India
four Suezmaxes, five Aframaxes and 16 products carriers ranging from Handysize to Panamax. GESCO has ditched plans to return to the VLCC sector. Two Suezmax tankers contracted in July 2008 at the height of the boom for an inflated US$98 million apiece were renegotiated into three VLCCs in July 2010 at Hyundai, priced at around US$104 million each taking into account contract change penalties. When GESCO struggled to secure gainful employment for the three vessels, they were sold to Maersk for around US$104 million each. Like many owners, GESCO is now far more
cautious about expenditure. In June, it placed an order with ShinaSB (formerly SLS Shipbuilding), in South Korea, for two 51,000 dwt medium-range products carriers, with an option for a further two. The orders are the first at the shipyard in three years. Prompt deliveries were on offer in the third and fourth quarters of 2012 at US$36 million apiece. GESCO has built products tonnage at the yard before. The new orders coincided with the departure of a 1989-built single-hull Suezmax from its fleet to the breakers for a very healthy US$10.6 million, catching a booming recycling market in India at the right time. Mumbai-listed Essar Shipping received a
boost with final confirmation in the High Court that it could demerge Essar Shipping and Essar Ports and Logistics into two separate companies. Shares immediately rose by 20 per cent and investors are confident stock will continue to rise over the long term in a difficult market. Essar Shipping is not afraid to operate a mix
of newbuilding and secondhand acquisitions and intends to exploit falling secondhand values. Unlike GESCO, Essar has more faith in VLCCs and plans a major expansion. The owner is seeking to acquire six VLCCs on the secondhand market and will add to this total depending on market developments. Indian oil companies have recently been negotiating and signing oil deals with Latin American countries. The demerger has freed up extra capital and the objective is to cash in on refining expansion in India by supplying the increased crude oil shipments required. For this Essar will seek long-term contracts of affreightment, especially from Indian Oil Co (IOC), which is the country’s largest charterer. The owner has given no date for the VLCC acquisitions and only operates two at the current time. In the context of today’s difficult trading conditions,
owner
Great Eastern Shpg. Great Eastern Shpg. Shpg. Corp of India Shpg. Corp of India Shpg. Corp of India Shpg. Corp of India
vessel type
one of these built in 1999 was recently fixed for up to a year to Hanjin Shipping, South Korea, at US$30,000 a day, giving breakeven earnings. This puts in perspective today’s trading environment for crude, as Essar’s second unit built as recently as 2005 was fixed to state- owned oil refiner IOC for a similar period at only US$20,000 a day. Previously, this VLCC ended a two-year commitment to IOC at a better rate, with an optional extension at US$41,200 a day. Not surprisingly IOC declined and Essar accepted an extension at a loss. VLCC owners hope for US$40,000 plus time charter rates today. They remain illusive for now, but the tide will surely turn. India Steamship Co (ISS) based in Kolkata
is pinning hopes on a demerger from its parent, Chambal Fertilisers and Chemicals. Such a demerger would enable this owner to raise more cash and finance a tanker fleet expansion plan. Following a six-month consultancy exercise, a High Court decision is expected by the end of 2011. ISS is solely a tanker owner that operates five modern Suezmaxes and an ageing Chambal Aframax. Following demerger, the plan is to acquire one VLCC and more chemical tankers. An IPO listing is under consideration to raise more finance. In order to minimise exposure to the wet trades, ISS will also diversify into dry bulk. ABG Shipyard, which has India’s strongest
orderbook, set up a Singapore-based subsidiary, Pacific First Shipping, in 2007. It has since made its debut in the tanker sector. The VLCC Varada Blessing was acquired in 2010 and earlier this year ABG acquired an Aframax tanker now trading as Varada Lalima. The former is locked into a three-year time charter to a Sinochem- associated company at US$31,300 daily, giving a breakeven return at least. Varada Lalima has been operating on the spot market with good rates, but a time charter commitment is sought. Two more secondhand Aframaxes will be purchased imminently as the company takes advantage of falling values. The prefix Varada links them to operation by Kristiansand-based Varada Shipping, which is strong in the offshore business and in turn an established subsidiary of PFS. ABG as a whole intends to create a diversified tanker fleet of VLCCs, Suezmaxes and Aframaxes. There is evidence of more logistics companies
entering the coastal tanker trades. For all global trading sectors it is surprising that with such a vast coastline only 8 per cent of India’s trade is
Products Carrier Products Carrier VLCC VLCC VLCC VLCC
CURRENT NEWBUILDINGS vessel sub type Medium Products Medium Products VLCC VLCC VLCC VLCC
28 I Tanker Shipping & Trade I October/November 2011
51,000 51,000
dwt month 9
320,000 320,000 320,000 320,000
12 0 0 0 0
year 2012 2012 2013 2013 2013 2013
$NB 36 36
107 107 107 107
served by its own tonnage. Fourcee Infrastructure Equipments has established a new shipping wing, Zen Shipping, and has purchased two chemical tankers specifically to serve costal transport of crude palm oil, chemicals and lubricants. Other companies are expected to make similar moves encouraged by the coastal policy introduced by the state of New Delhi. Overseas owners are discouraged by the requirement that they use the Indian registry and employ Indian crews, which push up costs. Zen’s move is also interesting since it concentrates on chemicals: Fourcee has a thriving inland chemical transport network. The ambition of Zen will go beyond coastal
transport in about two years with expansion into international trades. Another logistics player, Allcargo Global Logistics, entered shipowning for the first time in 2010 with two multipurpose freighters, and has hinted at tanker acquisitions. Accord Ship Management purchased two
15,000 dwt products carriers from Knutsen, Norway, now trading as Sea Grace and Sea Adventurer. The company has operated one products carrier since 2006. It is very active in commercial management from overseas offices and may intend the new acquisitions for Indian cabotage. Mercator Lines, the third-largest tanker
owner, will in future concentrate more on non- shipping commitments. The intention is that these will eventually account for 70 per cent of its revenue. This could see a reduction of the current tanker fleet. The parent owner of Mercator will concentrate on development of offshore oil exploration, though Mercator will employ two large tankers for floating storage. TST
owner
Shpg. Corp of India Great Eastern Shpg. Mercator Lines Ltd Pratibha Shpg. Co India Steamship Co Sanmar Group Essar Shipping
Forbes Doris Naess Ind-Aust Maritime
Indian government. Seven Islands Shipping
Accord Ship Mgmt. Pvt Ltd Varun Shipping Co Jaisu Shipping Co Lilly Maritime Pvt Ltd Zen Shipping
ABG Shipping Ltd Chambal Fertilisers
Sterling Oil Resources Ltd TESMA India Pvt Ltd total
FLEET VESSELS no 52 25 9 8 5 5 4 4 4 4 4 3 3 2 2 2 1 1 1 1
140 dwt
5,236,112 1,927,740 1,169,742 314,437 520,631 253,719 609,082 52,485 20,451 64,445 60,836 39,088
319,682 5,021 7,884
24,283
299,999 105,848 284,890 6,185
11,322,560
www.tankershipping.com
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