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Thursday, February 23, 2012

Research and Projects

Published	Article
03.02.2012	Tankers through the Suez Canal After a significant fall in 2009, total traffic through the Suez Canal has steadily increased over the last two years, almost back to where it was. But VLCC traffic has not returned to previous levels. Seventy nine part-laden VLCCs passed through the Canal northbound in 2011, compared to on average 158 VLCCs per year passing through between 2003-2008. Hardly any VLCCs use the Suez Canal...... More
27.01.2012	Oil supply and demand in 2012 and in the long term There are several interesting points pertaining to oil demand that have come to light. By analyzing figures produced by OPEC (see table) we see that oil demand 2008-2012 is projected to grow by 3.2 mbd, with more than half of that growth expected to be in China, while the rest of the growth is mainly in the areas of Middle East, Latin America, FSU and Africa, which will provide little tanker...... Login to view this article
20.01.2012	Concern over oil supply through Strait of Hormuz A looming sharp escalation in economic sanctions imposed on Iran by the US and EU has sparked concerns in Europe and Asia over potential crude availability, as well as raising alarms over the possibility of military action in the Middle East Gulf, according to The International Energy Agency (IEA). A new law was signed by President Obama on 31 December 2011 imposing sanctions on financial...... Login to view this article
13.01.2012	China reinforces position as top charterer of 2011 According to Poten & Partners, the Chinese charterers’ dominance in the VLCC spot market increased tremendously in 2011 compared to 2010, dominating the VLCC spot market in 2011 with Unipec and Petrochina taking the top two spots (see chart below) and accounting for almost one third of the total spot chartering of VLCCs in 2011. Unipec and PetroChina increased their combined number of spot...... Login to view this article
06.01.2012	Refinery expansions relative to increasing products demand China represents 2.996 mbd or 34% of the total expected global refinery expansion for the six-year period 2011-2016 according to the International Energy Agency (IEA) in its December medium-term report. Assuming an annual increase of 0.55 mbd in China’s products demand, which will mean a total increase of 3.3 mbd in China’s products demand over this period, planned refinery expansion in Chi...... Login to view this article
16.12.2011	Year-end thoughts The lack of tanker ordering, in combination with a yearly growth in oil demand of around one million barrels per day, suggests that the tanker market is on the way out of its slump. Orderbooks for the different sectors of between 11 and 28% of each fleet sector are not large in a historic context, even though the tanker fleet is very young and there will therefore be limited deletion of tonnage...... Login to view this article
09.12.2011	Demand for non-OECD oil overtakes OECD In 2012, the non-OECD oil demand looks set to overtake OECD demand for the first time. OECD demand is on the way down and has declined by some 5 mbd over the last five years, whereas non-OECD demand has increased by some 9 mbd. At the same time, since the 3rd quarter of 2008, non-OPEC production has increased by some 4 mbd, whereas OPEC production has declined over the same period. The most...... Login to view this article
02.12.2011	Trade prospects International trade in oil (including crude oil, NGLs, unconventional oil, additives and refined products) looks likely to continue growing. According to the International Energy Association’s (IEA) New Policies Scenario*, trade between the major regions is set to increase from 37 mbd in 2010 to more than 48 mbd in 2035, growing 11 mbd/d over the projection period. This compares with a projecte...... Login to view this article
25.11.2011	Long-term oil market outlook The IEA Oil Market Outlook is a huge publication with 660 pages, including appendices, and covers all major energy types, climate change scenarios, and special reports such as a comprehensive report on Russia which, it is stated, has huge potential savings on its energy consumption. Three different scenarios are put forward for future energy demand, depending on the energy source, and not least...... Login to view this article
18.11.2011	Record VLCC fixtures bring hope Fixture activity for VLCCs from the Arabian Gulf (AG) over the last couple of months has seen a record high, with the increase in westward movements seeing the biggest climb according to Clarksons, from an average of 13-15 fixtures per month in 2009-10 to an average of 22 per month in 2011. Fixtures eastwards is of a larger volume again, and has increased from an average of between 74-83 in...... Login to view this article
11.11.2011	VLCCs losing market share to pipelines and smaller tankers In the current tanker market, it is VLCCs that are faring worst. One of the reasons for this is that they are 70% dependent on the Middle East for loading, and as single hull tankers have virtually all but disappeared, the VLCC market may be compared to a commodity market without any differentiation. But there are also other factors threatening the VLCC market. The tanker broker MJLF in...... Login to view this article
11.11.2011	China pledges to slow down delivery The contracting of tankers has been moderate so far in 2011 and represented just 13% of total existing contracts (in dwt terms up to the end of September). In relative Compensated Gross Tonnage (CGT) terms, it will be less than this as the contracting of higher CGT containerships and LNG carriers has contributed to the filling of order books. CGT is a measurement for the amount of work that...... Login to view this article
04.11.2011	Product tanker market At present, the product tanker market is faring better than the crude oil tanker market and freight rates have shown an improvement since 2010. The product tanker market is, however, difficult to analyse as freight rate trends are usually based on round trip voyages, whereas the actual earnings of product tankers (in particular) are to a great extent dependent on getting backhauls and minimisin...... Login to view this article
28.10.2011	Period chartering The latest aframax period contract we have on record was for one year and at $12,000 per day, which is the lowest period contract for a large crude tanker that we have seen – at least in this decade. Year Number of contracts Average TC Rate Total dwt Average dwt Average Period Average age years 2000 161 20,351 18,385,221 114,194 1.4 9.5 2001 219 23,461 23,694,404 108,038 2.4 8.4 2002 211 16,261...... Login to view this article
21.10.2011	The Common Law of Business Balance “We often hear comments to the effect of shipping being the perfect market. This is simply not true. The market is not open, quite the reverse, it is permanently opaque as a result of the ways charterers go about their business.” This statement was by former Chartering Manager at Shell, Phil Owen, at a seminar in 1995. It is doubtful whether the situation has become more transparent today, as...... Login to view this article
14.10.2011	IEA revises oil demand downwards ... again In Paris, the International Energy Agency reported that global oil demand is revised down by 0.050 million barrels per day (mbd) for 2011 and by 210 mbd for 2012, with lower-than-expected 3Q11 readings in the non-OECD countries and a downward adjustment to global GDP growth assumptions. Global GDP growth is now seen at 3.8% in 2011 and 3.9% in 2012, with significant downside risks. Demand...... Login to view this article
30.09.2011	No need to order new tankers The ordering of tankers has so far in 2011 been at a moderate level, as is seen in this graph. We have looked at the current tonnage balance situation and can see that, even when assuming a relatively high level of sales for decommissioning and a strong demand increase of 5%, there is no need to order new VLCCs or suezmaxes before 2014 – today’s tonnage supply/demand balance situation means a...... Login to view this article
23.09.2011	Slow-down in demand The Financial Times has reported that Rio Tinto, one of the world’s largest natural resources companies and the 2 nd largest iron-ore miner, warns that some of its customers have been asking to delay shipments of metals in a clear sign that the financial turmoil is starting to affect the commodities sector. “It is noticeable that markets are somewhat weaker,” said Rio Tinto chief executive To...... Login to view this article
16.09.2011	IEA revises oil demand downwards The International Energy Agency (IEA) has reported that global oil demand is down by 0.2mbd for 2011 and by 0.4mbd for 2012 on lower non ‐ OECD readings and reduced economic growth expectations. Global GDP growth assumptions are now 3.9% for 2011 and 4.2% in 2012, with significant downside risks. Demand estimates stand at 89.3mbd in 2011 (+1.0mbd y ‐ o ‐ y) and 90.7mbd in 2012 (+1.4mbd y ‐ o ‐...... Login to view this article
09.09.2011	EIA’s short term forecast The latest U.S. short-term forecast from the U.S. Energy Information Administration (EIA) is not positive for the tanker market because of reduced oil imports to the U.S., anticipated stock draws, and the expectation that continuing high oil prices of around $100 per barrel is acting as a stimulus to invest in both fuel reduction measures and in the use of alternative energy. However the foreca...... Login to view this article

Published

Article

03.02.2012

Tankers through the Suez Canal

After a significant fall in 2009, total traffic through the Suez Canal has steadily increased over the last two years, almost back to where it was. But VLCC traffic has not returned to previous levels. Seventy nine part-laden VLCCs passed through the Canal northbound in 2011, compared to on average 158 VLCCs per year passing through between 2003-2008. Hardly any VLCCs use the Suez Canal...... More

27.01.2012

Oil supply and demand in 2012 and in the long term

There are several interesting points pertaining to oil demand that have come to light. By analyzing figures produced by OPEC (see table) we see that oil demand 2008-2012 is projected to grow by 3.2 mbd, with more than half of that growth expected to be in China, while the rest of the growth is mainly in the areas of Middle East, Latin America, FSU and Africa, which will provide little tanker...... Login to view this article

20.01.2012

Concern over oil supply through Strait of Hormuz

A looming sharp escalation in economic sanctions imposed on Iran by the US and EU has sparked concerns in Europe and Asia over potential crude availability, as well as raising alarms over the possibility of military action in the Middle East Gulf, according to The International Energy Agency (IEA). A new law was signed by President Obama on 31 December 2011 imposing sanctions on financial...... Login to view this article

13.01.2012

China reinforces position as top charterer of 2011

According to Poten & Partners, the Chinese charterers’ dominance in the VLCC spot market increased tremendously in 2011 compared to 2010, dominating the VLCC spot market in 2011 with Unipec and Petrochina taking the top two spots (see chart below) and accounting for almost one third of the total spot chartering of VLCCs in 2011. Unipec and PetroChina increased their combined number of spot...... Login to view this article

06.01.2012

Refinery expansions relative to increasing products demand

China represents 2.996 mbd or 34% of the total expected global refinery expansion for the six-year period 2011-2016 according to the International Energy Agency (IEA) in its December medium-term report. Assuming an annual increase of 0.55 mbd in China’s products demand, which will mean a total increase of 3.3 mbd in China’s products demand over this period, planned refinery expansion in Chi...... Login to view this article

16.12.2011

Year-end thoughts

The lack of tanker ordering, in combination with a yearly growth in oil demand of around one million barrels per day, suggests that the tanker market is on the way out of its slump. Orderbooks for the different sectors of between 11 and 28% of each fleet sector are not large in a historic context, even though the tanker fleet is very young and there will therefore be limited deletion of tonnage...... Login to view this article

09.12.2011

Demand for non-OECD oil overtakes OECD

In 2012, the non-OECD oil demand looks set to overtake OECD demand for the first time. OECD demand is on the way down and has declined by some 5 mbd over the last five years, whereas non-OECD demand has increased by some 9 mbd. At the same time, since the 3rd quarter of 2008, non-OPEC production has increased by some 4 mbd, whereas OPEC production has declined over the same period. The most...... Login to view this article

02.12.2011

Trade prospects

International trade in oil (including crude oil, NGLs, unconventional oil, additives and refined products) looks likely to continue growing. According to the International Energy Association’s (IEA) New Policies Scenario*, trade between the major regions is set to increase from 37 mbd in 2010 to more than 48 mbd in 2035, growing 11 mbd/d over the projection period. This compares with a projecte...... Login to view this article

25.11.2011

Long-term oil market outlook

The IEA Oil Market Outlook is a huge publication with 660 pages, including appendices, and covers all major energy types, climate change scenarios, and special reports such as a comprehensive report on Russia which, it is stated, has huge potential savings on its energy consumption. Three different scenarios are put forward for future energy demand, depending on the energy source, and not least...... Login to view this article

18.11.2011

Record VLCC fixtures bring hope

Fixture activity for VLCCs from the Arabian Gulf (AG) over the last couple of months has seen a record high, with the increase in westward movements seeing the biggest climb according to Clarksons, from an average of 13-15 fixtures per month in 2009-10 to an average of 22 per month in 2011. Fixtures eastwards is of a larger volume again, and has increased from an average of between 74-83 in...... Login to view this article

11.11.2011

VLCCs losing market share to pipelines and smaller tankers

In the current tanker market, it is VLCCs that are faring worst. One of the reasons for this is that they are 70% dependent on the Middle East for loading, and as single hull tankers have virtually all but disappeared, the VLCC market may be compared to a commodity market without any differentiation. But there are also other factors threatening the VLCC market. The tanker broker MJLF in...... Login to view this article

11.11.2011

China pledges to slow down delivery

The contracting of tankers has been moderate so far in 2011 and represented just 13% of total existing contracts (in dwt terms up to the end of September). In relative Compensated Gross Tonnage (CGT) terms, it will be less than this as the contracting of higher CGT containerships and LNG carriers has contributed to the filling of order books. CGT is a measurement for the amount of work that...... Login to view this article

04.11.2011

Product tanker market

At present, the product tanker market is faring better than the crude oil tanker market and freight rates have shown an improvement since 2010. The product tanker market is, however, difficult to analyse as freight rate trends are usually based on round trip voyages, whereas the actual earnings of product tankers (in particular) are to a great extent dependent on getting backhauls and minimisin...... Login to view this article

28.10.2011

Period chartering

The latest aframax period contract we have on record was for one year and at $12,000 per day, which is the lowest period contract for a large crude tanker that we have seen – at least in this decade. Year Number of contracts Average TC Rate Total dwt Average dwt Average Period Average age years 2000 161 20,351 18,385,221 114,194 1.4 9.5 2001 219 23,461 23,694,404 108,038 2.4 8.4 2002 211 16,261...... Login to view this article

21.10.2011

The Common Law of Business Balance

“We often hear comments to the effect of shipping being the perfect market. This is simply not true. The market is not open, quite the reverse, it is permanently opaque as a result of the ways charterers go about their business.” This statement was by former Chartering Manager at Shell, Phil Owen, at a seminar in 1995. It is doubtful whether the situation has become more transparent today, as...... Login to view this article

14.10.2011

IEA revises oil demand downwards ... again

In Paris, the International Energy Agency reported that global oil demand is revised down by 0.050 million barrels per day (mbd) for 2011 and by 210 mbd for 2012, with lower-than-expected 3Q11 readings in the non-OECD countries and a downward adjustment to global GDP growth assumptions. Global GDP growth is now seen at 3.8% in 2011 and 3.9% in 2012, with significant downside risks. Demand...... Login to view this article

30.09.2011

No need to order new tankers

The ordering of tankers has so far in 2011 been at a moderate level, as is seen in this graph. We have looked at the current tonnage balance situation and can see that, even when assuming a relatively high level of sales for decommissioning and a strong demand increase of 5%, there is no need to order new VLCCs or suezmaxes before 2014 – today’s tonnage supply/demand balance situation means a...... Login to view this article

23.09.2011

Slow-down in demand

The Financial Times has reported that Rio Tinto, one of the world’s largest natural resources companies and the 2 nd largest iron-ore miner, warns that some of its customers have been asking to delay shipments of metals in a clear sign that the financial turmoil is starting to affect the commodities sector. “It is noticeable that markets are somewhat weaker,” said Rio Tinto chief executive To...... Login to view this article

16.09.2011

IEA revises oil demand downwards

The International Energy Agency (IEA) has reported that global oil demand is down by 0.2mbd for 2011 and by 0.4mbd for 2012 on lower non ‐ OECD readings and reduced economic growth expectations. Global GDP growth assumptions are now 3.9% for 2011 and 4.2% in 2012, with significant downside risks. Demand estimates stand at 89.3mbd in 2011 (+1.0mbd y ‐ o ‐ y) and 90.7mbd in 2012 (+1.4mbd y ‐ o ‐...... Login to view this article

09.09.2011

EIA’s short term forecast

The latest U.S. short-term forecast from the U.S. Energy Information Administration (EIA) is not positive for the tanker market because of reduced oil imports to the U.S., anticipated stock draws, and the expectation that continuing high oil prices of around $100 per barrel is acting as a stimulus to invest in both fuel reduction measures and in the use of alternative energy. However the foreca...... Login to view this article