crude carriers business
Court confirms Chapter 11 protection and frees vessel
The New York Court supervising the reorganisation of Marco Polo Seatrade and its group affiliates has rejected the motions filed by the Royal Bank of Scotland and Credit Agricole seeking to dismiss the group’s US Chapter 11 filings. Both lenders had asserted that Marco Polo Seatrade was not eligible for Chapter 11 protection. The court, however, rejected all of the lenders’ arguments. The managing director of Marco
Polo Seatrade said: “We are delighted that the court has confirmed that we acted in accordance with the law and in good faith in starting our Chapter 11 proceedings. We now look forward to developing the Chapter 11 reorganisation plan, preferably on a consensual basis with our lenders and creditors, that will enable us to emerge from Chapter 11 as a strong and healthy competitor in the
Aframax tanker earnings are forecast to remain at barely profitable levels throughout 2012 due to the global fleet expansion and stagnant oil demand. The worldwide Aframax fleet is expected to increase by another 12 per cent in the next year, putting pressure on freight rates and tanker asset values, according to a report from DVB Group’s Research and Strategic Planning department. “Although oil demand is expected to
increase in the years to come, demand for Aframaxes is expected to remain flat at best in 2011 as well as 2012. We expect freight rates to remain under considerable pressure. In line with earnings, asset values are also expected to decrease further in the months ahead and hopefully bottom within 2012,” DVB said in the report. “Unless a significant amount of vessels
are permanently removed from the fleet, the Aframax market will take years to balance. Current market fundamentals point that earnings will remain close to operating expenditure levels for the remainder of 2011 and in 2012.” DVB said average spot market time charter
equivalent earnings by the end of August were around US$7,842/day. One-year time charter rates were around US$15,100/day and global fleet utilisation was 86 per cent. The bank forecasts one-year time charter rates will dip to US$13,400/day next year. The average Aframax newbuilding price in 2010 was US$55 million, but prices have fallen
60 I Tanker Shipping & Trade I October/November 2011
global shipping market.” Marco Polo Seatrade has reached an agreement with Credit Agricole to release the 115,000 dwt Aframax Montiron from arrest and return it to operations. Credit Agricole’s arrest of the Montiron was one of the factors that precipitated Marco Polo’s Chapter 11 filing. Marco Polo Seatrade forsees a speedy resumption of the vessel’s normal day-to-day trading activity. The return to operations of the
Montiron is the latest in a string of consensual agreements reached by Marco Polo Seatrade with its lenders in Chapter 11 proceedings. This includes Marco Polo’s continued use of its lenders’ cash collateral and its ability to obtain additional ‘debtor in possession’ financing from the Royal Bank of Scotland.
DVB forecasts flat earnings for Aframaxes in 2012
to US$50 million this year and DVB forecast they will drop to US$48 million in 2012. A similar decline is expected for 5-year-old Aframax values from US$45 million in 2010 to about US$41 million this year and US$39 million in 2012. Forecast declines in prices and rates are seen
as the result of an oversupplied market. Since the beginning of 2010, around 100 Aframax tankers, of 11 million dwt, entered service, but only 34 tankers, of combined 3.4 million dwt, were removed. This year alone 62 Aframaxes of almost 7 million dwt were expected to enter the market. As of August 2011, the Aframax fleet consisted of 886 vessels, of over 94 million dwt, an increase of over 4.5 per cent compared to the 853 vessels of 90 million dwt a year earlier. Ordering of tankers in the last two years
has exacerbated the overtonnage problem. According to DVB, 42 vessels of 4.7 million dwt were ordered in 2010 and a further five tankers this year. The global orderbook stands at 89 vessels, or almost 10 million dwt, representing 10.5 per cent of the existing fleet. Around 60 tankers are expected to enter service by the end of 2013. “The oversupplied fleet was only bound to
inflate further in 2011 and 2012 while owners seemed reluctant to scrap older tonnage. Owners have yet to realise the need to get rid of older vessels that do little more than undercut the market. And world oil demand, although set to keep increasing, it is not enough to offset the fleet oversupply,” DVB said in the report.
Frontline sells Front Fighter October saw the sale of the Frontline-owned 1994-built Suezmax tanker Front Fighter to an undisclosed owner. The sale will result in a net cash outflow of approximately US$3 million, after repayment of bank debt, and Frontline expects to record a loss of approximately $27.0 million.
Saga disposes of VLCC fleet Norway’s Saga Tankers is convening an extraordinary meeting to agree the sale of the remainder of its VLCC fleet. The move is in response to the declining value of its vessels and present weak freight markets. A measure of the decline in VLCC values
is demonstrated by its recent agreement for the sale of its 2000-built Kawasaki VLCC Saga Unity for US$29.4 million. The vessel last changed hands in April 2010 for over US$60 million.
Euronav reports lower third- quarter earnings Belgian crude oil transporter Euronav’s third- quarter core earnings before interest, tax, depreciation and amortisation was US$17.62 million, down 65 percent from the same period last year. The group said the tanker market had
been in decline since the second quarter of 2010 because of oversupply. It added that the demand for crude oil was slowing slightly due to weak economic growth. Euronav said its fleet of large tankers were
earning US$7,500 per day in the first weeks of the fourth quarter and 45 percent of the available days had been fixed.
Crude carrier sent straight to lay-up A newly delivered VLCC capable of carrying 2 million barrels of crude is being sent straight for lay-up in a natural harbour in Malaysia. This is believed to be the first time a tanker of this type has been sent for ‘deactivation’ since the 1980s. But with running costs increasingly exceeding operational costs for those without fixed charters, the move comes as no surprise. The owner and vessel names are understandably not being disclosed. TST
A vessel in lay-up being checked
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