Hello Pezz, Early Morning Report:
I bought more dollops of Ivanhoe Energy uk.finance.yahoo.com to make my position a full tranche at USD 1.94/shr;
I bought a dollop of Teekay Shipping uk.finance.yahoo.com at USD 44.39/shr. TK owns a lot of ships and supposedly has good/honest management; and
I bought a dollop of Nordic American Tanker uk.finance.yahoo.com at USD 13.34/shr. NAT owns three ships, all taken care of by its client (BP and RD) and pays a high distribution.
So, you see, I am organizing a private blend of my very own virtual shipping company, with potential for organic growth, capital gains, and current distribution :0)
I understand the following from a friend of mine:
“I think this is becoming a more interesting story.
"There were 16 so-called ultra-large crude carriers still trading as of Aug. 4, down from about 26 a year ago." An ULCC carries 4 million barrels, so 40 million barrels of transport capacity has been taken out in the past year on this type of ship alone. That's about 5 days of exports from Saudi Arabia. Double-hulled are VLCC's which can carry 2 million barrels each.
China is becoming a larger importer of oil as well. Given the fact that China will sell around 1.2 million cars this year and an additional 1.8 million cars next year, oil imports should increase dramatically. This is because China auto purchases tend to be new purchases as opposed to replacement purchases that we see in Europe and the US. Thus, it's the equivalent of about a 10% increase in demand in the US. Add to that the fact that transport time is longer to Asia than the US and we see that demand is increasing while it appears that new tanker supply isn't keeping up with scrap rates at present.
In sum, supply is decreasing faster than expected due to many people refusing to now charter single-hulled vessels and high scrappage rates alongside the fact that demand has been increasing globally. If Venezuela becomes more of a problem, then we see longer transport times for oil to the US and thus less tanker supply”
Some relevant news provide FYI:
Oil Tanker Rates Surge as Charterers Jostle for Available Ships
2003-09-18 03:41 (New York)
Oil Tanker Rates Surge as Charterers Jostle for Available Ships
Sept. 18 (Bloomberg) -- Persian Gulf oil tanker rates jumped as oil companies and traders hurried to book ships for their first half of October cargoes amid limited supply.
Nine so-called very large crude carriers, each loading about 2 Million barrels of oil, were signed up in the region to load as late as Oct. 22, Paris-based shipbroker Barry Rogliano Salles said in a report. The rate to South Korea, in Worldscale points, rose 5 points to WS 130. A tanker was booked at WS 100 to the U.S. Gulf Coast, up 10 points from yesterday, Bloomberg data showed.
``Charterers are panicking,'' said Chris Twiss, a tanker broker at Odin Marine, Dubai. ``There are still many cargoes to be fixed for October and not many vessels around.''
Tariffs for 2-million-barrel tankers are climbing for a sixth week as Middle East producers boost output to supply clients in Asia and the U.S., where inventories are low ahead of the cold season in the northern hemisphere. The increase in bookings has left importers with a narrower selection of ships and allowed owners to boost prices.
``The trend is firm for the first half of October and is most likely to continue'' when cargoes to be loaded in the second half of the month enter the market, Oslo-based shipbroker Fearnleys said in a note to clients.
ChevronTexaco Corp., the second-biggest U.S. oil company, signed up the World Crest for a 270,000-ton-cargo from the Middle East to the U.S. Gulf coast at WS 100, the highest since April 2. The oil producer may decide to ship the cargo to the U.S. West Coast at WS 112.5.
Daily Earnings
At today's rates, owners of modern VLCCs will earn an average of about $76,800 a day, $10,000 more a day compared with last week, to ship a 270,000-ton cargo to South Korea, after deducting voyage-related costs such as fuel and port fees, analysts said. Earnings on the Persian Gulf to the U.S. Gulf Coast leg stand at about $60,500 a day.
Frontline Ltd., the world's biggest operator of large tankers, had a break-even point of about $20,000 in the second quarter for VLCCs.
A total of 27 VLCCs were signed up globally in the week ending yesterday, Oslo-based shipbroker Fearnleys said in a note, down from 31 the previous week. About 50 VLCCs are forecast to be available to pick up cargo in the Persian Gulf in the next 30 days, up from about 45 a week ago, Fearnleys said.
--Petter Narvestad in the Oslo bureau (47) 22 99 62 10, or pnarvestad@bloomberg.net, with Saijel Kishan in London. Editor: Evense
West Africa Suezmax Tanker Rates Rise as Supplies Dwindle
2003-09-18 06:32 (New York)
Sept. 18 (Bloomberg) -- Oil tanker rates to send million-barrel cargoes from West Africa to the U.S rose to a 10-week high as charterers rushed to book ships amid a dwindling supply.
Seven so-called Suezmax tankers, the largest vessels that can navigate the Suez Canal with a full cargo, were booked to ship crude to the U.S. Gulf Coast, Oslo-based broker P.F. Bassoe & Co. said in a report. The rate, in Worldscale points, was WS 115. That's up 37.5 points from the start of the month, Bloomberg data showed.
``The list of ships available in the region is thin,'' said Jean Francois Vincke, a tanker broker at Riverlake Shipbrokers in Geneva.
Persian Gulf freight rates for so-called very large crude carriers, or VLCCs, which ship about 2 million barrels, rose for a sixth week as oil producers boosted output before the heating season in the northern hemisphere.
The strength in the Persian Gulf market has driven VLCC rates in West Africa up by more than 80 percent since the start of September, Bloomberg data shows. That prompted charterers to divide cargoes bound to the U.S and ship them on Suezmax tankers instead.
At current rates Suezmax vessels will earn about $29,900 a day on the benchmark route to the U.S East Coast, after deducting costs such as fuel and port fees, analysts said. Frontline Ltd., the world's biggest owner of large tankers, had a break-even point of about $13,000 a day in the second quarter on its million-barrel ships.
The cost of shipping million-barrel crude cargoes from West Africa Is about $1.66 a barrel, according to Bloomberg data, up from $1.55 yesterday. Suezmaxes ship about one million-barrels of crude, about equal to Indonesia's daily oil production.
--Saijel Kishan in the London newsroom (44) (20) 7073 3272
or at skishan@bloomberg.net. Editor: Farr
Asian Nations Devise Plan for Tanker Removals, TradeWinds Says
2003-09-12 06:15 (New York)
Sept. 12 (Bloomberg) -- Japan, South Korea, Singapore and the Philippines plan to propose an alternative to the EU plan for phasing out single-hulled tankers, the shipping weekly TradeWinds reported, without saying where it got the information.
The phase-out program will be presented to the International Maritime Organization, a United Nations agency, concerned with safety at sea, the paper said. The Asian proposal would allow single-skin tankers to trade until 2015 or up to the age of 25, whichever comes first, after passing an enhanced survey of their condition, the paper said.
The European Union wants to ban the single-hull tankers from 2010. The four Asian nations and Europe may try reach an agreement on a removal schedule at meeting this month paving the ground for a final IMO decision in December, the paper said.
Even though the EU may agree to a compromise with the Asian importers, it is still determined to enforce rules of its own within European waters, TradeWinds added.
(TradeWinds, 9-12 38)
See tradewinds.no for the newspaper's Web site.
--Petter Narvestad in the Oslo bureau (47) 22 99 62 10, or
pnarvestad@bloomberg.net. Editor:Foroohar
2003-08-22 07:18 (New York)
Fredriksen Sells World's 2nd-Biggest Tanker as
Aug. 22 (Bloomberg) -- Norwegian shipping magnate John Fredriksen sold the world's second-biggest oil tanker, the Sea Giant, to demolition for scrap steel, shipbroker Fearnleys said.
The ship is 424 meters long (1,358 feet) and 63 meters wide. The Eiffel Tower on its side is more than 100 meters shorter. Able to load more than 4 million barrels, or almost half of Saudi Arabia's daily output, the Sea Giant was sold for some $17 million, according to a report by Oslo-based Fearnleys. Frontline Ltd., which operates the ship for Fredriksen, wouldn't comment.
Almost three decades of pounding seas and new laws are making obsolete such so-called ultra large crude carriers, the dinosaurs among oil tankers. Their numbers are dwindling as single-hulled ships are beached, with oil companies and traders favoring those with two metal skins separating the crude and the sea. New laws have made the ship unusable in many waters in 2005.
``I am not surprised that the tanker was sold given the strong scrapping rates at the moment,'' said Martin Stopford, head of research at London's Clarksons shipbroker. ``It has less than two years of trading left.''
Fredriksen's Seatankers Management unit owned the vessel. Frontline, the world's biggest owner of large tankers, managed the ship on behalf of its main shareholder, Fredriksen, Norway's second-richest man. Tor Olav Troim, a Frontline director, declined to comment.
The 24-year-old Sea Giant, with a capacity of 555,051 deadweight-tons, is only surpassed by the 564,763 deadweight-tons Jahre Viking, the biggest ship ever built and controlled by the Fred. Olsen & Co. group of companies.
Sitting at the Dock
Aging single-hull tankers have been less in demand since the Prestige sank off Spain in November, polluting hundreds of miles of beaches. The spill may cost 2.9 billion euros ($3.2 billion), a study this week found. That would near the $3.5 billion Exxon Mobil Corp. spent after the Valdez ran aground in 1989.
As transport demand has slumped in the past few months, old tankers have had to wait between cargoes, without revenue to cover daily costs.
The European Union in June adopted a plan to ban single- hulled tankers as of 2010. That's five years earlier than originally planned by the members of the International Maritime Organization, a UN agency. The IMO may decide to make the EU phase out schedule global in December.
``Under recent IMO legislation the vessel would have been sold for scrap in 2005,'' Stopford said.
Another supertanker, the Stavros GL, was also sold for scrap, Fearnleys said. It brings this year's total of ultra and very large crude carrier demolition sales to 26 ships, down two units from the same time last year.
Fredriksen may also have been motivated to scrap the Sea Giant before the final deadline because prices for scrap steel have surged in Asia. Chinese demand for scrapping candidates has been especially strong because of steel shortages, brokers said.
``Last year rates were $140 per ton compared with $220 to $230 a ton at the moment,'' Stopford said.
Tomorrow's Bridge?
The scrapped ships end up at yards in China or beached in the Indian Subcontinent, where their steel hulls are cut into plates used in construction projects such as roads and bridges.
The Chinese breakers paid $233 per lightweight-ton of steel for the Sea Giant, which weighs about 72,000 tons, Fearnleys reported. The ship has been offered to scrap yards, and a sale may not have been completed yet, shipping Weekly TradeWinds reported, without identifying where it attained the information.
The Sea Giant has won two contracts this year and loaded in the Persian Gulf in late May and discharged it end-June, TradeWinds said. Since then the ship has been steaming ``slowly'' back to the Gulf, the paper added.
Rates for supertankers, measured in Worldscale points, rose as high as WS 125 in March on the benchmark route from the Persian Gulf to the U.S. rates fell as low as WS 40 last week, erasing owners' profits, Bloomberg data showed.
There were 16 so-called ultra-large crude carriers still trading as of Aug. 4, down from about 26 a year ago. Only six such vessels were delivered from shipyards after the 1970s, according to a Frontline presentation.
--Petter Narvestad in the Oslo bureau (47) 22 99 62 10, or pnarvestad@bloomberg.net, with Saijel Kishan in London through the London newsroom. Editor: Coulter |
