Saudi Arabia intends to invest as much as $10 billion in South Africa’s economy, with a focus on energy.

The commitment was made during a state visit by South African President Cyril Ramaphosa to the Middle Eastern nation, his spokeswoman Khusela Diko said by phone on Thursday. Officials from Saudi Arabia will take part in an investment summit in October in South Africa when they are expected to give more detail about the planned spending, she said.

Ramaphosa is seeking to revive a flagging economy after taking over from Jacob Zuma as the nation’s leader in February and has started a drive to lure $100 billion in investment over the next five years. Business and investor confidence has slumped after an initial boost following Zuma’s resignation.

“It’s a fantastic commitment from Saudi Arabia, especially coming in the aftermath of the president’s call to have $100 billion of investment,” Energy Minister Jeff Radebe said during the visit. “Their minister of energy is deeply committed to cooperating with us on the energy side.”

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• In the next five years, digital channels are expected to attract 30% of traditional corporate banking revenue

As digitisation of the banking sector gathers momentum across the globe, many technological buzzwords like ICO, blockchain, cryptocurrency, machine learning, artificial intelligence, etc., have become popular in the Middle East as well, with UAE banks taking the lead in adopting and implementing world-class digital solutions. The UAE is ranked amongst the top countries in terms of mobile penetration and easy access to internet, which further enhances the country’s potential for embracing digital banking services.

However, whenever we hear about digital banks or challenger banks, it is typically synonymous with retail or personal banking offerings — be it the capability to on-board the customers digitally or offering customised services in areas like wealth management, personal loans, cards, etc.

Investments in technology seem to have been focused mostly on the retail banking front, while on the other hand, wholesale banking has seen less investments in technology, leading to a continued reliance on manual processes and paper-based transactions. It is quite surprising that such a large banking segment has still not been able to come to terms with the value that digital transformation could offer commercial customers, in addition to corporate bankers who end up spending over 50 per cent of their time on non-core, repetitive and administrative activities, the majority of which could be replaced with digitisation.

A recent study by Boston Consulting Group (BCG), also predicts a paradigm shift in digital disruption, with new competition from digitally nimble fintechs offering stand-alone commercial solutions such as low-cost cross border wire transfers or supply chain financing solutions. This is expected to fuel an accelerated wave of digital innovation in the remittance space, blockchain and trade finance transactions, as products and services get enhanced in response to commercial customers’ changing expectations.

The financial stakes are high for commercial banks. In the medium term, namely, in the next five years, these new digital platforms and channels are expected to attract 30 per cent of traditional corporate banking revenue. Commercial banks must undertake comprehensive end-to-end digital transformations to keep pace with customer requirements or run the risk of becoming extinct. Banks may still exist in the future, but high margins and fees will not. Markets are dynamic and so are customer’s expectations, and hence there is no place for slow or lazy banks. The technology is available like never before and to the advantage of commercial banks, which can help them jump start their digital transformation journey.

The BCG recommends a road map for digitisation built around four pillars: reinventing the customer journey, discovering the power of data, redefining the operating model and building a digitally driven organisation.

Here are my recommendations on the top four areas where commercial banks must invest to remain in the race:

1. CRM and Mobility

A robust CRM platform supported with bespoke analytic tools is essential for RMs to make informed decisions while managing customer portfolios as the CRM system gets accessed by different stakeholders within the bank, including Treasury, Trade Finance and Cash Management. Through the CRM platform, customer information can be fed on a real-time basis, presenting enriched information on the customer such as current share of wallet, benchmarking with competition, credit approvals, latest call reports, pitch books, pipeline, mandates, product utilisation, exceptions, etc. All of this, on the go, on mobile.

2. Billing and Pricing

While new ideas such as mobility make the headlines, customer-centricity also covers the aspect on how customers are being charged and billed for services. Billing and pricing is an exceptionally critical customer touch point, and most of the commercial banks have not invested in this area using technology, thereby making this activity complex, rigid and prone to errors and thus, prone to revenue loss. It’s time that every bank looks to implement a tech-based billing and pricing engine, which can help position it for future growth and stability, with robust analytics to optimise every opportunity. The right investment can turn this system into a powerful tool to increase revenue and adequately control risk.

3. Credit and documentation

The entire credit process starting from sourcing information, underwriting, internal reviews, approval, documentation, disbursement, et al is still a paper-based and manual process. This can be digitised, by banks opening application programming interfaces (APIs) to its customers and counter parties to directly feed the information on their performance, documentation and requests, making the entire process streamlined and more efficient. As a start, banks could conduct a proof of concept for small and medium-sized business (SMEs) to pilot this idea.

4. Transaction banking

Undoubtedly, transaction banking is one of the areas where technology gets discussed more often than any other place in the bank. This is because of the agile nature of the business, the intense pace due to the rise of digital disruption, and of course, due to customer’s growing expectations. Continued investment is warranted, as commercial banks cannot survive on their old laurels. Research also suggests that banks have largely focused on catering to their existing customers, to protect the current share of wallet, without investing in innovation which would help them maintain the incumbent advantage or acquire new customers.

“It is inevitable that banks must increase their share of investments in the digital arena for wholesale banking, before they become marginalised or extinct.”

Amol Bahuguna is head of Payments & Cash Management at Commercial Bank of Dubai.

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• The drive is part of Omani government plans to provide jobs to nationals

Muscat: The number of jobs that have been specified by Oman’s oil and gas sector (5,000 jobs) has been exceeded in certain jobs, a top official at the Ministry of Oil and Gas, said. The drive is part of Omani government plans to provide jobs to nationals. On October 3, the Council announced 25,000 jobs would be created for Omanis in both the private and public sectors starting from December. More than 33,000 Omani nationals have been hired in both public and private sectors so far, according to the Ministry of Manpower.

Eng Salem Bin Nasser Al Oufi, Undersecretary of the Ministry of Oil and Gas said that employment in the oil and gas sector is still going on without being restricted to a certain number.

He pointed out that having more than 9 companies in the Oil and Gas Platform provides a good evidence that the employment process is still going on, in statements to the Oman News Agency (ONA).

Al Oufi affirmed that taking over jobs by Omanis is still going on and did not stop. There is training coupled with employment programs underway. Continuous cooperation is also maintained by the Ministry and Oman Society for Petroleum Services (OPAL) to avail suitable job opportunities for Omanis.

In response to a question about the Sultanate’s commitment to reducing oil production, he noted that the Sultanate is committed to reducing its production by 45,000 barrel per day.

He added that Opec will meet on July 18 to discuss the mechanism and the period at which the one million barrel per day production cut will continue.

Meanwhile, Oman recorded a robust 27.2 per cent growth in total export revenue in the first quarter of 2018 compared with the same period last year, according to the National Centre for Statistics and Information (NCSI).

Export revenue

The total export revenue for the first quarter of this year hit 3.76 billion riyals (Dh35.9 billion), compared with 2.96 billion riyals in the first quarter of 2017.

The value of oil and gas exports stood at 2.36 billion riyals, equivalent to almost 63 per cent of the total value of commodity exports in the first quarter of 2018, thanks to an increase in the price of Omani crude oil.

Of the total exports from the oil and gas sector, 1.75 billion riyals was from oil exports, while liquefied natural gas exports accounted for 394.3 million riyals in export earnings during the period, revealed the NCSI report.

The Sultanate’s total non-oil exports also rose by 28.8 per cent to 968.6 million riyals from January to March 2018, from 751.8 million riyals during the same period of the previous year.

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SINGAPORE (July 16): For Southeast Asia’s biggest economies, 2018 wasn’t supposed to be like this.

If a widening trade war wasn’t enough to contend with, a global wave of policy tightening, strong oil prices and domestic politics are also weighing on growth prospects for the region. Policy makers are rewriting economic strategies as volatility surges, in some cases putting greater emphasis on currency stability or even structural changes.

“With trade war risks now materializing, this suggests stronger headwinds for exports,” said Tamara Henderson, an economist at Bloomberg Economics in Singapore. “Investment, already buffeted by tighter monetary policy, is also likely to be a casualty.”

Election uncertainty in Indonesia and Thailand, as well as questions around the new Malaysian government’s commitment to fiscal consolidation, could add to investor angst in the region for the rest of 2018, said Henderson.

Here’s how the growth outlooks for Southeast Asia’s six biggest economies are being tested:

• Indonesia
  1Q GDP YoY: 5.1%
  Central bank 2018 forecast: 5.1-5.2%
  Bloomberg survey median, 2018: 5.3%

Policy makers in Indonesia have been working to temper expectations around growth as they’ve turned their focus to promoting financial stability amid a slumping rupiah. A widening current-account deficit and investment outflows are keeping more rate hikes on the cards for 2018, and the government’s pledges for lower spending and import curbs will probably damp growth further. Bank Indonesia’s next decision is on Thursday.

• Malaysia
  1Q GDP YoY: 5.4%
  Central bank 2018 forecast: 5.5-6%
  Bloomberg survey median, 2018: 5.5%

Uncertainty abounds in Malaysia, where a two-month-old government is only starting to give a clearer picture of economic policy. A new sales tax planned for later this year could slow consumer spending, and with more infrastructure projects on ice, investment and government spending outlooks are also clouded.

While Bank Negara Malaysia left its benchmark interest rate on hold last week, analysts have been trimming predictions for an increase amid the limp growth outlook and weak inflation. A more dovish stance from the central bank would buck regional and global trends.

• Philippines
  1Q GDP YoY: 6.8%
  Government 2018 forecast: 7-8%
  Bloomberg survey median, 2018: 6.7%

Inflation shooting far beyond the ceiling of its target range is giving the Philippines central bank some nerves that overheating might already have set in. The rapid price gains also could take some shine off the otherwise solid economic growth, particularly if the central bank is forced to move faster on raising interest rates.

A third hike for this year now looks more likely for the Aug. 9 decision.

• Singapore
  2Q GDP YoY: 3.8%
  Central bank 2018 forecast: 2.5-3.5%
  Bloomberg survey median, 2018: 3.1%

While economists see steady growth for Singapore in 2018, the second half may stumble. The city-state’s recent property-market curbs could damp sentiment and translate to crimped consumer spending. Singapore may also struggle to buoy the confidence of manufacturers, whose expectations were already lowered after a stronger-than-expected 2017 for global trade.

“We had projected slower growth in the second half, but the negative trade developments are increasing the downside risks,” economists at Standard Chartered Plc in Singapore said in a research note last week. “New export orders within the PMI readings have also decelerated.”

• Thailand
  1Q GDP YoY: 4.8%
  Central bank 2018 forecast: 4.4%
  Bloomberg survey median, 2018: 4.2%

The Thai economy is something of a regional outlier, with the first quarter’s 4.8% annual growth the fastest in five years. Inflation has only recently broken into the lower end of the central bank’s 1-4% target band, allowing policy makers some room to hold interest rates near the record low they’ve remained at since 2015.

“Economic growth in Thailand should remain reasonably strong in the near term, but a slowdown in global growth and rising political uncertainty suggest the recent upturn will run out of steam by next year,” economists at Capital Economics Ltd. said in a research note last week.

Thailand, run by a military government since a coup in May 2014, is expected to have an election early next year.

• Vietnam
  2Q GDP YoY: 6.8%
  Bloomberg survey median, 2018: 6.8%
  Government forecast 2018: 6.5%-6.7%

Given that Vietnam’s trade as a share of gross domestic product is about 200%, its economy is particularly sensitive to any worsening tensions that threaten global supply chains. The economy will be especially attuned to China’s growth slowdown for knock-on effects in regional trade, and has also felt the weight of rising US interest rates.

Growth eased in the second quarter from the previous three months on reduced mining output and state investment. The government expects a further slowing in the second half and is adding measures to boost business, the General Statistics Office said last month.

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Razer yesterday made its debut in Malaysia by launching an e-wallet service targeting the millennial generation.

The Singapore gaming company, co-founded by chief executive Tan Min-Liang, announced that the initiative is a partnership between Razer and Berjaya Corporation.

Users can transfer funds via peer-to-peer cash transfers using Razer Pay. They can also transfer money from their Razer Pay e-wallet to their bank accounts. The e-wallet can be used for online transactions.

Razer Pay was initially known as One2Pay, the e-wallet app launched by MOL last year. MOL was subsequently acquired by Razer in May this year.

Razer said more than 6,000 major retail and food and beverage outlets, including 7-Eleven, Starbucks and Kenny Rogers, will accept Razer Pay. The app is available for download from the iOS App Store or Google Play Store. The firm is aiming to grow Razer Pay’s merchant network to include healthcare, travel and other lifestyle services in Malaysia. Razer Pay will be available in other South-east Asian countries in the coming months with a focus on “interoperability between countries”, the firm said.

• 6,000 number of major retail and F&B outlets that will accept Razer Pay.

Razer has been aggressive in the area of digital payments in recent months. In May, it teamed up with Singtel to link their regional e-payment systems. Although both companies did not share on the timeline for the project, The Business Times reported that the move would give each partner access to the other’s one million merchant points.

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SINGAPORE (REUTERS) – Fire and rescue officials are battling to contain a blaze at three oil storage tanks of the Tipco Asphalt refinery in Malaysia’s southern town of Kemaman, media said on Friday (July 6).

The fire, which began on Thursday, had spread to a third tank, the New Straits Times newspaper said on its website, adding that losses were expected to run into the millions of ringgit.

Authorities expect to douse the fire in the first two tanks by Friday afternoon, Malaysian media quoted Assistant Commissioner Azlimin Mat Noor, an official of the fire and rescue department in the state of Terengganu, as saying.

“We believe (the fire in) both tanks can be fully extinguished by this afternoon,” Asst Comm Azlimin said, according to the Malay-language Berita Harian newspaper.

“We are now focusing our efforts on putting out the fire in the third tank, which is still ablaze, and we do not know how long it will take.”

Tipco Asphalt did not immediately respond to a request from Reuters for comment. Tipco operates the refinery through its unit, Kemaman Bitumen Company Sdn Bhd.

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In the oil and gas industry, digital finance is transforming the kinds of services that finance has traditionally delivered to the business. While digital finance is helping companies unlock millions of dollars of value, it is also creating a cross-functional, collaborative workforce capable of generating new insights and improving decision-making throughout the enterprise. In the process, the role of finance in oil and gas is being redefined from recording and reporting results to guiding the course of the business. This evolution will only accelerate as newly emerging technology areas, including quantum computing and blockchain become more established.

Our global study of Chief Financial Officers in the oil and gas industry – based on in-depth interviews with corporate or business-unit CFOs for regional entities at 80 companies – found a growing emphasis on insights rather than a narrow focus on efficiency. Digital finance was initially implemented by CFOs to make finance operations more efficient through innovations such as process automation, resulting in cost savings and better controls. Efficiency is still important, but now the excitement has shifted to the way digital changes the role of the CFO and the finance team.

In our research, 5 percent of respondents said leveraging digital has cut their company’s operating and capital costs by “medium” or “high” levels, while 77 percent said that digital has created a medium or high increase in their company’s revenues. To date, exploration and production companies are achieving cost takeout, while retail and oilfield services companies are capturing top-line growth. Either way, however, the impact on margins is significant, with oil and gas companies realizing median margin improvement of approximately $600 million following digital finance implementations.

New Services and Analytics Available

Respondents cited improved speed and efficiency as the primary impact of digital on finance services. One respondent, for example, noted productivity gains of 15 percent over 18 months. Other study participants reported sharp reductions in compliance irregularities; improvements in analysis, auditing, reporting and processing, leading to greater accuracy and control; and greater service efficiency, labor intensity and quality through the adoption of automated processes.

A large majority (82 percent) of study participants credited digital with enabling new services, such as analytics pertaining to risk, credit, pricing, expenditure monitoring and the identification of cost variances. As a result, respondents reported stronger governance, higher productivity and gains in robotic process automation. Digital is also improving core finance management, improving cash collection, billing, revenue recognition and practices related to taxation.

A New Finance Workforce

Just as important, many finance executives are redefining the finance workforce of the future. Nearly two-thirds of our research respondents say they have boosted the speed, capability and efficiency of the workforce, but the greatest impact may be in areas such as greater cross-functional collaboration and the development of new structures to partner productively with the business.

Digital finance in automated reporting and real-time analyses is compressing working hours while delivering faster insights. This frees up time for finance professionals to devote to business-facing and complex activities, provided the company helps in the development of new skills needed as part of the broader digital finance implementation.

In the digital environment, work looks different, with cross-functional roles and new roles for finance professionals who are also data scientists, cybersecurity specialists or application developers. Automation redefines rather than eliminates jobs, delivering greater efficiency but also stronger capabilities in areas such as analytics.

Making the Right Investments

Our research indicates that oil and gas companies are focusing their digital investments, with well over half spending on big data and advanced analytics and traditional ERP (enterprise resource planning) systems.  Big data and analytics support real-time pattern recognition and predictive capabilities such as scenario-based modeling to help make better decisions about investments and resources. Traditional ERP solutions, meanwhile, support core processes such as planning, reporting and transactions. There is also a growing shift to next-generation ERP such as SAP S/4 HANA©.

Other areas of focus for investing include robotic processing automation (standardizing transactions while boosting accuracy and speed), machine learning and artificial intelligence, such as cognitive assistants to manage support services, queries, reconciliations and reporting. Quantum computing, which could have value in areas such as portfolio optimization and fraud detection, is on the horizon as a key area for further exploration.

Overcoming Barriers to Progress

We found that many finance executives are unsure how to overcome obstacles to digital transformation including implementation cost, skill shortages and the legacy technology infrastructure. As companies, especially smaller firms, face reduced margins and other cost pressures such as infrastructure upgrades, employee training and external services, implementation cost emerged as the top challenge for digital finance.

The second-most cited challenge was digital skills, or the lack thereof. Companies need more digital experts and people with experience in agile delivery methods to implement advanced digital platforms. After digital skills, the next most commonly cited challenge was legacy infrastructure, with outdated platforms and limited server, network and portal capacity placing constraints on advanced technology systems. And, while cybersecurity is a challenge now, respondents see it as a top area of risk over the next five to 10 years, with the potential for damage increasing as data are stored on cloud networks and shared with different departments and partners.

Getting it Done – Accelerating the Move to Digital

We see oil and gas industry CFOs at an inflection point on the journey to digital finance. Most companies are realizing some value through their digital investments, but nearly half of the companies we surveyed sit in what we would call “traditional” mode, realizing suboptimal value with average digital capabilities. The companies we call Digital Value Leaders – representing about one in four companies surveyed – are successfully pioneering digital finance to position themselves for growth, while realizing double-digit value (10 percent or greater) from their investments in the form of greater revenue growth and/or cost reduction.

In addition to improved ROI, there are other benefits associated with being a Digital Value Leader, including the ability to execute the quarter-end close an average of three days faster; to undertake forecasting an average of four days faster; and reducing days sales outstanding by up to four days.

So, in our view, the question for non-leaders becomes: Where should CFOs undertaking a digital finance transformation focus their priorities? Our research, and our engagements with oil and gas companies around the world, has helped us define three key digital finance imperatives:

• Define a bold vision. Digital finance requires a carefully considered plan and CFO focus to identify where it can help unlock value. Traditional capabilities are being transformed for new approaches to old problems, such as the use of analytics to power zero-based budgeting (the justification of all expenditures within each new reporting period). The Digital Value Leaders we spoke to have moved beyond advanced analytics, ERP systems and using RPA to create digital-powered human teams to pilot blockchain and to explore technologies such as AI and quantum computing.
• Move fast – or very fast. Cost uncertainties and capital pressures present obstacles to implementing new technologies, especially when implementation requires an agile approach that can fail quickly and/or scale quickly. Such an approach should also be flexible, to respond to changes in volatile commodity markets and in technology. Cultural change management, a key capability, can be used to help with re-skilling and re-structuring, while leadership should visibly support the transition to organizational agility.
• Collaborate for greater success. Coordinating efforts through a new approach to business partnering or delivering finance as a part of cross-functional teamwork for end-to-end, customer-centric teamwork increases the chances of a successful digital initiative. For example, CFOs can engage with industry organizations and with stakeholders in the technology sector, in education, and with government and regulators to build cybersecurity capabilities. Similarly, alliances can help shape transparent, common regulations and standards aligned with industry interests.  Partnering with academic institutions can help nurture talent for future needs.

As our research shows, digital technologies have already had a major impact on the way oil and gas industry CFOs allocate their capital, track their companies’ results and performance, and manage cash and expenditures. As new technologies such as AI, blockchain and quantum computing take hold, we anticipate that the finance function will continue its rapid evolution, with the CFO’s focus shifting from reporting and control to the optimization of investments. In this environment, CFOs making the best use of digital technologies will be well-positioned to serve as even more valued advisors and business partners.

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NEW YORK, July 6 (Reuters) – Oil was mixed on Friday as a Canadian supply outage supported U.S. crude prices, while an increase in production from OPEC’s biggest exporter Saudi Arabia pushed Brent lower.

U.S. crude futures gained 86 cents, or 1.2 percent, to settle at $73.80 a barrel. Global benchmark Brent slipped 28 cents to settle at $77.11 a barrel.

For the week, WTI futures lost about 0.5 percent after hitting a 3-1/2-year high on Tuesday, while Brent lost about 3 percent.

U.S. crude was bullish after official data on Thursday showed inventories at Cushing, the delivery point for U.S. crude futures, fell to their lowest in 3-1/2 years.

That came after an outage at a major Canadian oil sands facility cut regional supply. The outage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for U.S. crude versus Brent crude over the past month.

The discount has halved to $5.54 a barrel on Friday from $11.57 in early June.

“We’re continuing to see – and I expect the trend will continue – lower inventories in Cushing in July, resulting in a very tight light sweet crude market,” said Andrew Lipow, president of Lipow Associates.

“That has been exacerbated by the Canadian Syncrude outage…which has resulted in a scramble for supplies in the Midwest. I do expect that at least over the next few weeks, the Brent-WTI spread is going to narrow.”

Brent was being pressured by expectations for higher Saudi and Russia production, which impacts Europe and Asia, where Brent is the benchmark, more than markets dominated by U.S. crude prices.

Saudi Arabia told the Organization of the Petroleum Exporting Countries that it increased production by almost 500,000 barrels per day last month.

OPEC and its allies agreed earlier this month to a modest increase in output to dampen the oil price rally, which hit a 3-1/2 year high. The supply increase reversed some of the cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut.

Saudi Arabia also said it would reduce the official selling price of its August barrels.

U.S. markets also garnered support from a government employment report showing better-than-expected growth in jobs. That blunted the impact of an escalating U.S.-China trade war.

“We’re seeing a bounce to the upside thanks to spillover from a really good jobs number and strength in equity markets, as well as a draw in Cushing stocks,” said Jim Ritterbusch, president of Ritterbusch and Associates.

The trade war has yet to have a direct impact on oil markets, but China has indicated it could place tariffs on U.S. crude imports.

If that happens, “Chinese demand would then shift to other suppliers. Because the oil market is already in tight supply due to the numerous outages, this would drive international prices (Brent) further up,” Commerzbank said in a note.

U.S. producers continued to bring more rigs into oilfields already producing at record levels. The U.S. rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co’s Baker Hughes energy services firm.

That brings the total count to 863, up 100 from last year.

(Additional reporting by Alex Lawler in London, Henning Gloystein in Singapore and Meng Meng in Beijing Editing by Simon Webb and Alistair Bell)

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Piper Alpha was an oil production platform in the North Sea operated by Occidental Petroleum (Caledonia) Limited. It began production in 1976, but on July 6, 1988 it was the site of the world’s most lethal offshore disaster.

An explosion and resulting oil and gas fires destroyed the platform, killing 167 people, including two crewmen of a rescue vessel. Only 61 workers escaped. 30 bodies were never recovered.

The total insured loss was about $3.4 billion, and at the time of the disaster, the platform accounted for approximately ten percent of North Sea oil and gas production.

A large fixed platform, Piper Alpha was situated on the Piper oilfield, approximately 120 miles (193 kilometers) northeast of Aberdeen in 474 feet (144 meters) of water. It was made up of four modules separated by firewalls, and for safety reasons, the modules were organized so that the most dangerous operations were distant from the personnel areas. A later conversion from oil to gas processing broke this safety concept, with the result that sensitive areas were brought together; for example, gas compression occurred next to the control room – this played a role in the accident.

Although the Cullen Inquiry found Occidental guilty of inadequate maintenance and safety procedures, no criminal charges were brought against the company.

The inquiry resulted in 106 recommendations for changes to North Sea safety procedures – all 106 were accepted by the industry. The most significant recommendation was for the Health and Safety Executive (the U.K.’s body responsible for encouragement, regulation, and enforcement of workplace health, safety and welfare, and occupational safety research) to bear responsibility for North Sea safety, replacing the U.K.’s Department of Energy’s obligation. The reasoning for this was based on a potential conflict of interest when one organization oversees both production and safety.

Timeline of Events

12:00 noon: Two condensate pumps, designated A and B, displaced the platform’s condensate for transport to the coast. On the morning of July 6, Pump A’s pressure safety valve was removed for routine maintenance. The pump’s two-yearly overhaul was planned but had not started. The open condensate pipe was temporarily sealed with a disk cover (flat metal disc also called a blind flange or blank flange). Because the work could not be completed by 6:00 pm, the disc cover remained in place. It was hand-tightened only. The on-duty engineer filled in a permit which stated that Pump A was not ready and must not be switched on under any circumstances.

6:00 pm: The day shift ended, and the night shift started. As he found the on-duty custodian busy, the engineer neglected to inform him of the condition of Pump A. Instead he placed the permit in the control center and left. This permit disappeared and was not found. Coincidentally there was another permit issued for the general overhaul of Pump A that had not yet begun.

7:00 pm: Like many other offshore platforms, Piper Alpha had an automatic fire-fighting system, driven by both diesel and electric pumps (the latter were disabled by the initial explosions). The diesel pumps were designed to suck in large amounts of sea water for fire fighting; the pumps had an automatic control to start them in case of fire (although they could not be remotely started from the control room in an emergency). However, the fire-fighting system was under manual control on the evening of July 6: the Piper Alpha procedure adopted by the Offshore Installation Manager (OIM) required manual control of the pumps whenever divers were in the water (as they were for approximately 12 hours a day during summer) although in reality, the risk was not seen as significant for divers unless a diver was closer than 10–15 feet (3–5 meters) from any of the four 120 feet (40 meter) level caged intakes.

9:45 pm: Because of problems with the methanol system earlier in the day, methane clathrate (a flammable ice) had started to accumulate in the gas compression system pipework, causing a blockage. Due to this blockage, condensate Pump B stopped and could not be restarted. As the entire power supply of the offshore construction work depended on this pump, the manager had only a few minutes to bring the pump back online, otherwise the power supply would fail completely. A search was made through the documents to determine whether Condensate Pump A could be started.

9:52 pm: The permit for the overhaul was found, but not the other permit stating that the pump must not be started under any circumstances due to the missing safety valve. The valve was in a different location from the pump, and therefore the permits were stored in different boxes, as they were sorted by location. None of those present were aware that a vital part of the machine had been removed. The manager assumed from the existing documents that it would be safe to start Pump A. The missing valve was not noticed by anyone, particularly as the metal disc replacing the safety valve was several meters above ground level and obscured by machinery.

9:55 pm: Condensate Pump A was switched on. Gas flowed into the pump, and because of the missing safety valve, produced an overpressure which the loosely fitted metal disc did not withstand. Gas audibly leaked out at high pressure, drawing the attention of several men and triggering six gas alarms including the high level gas alarm. Before anyone could act, the gas ignited and exploded, blowing through the firewall. The custodian pressed the emergency stop button, closing huge valves in the sea lines and ceasing all oil and gas extraction.

Theoretically, the platform would then have been isolated from the flow of oil and gas and the fire contained. However, because the platform was originally built for oil, the firewalls were designed to resist fire rather than withstand explosions. The first explosion broke the firewall and dislodged panels, one of which ruptured a small condensate pipe, creating another fire.

10:04 pm: The control room of Piper Alpha was abandoned. “Mayday” was signaled via radio by radio operator David Kinrade. Piper Alpha’s design made no allowances for the destruction of the control room, and the platform’s organization disintegrated. No attempt was made to use loudspeakers or to order an evacuation.

Emergency procedures instructed personnel to make their way to lifeboat stations, but the fire prevented them from doing so. Instead many of the men moved to the fireproofed accommodation block beneath the helicopter deck to await further instructions. Wind, fire and smoke prevented helicopter landings and no further instructions were given, with smoke beginning to seep into the personnel block. As the crisis mounted, two men donned protective gear and attempted to reach the diesel pumping machinery below decks and activate the firefighting system. They were never seen again.

The fire would have burnt out were it not being fed with oil from the Tartan and Claymore platforms, the resulting back pressure forcing fresh fuel out of ruptured pipework on Piper, directly into the heart of the fire. The Claymore platform continued pumping oil until the second explosion because the manager had no permission from the Occidental control center to shut down. Also, the connecting gas pipeline to Tartan continued to pump, as its manager had been directed by his superior. The reason for this procedure was the huge cost of such a shut down. It would have taken several days to restart production after a stop, with substantial financial consequences.

Gas pipelines of both 16 and 18 inch diameter ran to Piper Alpha. Two years earlier Occidental management ordered a study, the results of which warned of the dangers of these gas lines. Because of their length and diameter, it would have taken several hours to reduce their pressure, which meant fighting a fire fueled by them would have been all but impossible. Although the management admitted how devastating a gas explosion would be, Claymore and Tartan were not switched off with the first emergency call.

10:05 pm: The Search and Rescue station at RAF Lossiemouth received the first call notifying them of the possibility of an emergency, and a Sea King helicopter took off at the request of the Coastguard station at Aberdeen. The station at RAF Boulmer was also notified, and a Hawker Siddeley Nimrod from RAF Kinloss were sent to the area to act as “On-Scene Commander” and “Rescue Zero-One”.

10:20 pm: Tartan’s gas line (pressurized to 120 Atmospheres) melted and ruptured, releasing 15-30 tons of high pressure gas every second, which immediately ignited. From that moment on, the platform’s destruction was assured.

10:30 pm: The Tharos, a large semi-submersible fire fighting, rescue and accommodation vessel, drew alongside Piper Alpha. The Tharos used its water cannon where it could, but it was restricted, because the cannon was so powerful it would injure or kill anyone hit by the water.

10:50 pm: The second gas line ruptured (the riser for the MCP-01 platform), ejecting millions of cubic feet of gas. Huge flames shot over 300 feet (90 meters) in the air. The Tharos was driven off by the heat, which began to melt the surrounding machinery and steelwork. It was only after this explosion that the Claymore platform stopped pumping oil. Personnel still left alive were either desperately sheltering in the scorched, smoke-filled accommodation block or leaping from the various deck levels, including the helideck, 175 feet (50 meters) into the North Sea. The explosion also killed two crewmen on a fast rescue boat launched from the standby vessel Sandhaven and the six Piper Alpha crewmen they had rescued from the water.

11:18 pm: The gas pipeline connecting Piper Alpha to the Claymore Platform ruptured, adding even more fuel to the already massive firestorm that engulfed Piper Alpha.

11:50 pm: With critical support structures burned away, and with nothing to support the heavier structures on top, the platform began to collapse. One of the cranes collapsed, followed by the drilling derrick. The generation and utilities Module, which included the fireproofed accommodation block, slipped into the sea, taking the crewmen huddled inside with it. The largest part of the platform followed it.

00:45 am: The entire platform had gone.

News Source: Link

By Rachel Adams-Heard, Dan Murtaugh and Anna Shiryaevskaya (Bloomberg) — The world’s fastest growing fossil fuel is bracing for a direct hit from increasing global trade tensions.

U.S. President Donald Trump’s tough talk on trade with China is looming over his country’s efforts to become the world’s largest exporter of liquefied natural gas. In Europe, a potential pipeline project from Russia has been imperiled by possible U.S. sanctions, while the sales practices of Qatar, the world’s biggest LNG seller, are under investigation as being anti-competitive.

The friction risks disrupting global trade of gas worth almost $300 billion last year, threatening to distort flows of the commodity just as demand for the cleaner-burning fuel explodes. It’s also casting a shadow over multi-billion dollar export projects in the U.S. while creating opportunities for countries untouched by the wave of protectionism.

“Populism has come back and with it a form of economic nationalism, and that’s occurred at the same time as the emergence of global gas,” said Trevor Sikorski, head of natural gas and carbon research at Energy Aspects Ltd. in London. “The former is leading to trade wars, and as soon as that happens everything is on the table.”

The complications arising from trade disputes and geopolitical tensions could distort the global gas market, although it’s unlikely to derail its growth, Sikorski said. For instance, if China levies tariffs against U.S. LNG, traders could re-route cargoes to Japan and South Korea while selling Australian gas to China. Or a drop in Qatari shipments to Europe could be replaced by fuel from Nigeria or Angola.

The end result will be extra fees for traders and slightly higher costs for end consumers, said Nicholas Browne, an analyst with Wood Mackenzie Ltd. in Tokyo. He pointed to the example of Russia’s gas pipeline to Europe, which just celebrated its 50th anniversary, as how trade can endure despite disputes.

True Trade Wins?

“Even at the height of Soviet tensions or the worst days of the Ukraine crisis, they continued to export gas to the West,” Browne said. “When it’s in the economic interest of both parties, trade will continue.”

That’s being tested anew by Russian efforts to boost European sales. President Vladimir Putin recently claimed U.S. trade interests are at the heart of Trump’s threats of sanctions against the Nord Stream 2 pipeline between Russia and Germany because its success could reduce Europe’s demand for U.S. gas.

Meanwhile, Europe is also trying to give its utilities greater flexibility and weaken Qatar’s grip on the market. The European Commission last month said it would check “problematic territorial restriction clauses” in LNG contracts with the Middle East nation that may prevent importers reselling the gas. That probe comes a month after the regulator for the 28-nation bloc settled a 7-year investigation into how Russia’s Gazprom PJSC’s set prices for its pipeline gas supply to Europe.

“It’s been a European policy goal for quite a long time to increase market liberalization,” Wood Mackenzie’s Browne said. “They want open access to European gas markets, and that doesn’t work if you have a lot of supplier concentration.”

Despite being at the center of trade tensions, the U.S. and China are a natural fit in the global gas market. China’s booming demand pushed it past Japan this year as the world’s biggest importer. Meanwhile, the U.S. is vying with Qatar and Australia to become the largest exporter of LNG, the super-chilled form of the fuel that’s shipped around the world on special tankers.

That explains why LNG has been conspicuously absent as a target of China’s retaliatory levies after Trump announced duties on $34 billion worth of Chinese exports, which are scheduled to go into effect Friday. The country’s blazing gas demand growth– part of an effort by President Xi Jinping to cut coal use and smog — means it can’t be picky about where it gets its supply, Browne said.

“Security of supply is still paramount for China at the moment,” Browne said. “It’s in the best interest for both countries to continue to trade.”

Even though LNG has so far eluded direct tariffs, trade tensions are still having an effect on the market. Greg Vesey, head of the Australian company developing the $4.35 billion Magnolia LNG project in Louisiana, said a number of parties he’s talking to have indicated they want to see how the trade tiff shakes out before signing on the dotted line.

Projects to export America’s ample shale gas are vying with developments from Qatar and Russia to East Africa and Papua New Guinea to sign up long-term buyers that underpin billions of dollars in financing. It would be naive to think that competitors weren’t trying to find a way to take advantage of concerns about trading with the U.S., according to Charlie Riedl, head of the Washington-based Center for Liquefied Natural Gas.

“They are absolutely, 100 percent trying to figure out how to capitalize on this,” Riedl said.

News Source: Link