MEC&F Expert Engineers : 07/26/15

Sunday, July 26, 2015

Western and Middle East insurance specialists see Iran as an appealing $8 billion market in the marine and energy sectors in the wake of its nuclear deal with world powers

Insurers Cautious about Prospects in Iran

Tehran
Tehran skyline 
 
By Reuters 2015-07-26 03:05:19 

Western and Middle East insurance specialists see Iran as an appealing $8 billion market in the wake of its nuclear deal with world powers, though uncertainty over when sanctions on Tehran will be lifted means they are treating the country with caution.

Eight out of 11 insurance and reinsurance specialists who responded to questions emailed by Reuters this week said Iran was an attractive or very attractive market, especially in the marine and energy sectors. Responses were on an anonymous basis due to the sensitivity of the issue.

While several said they expected to have entered the Iranian market by the end of 2016, others said it was hard to say due to ongoing concerns about how and when sanctions might be repealed.

Under the accord reached in Vienna on July 14, Iran will be subject to longer-term curbs on its nuclear program in return for the removal of U.S., U.N. and European Union sanctions.

This would open a market of $8 billion in premiums to global firms looking to underwrite critical export-related risks while promising sorely-needed scale for regional players.

The deal has still to be approved by the U.S. Congress, where hawkish Republican foes of President Barack Obama oppose it, and also faces objections from influential conservative hardliners in Iran.

However, Iran, the Middle East and North Africa region's second largest economy, with a large oil and gas sector and a young educated population, is already drawing attention.

"The main economic boost for Iran will come in 2016, although domestic consumer and investor confidence will receive a short-term impetus," said Ludovic Subran, chief economist at credit insurer Euler Hermes.

The process of rescinding sanctions could start around the end of this year.
The Islamic Republic would be the biggest economy to rejoin the global trading and financial system since the break-up of the Soviet Union in 1991.
Investors are already looking to establish funds for Iran, classified by the World Bank as an upper-middle income country, with a population of 78 million.
Marine and energy come top of the list for insurance sectors in which to write business, both for the anonymous respondents to the emailed questions and for other industry specialists.

"Historically we have dealt with Iran; it's interesting to see what's happening there," said Ben Abraham, head of marine at insurance broker Willis, adding that the firm would adhere to the sanctions regime but would be watching for any changes.
"From a marine perspective, there are some large shipowners in Iran. There are lots of cargo, port terminals."

"ITCHING TO GET BACK" INTO IRAN

Globally, large businesses such as oil and shipping are typically insured locally, with reinsurers in Europe or the Lloyd's of London market sharing the burden of any claims in return for a part of the premium.

Since sanctions were imposed, both insurance and reinsurance have largely been handled by domestic players in the $8 billion Iranian insurance market, said Mahesh Mistry, director of analytics at insurance ratings agency AM Best.
"Lloyd's have supported (Iranian businesses) in the past. Some of them will be itching to get back in," Mistry said.

Several insurers, including Lloyd's insurer Beazley, said, however, they had not yet started researching the market.

"It has been a country we cannot deal with because of sanctions, so we need more clarity," said Andrew Horton, chief executive of Beazley.
One insurance underwriter said Western insurers would also face competition from Indian, Russian and southeast Asian peers who have already done business in Iran.

But for those eager to get going, marine and energy businesses are seen as easier to penetrate in a new market than consumer sectors such as motor, as they do not require a domestic presence.

Some insurers are also interested in areas such as motor and health, however, according to responses to the Reuters questions, while Iran's aviation and infrastructure needs are also seen offering opportunities.

"We have already seen some multinational insurance-related companies - brokers and outsourcing firms - showing interest in going to (Iran) and some have even already gone there," said Sasan Soltani, Regional Business Development Manager at Dubai-based Iran Insurance Company, adding that Iran also needed to ease regulations hampering the operation of foreign companies.

Political instability and armed conflict in many parts of the Middle East are among the main concerns, however, along with uncertainty over Iran's economic outlook.

There are also worries about a regional backlash over the nuclear agreement by adversaries of Iran such as Saudi Arabia and Israel, or a failure by the Islamic Republic to honor the deal's terms.

"The fact of the matter remains the religious and geo-political elements that exist within the region," said one Dubai-based insurance executive. "It's not going to be easy."

Lenders are increasing pressure on shale drillers either to raise more equity or do some sort of transaction to pay down their credit lines and free up extra cash

Wall Street Lenders Impatient With U.S. Shale Revolution

Published in Oil Industry News on Saturday, 25 July 2015

Graphic for Wall Street Lenders Impatient With U.S. Shale Revolution in Oil and Gas News
Halcon Resources Corp. almost ran into trouble with its banks in June 2013. And again in March 2014. And in February 2015.

Each time, the shale driller came close to violating debt limits set by its lenders, endangering a credit line that provided as much as $1.05 billion in much-needed cash. 

Each time, Halcon’s banks, led by JPMorgan Chase & Co. and Wells Fargo & Co., loosened their restrictions, allowing Halcon to keep borrowing.

That kind of patience may be coming to an end. Bank regulators have issued warnings on the risks involved in lending to U.S. drillers, threatening a cash crunch in an industry that’s more dependent than ever on other people’s money. Wall Street has been one of the biggest allies of the shale revolution, bankrolling thousands of wells from Texas to North Dakota. The question is how that will change with oil prices down by half since last year to $50.36 a barrel.

“Lenders in general are increasing pressure on oil companies either to raise more equity or do some sort of transaction to pay down their credit lines and free up extra cash,” said Jimmy Vallee, a partner in the energy mergers and acquisitions practice at law firm Paul Hastings LLP in Houston.

Next Re-evaluation

Banks are already preparing for the next re-evaluation of oil and gas credit lines, reviews which typically take place twice a year in April and October. The loans are based on the value of drillers’ producing reserves, which has shrunk as oil prices fell. Many companies are also losing protection as hedges that locked in prices as high as $90 a barrel begin to expire.

“There’s another redetermination cycle in the fall,” Marianne Lake, chief financial officer at JPMorgan in New York, said July 14 during a conference call to discuss the company’s earnings. “And I’m not going to say likely but it’s possible we’ll be selectively downgrading some clients.”

Banks so far have been willing to keep the money flowing because drillers that come close to maxing out their credit lines have paid them off by tapping public markets. U.S. producers have raised about $44 billion through bonds and share sales in the first half of this year, the most since 2007, according to data compiled by Bloomberg and UBS Group AG.

Debt Appetite

Now the appetite for that debt is dwindling. Bonds have become more expensive and are laden with more onerous terms, including liens against drillers’ oil and gas assets. The average coupon has increased to 6.84 percent in 2015 from 6.36 percent in 2014, according to data compiled by Bloomberg.

Some of the bonds issued this year are already trading at levels indicating financial distress, including $1.25 billion issued last month by SandRidge Energy Inc. More than $22 billion out of the $235 billion in debt owed by the 62 companies in the Bloomberg North America Independent Explorers and Producers index is trading at distressed levels. Their yields are more than 10 percentage points above U.S. Treasuries, as investors demand higher rates to compensate for the risk they won’t be repaid.

Halcon swapped some of its debt for shares this year to help reduce borrowing costs, leaving some bondholders with stock that was worth less than they were owed. The company also issued a $700 million second-lien bond in May.
Representatives for Halcon in Houston and SandRidge in Oklahoma City didn’t return calls and e-mails seeking comment.

Default Leftovers

In the event of a Halcon default, Standard & Poor’s estimates that unsecured bondholders would get, at most, 10 percent of the almost $2.6 billion they are owed. Banks have first dibs on most of the company’s assets. Other investors will get next to nothing. Even so, banks aren’t eager to take over drilling the oilfields themselves.

“They certainly don’t want to push anybody over the edge because the last thing the banks want to do is to try to run a company,” said Robert Gray, a partner at law firm Mayer Brown LLP who has worked on company restructuring.

Banks are under pressure from regulators to more frequently review their energy lending and cut back credit lines as the value of collateral drops. In April, the U.S. Office of the Comptroller of the Currency flagged oil and gas loans as one of the lending industry’s biggest emerging risks.

Wells Fargo saw a $416 million increase in past-due loans in the second quarter, most of them energy-related, the company said in a July 14 presentation. The impact is “relatively immaterial,” CFO John Shrewsberry said.

JPMorgan set aside $140 million to cover potential losses on oil and gas loans, Lake, the CFO, said during the bank’s conference call.

“For the weaker companies, it could be very, very painful,” Vallee, the partner at Paul Hastings, said of the potential downgrades. “Some of them are essentially running on fumes.”
Source: www.bloomberg.com

3 pay the piper in Japan: 3 killed, 5 injured after a Piper PA-46-350P Malimu Mirage crashed in a house just after takeoff from the runway 17 of Chofu Airport in Japan. A fire broke out, burning 3 homes.





A Piper PA-46 crashed in a house just after takeoff from the runway 17 of Chofu-Shi Airport, Tokyo. 

The plane first contacted on roofs of two houses located at about 700 m (2,100 feet) from the runway endpoint and slightly left from the extended centerline, and then dived into the next house, flipped up-side-down. 

The accident plane and the houses around were consumed by flames.  

Among 5 onboard, the pilot and a passenger were dead in the accident, and other three occupants received injuries. 

There were also one fatality and two injuries in the crashed house. The plane was on a training round flight between Chofu and Oshima.


Date:26-JUL-2015
Time:11:00
Type:Silhouette image of generic PA46 model; specific model in this crash may look slightly different
Piper PA-46-350P Malibu Mirage
Owner/operator:private
Registration: JA4060
C/n / msn: 4622011
Fatalities:Fatalities: 2 / Occupants: 5
Other fatalities:1
Airplane damage: Written off (damaged beyond repair)
Location:Fujimi-cho, Chofu city, Tokyo -   Japan
Phase: Take off
Nature:Training
Departure airport:Chofu Airport (RJTF)
Destination airport:Oshima Airport (OIM/RJTO)
Narrative:
A Piper PA-46 crashed in a house just after takeoff from the runway 17 of Chofu Airport. The plane first contacted on roofs of two houses located at about 700m from the runway endpoint and slightly left from the extended centerline, and then dived into the next house, flipped up-side-down. The accident plane and the houses around were consumed by flames.  Among 5 onboard, the pilot and a passenger were dead in the accident, and other three occupants received injuries. There were also one fatality and two injuries in the crashed house. The plane was on a training round flight between Chofu and Oshima.

The accident plane, JA4060, had suffered some substantial damages at a laning accident at Okadama Airport (OKD/RJCO), Hokkaido, Japan on 27 October 2004. The annual check for the airworthiness had been carried out and passed on 1 May 2015.

Weather data at Chofu Airport at the time of the accident:
RJTF 260100Z VRB01KT 9999 FEW030 BKN/// 33/22 Q1011 RMK 1CU030 A2986=
RJTF 260200Z VRB02KT 9999 FEW030 SCT/// 34/22 Q1010 RMK 1CU030 A2984=
(02:00UTC/11:00JST, wind variable 2 knots, visibility more than 10km, 1 okta cumulus 3000ft, scattered cloud layer height unknown, temperature 34 degree-Celsius, dew-point 22 degree-Celsius, QNH 1010hPa/29.84INS.)
RJTF 260257Z VRB03KT 9999 FEW030 SCT/// 36/22 Q1010 RMK 2CU030 A2983=

Sources
http://aviation-safety.net/wikibase/wiki.php?id=178067 http://www3.nhk.or.jp/news/html/20150726/k10010166711000.html
http://headlines.yahoo.co.jp/hl?a=20150726-00000019-asahi-soci
http://headlines.yahoo.co.jp/hl?a=20150726-00000026-jij-soci
http://headlines.yahoo.co.jp/hl?a=20150726-00000015-mai-soci
http://headlines.yahoo.co.jp/hl?a=20150726-00050046-yom-soci
http://headlines.yahoo.co.jp/hl?a=20150726-00000040-jij-soci
http://www.fnn-news.com/news/headlines/articles/CONN00298460.html
http://www.fnn-news.com/news/headlines/articles/CONN00298463.html

2 killed when a Yakovlev Yak-52 lost control in flight (stall) without height for recovery in the Samara Oblast, Russia





JULY 25, 2015 (CIE) SLM "CMC Chief FINANCIAL Office of the Russian emergency situations Ministry in the Samara Oblast» EDDS 

Manager M.r. Neftegorsky,  was reported that n.p. Utevka m.r. Neftegorsky fallen airplane YAK-52.   The plane lost control in flight (stall) without height for recovery. Unfortunately, 2 persons on board were killed. On the ground there are no injuries or damage.

In the main Department of the Samara region, Russian emergency situations Ministry deployed operational headquarters.  

At the scene of the crash work forces and means of the territorial system of BASIC IDEAS of Samara region in numbers: 49 personnel, 13 pieces of equipment, including those from the Ministry of emergency measures of Russia: human 32 personnel, 5 units of equipment.

Date:25-JUL-2015
Time:10:39
Type:Silhouette image of generic YK52 model; specific model in this crash may look slightly different
Yakovlev Yak-52
Owner/operator:DOSAAF
Registration: RF-00982
C/n / msn: 899814
Fatalities:Fatalities: 2 / Occupants: 2
Other fatalities:0
Airplane damage: Written off (damaged beyond repair)
Location:Uteevka -   Russia
Phase: Manoeuvring (airshow, firefighting, ag.ops.)
Nature:Training
Departure airport:XWWO
Destination airport:XWWO
Narrative:
Loss of control in flight (stall) without height for recovery
Sources
http://aviation-safety.net/wikibase/wiki.php?id=178056 http://63.mchs.gov.ru/pressroom/news/item/2958795/
http://tvrain.ru/teleshow/here_and_now/krushenie_jak_52_v_samarskoj_oblasti_video-391578/
https://vk.com/utevka_city?w=wall-64050816_25843