An Aberdeen councillor could be forced to step aside if he does not attend the next full council meeting.
Conservative Brett Hunt represents Bridge of Don, but his oil job means he is away on long-rotations around the world – and he last attended a meeting on September 10.
Now the opposition SNP group – who have described him as a member for “Bridge of Dubai” – had pointed to Section 85 of the Local Government Act, which states non-attendance for six months means a member can no longer serve as a councillor.
If Mr Hunt is forced to resign, a by-election would put the Tory, Aberdeen Labour and independent administration’s single member majority at risk.
Last night, the Tory group insisted Mr Hunt had been “extremely diligent” in serving his constituents and insisted he would be at full council on March 4.
They also argued that while similar legislation exists in Scotland, the specific law quoted by the SNP only applies in England and Wales.
Mr Hunt has previously defended his work commitments, and said he made “no secret” of his role when he was elected in May 2017.
Meanwhile, attendance figures for the whole chamber have revealed that between August 13, 2018 and February 5, 2019, just 17 of the 45 councillors have attended all the meetings they were required to.
However, a number of these absences have been due to poor health and other personal issues.
Last night, SNP group leader Stephen Flynn said last night: “We all know that exceptions have rightly been made in the past on health grounds to allow councillors to pass the six month period, but I don’t think ‘not being in the city’ will wash it’s feet as a reasonable excuse.
“I’ve heard a number of people refer to Brett Hunt as a councillor for the Bridge of Dubai and it will come as no surprise to them to learn that he hasn’t been seen at the townhouse since the start of September.
“I’ve no doubt that the administration will be making hasty arrangements to jet him back but the people of Aberdeen will be questioning how someone who is reputedly very rarely in the city can seriously vote on the council budget.”
But Conservative group leader, and council co-leader, Douglas Lumsden defended Mr Hunt and pointed out that many councillors have second jobs.
Conservative group leader Douglas Lumsden said: “Being a councillor is not always full time job as SNP MSP John Mason reminded the Scottish Parliament last week.
“Councillor Flynn and a third of the SNP group have second jobs with MPs or MSPs drawing double from the public purse.
“Councillor Hunt is on secondment with his energy sector job that he had at the time of the election. He will be with us at both the upcoming full council and budget meeting.”
UK oilfield services giant Petrofac has won a £73.5 million deal to provide a range of well services for Siccar Point Energy.
The three-year contract covers the provision of well operator and engineering project management services on the client’s west of Shetland assets.
Petrofac will be responsible for all new well work and the ongoing integrity management of existing well stock.
Nick Shorten, managing director for Petrofac Engineering and Production Services in the Western Hemisphere, said: “We are delighted to have secured this significant new scope with Siccar Point Energy and very much look forward to supporting them in successfully delivering their ambitious exploration, appraisal and development plans, safely and cost efficiently over the next three years.
“This award builds on our existing track record for delivering well operator and project management services for clients across the globe, but specifically west of Shetland, where we have significant exploration, appraisal and development experience.”
Siccar Point was set up by Jonathan Roger, formerly head of upstream for Centrica, in 2014.
The Aberdeen-headquartered exploration and production firm is backed by private equity funds Blue Water Energy and Blackstone.
Siccar Point owns and operates 70% of the Cambo field, which is thought to have 800 million barrels of oil in place.
An appraisal well was successfully drilled on Cambo, north-west of Shetland, last year.
This year’s drilling plans include exploration wells on the Lyon and Blackrock prospects off Shetland.
Petrofac has a track record of providing well services west of Shetland.
In July 2016, it signed a three year deal to with Hurricane Energy to carry out exploration, appraisal and development well activities on the client’s licences in that basin.
A four-well programme got under way at Hurricane’s Lancaster field that same month.
Some E.ON customers will see an average 10.3% price increase from April 1, the supplier has confirmed, just days after Ofgem said price caps designed to protect those on poor value deals would be hiked.
E.ON said that, in line with Ofgem’s price cap, customers on its standard variable gas and electricity tariff will see bills increase by around £117 from £1,137 to £1,254. It will be writing to those affected.
It said it has around 1.8 million customers on its standard variable tariff E.ON EnergyPlan.
E.ON said it expects to see “similar movements” take place across the energy industry.
Last week, Ofgem said it will increase the price cap for default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1 due to hikes in wholesale costs.
The watchdog said previously that those affected will still pay a “fair price” for their energy as the increase reflects a genuine increase in underlying wholesale costs, rather than provider profiteering.
An E.ON spokeswoman said: “Ofgem’s energy market price cap review set out that price cap levels would increase, driven by rising wholesale and other costs.
“In line with that, we’ll be making changes to our standard variable tariff prices from April 1 and expect to see similar movements across the energy industry.
“Prices will not change for existing customers until then.
“Over the coming weeks we’ll be writing to affected customers explaining what the changes will mean for them and encouraging them to choose the best tariff for their needs.”
Rik Smith, energy expert at uSwitch.com, said E.ON’s standard tariff will be as much as £286 more than deals currently available elsewhere in the market.
He said: “Predictably, just four days after Ofgem announced it is raising the level of the price cap, we’re seeing suppliers start to raise prices, with E.ON hiking bills for customers on its standard tariff.”
The UK is still the “most attractive” place for renewable energy investment, according to a new study.
Research by investor group Octopus has found that the UK has the most “attractive characteristics” for those looking to put money into the renewables sector.
The study found that the UK is still thought to offer the most “diversification, security and ability to tailor investment”.
Among respondents, more than half (55%) have already invested in the region, while six out of ten (61%) of those respondents yet to invest identified the UK and Northern Ireland as the most popular.
According to Octopus, investment is set to double over the next five years, with the report claiming more than £160 billion will be ploughed into the sector.
But the report also claims that investors are still concerned about a lack of government support and a skills deficit within the renewable energy sector.
In the UK, 56% of respondents highlighted energy price uncertainty as their main concern, closely followed by governmental barriers (32%) and lack of in-house skills (34%).
Matt Setchell, co-head of Energy Investments at Octopus, said: “This report not only identifies the key drivers for institutions investing into renewable energy, it also points to why investors might be holding back from investing, by setting out the challenges for those entering the sector and factors that will encourage increased allocations to this asset class.
Crucially, the roadblocks identified – concerns around energy price uncertainty, liquidity issues and lack of in-house renewable asset management skills and resources – are surmountable.”
The 250millon-barrel Glengorm discovery will ‘reignite excitement’ in the central North Sea, with eyes now on further prospects in the region according to Westwood Energy.
Cnooc International announced the discovery two weeks ago, which analyst firm Westwood said could be the start of a “bumper year” for oil and gas exploration globally.
It is one of four major finds so far this year, along with two in Guyana and another in South Africa, already equalling 25% of the global high impact oil and gas discovered last year.
In the UK, eyes will be on further central North Sea prospects like Edinburgh and Rowallan, according to head of exploration and appraisal Graeme Bagley.
Rowallan, operated by Eni, spudded at the end of last year and is estimated between 20 and 60million barrels of oil equivalent.
Meanwhile Edinburgh is considered one of the largest undrilled prospects in the North Sea, estimated to hold upwards of 200million barrels of oil.
A new deal in January has lined up Shell to take over operatorship of the prospect from Faroe Petroleum, once a final decision is taken on a well being drilled.
Writing for Westwood Insight, Mr Bagley said: “In the UK North Sea, the CNOOC operated Glengorm discovery, reported at ‘close to 250mmboe’ by partner Total, is potentially the largest discovery since Culzean in 2008, also 250mmboe.
“The discovery will reignite excitement for the HPHT play of the Central North Sea and eyes will be on the Rowallan well, currently drilling, and Edinburgh, which is one of the largest undrilled prospects on the UKCS.
“Utilising the Wildcat platform, Westwood has identified another 76 high impact wells either drilling or planned for the remainder of 2019 testing 22 billion barrels, half of which are in deep water.
“2019 could turn out to be a bumper year.”
Other major discoveries so far this year include Brulpadde well in the Outeniqua Basin, deep water South Africa which could contain up to a billion barrels of oil equivalent.
Meanwhile ExxonMobil has made the Haimara and Tilapia discoveries offshore Guyana in the Stabroek licence.
They are the latest in a series of finds in the region and experts predict these take reserves at Stabroek to more than five billion barrels of oil equivalent.
Peter Courtney, international tax specialist at Johnston Carmichael, looks ahead to the possible tax changes that will affect Scottish businesses operating internationally in a post-Brexit landscape.
In 2017, I recall reading a study by Professor Roland Alter of Heilbronn University that predicted Britain extracting itself from the EU will be “incomparably more complex” than the first moon landing.
Two years later and Professor Alter’s prediction seems on the money.
With less than 50 days left until Brexit with little certainty on what is going to happen at 11pm on March 29 2019, what should businesses be doing?
The key impacts of a no-deal Brexit on UK-EU trade will be:
o Imports and export declarations will be required to support all trade in goods with EU countries.
o VAT and Customs duty will be payable (where applicable) on imports into the UK.
o The loss of existing EU trade deals will mean that all UK trade with third countries will be on non-preferential, World Trade Organisation (WTO) terms.
o Customs simplification regimes currently governed by EU law (for example, transit arrangements and processing reliefs) will be lost.
From a corporation tax perspective, groups within the EU have operated without needing to think about withholding taxes on dividends, royalties and interest.
This will all change if it’s a no-deal, with the likes of Germany imposing a 5%, 10% or 15% withholding tax on dividends under the UK/Germany tax treaty.
The key priority is to know your business supply chain: what materials or services do you currently receive via other EU countries?
What goods or services do you export to or via other EU countries? What will happen if these flows stop or there’s a significant delay? Is there any alternative that could make the impact less damaging, such as:
o Additional borrowing facility from your bank?
o Change contractual terms? Buy-in additional raw materials early and extend delivery dates? Hold additional supplies of finished goods in say the Netherlands prior to 29 March? Do you need additional warehouse storage facilities/ insurance cover?
o How are your goods transported in and out of the UK? Should you consider a variety of ports/air?
o Do you have an EORI number? You and your trading partners will need this if currently the parties only trade with other EU countries.
o What duty will apply to your imports and exports? How much will it cost you and what impact will this have on cash flow?
o Do you rely on employing staff from other EU countries? Have you talked to them about the potential impact and have any applied for Settled Status?
Despite the uncertainty surrounding Brexit, trade with foreign markets will continue in one way or another, so it will be important for all of us to be close to new legislation and regulations as this gets developed.
It’s important to seek advice to avoid any potential pitfalls and give your business the best success, no matter how the negotiations eventually pan out.
Concerns have been lodged over ambitious plans for an underground hydro plant at Loch Ness – opposite the iconic Urquhart Castle.
Developers say around 300 jobs could be created by the Red John Pumped Storage Hydro Project at Dores, proposed to run between Loch Duntelchaig and Loch Ness.
If approved, it would have a generating capacity of 400MW, enough to power almost 500,000 homes.
But fears have been expressed about the potential impact of the project. These include high levels of traffic – HGVs transporting materials and the large number of workers travelling to and from the site – the effect on wildlife, ancient forestry, local paths and trails, noise, and the potential of flooding, as the location lies on the Great Glen faultline.
A pre-planning assessment highlighted concerns it could affect protected species, birds and peatland, while others expressed concerns about the visual impact. Dores resident Barry Dennis said he had “major concerns” about an increase in traffic on the Dores road. He added: “There are also security and environmental issues with construction covering such a large area with precious wildlife and fauna and also such a dam being an inviting target for terrorists.”
Chairwoman of Dores and Essich Community Council, Ella Macrae, said: “Representations will be made to Highland Council planning in due course.”
The hydro scheme plans were lodged with Highland Council in November by Hamilton-based Intelligent Land Investments (ILI) Group. They claim much of the infrastructure could be deployed underground, meaning there would be minimal damage to Loch Ness, Urquhart Castle and the surrounding landscape.
Mark Wilson, managing director of ILI Energy, said statutory consultees were “satisfied to the information provided to date”, adding: “We are responding directly to the concerns and queries from the local communities.”
BP has started production from the second phase of its West Nile Delta development offshore Egypt.
The project, which produces gas from the Giza and Fayoum fields, was developed as a deepwater, long-distance tie-back to an existing onshore plant.
The West Nile Delta development includes a total of five gas fields across the North Alexandria and West Mediterranean Deepwater offshore concession blocks.
It was originally planned as two separate projects, but BP and its partners realiSed the opportunity to deliver it in three stages, accelerating delivery of gas production commitments to Egypt.
Stage one of the project, which started producing in 2017, included gas production from the first two fields, Taurus and Libra.
The Giza and Fayoum development, which includes eight wells, is currently producing around 400 million cubic feet of gas per day (mmscfd) and is expected to ramp up to a maximum rate of approximately 700 mmscfd.
The third stage of the West Nile Delta project will develop the Raven field. Production is expected in late 2019.
When fully onstream in 2019, combined production from all three phases of the West Nile Delta project is expected to reach up to almost 1.4 billion cubic feet per day (bcf/d), equivalent to about 20% of Egypt’s current gas production.
All the gas produced will be fed into the national gas grid.
BP has an operating stake of 82.75% in the development.
The start-up announced today in Egypt is the second for BP in 2019, following the Gulf of Mexico’s Constellation development, which BP has a 66.6% non-operated stake in.
BP chief executive Bob Dudley said: “This important project start-up benefitted from the excellent working relationship between BP and the Egyptian government.
“With the second stage of West Nile Delta now online, BP has now safely brought 21 new upstream major projects into production over the last three years, keeping us on track to deliver 900,000 barrels of oil equivalent per day by 2021.”
Hesham Mekawi, regional president, BP North Africa, added: “We are proud to have worked with the Egyptian government to deliver this multi-phase, complex project, which plays an important role in both Egypt’s gas supply and BP’s strategy.
“Our story in Egypt now stretches back for more than half a century and, thanks to projects like this, it has a bright future.
“Production from Giza and Fayoum will sustain local energy supply and keep us on track to triple our net production from Egypt by 2020.”
Oil fell toward the lowest level in almost two weeks as global growth concerns continued to damp the demand outlook, with investors hoping for positive news from high-level U.S.-China trade talks this week.
Futures dropped as much as 1.6 percent in New York, following a 4.6 percent decline last week that was the biggest this year. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are heading to Beijing for discussions before a March 1 deadline set by the U.S. to more than double tariffs on $200 billion of Chinese goods. Hedge funds plowed back into bearish bets on Brent crude in the week through Feb. 5.
West Texas Intermediate oil has reversed course after the best January on record as a lack of progress on the trade war and growth warnings from Europe, Asia and elsewhere depressed the demand outlook. In more bearish news, American drillers added seven working oil rigs last week, bolstering concern that record U.S. production will undermine efforts by the Organization of Petroleum Exporting Countries and its allies to curb a global glut.
“We’ll see oil trading in a range between $50 to $55 a barrel in the short term as uncertainties linger over the U.S.-China trade negotiations, as well as over wider economic growth,” said Vincent Hwang, a commodities analyst at NH Investment & Securities Co. in Seoul. Crude is likely to recover to near $60 a barrel in the longer term once the macroeconomic concerns ease, he said.
West Texas Intermediate oil for March delivery dropped 60 cents to $52.12 a barrel on the New York Mercantile Exchange at 7:53 a.m. in London after falling as much as 82 cents earlier. The contract closed 8 cents higher at $52.72 on Friday.
Brent for April settlement lost 30 cents to $61.80 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 47 cents to $62.10 on Friday. The global benchmark crude was at a $9.29 premium to WTI for the same month, the highest in more than seven weeks.
Investors are hoping that the world’s two biggest economies can get their trade talks back on track after U.S. President Donald Trump said last week that he’s unlikely to meet with his Chinese counterpart, Xi Jinping, before the end of the 90-day truce on March 1. Fears are intensifying a deal won’t be reached, which could spur a tit-for-tat escalation that would make an already shaky global growth outlook even worse.
Short-sellers boosted wagers by 28 percent, the most since October, that Brent crude prices would fall, according to data released Friday by ICE Futures Europe Exchange. Net-longs — the difference between bets on a Brent increase and wagers on a decline — nudged up by less than 1 percent.
A slew of reports due this week may provide fresh direction for oil markets. The Energy Information Administration and OPEC will publish data including their market outlooks on Tuesday. The Paris-based International Energy Agency and BP Plc will also put out reports containing their demand forecasts on Wednesday and Thursday, respectively.
Other oil-market news: Talks to avert a new U.S. government shutdown over funding for border-security funding broke down late on Saturday, according to lawmakers and aides, imperiling the prospects for a deal as time runs short. Kuwait Petroleum Corp. is reassessing plans to spend about $500 billion in capital investment and may decide this year to combine its eight business units into four to streamline the company, according to a person familiar with the matter.
The Scottish Government is set to turn the tide on a previously defunct £10 million marine energy scheme.
The relaunched Saltire Tidal Energy Challenge Fund will look to encourage the commercialisation of wave and tidal projects, many of which are currently based in the Scottish Highlands and Islands.
The original taxpayer funded scheme was launched in 2008, offering up £10m to the first company to produce 100 gigawatt (GW) hours of marine-generated power, but was ultimately scrapped.
The Scottish Government claim the new fund could help to build on the “substantial export potential” of Scottish tidal energy.
Scotland’s energy minister, Paul Wheelhouse, added: “We believe that tidal energy can not only play an important role in our own future energy system, but it has substantial export potential.
“The industry has taken momentous steps forward in recent years, and we are proud to have supported that, but the path to commercialisation is taking longer, and proving more difficult, than initially expected.
“This fund provides a timely and appropriate approach for the Scottish Government to support the current needs of the sector and to help ensure Scotland’s huge marine energy potential is realised.”
The north of Scotland boasts a clutch of world-leading tidal firms such as Orkney-based Orbital Marine Power and Nova Innovation and Simec Atlantis Energy’s Meygen project in the Pentland Firth.
However, the removal of UK Government subsidy in 2016 sparked a clamour for private investment within the sector.
In June, Sanjeev Gupta’s GFG Alliance took a multi-million stake in the company behind the Atlantis MeyGen tidal array.
It was closely followed by Orbital Marine clinching its £7m investment target to build the world’s most powerful tidal turbine.
Andrew Scott, chief executive of Orbital Marine Power, said: “This achievement has been the result of a lot of hard work and commitment over the years from both Scottish Government and the industry.
“We applaud the Scottish Government for recognising the unique challenges that we now must overcome to commercialise technologies and grow an industry that can deliver further success domestically and globally.”
Renewable energy trade body Scottish Renewables senior policy manager Hannah Smith said the new fund would drive innovation and “lower the cost” of marine energy in Scotland.
She added that it is important the Scottish Government “recognises both the need to fund innovation in this promising sector and the commercial realities faced by developers.”
A former Aberdeen football legend will use what he learned under Sir Alex Ferguson to tackle leadership in offshore training.
John McMaster, the unwavering left-wing talisman in Fergie’s world-shocking Gothenburg Greats, is set to team up with Maersk Training and Route to Employment to share his experiences of leadership under arguably the greatest ever manager in world football.
During his lengthy career with The Dons, Mr McMaster lifted the European Cup Winners’ Cup in 1983, two Scottish League titles and three Scottish Cups.
In contrast to the way he kept strikers quiet throughout his illustrious career, his new role will see him unleash a winning mentality in those looking to progress up the professional field.
Mr McMaster believes everyone has leadership within them, it’s just a matter of releasing that potential – without any need for the hairdryer treatment.
He said: “This training course is about challenging people who think they can’t go that one step further in their career.
“I want to share what The Boss was like on and off the field, show that, although he was hard, being a great manager is also about showing compassion.
“He created a real family unit at Aberdeen. I learned a lot by watching that. Little did I know I’d be here 40 years later sharing these experiences with people.”
Further to that aim, Maersk Training has a few big name signings they’re talking to in terms of North Sea operators.
Subsea service firm Rever Offshore has already put pen to paper, and instructor David Christie is confident the course will attract other top players.
He said: “The key in any good business is leadership and what we’ve realised is that there are parallels between sport and high performing teams.
“What management is often gets lost in translation so we’re looking at the human side – how people deal with people – but also how that impacts on a very high performing team.
“John McMaster’s stories about Sir Alex Ferguson and Aberdeen further compound what we believe the human side of running a business is all about.”
Nathan Calvert, training manager at Rever Offshore, added: “For us it’s a totally unique programme and a very engaging one.
“People buy into John and the transferable skills that he talks about.”
Dutch marine firm Boskalis has set up a new subsea services base in Aberdeenshire.
A total of 53 staff are this week being moved in to the new facility on Westhill’s Prospect Road, with potential for further expansion.
The dredging and maritime services company last year announced its ambitions to expand in the UK subsea sector.
The Boskalis Subsea Services premises in Westhill is focussed on growing a client base in the UK North Sea, while contracts from other parts of the world will mainly be managed out of the global HQ in the Netherlands.
Managing director Stuart Cameron believes there is an appetite for a new “nimbler” firm in the recovering market.
He said: “I think that the Boskalis financial position, the strength that brings, enables clients to look at a real alternative to the big guys for some of the work they need committed.
“From the number of projects coming back, you see almost the same thing that happened in the last cycle which is the bigger developments pull in the bigger contractors.
“It does leave a bit of a gap of who can do the day-to-day, the smaller EPICs or the smaller SURF or IRM programmes for what is still a pretty important part of the cycle.
“We’ve been here for a long time as Boskalis with the projects we’ve done on dredging and rock dumping over time, but the real commitment now is to invest in Aberdeen.
“I think Boskalis can bring that guarantee that this organisation can grow and deliver, and still be here in two years’ time to commit to it.”
Mr Cameron, who has spent the majority of his career at Subsea 7, joined as the first permanent employee in September for the subsea services arm and wants the company to be among the fastest-growing in the North Sea.
To do that, the firm recognised the importance of being based in the north-east.
He added: “To really be part of the UK North Sea sector you have to be here in Aberdeen.
“We need to be able to run the whole project, and that’s everything from the leadership side through project management, engineering, operational management, HSE and quality so we’re building up a team that can manage a project from start to finish here.
“We’re committed now and taken a 10-year lease on the office. We’ve got more than 50 employees and that will grow.
“We’ve got the right kit and we’re well set-up. It’s now about us proving to our clients that we can deliver that quality and HSE performance.
“If we can do that, we’ve got a really exciting path ahead of us.”
Aberdeen-headquartered PD&MS has announced a contract extension with Shell that will secure jobs on a number of North Sea assets.
The two-year agreement will see the engineering firm continue its existing three-year business relationship and safeguard 50 full-time jobs.
PD&MS technical director Derek Thoms said in December the firm would increase its headcount by around 25% over the next year to support a series of recent contract wins.
He revealed the announcement of new deals would mean up to 100 new jobs.
The firm has enjoyed two years in decommissioning as well as engineering, procurement and construction contracts.
PD&MS, which employs around 400 people in Aberdeen and internationally, said it also expects strong growth opportunities in the New Year.
Commenting on the Shell deal, Liam O’Neil, PD&MS’ director of projects said: “It’s fantastic that Shell has awarded us this extension, and we now have an opportunity to raise the bar even further in our EPCC space.
“Using the PD&MS delivery model, we pride ourselves on challenging the norm, working smarter and attacking problems from different angles. By doing so, we aim to provide long term value to Shell UK, and our wider customer base, through continuous innovation and improvement.
“Our aim is to continue working with Shell UK to develop innovative and value-adding solutions to common problems, which has been a key USP of PD&MS since inception in 2002.
“This contract extension is superb recognition of our commitment to continuous improvement, which in turn strengthens our market position and supports our efforts to fulfil our business growth strategy.”
PD&MS has operations across the UK, Dutch and Norwegian sectors of the North Sea, as well as work for BP in the Caspian Sea, served by an office in Baku, Azerbaijan.
Anglo-French oil company Perenco is considering selling some of its southern North Sea gas fields.
The firm said today that it was “reviewing strategic options” for that part of the business, which “may or may not lead to any divestments or new partnerships”.
Perenco’s gas production in the North Sea stands at around 72,000 barrels of oil equivalent per day.
The Sunday Times reported that Perenco was looking to sell a package worth more than £500 million, and would include its stake in the Bacton gas terminal in Norfolk.
Investment bank Tudor, Pickering, Holt & Co is handling the process, the report said.
A spokesman for Perenco said: “As part of an assessment of its future global investment priorities, Perenco is reviewing strategic options for the southern North Sea gas business, which may or may not lead to any divestments or new partnerships.
“At the moment it is business as usual.”
The company was founded in 1975 by Hubert Perrodo, who died in 2006 on a hiking trip. It is now owned by his widow Carrie, 66, a former model.
As someone who provided written evidence to the House of Commons Scottish Affairs Committee, The future of the oil and gas industry, I attended the launch of the final report at an Oil and Gas Technology Centre session on Monday, February 4th.
My written evidence related to decommissioning and the societal, environment and economic impact of leaving offshore architecture clean, in-place and re-purposed as a benefit to the marine environment. I also proposed that the money saved by doing so to be used to support UK decarbonising initiatives. I took the stance of a taxpayer, the largest stakeholder in decommissioning, and provided my evidence as to why this option should be investigated: an option which current regulation largely precludes.
I was pleased to see some of my evidence was used together with a reference to my articles on this subject. However, the report used a quote of mine that was out of context. Relating to Economic Benefit, the report cited my colleague, Professor Richard Neilson – ‘any reduction the Scottish sector could achieve in the cost of well plug and abandonment support would deliver particular benefits’.
With well plug and abandon (P&A) being around 50% of decommissioning costs this is a true assertion. That quote was then followed by ‘Other commentators were less positive, arguing that while decommissioning creates opportunities in the short term, there is a natural limit to the contribution it can make to the economy in the longer term. Tom Baxter, Aberdeen University argues that:
While it’s true you create short-term employment and that the employees and service companies will pay taxes, you don’t build any factories or provide new infrastructure to serve society and the economy. Also, much of the removal money will go to the heavy-lift companies—the UK has none.’
My position has nothing to do with P&A and the benefits of developing more cost efficient techniques to be used for future projects in the UK and globally. The quote is completely out of context and infers I disagree with Prof Neilson. My view is that decommissioning per se provides the UK taxpayer with very little benefit.
I was also unhappy with the context of another quote under Rigs to Reefs. Wendy Kennedy of Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) stated – ‘We have visited and in the Gulf of Mexico if you want to leave something in place you do not leave it where it is. You have to clean it all up, take away the topsides, cut it, move it to the reefing site that is close to shore, because then it is useful for fishing and things, and then you have to pay money to the local state to maintain that fishing site. In the UK, by the time you have plugged and abandoned the wells, taken off the topside, cut it and started moving it to shore, frankly you are just as well carrying on and decommissioning and having it cleaned up onshore’.
Again a true statement when taken in isolation, but the concept of rigs to reefs as proposed by the Scottish Wildlife Trust and myself is to leave in place. Shallow water placement, as undertaken by the US, is not a viable concept for the North Sea. So why use this quote as it infers that shallow water placement is being proposed? What the rigs to reefs approach, as used in the US, does demonstrate is that man-made structures in the marine environment can be a positive.
If I put my lecturer’s hat on I would mark the Decommissioning section of the report with a ‘could do better’.
On a more positive note, the report does recommend that re-purposing should be further investigated.
UK-based firm Engineering Technology Applications (ETA) will supply a subsea tidal turbine connection system for the extension of a major tidal array in the Pentland Firth.
The subsea system will allow multiple turbines to be connected to a single power export cable, which will significantly reduce the costs associated with grid connection.
Project Stroma will connect two additional Atlantis AR2000 turbines to a single power export cable which will then be connected via the MeyGen substation to the National Grid.
The contract was awarded by Simec Atlantis Energy (SAE), operator of the MeyGen tidal development.
ETA is based in Romsey, near Southampton.
Drew Blaxland, director of turbine and engineering services division at SAE, said: “The Atlantis subsea hub has been designed to deliver immediate, material reductions in the overall cost of tidal power generation.
“Leveraging technologies developed for the oil and gas and offshore wind industries, we have adapted tested products to our new turbine design to deliver an approximate 50% reduction in the capex costs on a per turbine basis associated with turbine grid connection compared to MeyGen Phase 1.
“Further, this subsea hub has direct application to the growing floating offshore wind market globally. An adaption of our hub will be able to connect multiple floating offshore wind turbines in deep water, helping this industry on its cost down trajectory.”
Simec Atlantis Energy Subsea Hub
SAE chief executive Tim Cornelius said: “The iconic MeyGen project is once again at the forefront of the development of the marine energy industry in Europe.
“Building on the success of our previous project specific bond issuances, we are currently in discussion with several regulated exchanges about the issuance of a debt instrument to fund Project Stroma which will in turn allow us to progress our plans to secure CfD allocations for future phases of the MeyGen project.”
The chief executive of Cluff Natural Resources (CLNR) has said the company’s farm-out deal with Shell will be “transformational” in its North Sea growth plans.
Last week CLNR announced it will farm-out 70% of its P2552 licence to Shell, along with the option for the energy giant to acquire a 50% stake in the P2437 licence.
CLNR saw its share price surge following the announcement, and CEO Graham Swindells said it gives them “clear line of sight” over their drilling plans, with Shell set to bear most of the costs.
He believes the deal will raise the profile of the company and offers a platform for growth as it aims to take on more licences in the next round from the Oil and Gas Authority (OGA).
He said: “This takes us from a company with a portfolio of highly prospective assets to a company that’s trying to position ourselves as one of the leading independent exploration and appraisal-focussed companies in the North Sea.
“A big part of this is it provides a platform for us from which to work and build on these assets that we have farmed out.
“We have the intention to further expand and diversify our portfolio when the 32nd licensing round is opened up, hopefully in the summer of this year.”
The two licenses combined hold an estimated 190million barrels of oil equivalent.
CLNR first announced it was in exclusivity talks with a major oil and gas firm in November.
Graham Swindells, CEO of Cluff Natural Resources
Mr Swindells said closing the deal was a “tremendous achievement”.
He added: “There was always talk of things being a partnership.
“It would be an understatement to say there is a difference between CNLR and what is one of the most profitable companies in the world, in and out of the oil and gas industry.
“To have that endorsement from a company like Shell is a tremendous achievement for a company such as ours.
“We feel that this is just the start of what will hopefully be a very long-term and fruitful relationship with Shell going forward, not just with these licences but as a company as a whole.”
Shell has until the end of April to exercise the option to farm-in to the P2437 licence, but may do so sooner.
Following last week’s announcement, CLNR is still on the hunt for a partner for another of its southern North Sea licences.
Talks have fallen through with a preferred bidder to farm-in to the P2248 licence due to the other company not being able to demonstrate it can fund the project.
Cluff has until the end of February to find a farm-in partner or it will be forced to drop it.
Mr Swindells hopes the Shell news will make matters easier in that job.
He added: “The announcement will hopefully raise the profile of the company so that people will become more aware of the other portfolio of assets that we have.
“We were awarded six additional licences in the 30th licensing round in October. We have been running a process on P2248 but we are running against time and we’re still working on it.
“If we don’t get that over the line I think the likelihood is we would relinquish and reapply for the licence in the next round.”
A recent poll suggested industry’s mission to lower its cost base and learn lessons from the downturn will be subjected to an acid test this year.
Two fifths of UK respondents to DNV GL’s survey experienced price inflation from suppliers last year, and 44% have braced themselves for “notable” increases in 2019.
People will have different interpretations of what represents a “notable” increase.
But the experiences of bosses at two engineering consultancies indicate operators have little to fear.
Indeed, more operators and suppliers appear to be singing off the same hymn sheet on costs.
The penny has dropped that continuing to squeeze suppliers is no longer an option, and the operator community knows it.
At the same time, it is in the supply chain’s interests to keep a lid on inflation and ensure the industry is sustainable long term.
So, rates charged by suppliers are starting to creep up at long last, but they are certainly not going to spiral out of control.
Ryan Menzies, managing director at Apollo, said: “Rates are still depressed but operators understand we have to make money and be sustainable.
“Operators know we are at the bottom of the barrel and can’t be squeezed any more. Ray Riddoch (of CNOOC International) said that at a recent contractor council meeting of Oil and Gas UK. That’s over, it cannot go on. But the supply chain has an important role to play in keeping industry sustainable. We have to keep people realistic. Pricing points will start to increase a little this year.
“We do not expect anything significant, but there is probably a requirement for rates to nudge up.
“We know operators have adjusted their businesses and made cost savings. Part of that comes from companies like Apollo and we should share in that success.”
In a separate interview with Energy Voice, Andrew Wylie, an operations director at Xodus Group, said: “During the downturn, the supply chain had to cut its costs by about a third.
“We’re now seeing small increases, but nothing too much. We do not want rates to increase too much. We want industry to be sustainable.
“An increase of 3-5% is fine. We do not need to go up 30%, because industry would not survive.
“We want a good steady flow of work going forward in the North Sea.”
He added: “This is first time in years we are not being asked to cut rates. Our top five clients asked us to stick with current rates for the next two years. Clients understand they can’t squeeze any further.”
Andrew Wylie, Xodus
Recruitment bottlenecks was another issue touched on by DNV GL’s poll: 39% warned skills shortages and an ageing workforce would be a barrier to growth.
The annual Global Energy Talent Index (GETI), by Airswift and Energy Jobline, added further fuel to the fire.
Nearly half of oil and gas professionals said they were worried about an “impending talent emergency”.
Two fifths feel the sector is already in the grip of a crisis, with a further 28% expecting the problem to hit home within the next five years.
Apollo’s Mr Menzies accepts a problem does exist, even if the chickens haven’t come home to roost yet.
The firm employs about 60-70 people full-time in Aberdeen, and 110 at group level.
Not long ago, it had 60 overall, so the company has seen a lot of growth. It also has a healthy number of graduates.
Accommodating so many new people could have put a strain on Apollo, but the company coped.
In fact, Mr Menzies feels he could have afforded to take on a few more people in the last year.
“Skills are still a worry for industry, but it’s less of a concern for us,” said Mr Menzies, who has been heading up the group since chief executive Jonathan D’Arcy sustained a serious injury while cycling last year.
“We’ve got a group of people who like working here, and in the short term we don’t foresee challenges.
“In 2014-15 there were a lot of redundancies across the sector. Graduates were let go and industry is still hurting from that.
“Those people would now be engineers with five years’ experience under their belts, but instead they do not exist. Beyond this year recruitment will become even tougher, depending on activity levels.
“Drilling activity is still low and we’re not seeing mega projects: They’re coming to an end.
“But good opportunities are coming through in brownfield as companies invest in keeping mature assets going.
“We have growth plans this year for another 30 people. With engineering, procurement and construction (EPC) opportunities, one project could wrap up 30 people quite quickly.”
Xodus, which employs 300 people at group level, has also been in recruitment mode in the UK.
It has about 185 staff members in Scotland, up from 160 in 2017.
About 120 are based in Aberdeen.
Mr Wylie said: “We see a rosy future so we’ve increased headcount. But it is getting more difficult to recruit and find talent. Graduates have more choice now.
“But more people are returning to work for Xodus, and thank goodness because of the amount of work we have to do.”
Xodus’ Mr Wylie said field development work had picked up in the last 12 months, though more than half of its work in that segment is international.
The North Sea is heading in the right direction, but Mr Wylie said no big projects are expected to grace the UKCS in the near term and tiebacks are the order of the day.
Integrity and asset support services are fruitful business streams. They also augment Xodus’ knowledge of installations, helping the company advise whether they could be used to facilitate new tiebacks.
Mr Wylie said the company enjoyed working with small to medium-sized enterprises because it is they who get most value from Xodus’ services.
Clients have included Premier Oil, Dana Petroleum and Apache, while master service agreements have been inked in the last six months with newcomers Chrysaor, Siccar Point and Serica Energy.
Steve Swindell, managing director at Xodus, is also excited about working with new entrants.
He said: “With them, it feels like the shackles are off. They’re like the Manchester United team without Jose Mourinho.
“It’s the same people as before, but now they’re more positive and want to invest. We’re seeing different approaches from the same people.”
Decommissioning work is also boosting Xodus’ finances.
In November, Xodus announced that its dedicated decommissioning division had secured several new clients and won contracts worth £2 million in 2018.
Most of that work is in the North Sea and relates to the planning phase.
Mr Wylie said: “By trying certain things, we can put cessation of production (COP) back by two or three years. We can look at production profiles and make small tweaks here and there.
“Xodus was created to do field development work, but we have diversified.”
The company is doing a lot of permitting work in the North Sea, which is good news for the Oil and Gas Authority’s aspirations for spurring exploration.
Mr Wylie noted the amount of drilling permits had increased in the last three months from different operators on the back of recent licensing rounds.
Xodus also has an advisory team focusing on mergers and acquisitions.
Back at Apollo, front end engineering and design (Feed) and consultancy services became the firm’s bread and butter after it was established in 2010.
And though the marine and drilling markets remain challenged, Apollo has also seen signs of an uptick in the market, and has been picking up subsea Feed work. Mr Menzies feels there are big opportunities in the market for smaller players, and said Apollo, with its speed and nimbleness, was becoming a thorn in the side of tier one contractors.
Mr Menzies said: “Our origins are in consultancy, and you do get pigeon holed.
“So when it comes to EPC, some clients say, ‘well that’s not your bag’.
“You need to build trust and get them over that hurdle. They’ve been giving us a shot and coming back for more.”
“Previously, the first question from operators was always, ‘how many people have you got?’ rather than, ‘what’s your capability?’
“We were seen as too small. Operators went to contractors with bigger headcounts for a sense of security, albeit a false one.
“We’ve shown we are good value, so operators’ doors have opened.”
Mr Menzies acknowledged tier one contractors serve a purpose, and are particularly well-suited to undertaking big capital projects.
But he said Apollo can compete with the “big boys” on brownfield projects – upgrades and modifications.
Ryan Menzies believes Apollo has set the standard for others to follow
Apollo’s KnowHow and KnowHow Dive asset integrity data management products have been picked up quickly by operators.
Mr Menzies said: “When we look at a problem, we ask, ‘do we actually need to do anything? Can we defer?’
“Rather than launching into an expensive repair job it might be that we don’t need to do anything for three years.
“If COP is in three years, you do not need to do it at all. Now everyone thinks like that, but we’ve been doing it from the start.”
Furthermore, he is convinced that the likes of Apollo have forced tier one contractors to change the way they work.
“We can react more quickly than others,” Mr Menzies said.
“Tier one has had to change and introduce new concepts and more efficient ways of executing smaller scopes. I think that’s in response to companies like Apollo.
“We are lean, mean and hungry. We have to be profitable at all times.
“We’ve spotted EPC opportunities. We have taken some work from the big boys and they do not like that, but we’ve forced them to change.
“They’ll win some scopes from us, but we’ll take some from them.”
Mr Menzies added: “It has been a tough few years. Apollo has punched above its weight and played a part in changing the industry.
“We do not want people to forget the role we played and will keep playing.
“We can’t go through the same old cycle and go back to having us just serving tier one contractors.
“We want operators to be sustainable and help generate spend.”
Back in the day – the late ’ 90s – a project called the Zero Surface Facilities Initiative was set up between a collection of operators and contractors known as the Atlantic Margin Joint Industry
Group and the now defunct Centre for Marine and Petroleum Technology.
The basic objective of this initiative was to develop plausible solutions to issues deemed to be potential obstacles to building deepwater subsea production systems with very long distance tie-backs.
The aim was the “identification of applicable technologies, their system impact individually and in conjunction with other technologies”.
To provide a realistic scenario the study looked at a low energy, low gas to oil ratio reservoir with an API of 24, a high energy, high gas to oil ratio reservoir with an API of 35 and a gas/condensate reservoir.
This was a comprehensive piece of work and as I recently trawled through the final report for the first time in 20 years I found it interesting to identify technologies that are now commonplace and those that never made it past the “here’s a cool idea” stage.
Those that made it include multi-phase pumping, electrical submersible pumps, subsea separation, subsea power distribution and high-voltage subsea connectors.
We can also include raw-water injection although perhaps it’s not as widely used as we thought it might be.
Then there’s multifunction inhibitors, hydrate and wax prevention including heated pipelines, diverless pipeline connections and similar technologies.
Inevitably, though, there were lots of “false dawns”.
The all-electric subsea tree, while having been successfully prototyped, hasn’t yet achieved full acceptance.
We looked at the idea of a “launch and leave” ROV that was garaged on and powered by a subsea production system and controlled from shore either by a fibre link or pre-programmed to undertake specific tasks and triggered by an acoustic link.
We also very seriously considered geothermal heating for pipelines using what is effectively a ground source heat pump.
Subsea power generation, seabed gas to liquid technology, active insulation and much more extensive use of composite materials were also considered, but back then had to be transferred to the “stuff for later” list.
In fact it has taken until quite recently for a company to develop a small prototype subsea generator based on tidal energy.
The question is, where does subsea go next?
Robotics seems to offer large potential – but it always has.
Now, though, there are some companies, notably in the US, doing serious work in this area.
Does subsea production need further innovation? Probably, but the incentive and above all the money probably isn’t there now to fund much more than incremental improvements.
Energy transition offers real opportunities provided we’re prepared to be as bold and innovative as we were in the ’80s and ’90s when most of the real progress was made.
Using renewable resources for the generation of electricity is one such opportunity.
Tidal turbine design uses subsea engineering skills, although from what I can tell, bar the example above, no “conventional” subsea engineering and manufacturing companies are active in the sector. Is that because oil and gas sector costs tend to be higher, subsea companies aren’t interested in diversifying or it’s out of their comfort zone?
Then there’s the cable industry.
Quite recently a Danish company laid a 100km cable from Caithness to Moray to connect remote wind farms to a major substation enabling the electricity produced to flow into the national grid.
This company used a cable it manufactured itself, and its own cable lay ship built for it in Norway.
Cable laying is widely used in the subsea industry so this is a good example of what can be achieved if you’re prepared to invest in the right tools. The Danes and Norwegians obviously were.
I would love to see some work being done on the viability of subsea hydrogen production. Electrolysers powered by floating wind turbines could perhaps produce and compress hydrogen for transport by pipeline to shore.
Would it be possible to undertake natural gas reforming subsea?
If it was, you might be able to pump the carbon dioxide produced straight back into the reservoir while pumping the hydrogen ashore. Why not build ultra large diameter tidal turbines driving 50MW or perhaps even larger generators for use in deeper but slower waters? That would be extreme subsea engineering.
On the other hand, why not pick up the idea generated in that study from 20 years ago and investigate large-scale subsea thermal power generation?
While these ideas may or may not be feasible we need to catch the imagination of the subsea fraternity again and apply it to the huge so called renewables market because that’s where we’re headed – and they’d better realise it fast.
Dick Winchester is a member of the Scottish Government’s Energy Advisory Board
The energy sector’s next generation is to be given advice on how to make it in the industry.
Transition – a programme organised by Aberdeen social enterprise AFBE-UK Scotland – takes place at Robert Gordon University on Saturday, February 16, from 9am-5pm.
More than 100 attendees will gain an insight into the opportunities in the world of work through two talks. Lina Serpa, vice-president wells, North Sea for BP will give a presentation on her experiences in the energy sector. She has more than 25 years’ frontline and management expertise through working in a number of countries.
In addition, motivational speaker, Dr Tharaka Gunarathne – who graduated from the University of Aberdeen Medical School – will give a talk on thinking big. Dr Tharaka is a consultant clinical psychiatrist and medical educator that advises those in business and education on how to maximise performance
Previous events have helped more than 1,000 students prepare for the move from academic studies.
AFBE-UK Scotland promotes engineering as a career choice among young people from various backgrounds and under-represented groups.
The day-long event features activities geared at preparing undergraduate and postgraduate students, including mock interviews, assessments, CV reviews and networking experience.
Dr Ollie Folayan, chairman of AFBE-UK Scotland, said: “We’ve had first-rate feedback from students and graduates about previous Transition events and we expect this latest one to be another successful gathering.
“Experienced professionals will be on hand to pass on tips on what to expect when trying to land that first job. The presentations from Lina and Dr Tharaka will also provide insight on how to have a successful career.”
The event is open to students and recent graduates of the University of Aberdeen and Robert Gordon University.
AFBE-UK Scotland was established in Aberdeen in November in 2011 and is the Scottish chapter of AFBE-UK.
Schlumberger has appointed Olivier Le Peuch as chief operating officer of Schlumberger, effective immediately.
Reporting to chairman and chief executive officer Paal Kibsgaard, Mr Le Peuch will be responsible for the day-to-day management of all worldwide operations.
Previously, Mr Le Peuch was executive vice president reservoir and infrastructure, responsible for the management of the Cameron product lines, including OneSubsea, as well as some of Schlumberger’s leading technology products lines, including Software Integrated Solutions and Schlumberger Land Rigs.
Mr Kibsgaard said: “Olivier’s track record, consisting of significant industry experience combined with technical and management roles within Schlumberger, gives me complete confidence in his ability to manage and grow all aspects of our operations. I look forward to working closely with Olivier.”
Mr Le Peuch began his career at Schlumberger in 1987 as an electrical engineer and spent his early career in custom software integration and development, and in high temperature electronics development for Wireline equipment.
To his friends, Rodrigo Berkowitz lived within his means in a rented house in the suburbs of Houston.
The former oil trader for state-controlled producer Petroleo Brasileiro SA bought clothes in outlet malls and sent his two daughters to public school. For a family Christmas trip to Orlando, his plan was to drive the 960-mile route in their black Honda CR-V sport utility — because it was crazy to spend on plane tickets, he said.
So they were shocked when the news broke in December that Brazilian federal police had issued arrest warrants for about 15 former oil traders and intermediaries. While some of the suspects had surfaced in previous corruption investigations in Brazil, this time a new name came up: Berkowitz.
Brazilian prosecutors said that the 39-year-old trader was among a group of former Petrobras employees accused of taking more than $31 million in bribes from intermediaries linked to some of the biggest commodity-trading firms in the world — Glencore Plc, Vitol Group and Trafigura Ltd. — between 2011 and 2014. In exchange, the firms were fed more contracts at discounted prices.
Digging into popular culture for code names, Berkowitz was “Batman” while one former boss used “Phil Collins” and another “Flipper,” court documents show.
The investigation is an outgrowth of the long-running Carwash bribery scandal in Brazil, which has so far ensnared scores of local business leaders, including several Petrobras executives, and politicians, notably former President Luiz Inacio Lula da Silva.
Now, Berkowitz’s case could potentially open a window into the opaque world of commodity trading, where firms buy and sell billions of dollars of raw materials and fossil fuels, often with little direct regulatory oversight. Brazilian police are seeking cooperation from authorities in the U.S., Switzerland, U.K., Bahamas and Uruguay, which could expose the firms to widespread scrutiny.
The U.S. Justice Department and Federal Bureau of Investigation have joined Brazil’s investigation, and American authorities could open a probe of their own, Filipe Pace, head of the Carwash probe, said in an interview in Curitiba, Brazil. The Justice Department declined to comment on Petrobras.
“We think there’s extensive evidence produced in Brazil for the U.S. to open a formal probe,” Pace said. “We want whoever is proven to have committed a crime to be prosecuted, in Brazil or in the U.S.”
Vitol said it’s cooperating with Brazilian authorities and it would be inappropriate to comment on specific allegations.
“Vitol reiterates that it has a zero tolerance policy in respect of bribery and corruption and, as stated previously, Vitol will always cooperate with the authorities in any jurisdiction in which it operates,” the company said in a statement.
Trafigura said it’s taking allegations seriously and denies management had any knowledge of the alleged scheme. Glencore said it takes ethics and compliance seriously, and that it’s cooperating with the investigation.
Suspects are already cooperating with authorities. A Brazilian accused of being a middleman for the trading firms, who was briefly detained in Florida on Dec. 20, is working with U.S authorities and has been granted a witness visa, Pace said. A former top Trafigura executive and ex-board member is trying to obtain a plea bargain in Brazil.
Berkowitz is also cooperating with U.S. authorities and could potentially expose his allegedly illegal links to trading firms, according to a person with knowledge of the investigations, who asked not to be named because the information isn’t public. There’s evidence he was conducting illegal activities until a Brazilian judge issued an arrest warrant for him in early December, the person said.
Among the Petrobras officials targeted by Brazilian prosecutors, Berkowitz was the only one still employed when the accusations surfaced, while others have retired since the alleged crimes occurred.
Emails intercepted by Carwash suggest strong links with executives at Vitol, Pace said.
“He brags in messages that no one had been able to negotiate with Vitol like he did,’’ Pace said of Berkowitz. “He was very proud of what he was doing.’
The trader, who worked for Petrobras for 17 years, was fired on the same day the arrest warrant was issued, banned from entering Petrobras’s Houston office, and his belongings were shipped in a box to his home. He’s now considered a fugitive by Brazilian authorities. His name has been placed on Interpol’s Red Notice list of individuals to be detained and extradited.
Berkowitz didn’t respond to phone calls seeking comment. Petrobras said it launched an internal investigation on Dec. 5, which is still ongoing.
The charges against Berkowitz didn’t match the reputation he had at work in Houston. Peers praised his competence and organizational skills. They saw him as a role model of ethical compliance in a company that’s been left traumatized after several former top executives were sent to jail since Carwash started in 2014.
For a fugitive, Berkowitz seems to be living normally, according to people who have spotted him and asked not to be identified. They say they’ve seen him buying groceries at a Target Corp. store, eating at restaurants and taking his kids to parks in Texas.
Berkowitz’s father was arrested in Brazil and is accused of laundering at least 3.4 million reais ($910,000) for his son through an offshore account in Uruguay. Brazilian police traced bank records of the transactions and emails of the negotiations. They include payments from accounts in Switzerland to Uruguay.
His father confirmed the financial transactions but said he wasn’t aware they resulted from illegal activities, according to a petition filed to a court in Brazil’s Parana state. His lawyer, Joao Francisco Neto, said his release has been granted by a judge, pending a bail payment of 5 million reais, which the defense is disputing.
Berkowitz was among a group of traders empowered to negotiate deals to sell Petrobras oil products. With a phone call, his group could close multimillion-dollar contracts with trading firms, which then would sell the product to end users.
Berkowitz was tasked specifically with selling Petrobras’s fuel oil, a byproduct of crude refining that’s mostly used to generate power or as fuel for large ships. It’s a volatile market: Hurricanes or refinery explosions can make prices spike unexpectedly.
For years, Berkowitz allegedly took bribes in exchange for giving trading firms contracts and a discount on fuel oil, according to a Dec. 19 accusation by prosecutors made public on a court website.
On Vitol’s deals, for example, Brazilian police traced more than 80 transactions for fuel oil and another product called VGO, or Vacuum Gas Oil, that’s used by refineries, according to the indictment.
In one of the transactions, participants shared $1 per barrel in bribes — 27 cents for Berkowitz and the rest for his peers, according to prosecutors. The money was diverted to offshore accounts in the U.S., U.K., Sweden, Switzerland and Uruguay, among other countries.
“With large volumes and tiny price variation they could generate millions in bribes,’’ prosecutors said in a court document.
The prosecutors say top executives from the trading firms had “total and unequivocal” knowledge of the graft.
At Vitol, police and prosecutors say the firm’s top executive in the U.S., Mike Loya, and Tony Maarraoui, who’s responsible for Latin America and the Caribbean, were “involved” and “gave consent” to alleged illegal transactions Berkowitz would have generated as a trader, according to court documents.
“It is too naive to think that such high-level executives had no knowledge of how the industry works and its dirty side and did not know they were authorizing bribes,” Pace said. Loya and Maarraoui couldn’t immediately be reached for comment.
Loya and Maarraoui haven’t been charged in Brazil. Pace said his team is focusing on Brazilians and expects foreigners to be prosecuted by authorities in the U.S. or other countries where they were based. That would be more efficient and increase the chances of conviction, he said.
NGOs active in anti-corruption campaigns have been calling on regulators and Swiss authorities to investigate the use of middlemen to secure lucrative deals in oil rich countries.
In November, Global Witness called on the U.K., U.S. and Switzerland to examine the activities of Glencore, Vitol and Trafigura in Brazil.
Meanwhile, Berkowitz has left the rented home and moved to a two-bedroom apartment in the same area, according to people who know him. A posting on Facebook shows the family is selling furniture and appliances, including a French door refrigerator, “because it doesn’t fit in our apartment.’’
Owners of newly built homes are being hit with higher heating bills because tough new energy efficiency standards were scrapped, a report has said.
If the “zero carbon homes” policy had been implemented as planned in 2016, people moving into new homes would be saving more than £200 a year on their energy bills, the Energy and Climate Intelligence Unit (ECIU) study said.
The zero carbon homes policy was first devised in 2007 as a requirement that new-build homes would not result in the net release of any carbon dioxide into the atmosphere, and was set to be implemented in 2016, the report said.
But it was scrapped in July 2015 by then chancellor George Osborne – after having been watered down since it was first announced – as part of plans to boost productivity, including increasing house building.
The report from ECIU said building a home to zero carbon standards would in theory add 1-2% on to the purchase price.
But it suggested the impact of the help to buy scheme, which critics have said enabled sellers to ramp up prices because buyers only need to find a small deposit, on house purchase costs is much greater.
The extra costs of the more efficient homes would be recouped through energy bill savings within a few years and may even have been absorbed by developers, the study argues.
Since the beginning of 2016, some 380,000 homes have been built, and their heating efficiency falls short of what would have been needed to meet the zero carbon homes standards.
Current new-build homes require more than twice the energy to heat than a zero carbon home would have done – which based on current retail gas prices will have cost a cumulative £122-£137 million in England, the report claims.
Families who moved into their homes at the start of 2016 will have been paying on average an extra £208 to £233 a year per year to heat their houses, it said.
If current house-building rates continue, by the end of 2020, the amount of wasted energy to heat these less efficient homes will be more than £2 billion, using up enough extra gas to fuel 3.3 million homes for a year.
And it makes it harder to cut carbon emissions from homes, a necessary part of tackling climate change, and one where experts say the first step should be increasing efficiency.
Dr Jonathan Marshall, ECIU head of analysis, said: “Successive governments have struggled to devise effective domestic energy efficiency policies, meaning carbon emissions from homes are rising, but zero carbon homes could have made a real difference.
“As well as future-proofing new homes, the policy would have saved families money, reduced Britain’s vulnerability to energy supply shocks, and cut carbon emissions.
“Tackling new-build homes is one of the easiest ways of improving the UK’s leaky housing stock, and reintroducing this policy could also deliver a boost to firms involved in insulation and low-carbon heating.”
Paula Higgins, chief executive of the Homeowners Alliance, added: “Homes should be built to the highest standards to be fit for this and future generations. Government and industry need to recognise that it’s in everyone’s interest to get this right.”
Minister of State for Housing Kit Malthouse said: “I don’t agree with the assertion that energy efficiency regulations have been watered down – in fact new homes built in England have increased in efficiency by over 30% since 2010.
“As well as cutting carbon emissions to tackle the threat of climate change, our efforts have actually put an average of £200 a year back into the pockets of families.
“There is more we can do to secure more efficient homes and, following our ongoing review of Building Regulations, we will likely consult on further energy saving proposals later this year.”
Currently, more than a third of global oil and gas production comes from offshore fields. The exploration, development, construction, production, logistics, maintenance and decommissioning operations of these fields are carried out with maritime units, including offshore vessels, installations (fixed, floating and subsea) and pipelines. For many countries, the offshore industry is contributing significantly to the national and global economy.
However the offshore industry is not free from incidents and accidents as demonstrated by catastrophic events such as the 1988 Piper Alpha disaster, the 1989 Exxon Valdez oil spill, and the 2010 Deepwater Horizon blow out and oil spill. Consequently, issues of liabilities could be disastrous to the players in the offshore sector, making contractual risk in the upstream oil and gas sector a major concern to all involved. This concern usually manifests itself during and after incidents when contractual issues of liabilities and indemnities are contested in disputes between operators and contractors.
Today, working in the offshore industry requires not only good practical experience but also a thorough understanding of the complexities of the various technical, legal, contractual and regulatory aspects of the energy, oil and gas, and maritime sectors.
The UK oil and gas sector is predominantly an offshore sector with around 470 installations located in the UK North Sea (more than 1350 offshore installations are operational in the OSPAR maritime area), and more offshore renewable energy installations (windfarms) are being installed offshore Europe and around the UK’s coastal waters to add electricity to the national grid. A variety of offshore vessels are supporting the industry through all phases and are operating from main harbour ports along the coastline including Aberdeen, which is widely regarded as the UK’s oil and gas hub because of its close proximity to major offshore developments in the North Sea, and is playing an important strategic role in the offshore industry.
For many companies involved in the sector, the recent downturn of the UK’s sector forced the implementation of robust cost cutting measures and downsizing, but also presented an ideal opportunity to reflect on the past contributions, current climate and future challenges facing the industry. It also re-emphasised the highly cyclical nature of the global industry. Even before the Wood Review of 2014, the future of the North Sea oil and gas industry has been under scrutiny with industry players focusing on the maximisation of the remaining oil and gas resources and continuously looking at ways of prolonging the longevity of their offshore operations. Decommissioning is looming for most offshore installations – some of them have been in place since the 1960s.
Recent activities in the last two years show renewed confidence and a positive outlook for the UK oil and gas sector. Similarly, on a global scale, the industry has received positive projections for the near future with the US shale production, the role of major OPEC producers, opportunities in Africa, and the role of Russia and China in claiming substantial components in supply and demand. The transportation of oil and gas through pipelines and shipping is on the increase globally. Due to climate change and global warming, environmental sensitive areas such as the Arctic are going to be of increased importance for the maritime sector in the future, i.e. shipping routes and exploration activities. The offshore sector is a pivotal player in the inevitable transition from hydrocarbons to an energy sector that should meet the challenges of rising energy demand.
Over the years, RGU has established a close connection with the industry and are delivering various educational programmes relating to all aspects of the local and international industry. The oil and gas law masters course delivered by the Law School is specifically designed with a focus on the offshore industry and examines the legal, regulatory and contractual aspects of the national and global energy, oil and gas sectors. The course has received accreditation from the Energy institute for the next 5 years. It is therefore paramount to cater for all segments of the industry, which could be achieved through closer collaboration with industry stakeholders both in the UK and internationally.
New modules on maritime law, and health and safety law cover topics such as wet and dry shipping, insurance and risk management, which are very relevant to the offshore industry. The course covers key contractual and legal issues and major maritime incidents and disputes that have shaped the operations of the global industry and the regulatory landscape in a major way. These incidents have proved very costly to the industry, environment, and people as demonstrated in court cases that examined issues of health and safety regulation, risk management, liabilities and compensation which mostly hinged on factors such as a breakdown of relationships, disagreements in joint ventures, lack of regulatory control, contractual uncertainty and ineffective risk management.
Maritime incidents connected to the offshore sector therefore warrants in depth scrutiny in terms of the regulatory complexities, practical realities and theoretical understanding. The course team therefore consults on a regular basis with local legal and industry practitioners to address real problems facing the offshore sector. The importance of good education on the legal, regulatory and commercial aspects of the offshore sector is pivotal to anyone working in the industry and thereby contributing towards addressing the challenges, practical complexities and the national skills needs of the UK and global maritime and offshore oil and gas industry.
Leon Moller is a lecturer in Oil and Gas Law, specialising in Maritime Law and Oil and Gas Law at an International
Cameron Bruce, head of oil and gas at RSM, distils the key themes from Subsea Expo 2019.
After years of cutbacks, cautious optimism has returned to the sector despite the recent volatility in the crude oil price; and this is expected to continue throughout 2019. Winners in the sector will emerge; however, this will depend largely on where they are in the project cycle and many companies will look to recruit throughout 2019.
A year to collaborate
Historically collaboration, especially between oil and gas entities, has been sporadic. Businesses have struggled with the practicalities and realities of collaboration; but there have been pockets of success with some pulling together during a challenging time. This is a positive step forward and 2019 will see more organisations working together to change culture, reduce costs, enhance productivity and develop new technologies. These innovations will allow many businesses to access tax reliefs (R&D tax credits, Patent box) and this will continue to assist further investment in research and development.
Different ways of working
The protracted downturn has enhanced labour shortages in the sector as large numbers have left through redundancies, retirement or staff looking for a more stable work environment. Arguably this is the greatest challenge facing the industry in the short term. Attracting employees and newcomers to the sector without just paying enlarged salaries must lead to further innovation, different ways of working and contractual changes. Consideration is also required on the impact for the sector of changes to IR35 off-payroll tax rules on Limited Company contractors being introduced in 2020. This will put the onus on the end users of the services to assess employment status and arrangements should be made now to ensure that they are ready to take on new responsibilities in April 2020.the arrangements – putting more pressure on the operators; and will likely lead to increased scrutiny.
Changes to operators
Focusing locally the future of oil and gas industry is likely to be very different to what has gone before. With a mature basin we can see that the mix of operators is changing with an increase in new players entering the market. It will be interesting to see the results of the 31st licensing round for the North Sea in early 2019, to assess the level of industry interest and the entities looking to unlock new opportunities in this area.
Geopolitics has a massive impact on oil and gas prices and continues to be a significant risk for the industry. Recent events have shown political uncertainty leads to volatility, instability and a lack of investment in the sector. This trend looks set to continue in 2019, making energy prices very difficult to estimate. Undoubtedly Brexit will also have some implications for the UK oil and gas sector. Having said that there will inevitably be upsides which will benefit those in a position to take advantage.