China refinery quota changes could impact on tanker markets

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According to data provided by Reuters, China’s crude oil imports and refinery processing reached new highs in the first quarter of this year. 

 

Overall, despite slowing economic growth, China’s continued advance in crude oil imports since 2016 has been down to strong demand from independent refiners, commercial and strategic stockpiling and declining domestic production from maturing fields, shipbroker Gibson said in a recent report.

However, several factors are beginning to emerge which could shake up China’s refinery sector and impact on the tanker markets.

Throughout 2016, China’s CPP exports were boosted in part by independent or ‘teapot’ refineries being granted export quotas and competing with state-run refiners to place barrels domestically - hence stronger growth in crude imports.

But, in a major shake up to the sector, it was announced last December that fuel quota export licences for independent refineries will be scrapped. Independent refineries could still export product, although this would now need to be done through state-owned energy companies. This should put the CPP export market back into the hands of China’s big four state-owned refiners, Gibson said.

In addition, favourable export permits were granted to state oil refiners, which allow for an exemption or rebate on import taxes and export taxes for oil and refined products, respectively. The permits will only cover a portion of total imports and exports and will most likely affect diesel and gasoline exports equating to roughly 4.65 mill tonnes worth of exports. 

It is important to note that removing export licenses for independent refiners should not significantly affect China’s total exports, in part due to the favourable export quotas granted to state refiners. However, something with the potential to have a significant impact on exports is lurking just around the corner, Gibson warnedser to imposing a consumption tax on imports of oil by-products; such as mixed aromatics, light cycle oil and bitumen blend. These taxes could have negative effects on product tankers in Asia. Mixed aromatics is the main blending component of gasoline, while light cycle oil (LCO) is the same for gasoil.

As both products are currently free of import duty, imports have surged in recent years, supporting record exports. According to data provided by China’s General Administration of Customs, imports of mixed aromatics reached 11.7 mill tonnes in 2016 and LCO imports - 4.46 mill tonnes. If imports of mixed aromatics decline significantly, then refiners will be forced to boost domestic supply which could lead to less product being available for export. 

An example of the impact of a consumption tax can be found in fuel oil imports into China. Imports have been declining for several years after the introduction of the tax and it looks increasingly likely that mixed aromatics and LCO imports would follow a similar trend. As mixed aromatics make up such a large share of China’s gasoline market, exporting surplus product would naturally be affected as mixed aromatics become more expensive to import.

This has the potential for a double hit on product tanker trade, translating into less imports of blending components and fewer exports of finished products, Gibson said. 

However, as often happens, the closing of one door can lead to new opportunities. Potential positives could be that refiners would need to increase imports of lighter crudes (many of which originate from the Atlantic Basin) in order to increase production of gasoline. Furthermore, the decline in product exports out of China will not only reduce the regional excess but could also stimulate longer haul imports, the shipbroker concluded.

After fatal house explosion, Anadarko Petroleum to shut down 3,000 wells in northeastern Colorado

Aging well was located 170 feet from where home exploded

Anadarko Petroleum Corp., the state’s largest oil and gas producer, plans to shut down 3,000 vertical wells in northeastern Colorado after a fatal home explosion in Firestone near one of its wells.

State regulators announced they are investigating the cause of the April 17 explosion that killed two men in a recently built home located within 170 feet of a well that was drilled in 1993 and later acquired by Anadarko.

Frederick-Firestone Fire Protection District Chief Theodore Poszywak said his department also will continue to gather and analyze evidence to determine the cause of the explosion.

“While the well in the vicinity is one aspect of the investigation, this is a complex investigation and the origin and cause of the fire have not been determined,” Poszywak said.

He added that “there is no threat to surrounding homes” and said fire investigators have been in contact with surrounding residents.

Anadarko said while a lot of unknowns remain about the explosion, it would shut in all vertical wells of that same vintage out of an “abundance of caution.”

“Colorado residents must feel safe in their own homes, and I want to be clear that we are committed to understanding all that we can about this tragedy as we work with each investigating agency until causes can be determined,” Brad Holly, Anadarko’s senior vice president of U.S. Onshore Exploration and Production, said in a statement.

The wells, which produced about 13,000 barrels of oil a day, will stop operating until the company can conduct additional inspections and test associated equipment, including underground lines at each location.

The inspections should take between two and four weeks with priority given to wells closest to residential and commercial developments, the company said.

State officials issued a statement Wednesday saying that the Colorado Oil and Gas Conservation Commission has been investigating the explosion since April 18.

“It is an ongoing investigation. We are trying to assist Firestone as best as we can,” COGCC spokesman Todd Hartman said.

The commission said staffers are “evaluating additional steps to review activities in the region.”

The COGCC said it is directing environmental sampling and inspecting oil and gas wells in the area, including the Anadarko facility, located southeast of the home at 6312 Twilight Ave. Anadarko said it was assisting the investigation.

According to family members, Mark Martinez and his brother-in-law, Joey Irwin, were working on a hot-water heater in the basement of the Martinez’s home in Firestone when the house exploded. They were killed, and Martinez’s wife, Erin, was seriously injured.

Property records show the Martinez’s home was built in 2015, two years after the COGCC passed rules that required oil and gas drilling be at least 500 feet away from existing homes.

American Petroleum Institute supports Keystone XL

http://norfolkdailynews.com/news/american-petroleum-institute-supports-keystone-xl/article_c493312e-2a8a-11e7-bf9a-6342672acc28.html

The largest trade association for the oil and natural gas industry in the United States believes that the Keystone XL pipeline would be good for Nebraska and for the nation as a whole.

The American Petroleum Institute is on record that Keystone XL not only will bring immediate economic benefits to the state in terms of job creation, but that it also will bring longer-lasting benefits in terms of cheaper energy, said Marty Durbin, the institute’s executive vice president and chief strategy officer.

In an interview Tuesday with the Daily News, Durbin said that during construction of the first Keystone pipeline in Nebraska, workers spent approximately $1,000 a week on room, board and dining in the communities where they stayed during construction.

TransCanada has received federal approval to build the pipeline that will carry oil from Canada to Texas, but it must first receive the OK from the Nebraska Public Service Commission for its route through the state.

“There are already dozens of pipelines that are bringing crude oil from Canada and that are here operating anywhere in the upper Midwest,” Durbin said. “Chances are we’re using crude oil from Canada, whether we’re flying on a plane, driving a car or driving a truck.”

The economic benefits derived during the construction process are not to be overlooked, he said.

“We’ve got a Keystone pipeline here (in Nebraska) already that has been operating safely. That pipeline itself brought an awful lot of benefits to the state and I think Norfolk is one of those areas that saw benefits,” he said.

While Durbin recognizes concerns about the safety of adding another oil pipeline that would cross the state, he also believes that Keystone XL will be safe.

“Anytime we’re building infrastructure, we have to be able to listen to the concerns of the local communities,” Durbin said. “There are legitimate issues that are raised. ... More than 99.9 percent of the product going through the oil pipelines arrive safely. Our goal is to make that 100 percent and we will continue to do that. If you have concerns, take a look and see how well we have done to date.”

Durbin said TransCanada and the oil industry as a whole are committed to building Keystone XL in an environmentally safe way.

“We’re going to continue to need oil and natural gas in the country for decades to come,” Durbin said. “It’s in all of our interests to make sure that we have the appropriate infrastructure in place so that we can efficiently move it where it’s needed.”

The state’s public service commission will start holding hearings on the proposed route next month. If approval is given, rough estimates are that Keystone XL could be up and running 12 to 18 months later.

Durbin said he is hopeful that the issue of Keystone XL will not be as contentious this time as it has been in the past during the Barack Obama administration.

“It’s unfortunate that the debate over this one pipeline got as polarized as it did the last time around,” Durbin said. “We’re certainly hopeful that this time that we can have a more civil conversation about what it means to have the necessary infrastructure.”

Russia elbows Saudi Arabia aside as China's top crude oil supplier in March

http://uk.reuters.com/article/us-china-economy-trade-crude-idUSKBN17R0P2

Russia reclaimed its position as China's biggest crude oil supplier in March, customs data showed on Tuesday, displacing Saudi Arabia after two months in second place as Moscow fights to hang on to its slice of the Chinese market.

Russian shipments grew nearly 1 percent to 1.104 million barrels per day (bpd) from the same month a year earlier, as China's private refineries maintained high processing rates and restocked inventories after receiving fresh 2017 import quotas. China's crude imports rose to a record in March, overtaking the United States and shattering expectations.

Saudi shipments were 1.072 million barrels in March, up nearly 15 percent from a year ago, the General Administration of Customs said. For the first three months, Saudi arrivals stood at 1.165 million bpd, making it the top supplier on a quarterly basis.

March's record arrivals came as Saudi Arabia cut April prices of light crude as Europe and the United States ramped out supply to Asia.

The Organization of Petroleum Exporting Countries (OPEC) agreed to curb its output by about 1.2 million bpd from January to support prices. Non-OPEC producers, including Russia, agreed to cut another 600,000 barrels, but both OPEC and non-OPEC countries continued efforts to keep Asian markets vital for growth well supplied.

March also saw the United States ramp up shipments to 45,057 bpd. A year ago, China did not import U.S. crude.

Imports from Iran meanwhile rose 5.97 percent to 626,200 bpd.

(Reporting by Meng Meng and Aizhu Chen; Editing by Tom Hogue and Kenneth Maxwell)

U.S. Summer Gasoline Off to Slow Start; Course for Season May Change

The U.S. summer gasoline market is off to a slow start, based on the current prices, demand and supply fundamentals so far.

It is noted that while current gasoline market appears bearish, it is relatively more favorable compared with the same time period a year ago when the market was suppressed by an oversupply.

The current U.S. gasoline market reflects the prevailing supply overwhelming demand. The bearish market sentiment, at least for now, is backed up by a surprising increase in the weekly gasoline stocks in mid-April when stocks should start falling based on the historical trend. However, the slow start may not dictate the tone for the rest of the summer season as peak demand later in July-August could clean up the "oversupply."

The NYMEX front-month RBOB price spread was at a slight contango of about 10pts/gal, narrowing from about minus 50pts seen earlier this week. For the last three years, the NYMEX RBOB front-month gap was at a contango in mid-April, reflecting a supply overwhelming demand scenario. In mid-April 2015, the front-month spread was at a 4ct backwardation.

The Northeast gasoline market switched to lower-RVP summer grade from higher-RVP winter gasoline in mid-April.

"The market normally sees a stockbuilding trend in winter and spring in preparation for the peak summer demand season, but the problem is a stockbuild in early summer from already high inventory," a trader said, pointing to the blip in higher U.S. gasoline stocks last week.

U.S. gasoline inventory for the week ended April 14 rose by 1.5 million bbl from the previous week, according to the Energy Information Administration. For the past few years, April gasoline stock data had typically shown a falling trend. It remains to be seen if U.S. gasoline stocks will continue to build for the rest of April.

Traders noted that the rising stocks were attributed to higher domestic gasoline output and strong import flow.

Gasoline imports for the week ended April 14 jumped to 843,000 b/d, the highest so far this year, according to EIA.

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Markets - VLCCs on a roll

Despite the recent holiday period, the week was very active for VLCCs.

 

Thinning tonnage lists almost everywhere and steady supply both from West Africa and MEG to the East, resulted in sharply firming rates, Fearnleys said.

Earnings were almost $30,000 per day, which was far better than forecast. The question remains - how sustainable is the present trend?

Before the holiday period, there was a surge in Suezmax activity as charterers left it late to cover the 1st decade of May for West Africa in a narrow week. Owners sensed an opportunity and pressed for higher levels gaining some ground with TD20 briefly hitting the WS80 mark.

The Black Sea and Med followed and managed some moderate gains, thus improving the sentiment going into the holidays.

However, a more measured approach from charterers was seen this week as cargoes were circulated in a orderly fashion and as a result, they have wrestled back some control, thus steadying rates.

Current earnings could be described as reasonable but the forward paper curve suggests that there will be some erosion in the coming weeks, but in the short term, owners will be looking for any excuse to capitalise.

North Sea and Baltic Aframaxes were well balanced in the past week. The Baltic ice season is coming to an end. However, the market is expected to remain at present levels in the week ahead, Fearnleys said.

The days leading up to Easter proved to be quite busy in the Med and Black Sea. But a very long position list kept rates under downward pressure, softening to WS100, despite good chartering activity.

Given that a small ship clearance has taken place from the position lists and Libyan activity has increased, the market is slowly firming again, Fearnleys concluded.

Due to the holiday period, only one fixture was reported on brokers’ lists. This concerned the 2017-built MR ‘St Pauli’ thought fixed to Maersk Tankers for nine months, option three months, for $14,000 per day.

In the newbuilding sector, Dynacom was said to have concluded four, option four VLCCs on LOI terms at New Times for a price reported to be in the region of $77 mill each. They are to be delivered in 2019-2020.

Lundqvist was thought to have ordered another Aframax at Sumitomo for 2019 delivery.

There were a few more tanker orders believed to be nearing fruition, which should come to light in the next week or so.

Reported leaving the fleet were the 1999-built VLCC ‘Good News’ sold to Indian sub-continent buyers for around $390 per ldt; the 1992-built Aframax ‘Catherine Knutsen’, said to have been taken by Indian breakers for $361 per ldt and the 1983-built parcel tanker ‘Bow Hunter’ believed sold to undisclosed interests on the basis ‘as is’ South Korea for about $302 per ldt. She is fitted with around 700 tonnes of stainless steel and is to be towed to her final destination.

On 4th April, 2017, Stealthgas named three prototype 22,000 cu m ammonia/VCM carrier newbuildings at Hyundai Mipo.

Hull No 8184 was named ‘Eco Frost’; Hull No 8185 was named ‘Eco Arctic’ and Hull No 8186 - ‘Eco Ice’.

The ships feature many innovative technologies that were implemented for first time by HMD’s R&D department, Stealthgas said.

These included being built to Ice Class 1b and being fitted with exhaust scrubbers.

All three ships fly the Marshall islands flag and are classed by Lloyd’s Register.

Normally all of Stealthgas's newbuildings are built in Japanese yards but in this case HMD was chosen as it’s the global leader in specialised gas vessels with innovative technologies, the company explained.

These vessels represent Stealthgas's 31st, 32nd and 33rd newbuilding deliveries. One more sistership is left to be delivered from Hyundai, due in 1Q18.

 

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OPEC Gets a Surprise After Oil Cuts: Higher Stockpiles

https://www.bloomberg.com/news/articles/2017-04-19/opec-faces-surprise-outcome-after-oil-cuts-higher-stockpiles-j1pl0qsv

When OPEC and Russia meet next month to assess the impact of their oil cuts they face a surprising outcome: stockpiles are even higher than when they started.

Inventories have started to decline, but by the time ministers gather in Vienna on May 25, developed nations still won’t have burned through the big stockpile increase caused by a surge in OPEC output just before the cuts came into force, data from the International Energy Agency indicate.

The Organization of Petroleum Exporting Countries has been “hoisted by its own petard” by agreeing in principle to reduce production last September while allowing members to keep boosting sales until the deal took effect on Jan. 1, Citigroup Inc. said. While the group has fully implemented its pledged cuts, that’s being offset by U.S. shale oil producers buoyed by price gains, according to Commerzbank AG.

“OPEC is like a magician waving his hands and trying to pull the rabbit out the hat, but still the rabbit isn’t there,” said Eugen Weinberg, Commerzbank’s head of commodities research in Frankfurt. “They’ve done all they can with the production cuts and the effect is close to non-existent.”

The accord last year between OPEC, Russia and 10 other producers was intended to boost prices by eliminating an inventory surplus of about 300 million barrels over the five-year average -- equivalent to three days of global oil production. By this measure, the historic agreement hasn’t delivered.

Persistent Surplus

At the end of December commercial oil stockpiles in the 35-nation Organization for Economic Cooperation and Development totaled 2.98 billion barrels, according to the Paris-based IEA, which advises those countries on energy policy. That rose to 3.06 billion barrels in January due to a late surge in OPEC shipments before the cuts came into force.

“Producers unintentionally accelerated activities that would ultimately obstruct, and for a period reverse, the very rebalancing they were trying to accelerate,” said Ed Morse, head of commodities research at Citigroup.

Inventories in the OECD -- which consumes about half global supply -- fell only slightly in February and remained 330 million barrels above the five-year average, bigger than the surplus of 286 million at the end of December, IEA data show.

Bloomberg calculations using the agency’s supply and demand projections indicate that, by the time OPEC’s accord expires in June, stockpiles will be roughly back in line with their end-December level and still about 200 million barrels above the five-year average. That would leave the group, which must decide in May whether to extend its pact for another six months, well short of its goal.

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That picture could change in the coming weeks, said Paul Horsnell, head of commodities research at Standard Chartered Plc in London. Data for the first quarter aren’t detailed enough yet to make solid conclusions, and inventories in more obscure locations may be falling more rapidly than it appears, he said. Some major oil consumers, notably China and India, do not publish monthly inventory levels.

Even if current data are correct, Citigroup, Standard Chartered and many other analysts aren’t declaring the cuts a failure. Instead they predict that OPEC and Russia will extend their pact for another six months, giving time to fulfill their goal.

 

Saudi Arabian Energy Minister Khalid al-Falih said on Thursday there is “an initial agreement” among producers that they may need to prolong the measures because stockpiles remain too high. U.S. oil prices plunged the most in six weeks on Wednesday after U.S. government data showed supplies remain plentiful.

West Texas Intermediate crude rebounded on Thursday, rising 45 cents to $50.89 a barrel on growing confidence that producers will extend the agreement.

“I believe OPEC will continue its policy of restraining production,” Paolo Scaroni, former chief executive officer of Italian oil major Eni SpA and current vice chairman of NM Rothschild & Sons Ltd., said in an interview with Bloomberg television Wednesday. “There is not the kind of oil glut that we had only 12 months ago” and the agreement is on track, he said.

Banned at sea: Venezuela's crude-stained oil tankers

 

http://www.reuters.com/article/us-venezuela-oil-tankers-insight-idUSKBN17K0CE

In the scorching heat of the Caribbean Sea, workers in scuba suits scrub crude oil by hand from the hull of the Caspian Galaxy, a tanker so filthy it can't set sail in international waters.

The vessel is among many that are constantly contaminated at two major export terminals where they load crude from Venezuela's state-run oil company, PDVSA. The water here has an oily sheen from leaks in the rusty pipelines under the surface.

That means the tankers have to be cleaned before traveling to many foreign ports, which won't admit crude-stained ships for fear of environmental damage to their harbors, port facilities or other vessels.

The laborious hand-cleaning operation is one of many causes of chronic delays for dozens of tankers that deliver Venezuela's principle export to customers worldwide, according to three executives of the state-run firm, eight employees of maritime firms that contract with PDVSA and Thomson Reuters vessel-tracking data. Other reasons include delayed repairs and impoundments by service providers that are owed money by cash-strapped PDVSA.

Neither PDVSA nor Venezuela's Oil Ministry responded to requests for comment about the firm's maritime operations.

The tankers sidelined for cleaning provide a vivid example of the firm's downward spiral: Lacking the cash to properly maintain ships, refineries and production operations - or to pay business partners on time - PDVSA can't boost exports, which is its only option for raising more cash.

The lagging exports crimp the flow of cash back to the country's crippled socialist economy, as citizens struggle daily amid soaring inflation and shortages of food and medicine. Because Venezuela relies on oil for more than 90 percent of export revenues, the problems of its state-run oil company pose a national crisis.

Venezuela's crude exports declined 8 percent to 1.69 million barrels per day (bpd) in the first quarter versus the same period in 2016, according to Thomson Reuters data.

When oil prices were high, crude and fuel exports almost entirely financed an elaborate system of government price controls and social subsidies that maintained the popularity of late President Hugo Chavez, the socialist firebrand.

Although embattled Venezuelan President Nicolas Maduro insists the government has maintained social programs, he has publicly acknowledged that lower oil prices have left the government with less money to finance them.

Venezuela's Information Ministry did not respond to a request for comment about the nation's social spending.

THOUSANDS OF BRUSH STROKES

At oil export terminals around the world - where crude leaks like those in Venezuela are relatively rare - an oil-stained tanker would normally be taken out of the water and cleaned with industrial equipment in a dry dock.

But Venezuela has just one small dry dock and lacks the cash or the time to send its soiled tankers there for proper cleaning, according to the PDVSA executives, ship captains and two workers from tanker cleaning companies.

So workers on a small fishing boat clean the giant tanker with thousands of scrub-brush strokes. The work - which involves scouring ships above and below the water line - can take up to ten days per vessel, a worker involved in the cleaning said.

The oil tanker Caspian Galaxy sits anchored near Amuay beach, in Punto Fijo, Venezuela. REUTERS/Stringer

 

In a scene witnessed by Reuters in April, workers wearing scuba suits baked on the deck of a small boat as they reached out with brushes to scrub the Caspian Galaxy, a tanker leased for one trip by a PDVSA customer.

The workers labored just offshore from Amuay beach, near a tourist hub and PDVSA's largest refinery. The crews here have washed so many vessels in recent months that they have dubbed their operation "the boatwash".

In nearby Maracaibo Lake - where tankers are stained at the export terminals - a scuba diver died in an accident this week while inspecting a leaking pipeline.

Jose Bermudez, a 40-year-old father of two, drowned after the line connected to his air supply got tangled in the propeller on his boat, according to union representatives.

The Professional Union of Scuba Divers and Marine Staff from Zulia state had previously requested that PDVSA replace the propellers with a different propulsion system, the organization said.

A supervisor at PDVSA's Western division on Monday confirmed the accident but declined to answer further questions.

PDVSA's maritime crisis is uniquely dire, said George Los, a senior tanker market analyst at U.S. ship brokerage Charles R. Weber Company.

"I can't think of any situation similar to this anywhere else in the world right now," he said.

LEASES AT $1 MILLION PER MONTH

Eighteen of the 31 oil tankers PDVSA owns were out of commission at the end of March, according to Thomson Reuters vessel-tracking data and six maritime industry employees, who spoke with Reuters on condition of anonymity.

Several needed cleaning, while others need repairs, according to the data.

To keep oil flowing, PDVSA leases more than 50 tankers - each at a cost of between $800,000 to $1 million per month, according to three captains and ship brokers involved in lease contracts with PDVSA and Thomson Reuters vessel tracking data.

That is more than double the number of vessels it typically leases to complement its own fleet of tankers, according to the sources.

It's a short-term fix that is driving up costs and exposing PDVSA to further detentions or seizures of vessels when it does not pay leasing fees on time.

Several ship owners, exasperated by payment delays, have sought court orders to have the oil on board the tankers impounded, according to three sources involved in some of the disputes and a court document seen by Reuters.

Russian shipping conglomerate Sovcomflot in October won a court order to seize a $20 million Venezuelan crude cargo from a Sovcomflot tanker as partial payment on a $30 million debt.

The tanker was carrying crude to the Caribbean island of St. Eustatius.

Sovcomflot did not respond to requests for comment.

Six other PDVSA vessels are stuck in yards in Portugal, Turkey and Curacao, either for lack of payment or because PDVSA has not supplied the necessary parts for repairs, according to two shippers and an executive of a firm supplying equipment to PDV Marina, PDVSA's maritime branch.
THE 'VENEZUELA CLAUSE'

Most port owners have to pay fees if they delay tankers from loading or unloading at their docks. But PDVSA, which operates terminals in Venezuela, has traditionally refused to include such penalties - known as demurrage fees - in its contracts with shipping companies that move Venezuelan oil.

At least five major shipping companies, however, are now pushing back on that practice, according to oil traders and contracts signed by PDVSA. The shippers now include a so-called "Venezuela clause" in their contracts.

The penalties can be as much as $23,500 per day, according to recent shipping contracts with PDVSA seen by Reuters.

One contract specifies that PDVSA must pay demurrage for delays resulting from workers strikes, the late arrival of tug boats and even for drug inspections - a nod to international investigations into Venezuela's role in the global drug trade.

Some tanker-leasing companies and service providers also charge PDVSA above-market rates because of the risk of delayed payments, two shipbrokers told Reuters.

Similar operational problems plague PDVSA's oil drilling and refining operations. Once the pride of the country's economy, the state-run firm saw crude production plummet last year to a 23-year low.

The crisis has now reached the point where state-run PDVSA can't buy spare parts to keep oil fields pumping, pay workers enough to feed their families, or keep its tankers on the water, the PDVSA executives and maritime company employees told Reuters.

The rising costs and falling exports, in turn, are depriving the firm - and the country - of the commodity it needs most: dollars.

(Additional reporting by Brian Ellsworth in Caracas and Jonathan Saul in London; Writing by Brian Ellsworth; Editing by Simon Webb and Brian Thevenot)

Citi Sees Oil Surging $10 as OPEC Combats Roaring U.S. Shale

https://www.bloomberg.com/news/articles/2017-04-18/citi-sees-oil-surging-10-in-season-to-have-faith-in-commodities

Citigroup Inc. joined Goldman Sachs Group Inc. in backing commodities, saying it’s the season to have faith in raw materials and oil will probably rally to the mid-$60s by the end of the year.

While U.S. shale output may come “roaring back” amid higher crude prices, production curbs by OPEC and its allies should help offset that increase over the next six to nine months, Citi analysts including Ed Morse and Seth Kleinman wrote in an April 17 report. The producers need to extend their deal to cut supplies through the end of the year amid concerns that Russia is lagging behind on its pledged reductions, the bank said.

While the historic agreement between producers that went into effect Jan. 1 “induced a euphoric and unsustainable surge” in bullish bets by investors, that also set the stage for an inevitable sell-off as record fourth-quarter OPEC output and oil stored at sea moved to onshore sites, according to Citigroup. Goldman Sachs has also made similar comments, saying ample inventories that have undermined the output cuts are set to shrink and calling for more patience from the market.

“With a continuation of the OPEC and non-OPEC producer deal in the second half of 2017 and the expected associated inventory draw-down, we expect oil prices to move above $60 a barrel by the second half of the year,” the analysts wrote in the note. Still, increased supplies from producers in the fourth quarter of 2016 is now “a dark cloud hanging over the market,” and a failure to extend the output agreement would send prices “precipitously lower,” they said.

The bank expects U.S. West Texas Intermediate oil to average $62 a barrel and global benchmark Brent crude to average $65 a barrel in the fourth quarter. WTI was trading 30 cents lower at $52.35 a barrel on the New York Mercantile Exchange at 10:34 a.m. London time on Tuesday. Brent on the ICE Futures Europe exchange was down 35 cents at $55.01 a barrel.

Supply Surge

The production-cut agreement spurred a change in market structure that meant traders had less incentive to store oil at sea, prompting the flow of supplies floating on ships to onshore sites. That set the stage for boosting U.S. inventories to a record in the first quarter of 2017, the bank said.

This gain and a surge in output by the Organization of Petroleum Exporting Countries in the fourth quarter had an effect that would “ultimately obstruct and for a period of time reverse the very rebalancing they were trying to accelerate,” the analysts said. The bank expects U.S. liquids output to grow year-over-year at 1 million barrels per day or more by December.

The drop in oil prices during March led declines across commodities, according to Citigroup. It estimates commodity assets under management grew about $45 billion in the first two months of the year but gave up $35 billion during the selloff in raw materials in March. Investment inflows should increase in the second quarter, the bank predicted.

“Do commodities need a bit of a prayer to rebound in ‘17? Probably not,” the analysts wrote. “Commodities stumbled through the first quarter following what was clearly the healthiest year for the sector since the decade began. In retrospect part of the sell-off toward the end of the last quarter was too much froth in critical subsectors like oil, copper and iron ore. But signs of better performance are increasingly clear, despite major risks.”

Nigeria loses Africa’s top oil producer position to Angola

With the cumulative loss of 4.8 million barrels in the month under review put in cost at the prevailing $55.89 per barrel for Brent crude, Nigeria is estimated to have lost over $271.8 million (N82.8 billion). PHOTO:AFP

https://guardian.ng/news/nigeria-loses-africas-top-oil-producer-position-to-angola/

Nigeria’s crude oil production fell by 156,900 barrels per day (bpd) to 1.269 million bpd in March, from 1.426mbpd recorded in February. Consequently, the country lost its status as Africa’s top oil producer to Angola, according to latest data from the Organisation of Petroleum Exporting Countries (OPEC).

With the cumulative loss of 4.8 million barrels in the month under review put in cost at the prevailing $55.89 per barrel for Brent crude, Nigeria is estimated to have lost over $271.8 million (N82.8 billion).

Going by the Federal Government’s 2017 budget proposals, the sum could have substantially funded the expenditure for water resources, put at N85 billion. This is particularly important, given the outbreak of leprosy in some parts of the northern region due to the absence of potable water.

 

Again, this is not the first time the nation will lose its premier position to the former Portuguese enclave, spurred majorly by crude shut-ins resulting from either militant attacks or facility maintenance by oil companies.

 

The Nigerian subsidiary of Royal Dutch Shell Plc had shut down the Nembe Creek Trunk Line, which exports Bonny Light crude oil, in order to remove theft points.

The Managing Director of Shell Petroleum Development Company (SPDC), Osagie Okunbor, had said the company was working to remove a significant number of oil theft connections and effect repairs on the pipeline.

The line, operated by Aiteo, is one of two along with the Trans Niger Pipeline that carries Bonny Light crude oil to the export terminal.SPDC has, however, completed the repair work and production is expected to peak in the next monthly report, while exports of roughly 232,000 bpd had been planned for this month.

Angola, which has been working hard to remain Africa’s top producer, climbed to the top again for being able to maintain a daily production of 1.652 million barrels since January, even though it is a drop from last quarter of 2016 levels of 1.736mbpd.

The southern African country became the top producer at the onset of renewed militancy in the Niger Delta, but Nigeria was able to recover lost grounds between December and January when the Minister of State for Petroleum Resources, Ibe Kachikwu, put the country’s production at 2mbpd.

Nigeria recorded the biggest drop in output in March among its peers in OPEC, followed by Saudi Arabia, the group’s biggest producer. The 13-member cartel, in its latest monthly oil market report for April, said Nigeria recorded the biggest decline of about 157,000bpd in the period under review.

According to OPEC, its members pumped a combined 31.93 million barrels daily last month, down by 153,000 bpd from February. Saudi Arabia was said to have produced 9.9 million bpd in March, more than 100,000 bpd below its monthly quota under the production cut deal.

OPEC said crude oil supply from non-members this year would average 57.89 million bpd due to growing output in the U.S. and modest declines in Colombia and China.

The figure is 176,000bpd higher than what OPEC projected in February for the non-members.In the U.S. alone, the cartel predicted that production would grow at an average rate of 540,000 bpd, up from last month’s forecast of a 340,000 bpd growth rate.

On the demand front, OPEC expects the world to need about 96.32 million barrels daily, a growth rate of 1.27 million bpd. India and the “Other Asia” group of countries, excluding China as designated by OPEC, are to lead this growth crusade, while China will be second, followed by the Americas.Demand for oil is seen growing by 600,000 bpd from 2016, to 32.2 million barrels daily.

Goldman Sachs Sees Strong Performance for Oil Soon, But not Forever

Analysts at Goldman Sachs remain confident that the second quarter of 2017 will bring consistent inventory declines, and warn that global demand growth may top its already ambitious 1.5 million-b/d-year target. The bank also reiterated its view that front-month WTI will rally to a high of $57.50 bbl before July arrives.

But unlike many other banks, investment houses and hedge funds, the brain trust at Goldman does not talk of $60-bbl, or $70-bbl or even $80-bbl oil benchmarks. The Goldman view is that the long-term appropriate price for WTI is about $50 bbl, or under the $53 bbl or so levels witnessed in recent sessions.

The company stresses that commodities, and particularly oil, represent a smart investment this year. But that view is rooted not so much in price, but rather in structure. Notwithstanding U.S. inventory builds that clearly surprised to the upside through March, bank analysts believe that the draws are coming, and tighter near-term supply will lead to a steep level of backwardation later in 2017.

Investments in oil funds, which typically roll forward positions month after month as benchmarks expire, get punished when oil is in contango, which has prevailed since mid-2014. On the other hand, a backwardated futures' structure rewards investors who see their holdings swell in that environment.

(OPIS provides an example: A $1 million position in an oil ETF at $53 bbl would reflect 18.87 contracts. If the next month were say 30cts bbl lower, that $1 million roll to the next month would result in 19.05 contracts. Volume holdings would continue to expand if the market remained backwardated.)

In a commodities report that amounts to a tutorial on the asset class, Goldman analysts note that if oil is priced higher ahead of anticipated inventory draws, sellers would simply dump inventory from storage and crush spot prices, putting the market back into contango. Investors need to differentiate between financial markets that are "anticipatory assets" and commodities and physical markets that represent "spot assets."

Despite the $57.50 bbl spring target, the bank has expectations well below those of its peers for the longer 10-year time frame. Its base case assumes that $50 bbl is a fair price for WTI over the long term, and it mentions aggressive hedging programs as a threat to further downside. Spot prices need only be above the long-term cost of producing shale -- the marginal barrel these days -- to incentivize investment.

Goldman suggests that the last time oil futures had a level of certainty comparable to now was back in 2003, before the record spikes of the last decade. Sovereign producers could plan around a $20-bbl price and didn't have to save or borrow large amounts of U.S. dollars. The bank believes that the global oil industry is returning to an environment akin to the period preceding 2003, when there was stability in long-term oil prices and a very low oil-to-dollar correlation.

In the end, Goldman analysts believe strong commodity returns this year will be linked to backwardation and not appreciation. That makes the period reminiscent of the 1990s, when commodity returns were generated from carry and not from price hikes.

Some other observations from the bank today:

--Goldman analysts still believe that it's not in OPEC's best interest to extend production cuts. That would simply provide more incentive for additional drilling.

--Markets appear to have lost confidence in the Trump administration's ability to implement policy, and the only real faith is in deregulation that can be accomplished without congressional approval. But the bank still sees an uptick in infrastructure spending.

--Notwithstanding the slow start in 2017, Goldman thinks gasoline demand will pick up and it forecasts 70,000 b/d growth, which would imply a new record for consumption.

--Diesel inventories are normalizing fast and signs point to global demand rising with accelerating industrial activity.

--On a day that featured EIA measuring refinery runs, some 738,000 b/d above the same period in 2016, Goldman suggested that refinery runs would eventually average less than 2016. It also suspects that disruptions in Mexican refining could potentially boost RBOB and other U.S. grades of gas.

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Tanker future belongs to LNG-fuelled vessels - SCF

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8550

At the recent Gastech 2017, Sovcomflot (SCF) president and CEO Sergey Frank outlined the company’s strategy on LNG as a fuel for large vessels.

 

As one of the largest players in the Aframax segment, SCF is pioneering the conversion of this class of vessel to burn LNG as a fuel.

A key event was the signing of a bunkering agreement between SCF Group and Shell for the supply of gas engine fuel for SCF’s Aframaxes that are specially designed to run on LNG.

These tankers will join the SCF’s fleet at the beginning of June, 2018. The new tankers will each have a deadweight of 114,000 dwt and will be certified as Ice Class 1A.

“Aframax is one of the key size categories for tankers employed in transportation of liquid hydrocarbons. These are ships that are most in demand to cater for Russian oil exports. Sovcomflot and Shell are initiating the conversion of this segment of large-capacity tankers to gas engine fuel. Sovcomflot aspires to become a leader in the global transformation of maritime transport towards more efficient and environmentally friendly systems and technologies. The market is set a new standard of navigation safety and quality, which is especially important for the operation of ships in environmentally vulnerable areas of the world ocean,” Frank said at Gastech.

Long-haul trades to gain from oil demand forecast

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8548

In the recently released International Energy Agency (IEA) medium-term outlook, the agency forecast global oil demand will rise from 96.6 mill barrels per day last year to 103.8 mill barrels per day by 2022.

 

This demand growth will mainly come from non-OECD counties, as the forecast oil demand growth for these counties, according to the report, is expected to rise by 8.5 mill barrels per by 2022, while in contrast, OECD demand is expected to decline by 1.2 mill barrels per day over the same period, Gibson Research said analysing the report.

 

More efficient oil use and the shift towards alternative energy sources are cited as part of the reasons behind the slower demand growth. So effectively, the bulk of future oil demand will continue to come from the Asia/Pacific region.

 

IEA estimated that Asian crude demand will increase by around 5 mill barrels per day by 2022. Over the past few years, Asian crude producers have experienced a continual decline in domestic production, in part due to the low oil price environment (cheaper to buy on the international market), as well as depleting oil fields and lack of fresh investment.

 

The latest analysis said that this situation is unlikely to change in the foreseeable future. Research pointed towards further downwards pressure on Asian oil production, which is set to fall by more than 600,000 barrels per day by 2022, an equivalent of 1% of global oil demand. Half of this production decline is accounted for by the largest producer, China, but many fields are mature, drying up and extraction is becoming more expensive.

 

According to the IEA, Chinese production has reached its lowest level in nearly a decade and shows no sign of recovering. The report predicted a drop to 3.7 mill barrels per day by 2022, compared with 4 mill barrels per day in 2016.

 

The situation is the same for other Asian countries. By 2022, the IEA believed that in addition to Chinese losses, other Asian producers will see a 410,000 barrels per day drop in production with the biggest decline from Indonesia (falling by 125,000 barrels per day). Smaller losses are forecast for Malaysia, Thailand, Vietnam and India over the outlook period, but nevertheless adding to the picture. Of the Asian producers only Australian production is set to grow.

 

This situation could provide support for the crude tanker market in the medium-term, in particular the VLCC sector. The IEA report claimed that not all the additional barrels will be met by Middle East producers, as more production will be absorbed by the local refiners. Consequently, barrels will have to be sourced from other regions including the US, Gibson said.

 

Other developments in the Asian region include expanding refinery capacity, which will naturally require feedstock whether sourced domestically or otherwise. An illustration is the 200,000 barrels per day Vietnamese Nghi Son refinery expected to receive its first shipment of crude in May. Nghi Son is 35% owned by Kuwait Petroleum and will eventually produce 8.4 mill tonnes of product annually meeting around 40% of growing domestic demand.

 

These developments will support long-haul crude trades but could impact on the short-haul Aframax market in north Asia, which are already being impacted by pipeline developments. In addition, new refinery developments may support the crude import sector but could compete with long haul product flows into the region.

 

As the tanker market starts to feel the impact of the recent OPEC agreement, the industry continues to seek some good news to boost spirits, Gibson concluded.

Asian refiners diversify crude oil supplies to reduce impact of OPEC-related output cuts

http://www.platts.com/videos/2017/april/snapshot-dubai-brent-crude-asia-041117

The difference in price between medium-heavy sour Dubai crude and light sweet Brent crude has hit its narrowest spread in nearly one and a half years due to bullish prices for Middle East sour crudes following OPEC's decision to cut production made at the end of November.

The Brent/Dubai Exchange of Futures for swaps contract averaged $1.33 a barrel in March. Within the month, it touched a low of $1.10 a barrel, which is the lowest level since August 2015.

Prices for Middle East sour crudes have rallied since late 2016 after OPEC producers agreed to reduce production.

Since the agreement was reached, the Middle East crude complex has moved higher steadily as the market priced in the prospect of cuts in term supply from OPEC producers.

In the meantime, the narrow EFS spread and cheap freight has made long haul Brent related crude grades attractive to Asian refiners and this has led to a surge of Atlantic basin crudes making the voyage eastwards to refineries across Asia, ranging from China to Japan to Thailand and to India.

Since the beginning of the year Asian refineries have been looking at a wider range of crudes to run as they seek to diversify their supplies and reduce the impact of OPEC related production cuts.

China, as the largest single buyer in the region, has been leading the charge, expanding purchases of West African and North Sea crudes, and taking oil from Mexico, Brazil and the US. In particular, it has seen a dramatic increase in Brazilian crude imports since late 2016 and the trend remains firmly intact.

Two of India's largest refiners, Reliance and state-owned Indian Oil Corp., have also been looking at Russian Urals crude as the key export grade shows signs of competing with some Middle Eastern sour barrels.

Recently, IOC branched out and bought a 1 million-barrel cargo of the eastern Canadian Hibernia crude into its April-May tender. The cargo is only the second shipment of eastern Canadian crude to make the trip to India, with the previous one in November 2013.

Japanese refineries have also been eyeing longer-haul crudes, with Idemitsu Kosan having bought its first cargo of Angola's Girassol, Japan's first purchase of West African crude since November 2015.

Looking ahead, the key question facing the market is whether OPEC will extend the agreement beyond June, which is supposed to be decided upon at the next full ministerial meeting in Vienna on May 25.

China Surpasses Canada as Top Buyer of U.S. Crude

https://www.bloomberg.com/news/articles/2017-04-04/china-surpasses-canada-as-top-u-s-crude-buyer-amid-record-sales

China became the biggest buyer of U.S. crude oil in February, surpassing Canada, at a time when OPEC is cutting back output.

China imported 8.08 million barrels of U.S. light crude, nearly quadrupling its January purchases, according to data released by the U.S. Census Bureau Tuesday. That helped boost U.S. exports to a record 31.2 million barrels during the month. Canada, the U.S.’s largest trade partner, imported 6.84 million, down 20 percent from a month earlier.

The surge in U.S. shipments to Asia, a market long dominated by Saudi Arabia and other Middle East producers, comes as the Organization of Petroleum Exporting Countries trims output in an effort to end a glut that battered the economies of global energy exporters. Saudi Arabia reduced its pricing for some of its April crude sales to Asia as supplies from the U.S. became more competitive.

“The U.S. is a larger exporter of crude than many OPEC countries,” John Auers, executive vice president at energy consultant Turner Mason & Co. in Dallas, said by phone. “That China is buying more means that the U.S. has become a larger player in the global crude export market.”

Ships hauling U.S. crude to Asia included the supertanker Alex, which headed for Ningbo in eastern China after loading 2 million barrels of West Texas Intermediate crude in the Gulf of Mexico in late February, a person familiar with the matter said last month.

U.S. crude exports in February jumped 35 percent from a month earlier, according to the U.S. Energy Information Administration. While shipments are expected stay above 2016 levels, the boost was likely aided by seasonal maintenance at U.S. Gulf refineries, according to Auers. Also, the production cuts made by OPEC countries made Dubai, an Asian benchmark, more expensive compared to the U.S. counterpart.

WTI on Tuesday was $1.05 a barrel below Dubai, a lower-quality grade, based on front-month swaps data from broker PVM Oil Associates Ltd. It’s averaged a 50-cent discount this year, compared with a $2.43 premium in 2016.

The shipments from the U.S. to China appear to be ongoing. Sinopec bought 1 million barrels of U.S. Mars Blend crude for loading in April, a person familiar with the matter said.

"A very strong WTI-Dubai spread enabled opening in arbitrage opportunities to Asia at a time when there were lots of turnarounds going on in the U.S. Gulf in February," Dominic Haywood, a London-based analyst for Energy Aspects Ltd. said in a phone interview.

U.S. crude inventories have remained stubbornly high despite lower output from OPEC, climbing to 534 million barrels in the latest government data, the highest level going back to 1982. In March, crude prices slumped the most since July amid concerns about global stockpiles.

Singapore imported 2.03 million barrels from the U.S., while countries including Curacao, Italy, Japan, South Korea and the Netherlands bought in excess of 1 million barrels each, government data show. Shipments included condensate derived from natural gas.

Nymex Overview: Looming Cushing Crude Increase Derails Market Advance

There was a lot of enthusiasm coming into April, and indeed for the entire second quarter, but some of those bullish sentiments were tarnished this morning when reports indicated that Cushing stocks may have built by more than 750,000 bbl through last Friday.

There are a lot of hedge funds and money managers who want to be long in energy, but they've been burned badly by the consistent inventory builds seen across the 93 days of 2017.

So, oil prices backed off around midday Monday, despite the prevailing view that the second half of the month will see stocks dwindle with demand ratcheting higher. WTI sold off fairly aggressively with a 41ct/bbl loss to $50.19/bbl while June Brent lost 43cts/bbl to $53.10/bbl. Higher numbers out on the curve are seeing some producer selling, but $52/bbl or so does not bring much enthusiasm from the E&P companies.

Venezuela, which loomed as a possible source of news heading into the weekend, has been conspicuously quiet so far this morning. The dollar has suppressed crude a bit, thanks to a rise of about 0.25% in the Greenback.

Gasoline prices reversed course in tandem with crude and May RBOB fell 0.68cts/gal to $1.6962. There is very slight backwardation between May and June and other summer months.

Cash prices for gasoline were surprisingly sedate. The red hot Pacific Northwestern market backed off from its assault on $2/gal but still fetches over $1.96/gal, and most U.S. markets lost 0.25-0.75cts/gal. Ethanol, which is a key component in finished motor fuel, rose quite robustly, adding 2.0-2.8cts/gal. Diesel held its own, and remains about 7cts/gal above last week's lows. May ULSD was off 0.67cts/gal at $1.5680/gal on very quiet volume.

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SCF partners with Shell for LNG-fuelled Aframaxes

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8528

SCF Group (Sovcomflot) has signed an agreement with Shell Western LNG to supply LNG to fuel what are claimed to be the first Aframax crude oil tankers in the world to be powered by natural gas. 

 

The agreement was announced by Sergey Frank, Sovcomflot president and CEO, and Maarten Wetselaar Shell’s integrated gas and new energies Director.

The agreement calls for Shell to provide the LNG fuel for the new generation of SCF Group’s 114,000 dwt ice classed Aframaxes that are due to enter service at the beginning of the third quarter of 2018.

They will be the first LNG-fuelled Aframaxes built and will operate primarily between the Baltic and Northern Europe transporting crude oil and petroleum products. Shell will fuel the vessels from a specialised LNG bunker vessel at the Gas Access to Europe (GATE) terminal in Rotterdam and other supply points in the Baltic. Each LNG-fuelled tanker will have an Ice Class 1A hull notation enabling year-round export operations from the Russian Baltic.

“SCF Group and Shell have an extensive and successful track record of collaboration and technical innovation, and at the heart of our joint aspirations is the shared desire to play a major role in delivering a cleaner and safer maritime environment. This is why SCF Group and Shell decided to pilot this breakthrough initiative to switch the principal fuel of Aframax tankers, the workhorse of the global tanker industry, to LNG,” said Frank.

“This is an important next step for gas as part of the energy mix. The decision to work with SCF Group to power the world’s first LNG-fuelled Aframax crude oil tankers is evidence of Shell’s commitment to LNG as a transport fuel. LNG will increasingly play a larger role in helping the shipping industry meet new emissions regulations,” added Wetselaar.

The signing of this agreement marks the fulfilment of a MOU signed between Shell and SCF in September, 2015 to develop marine LNG fuelling for large-capacity tankers.

SCF said that it had opted for these innovative technical solutions to ensure that the new generation of Aframaxes exceeds rather than simply complies with emission legislation and sets the standard for shipping in the environmentally sensitive regions in which the fleet operates.

The concept for these tankers was developed jointly by technical specialists from SCF and the shipbuilder, including the Far Eastern Shipbuilding and Ship Repair Centre and Hyundai Heavy Industries, the technology partners of Zvezda shipbuilding complex (Primorsky region of the Russian Far East). This concept was developed as part of the preparation for the construction of of this type of vessel at Zvezda, where it is envisaged that the construction of large-capacity tankers will commence by 2021..

SCF is working towards reducing the environmental impact of its fleet. For example, in 2011-2016, these efforts made it possible to noticeably reduce SOx emissions by 24% per tonne/mile, NOx by 10% per tonne/mile and CO2 by 4% per tonne/mile.

Nigerian ex-oil minister charged with money laundering - crimes agency

Ex Oil Minister of Nigeria Diezani Alison-Madueke

http://www.reuters.com/article/nigeria-corruption-idUSL5N1HD555

Former Nigerian oil minister Diezani Alison-Madueke, who held the post for five years between 2010-15, has been charged with money laundering, the country's financial crimes agency said on Wednesday.

Three members of the National Electoral Commission (INEC) "allegedly received bribes" from the minister ahead of the 2015 general election, the Economic and Financial Crimes Commission (EFCC) said in a statement.

One charge read at the Federal High Court in Lagos stated that Alison-Madueke and the officials "conspired among yourselves to directly take possession of 264.9 million naira ($867,813)" on or about March 27, 2015, contrary to money laundering laws.

The former petroleum minister, who served during the presidency of Goodluck Jonathan, was not in court to enter a plea.

Alison-Madueke - who was briefly arrested in London in October 2015, although no charges were brought - has previously denied to Reuters any wrongdoing when questioned about missing public funds and corruption allegations.

Jonathan lost the 2015 presidential election to Muhammadu Buhari, who had campaigned on a ticket to fix the economy of a country where 70 percent of the 180 million people live on less than $2 a day despite the OPEC member's vast energy wealth.

The financial crimes agency has been investigating allegations of illegal transactions in the run-up to the 2015 election for more than a year.

The EFCC said one of the INEC officials, Christian Nwosu, pleaded guilty to receiving 30 million naira. The two others pleaded not guilty to money laundering offences.

The prosecution lawyer said Nwosu had entered into a plea bargain agreement. He also said he had purchased properties with the 30 million Naira.

"Having demonstrated remorse and given useful information to aid the prosecution of the case, he has entered into an agreement to forfeit the properties to the federal government," said prosecution lawyer Rotimi Oyedepo.

"The EFCC has recovered the 5 million naira left from the first defendant, having spent 25 million naira to acquire properties," he added.

Former National Security Adviser Sambo Dasuki, who also served under Jonathan, was charged in December 2015 with money laundering and criminal breach of trust. He pleaded not guilty.

Bello Haliru Mohammed, who was Jonathan's defence minister, was charged in January 2016 with money laundering and criminal breach of trust over 300 million naira that was intended for defence spending. He also pleaded not guilty. (Reporting by Alexis Akwagyiram; Editing by Andrew Bolton)