore wind market having previously supplied the offshore substation cranes for the Sheringham Shoal wind farm” highlighted Graham Manning, Protea’s Global Sales Manager.

“This crane is designed to meet the specific requirements of the offshore wind sector and is a safe, reliable, low maintenance, operator friendly unit that can be easily configured to suit the requirements of an individual offshore wind farm development or turbine manufacturer.”

The service crane is designed in accordance with the relevant DNV and NORSOK codes and has a fully electric hoist with AOPS and MOPS overload protection. A range of options such as electrical slew drive or visual display showing service requirements can also be provided to meet specific client requirements.

Supplied as turnkey, fully tested unit from Protea’s state of the art facility in Kluczbork, the crane can be quickly installed and commissioned on a wind turbine base platform by Protea’s experienced team of service engineers. It can then be used to safely and efficiently transfer spares and equipment from support boats to the turbine.

“With the continued growth of the Offshore Wind Market and a forecast investment of 200 billion euro over the next decade, I am confident that this crane and other equipment targeted at the offshore wind sector will become an increasingly important part of Protea’s product range” added Tomasz Paszkiewicz, Protea’s Managing Director.

Iran’s position in the international O&G market was expectedly one of the highlight topics of IP Week. Approximately one month after the lifting of EU and US nuclear sanctions on Iran, the country’s Energy Minister has announced Tehran needs to attract a huge $200 billion in international investment to modernize its existing oil infrastructure.

Unwinding of sanctions, coupled with discussions over a new Iranian Petroleum Contract offering more flexible terms and conditions, serve as direct incentives for international investors. Oil majors and former business partners of Iran including Total, ENI and Repsol have already expressed clearly their interest to resume business in the country. A sustained return of 500,000 barrels per day to the crude markets from Iran would create significant downside risk on Douglas-Westwood’s (DW’s) expectation of a slow-paced 2H2016 price recovery. The importance of Iran was confirmed recently by the US EIA’s Short-Term Energy Outlook: “most of the increase in global surplus crude oil production is attributed to Iran”.

DW holds a conservative view on the sustainability with which Iran can return significant additional crude volumes to the market. A degree of uncertainty on the timing, structure and implementation of the new oil contract model remains. Given the level of required investment, significant involvement will be required from international parties who will need clarity on the new Iranian operating environment before committing capital and resource. Given the remaining uncertainties and the enduring risk attached to operating in Iran, the sector will take time to attract required investment.

Nevertheless, as outlined in the recently published “Iran Oil & Gas Market Forecast 2015-2019”, DW anticipates a meaningful upside potential for drilling and production over the next five years from projects that were stalled, delayed or under-invested during the sanction period. Notably, the North Pars, Goldham and Ferdowsi gas fields, as well as the South Pars oil layer are likely to tender for international investment. Any immediate growth in Iranian petroleum exports, however, is likely to originate from existing storage capacity, whereas more significant rises in production will be coming to the market after depletion of storage oil reserves.

Marina Ivanova, Douglas-Westwood London

Expro is delighted to announce the appointment of Mike Jardon as Chief Executive Officer, succeeding Charles Woodburn, in this key leadership role.

Mr. Jardon joined Expro in 2011 as Chief Operating Officer, after holding senior roles within Schlumberger’s wireline, completions, well testing and subsea businesses, and at Vallourec & Mannesmann, where he led the organisation’s commercial activities across North America.

As a natural successor to Mr Woodburn, over the past five years Mr. Jardon has provided a relentless focus on operational excellence, alongside the company’s industry-leading safety performance. Commenting on this appointment, Expro’s Chairman, Sir George Buckley, said:

“Mike has been instrumental in delivering the exceptional results we have seen from Expro in recent years. His experience, leadership skills and passion for the business will ensure a seamless transition for the company. The Board and Executive Management Team are delighted to see him succeed as CEO, as we focus on driving forward the business safely and efficiently.

“I would also like to thank Charles for his significant contribution and unwavering commitment to the business. His talent, honesty and integrity will be missed by everyone in Expro, and we wish him all the very best in his new role.”

Mr Woodburn is leaving the company in April to join BAE Systems plc.

Diamond Offshore Drilling, Inc. (NYSE: DO) and GE Oil & Gas (NYSE: GE) have announced the offshore drilling industry's first-of-its-kind contractual service agreement (CSA) that transfers full accountability for BOP performance to GE Oil & Gas. In this Pressure Control by the Hour™ model, Diamond Offshore will compensate GE Oil & Gas only when the BOP is available. This 10-year collaborative arrangement for GE's engageDrilling™ Services showcases a new way of thinking to drive continuous improvement in deepwater drilling.

The arrangement will include GE purchasing the BOP systems aboard Diamond Offshore's four drillships, currently located in the U.S. Gulf of Mexico, for a total of $210 million.

"Subsea equipment repair and maintenance is the single largest cause of nonproductive time across our industry, resulting in great expense to both drillers and operators," said Marc Edwards, President and CEO of Diamond Offshore. "In today's market, we have to make the economics of offshore drilling more competitive for our clients. The purpose of our new Pressure Control by the Hour service model is to incentivize all parties to prioritize equipment reliability and availability for the ultimate benefit of our customers."

"To deliver a solution that improves drilling efficiency now and in the future, collaboration is essential," said Lorenzo Simonelli, President and CEO, GE Oil & Gas. "We are changing the game by building the new blowout preventer service model for the industry. With improved control, maintenance and servicing of our equipment, we are putting skin in the game and guaranteeing performance."

The GE Oil & Gas engageDrilling™ Services offering enhances BOP system availability by transferring the maintenance and service of pressure control equipment to GE Oil & Gas. This includes on-rig GE Oil & Gas personnel, management of parts, overhaul and repair, continuous certification, data monitoring, and management of change. This new arrangement is a performance-based alliance that leverages the scale of GE data, predictive analytics, insights and continuous certification, positioning GE as a long-term commercial, operational and technical partner.

Under the new service model, Diamond Offshore will begin capturing data through GE's monitoring and analytics solutions. Over time, this will enable condition-based monitoring and maintenance, which will drive proactive decision-making and planning to address the requirements of industry standards for drilling systems. By transferring the maintenance and service of well control equipment to GE Oil & Gas, Diamond Offshore is simplifying operations and optimizing between well maintenance to reduce the frequency and duration of downtime.

"This is a key part of GE's business strategy to collaborate with drilling contractors and operators to push the boundaries of our industry," said Simonelli. "Our new CSA model addresses the current needs of drilling companies, and establishes the roadmap for smart, predictive, condition-based services and maintenance in our digital-industrial future."

"We look forward to partnering with GE Oil & Gas to lead the way forward in our industry," said Edwards. "By combining Diamond Offshore's operational excellence with the guaranteed performance of GE's BOPs, we are increasing our competitiveness in the market."