Inséré 04/11/16 DOSSIER Enlevé 04/12/16 Storing oil on board VLCCs could be losing its appeal soon It’s all a matter of pricing and oil traders have played the waiting game for quite some time now. With oil prices briefly surpassing the psychological barrier of $50/bbl on Thursday, the highest level since July of 2015, some analysts are beginning to question the long- term viability of storing oil onboard VLCC tankers. If that indeed is the case and this view is more widely accepted, it could release a significant number of VLCCs in the market, as these vessels are currently used as floating storage units. If that scenario unfolds, it would exert additional pressure on tanker freight rates moving forward. In a report this week, shipbroker Alibra Shipping said that “analysts expect a further correction in crude prices because supply remains so abundant. Iran’s oil exports are expected to rise a further 200,000 bbl to reach 2.2m bpd by the middle of this summer. Last Friday, rig counts in the US did not decline for the first time in 17 weeks, possibly indicating that America intends to ramp up oil production again. Meanwhile, disruptions to supply such as wildfires in Canada and unrest in Nigeria appear to be resolving themselves”, said Alibra.The shipbroker added that “global oil stockpiles, including floating storage, have increased for the past 10 consecutive quarters – and there’s a lot of oil in floating storage. A senior derivatives trader at Global Risk Management told the WSJ this week that if oil prices hit $51 or $52/bpd they could fall again by $6-$10 because of the volumes stored at sea. It is estimated that almost 9% of the global VLCC fleet is currently booked for floating storage, which is a 40% increase in tankers by number since December. Reuters last week reported that at least 40 laden VLCCs anchored off Singapore as floating storage, storing estimated volumes of up to 47.7m bbl, thought to be the highest level in at least five years. Rather than the prospect of arbitrage opportunities on the horizon, traders have been enticed to store oil at sea by the cost efficiencies created by cheap oil and falling VLCC charter rates during the first quarter. Morgan Stanley estimates the current one month arbitrage on Brent in floating storage arb is -$0.48/bbl, while the 12-month arbitrage is -$6.11/bbl, implying there is no profit incentive to store oil on ships”, Alibra concluded. Meanwhile, in a similar report prior to the recent rise of oil prices, shipbroker Gibson had also noted that the contango structure in crude futures never widened enough to justify a major floating storage play. The possibility of this happening now is perhaps even smaller than it has been over the past sixteen months. The premium for forward assessments in Brent futures has generally been in decline this year. Although VLCC period rates have also edged down, the decline has not been so steep. As such, the gap between VLCC freight costs and the contango premium has widened”, Gibson had said. The shipbroker has also mentioned that “despite a shrinking contango, there has been an increase in VLCCs storing crude of non-Iranian origin: from 8 tankers in January to 16 currently, most likely for operational/logistical reasons. The main driver behind this type of storage has been a persistent and major overhang of crude oil production. However, US shale output is falling and so the excess in oil supply vs demand is expected to fall notably in the 2nd half of this year. In its latest monthly report, the IEA sees global oil inventories rising by just 0.2 million b/d between July and December 2016, versus an expected stock build of 1.3 million b/d in the 1st half of the year. More importantly, global oil inventories are expected to start to draw steadily at some point in 2017 and with it, crude floating storage is also likely to decline. Tanker storage of Iranian crude/condensate has also moved up this year, despite sanctions being lifted. Currently 28 VLCCs are employed, up from 24 in January. Most of these tankers are part of the NITC fleet, although a few are owned by international players. It remains to be seen what the immediate future holds for these VLCCs. It has been widely speculated that the majority of Iranian storage is condensate, which is difficult to market for a number of reasons. Furthermore, for a while now we have been of the opinion that it will take time for the Iranian tankers to sort out insurance, classification and some units are too old to return to trade”, said Gibson. It also added that “however, it appears that Iran is making progress to address these issues. Earlier this week Iranian officials stated that Iran has obtained agreement of the International Group of P&I Clubs for insurance coverage of its tankers and that the Egyptian authorities have issued the permit that will allow the NITC tankers to resume oil shipments through the SUMED pipeline. Crude/condensate storage aside, there also has been an uptick in a number of VLCCs involved in other non-trading activities this year, with the latest count at 14 tankers. These units have been primarily employed for fuel oil storage off Singapore. The dynamics of fuel storage are different to crude, and as such it is unlikely to be affected to the same extent by rebalancing in oil markets. All in all, the number of VLCCs employed in non-trading activities has reached 58 units since late March. This represents nearly 9% of the global fleet, offering major support to tanker earnings. What happens to these tankers over the course of the year is critical to the health of the VLCC market, as any major changes in these numbers are likely to have a notable impact on spot rates”, the shipbroker concluded. Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide Inséré 06/11/16 NIEUWS NOUVELLES NEWS Enlevé 06/12/16 Euronav orders suezmax pair at HHI after sealing Valero Energy charter By : Grant Rowles Belgium-headquartered Euronav has ordered a pair of ice class suezmax tankers at Korea’s Hyundai Heavy Industries. The order has been placed to fulfil two new seven-year time charter contracts signed with Valero Energy. The charters will commence once the vessels are delivered, currently scheduled for 2018. Paddy Rodgers, CEO of Euronav, commented: “Euronav and its predecessors have been serving the Quebec refinery with purpose built new buildings since 1998. In a world of continuous change our commitment to serve our customer remains a constant point”. Euronav did not disclose the financial details of the charter or the price of the vessels ordered, but did say it has secured what it believes is an excellent price for two vessels. Source: splash 24/7 Inséré 07/11/16 NIEUWS NOUVELLES NEWS Enlevé 07/12/16 Euronav’s Profit Down amid Freight Rate Weakness Antwerp-based tanker owner and operator Euronav NV has seen its net profit for the third quarter plunge to USD 0.1 million from USD 72.2 million reported in the same period a year earlier. The company said that seasonal freight rate weakness compounded by vessel supply factors marked the third quarter. “Freight rates were lower during the third quarter with anticipated seasonal weakness throughout the quarter compounded by higher levels of less favored vessel supply from several sources affecting tanker owners pricing behavior,” Paddy Rodgers, CEO of Euronav, said. “This was exacerbated, in particular for Suezmax vessels, by dislocation from reduced Atlantic basin oil production negatively impacting on ton miles,” he added. The company said that the freight rates have now improved, underpinned by seasonal trading patterns, continued demand from the Far East and boosted in the short term by cargo activity from the Arabian Gulf, which is at record levels. Euronav anticipates a regular seasonal pattern for the fourth quarter in terms of freight rates. Scheduled vessel supply, however, remains at elevated levels, which combined with no scrapping, will continue to present headwinds into 2017 for tanker operators, the company said. During the third quarter the company entered into a binding agreement for the acquisition through resale of two Very Large Crude Carriers (VLCCs) which are completing construction at Hyundai Heavy Industries for an aggregate purchase price of USD 169 million. On October 13, Euronav agreed with the shipbuilder to defer the delivery of the two VLCCs to the first quarter of 2017. Additionally, on October 3, the company signed two long-term time charter contracts of seven years each with Valero Energy Inc. for Suezmax vessels with specialized Ice Class 1C capability starting in 2018. In order to fulfil this contract, Euronav ordered two high specification Ice Class Suezmax vessels from HHI, scheduled for delivery in early 2018 when each of the time charter contracts will begin. So far in the fourth quarter of 2016, the Euronav VLCC fleet operated in the Tankers International Pool has earned about USD 23,958 and 56% of the available days have been fixed. Euronav’s Suezmax fleet trading on the spot market has earned about USD 19,569 per day on average with 57% of the available days fixed. Inséré 8/11/16 BOEKEN LIVRES BOOKS Enlevé 8/12/16 “Gale Warning. High seas on the Northsea”. B O E K B E S P R E K I N G door : Frank NEYTS De Nederlandse uitgeverij Flying Focus pakt andermaal uit met enkele prachtige fotoboeken.