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Wednesday, October 22, 2014

VLCC fleet and market

Johan G Olsen (JGO) lists in its latest VLCC review a total of 520 VLCCs - up 22 from March 2007. In addition to that there is an orderbook of 196 VLCCS (up 3).

 

106 of the VLCCs are fixed to 2009 and beyond, and 178 are oil company/state owned.  This leaves 236 VLCCs in the spot market, according to JGO, of which 4 used for permanent storage.

 

 

We have recorded a number of VLCCs which have been sold for conversion in 2005 and 2006 as well as a large number in 2007.  Since 2001 we have recorded a total of 165 VLCCs which have been removed from the market (20 of these in 2007), of which we have recorded 98 that have been sold for decommissioning – meaning that 67 have gone for conversion.

 

Year

No VLCCs* 1 Jan.

Increase

Deliveries**

Removals***

2001

438

-0.50%

27

29

2002

436

-2.30%

38

48

2003

426

1.20%

37

32

2004

431

4.20%

29

11

2005

449

5.10%

31

8

2006

472

2.50%

21

9

2007

484

2.10%

30

28

2008

486

3.60%

43

25

2009

504

6.30%

67

25

2010

546

-5.70%

48

78

2011

516

3.10%

16

0

2012

532

 

4

0

Total

 

 

391

296

Source: *Fearnleys Review **Source: Clarkson*** Calculated/projected

The phase out 2010 the remainder of the SH VLCCs

 

The large number of deliveries 2008-2010 will most likely create a surplus of VLCCs.  This surplus might disappear in 2010 if all SH VLCCs were to be phased out and the increase in demand is around 3% annually. In fact it is probable that some SH VLCCs will trade beyond 2010 until the age of 25 years old, but this will depend on the market situation in 2010 and the number of VLCCs that have been sold for conversions in the meantime. 

 

 

According to JGO, the five main Middle East tanker companies, with a total current fleet of 63 VLCCs, have the biggest VLCC orderbook comprising 38 orders of which NITC has 12, VELA 10, Gulf Management Services 8, National Shipping Company of Saudi Arabia 6, and Saudi Maritime Holding Co  2.

 

The six main Chinese tanker companies, with a total existing fleet of 26 VLCCs, have the second biggest VLCC orderbook comprising 35 VLCCs of which Nanjing tankers has 14, China Shipping Group 8, China Merchants (Ming Wah) 7, and COSCO 6.

 

Fifteen Japanese tanker companies, with a total current fleet of some 110 VLCCs, have an orderbook of 26 VLCCs; Mitsui is the biggest with 10, NYK with 6 and CIDO with 5.  Some 60% of the Japanese VLCC fleet is still fixed out on period contracts, and others have other long term arrangements, but there appear to be an increasing number operating in the spot market.

 

We also note 19 Greek tanker owners with a combined fleet of 90 VLCCs and an orderbook of 25 units.

 

The major oil companies, ExxonMobil, BP, Shell, ChevronTexaco have a VLCC fleet totalling 26 units and do NOT have any VLCCs on order. They have 18 VLCCs on long-term contracts until 2009 and beyond.

 

The four biggest VLCC owners in JGO's book are Mitsui with 35 VLCCs, NYK with 29, Frontline with 26 and Acol Tankers/Kristen Navigation (Angelicoussis) with 23.  Frontline has in addition some 6 VLCCs on period contract from Dr Peters to 2009 and beyond, and two from Knightsbridge, all of which trade in the Frontline pool. Four of the Fred Cheng/Shinyo International newbuildings are also fixed on commercial management to Frontline as from 2009/10.

 

The trading single hull (SH) VLCC fleet is around 145 – but this figure is somewhat uncertain due to the significant number of sales for conversions with uncomfirmed start dates. There are 25 VLCCs left which are 20 years or older, 112 SH VLCCs which are 15 years or older, and 31 SH VLCCs which are younger than 15 years. Two of the VLCCs listed are oil/ore carriers, and TMT has 9 oil/ore carriers on order.

 

The biggest owners of single hull tankers are:

 

The biggest owners of single hull tankers are:

SH

Remarks

VELA

15

 

Dynacom (George Procopiou)

9

(of which 2 sold for FPSO conversion)+ 1 DS

Titan Ocean (

9

(all but one of the VLCcs built in the 1980s

World tankers (Haji-Ioannou)

7

+1 DB (O/O)

TMT (Great Elephant

7

(all to be converted to dry)

Frontline

6

+ 1 DS

Bergesen World Wide

6

(of which 1 sold for conversion to dry)

Cido Shipping

6

(of which 1  to be converted to dry)

Tanker Pacific

5

 

Shinyo International (Fred Cheng)

5

 

Others

72

 

Total DH (including DS/B)*

145

 

* not including O/Os

 

 

 

 

Average freight rates are at a lower level than last year but still relatively strong. VLCC fixtures have naturally correlated strongly with oil production in the Middle East. The table below shows that, despite the increasing number of VLCCs and the steady number of monthly AG VLCC fixtures over the 3 years, freight rates are still strong. As we have noted before, the tightness in the market also depends on the productivity of the fleet.  In 2006 VLCC productivity was reduced due to VLCCs being used for floating storage, waiting time for SH VLCCs, slow steaming SH VLCCs and increased time in drydock due to yard capacity problems.

 

Year

Average monthly AG VLCC fixtures*

ME Oil prod mbd**

No. of VLCCs, 1 Jan

Increase

$/day spot***

2001

82

20.9

438

-0.5%

32,852

2002

73

19.7

436

-2.3%

19,655

2003

90

21.1

426

1.2%

52,209

2004

101

22.4

431

4.2%

91,872

2005

88

22.5

449

5.1%

60,627

2006

87

22.8

472

2.5%

63,073

2007

99

22.5

484

5.2%

55,009

2008

 

 

520

 

 

Source: *Clarkson, ** IEA Middle East oil production, ***Fearnleys Review, **** Clarkson

 

 

Today some 45% of the VLCC fleet is in the spot market, compared to 58% in 2000/2001. The number of period contracts of one year and above peaked in 2002 when some 40 contracts were entered, and hit as low point in 2005 when 16 were made. We recorded 33 period contracts in 2006 and we have recorded 29 so far in 2007. 

 

Recorded VLCC Period contracts

Year

Number

dwt

Average period

Average rate

1997

4

1,357,626

1.30

24,488

1998

12

3,356,368

1.85

20,091

1999

8

2,182,259

1.35

18,503

2000

28

7,660,911

1.60

27,029

2001

32

8,812,465

2.77

32,086

2002

40

11,164,695

2.31

22,689

2003

19

5,382,083

2.86

21,883

2004

31

8,691,306

4.02

36,454

2005

16

4,344,787

2.93

41,238

2006

33

9,772,538

4.33

36,097

2007

30

8,750,089

3.59

44,403

Total

253

71,475,127

3.04

31,923

 Contact: Erik Ranheim