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Thursday, October 18, 2018


LORENTZEN & STEMOCO have reported that major oil companies shy away from fixing fuel carriers in European waters. But oil companies do not have to charter in vessels themselves if they want to buy or sell a cargo, they can always engage the services of the independent oil traders.

The rationale for such tactics is easy to comprehend. As cargoes may be sold several times in the course of a voyage, it is much more difficult for the press to identify the role of an oil company in case of an accident. The trader would surely be blamed together with the shipowner, who by the way, still is the party who is financially responsible. We understand that TotalFinaElf has estimated that the bill resulting from the “Erika” accident will exceed USD 1 billion, which confirms that the consequential damages for a major oil company can indeed be enormous. So it is not a bad idea to shy away from such exposure whenever possible.

According to LORENTZEN & STEMOCO approximately 250 vessels out of a fleet of about 830 units between 20 and 50.000 dwt are involved in carrying fuel oil in European waters. The average age of these units was 20 years during the first half 1999, implying that about 55 pct of the fleet was over 20 years of age at the time. It goes without saying that the large and complex fuel trade in European waters would literally collapse if the entire market should follow the example of TotalFinaElf and adopt a universal 20 year age limit.

The new environment prevailing in this market has, however, caused the average age of the vessels employed to drop to 17 years, and the proportion of plus 20 year old vessels to drop to 43%. Notwithstanding that the number of fixtures with “Charterers not reported” has increased as the market has strengthened, our research reveals that oil companies have reduced their chartering activities drastically (see table below


Charterer         March - June 1999       March - June 2000

Total Fina                26                              12

Agip                        14                               6

BP                          19                               4

Stentex                   13                               9

Shell                        9                                5

According to LORENTZEN & STEMOCO the European fuel oil trades represents an interesting new market for owners of modern tonnage, but the situation is still under control as far as the charterers are concerned, particularly in view of the fact that some 33 product carriers are still due for delivery this year.


For further market information, please visit the INTERTANKO tanker market pages on our web’s members' area.