Focus on suezmaxes

Johan G. Olsen’s latest suezmax fleet list gives the the employment of the ships and their charterer. Out of a total of 317 existing ships (including 16 OBOs) plus 75 newbuildings, oil companies or state-owned companies own 88 and have an orderbook of 23 ships. This means that some 72% of existing suezmaxes are owned by independent owners, who also have 52 suezmaxes on order, 9 of which are fixed to oil companies to 2005 and beyond.

The four largest oil majors, BPAmoco, ChevronTexaco, ExxonMobil and Shell, have a combined owned fleet of 19 suezmaxes, plus 7 on period charter until 2005 or later. The biggest oil company and state-owned fleets are ChevronTexaco with 8 suezmaxes, Petrobras with 7, ConocoPhilips (Polar tankers) with 6 plus two on order for the Alaskan trade and NITC with 5 plus two on order.

Some of the biggest suezmax fleets operate in the shuttle tanker segment, which consists of some 45 suezmaxes.

The biggest single suezmax owner is Frontline with 27 suezmaxes, 16 of which are double-hulled. The Frontline suezmax fleet includes 8 OBOS (all currently trading in the strong dry bulk markets), 2 shuttle tankers and 8 ships on period contracts to 2005 and beyond. In addition Frontline has three suezmaxes on period contracts until 2012/3 from the German KG Dr. Peters.  John Fredriksen’s Hemen also has four suezmaxes on bareboat contracts to ChevronTexaco, three of which are double hulled.

The 2nd biggest suezmax owner is General Maritime (Genmar) with 19 suezmaxes, 9 with double hull and 4 with double sides. Genmar is also the 3rd biggest aframax operator.

The 3rd biggest suezmax owner is Sovcomflot with 12 suezmaxes, all with double hulls, including five on period contracts.

In addition, there are some 16 owners with 5-11 tankers each, totalling 113 ships, plus 25 newbuildings. This means that the 19 owners with 5 suezmaxes or more operate 171 suezmaxes, giving them a 54% market share. The ownership of the remaining 146 suezmaxes is split between some 76 owners, giving them an average of less than two ships each. This means that while half this sector has been consolidated into larger operations, the other half still has not.

There are only 82 suezmaxes still trading which were built before 1990. The peak building years were 1991 and 1992 when 26 and 30 suezmaxes respectively were built. 31 of the trading suezmaxes were built in the 1970s. At the same time there are 75 suezmaxes on order for delivery end 2003-2007.

The average size of suezmaxes is increasing. Those built before 1990 that are still trading average 141,774 dwt, whereas those built since 1990, including those on order, average 154,536 dwt. Only 24 of the 75 suezmaxes due for delivery are below 155,000 dwt.

A large number of suezmax OBOs are currently trading in the dry bulk market, which is generating nearly twice the t/c equivalent earnings of the tanker market at the moment. This is limiting the size of the active suezmax fleet. A weaker dry bulk market could see OBOs re-entering the tanker market.

The LRFairplay database contains some 220 (69%) suezmaxes with double hulls and 33 (10%) with double bottom or sides. This means that only 64 (21%) are single-hulled. The average age overall is 9.6 years. By end 2005 at least 83% will be double-hulled.

If we look at the phase-out of suezmaxes, 23 of the trading ships have already been denied access to the US (except dedicated lightering areas and LOOP). EU denied access to 26 as from 21 October. Only 1 is due for MARPOL phase-out this year and 7 next year. If IMO agrees a compromise with the EU to realign single-hull phase-out, 22 suezmaxes would have to go in 2005.

The peak single-hull phase-out in 2010 will be similar for the EU and OPA 90. 24 of the 47 tankers that will be denied access to Europe in 2010 will be less than 20 years of age.

We have recorded 13 suezmaxes sold for decommissioning so far in 2003 ranging from 22 to 29 years. Six were older than 25 years, the oldest being an OBO. The average age of the vessels sold for decommissioning was 25.4 years.

Suezmax trades

The total suezmax trade 2002 was calculated by Fearnleys to be some 519 m dwt, of which 110 m dwt were single-hull tankers and 359 m dwt double-hull tankers.

* Some 49% of the single-hull suezmaxes in 2002 traded to/from Europe/Mediterranean.

* Intra NW Europe trade alone represented 28% of the total suezmax trade.

* 15% of the single-hull suezmaxes in 2002 traded to N America.

* Only some 5-10 suezmax tankers passed Suez Canal northbound each month.

* 34% of the suezmax trade was from NW European areas

* Suezmax trades represented some 22% of total tanker trade. In comparison, panamaxes have 8%, aframaxes 34%, VLCCs 36%.

The three single biggest trades were:

1.              Intra NW Europe                             141 m dwt          27% of total
2.              N Africa - Mediterranean                    48 “                   9% “
3.              Black Sea - Mediterranean                  38 “                   7% “
4.              W Africa - N America East/Gulf            34 “                   6% “

The main trades with the largest proportion of double-hull tankers were

1.              Caribbean to C America East                  11.5 m dwt     94% of this trade
2.              North Sea to N America East/Gulf            24.3 “            86% “
3.              Caribbean to N America East/GUlf            10.2 “            86% “

The main trades with the largest proportion of single-hull tankers were

1.            Middle East to other Far East                7.5 m dwt        85% of this trade
2.            Middle East to S Asia                          6.5 “               37% “
3.            N Africa to Mediterranean                   15.5 “               32% “

INTERTANKO has recorded only 12 period contracts of 6 months and longer in 2003. Most of the suezmaxes taken on period contract were modern tankers. Only one was single-hulled, one double bottomed, and the others were double-hull tankers built 1992-2003. The average rate was $23,867 per day, which is some $10,000 less than the average rate obtained in the spot market. This probably explains the relatively low number of contracts.

The positive factors for the suezmaxes are about the same as for the aframaxes:

  • Increasing US oil imports: according to DOE/EIA the US crude oil imports until 1 November 2003 were almost 7% higher than for the same period in 2002 and the highest ever for this period - 9.5 mbd compared to the previous record in 2001 of 9.2 mbd
  • Increasing Russian oil exports from the Black Sea and the Baltic: FSU is projected by IEA to increase oil production by almost one million barrels per day in 2003 to 10.3 mbd and by a further 0.6 mbd in 2004
  • Increasing Algerian oil exports: the start-up of a new field has increased oil production from 0.85 mbd in 2002 to 1.2 mbd in September 2003 and it will probably continue to increase somewhat
  • Increasing Mexican oil exports (will increase by 0.3 mbd in 2003 but then fall back marginally according to IEA)
  • Potential resumption of Iraqi oil exports from Ceyhan

The negative aspects for the suezmaxes are:

  • The orderbook is quite large with 75 ships accounting for 24% of the fleet.
  • There are relatively few candidates for withdrawal as only 25 ships (8% of the fleet) were built in 1978 or earlier and 35 ships (11% of the fleet) were built in 1981 or earlier.

Contact: Erik Ranheim