Features: - Tanker Operator

INDUSTRY - MARKETS
# of Vessels
100
Additions
75 Deletions
50
40
32
25
60
< ACTUAL | FORECAST >
86
63
YTD 15
45
0
0
-2
-25
-24
-39 -37
YTD -16
-32
-50
2007 2008 2009 2010 2011 2012
Source: McQuilling Services
Figure 1: VLCC fleet additions and deletions.
Source: McQuilling Services
Figure 2: Ras Tanura/West via extended anti-piracy route.
commercial matters, rather than the cargo
owners, especially where the financial aspects
were concerned. “This is a big change over
the past 40 years,” he said.
McQuilling’s Dave Saginaw said that the
products trades were moving into larger
tonnage. Next year will see 900 product
carriers delivered of over 27,500 dwt, which
should be the peak in the newbuilding boom.
Colin Cridland, also of Clarkson, said that
the increase in the number of MRs is being
seen at the same time as time spent in port is
being reduced. He also commented that there
was only 10% of the current product tanker
fleet that was still of single hull construction.
Slow steaming was having an effect as some
tankers were sailing at around 12 knots
instead of 14 knots to save fuel.
In the smaller tramp trades, Quincannon’s
Soren Wolmar said that there had only been a
modest increase in two years, but this year
could see around 600 vessels joining the fleet.
Thereafter 190 were due for delivery next
year, 31 in 2012 and only six in 2013, thus far.
New owners tended to rely on the spot
markets and there would be more
MEG/Southeast Asia movements seen in
products as a change in sourcing kicks in.
Overall, future tonne/miles patterns were
unpredictable and the tanker industry is faced
with a very young fleet. Difficult to facture
into the equation are newbuilding
postponements and cancellations and there
will be a certain amount of consolidation, as
has been seen recently.
The MR IMO II types will see no
sustainable improvements without CPP
cargoes, while smaller tramp tankers will
suffer from unreliable spot rates. Parcel
tankers will still be at the mercy of port
congestion and disruptions to the supply
chain.
MR prospects
Remaining with MRs, London’s Gibson
Research said that tanker demand had come
under tremendous downwards pressure in the
past two years.
There has been some support for VLCCs,
Suezmaxes, LR2s and LR1s from floating
storage, but for MRs there was no such relief.
However, the driving forces for MR product
tanker demand are far more complex than for
crude oil; product trade can increase by a lot
more than gains in oil demand and volumes in
to or out of a country can rise even if its oil
demand falls.
Focusing on Asia and looking at the main
petroleum products carried by MRs, over the
past two years Japanese oil demand has fallen
by 0.55 mill barrels per day (minus 14%) and
yet the combined total of product imports and
exports on an annual average basis remained
unchanged at around 1.15 mill barrels per day
(imports were down by 0.1 mill b/d, but
exports were up by a similar amount).
This illustrates the intricate nature of
product trades and that total oil demand can
be a misleading indicator. In the same way,
2009 oil demand in South Korea was the same
as in 2007 and yet product import/export trade
increased by 20% over the two years, from
1.25 mill barrels per day to 1.50 mill barrels
per day.
We are all aware of the rapid expansion in
Chinese oil demand and the strategy to build
domestic refining capacity to meet these
requirements, Gibson said. However, over
2007-09 product imports were up by 0.1 mill
barrels per day and exports increased by 0.2
mill barrels per day.
All this reflects the fact that just because the
refining capacity is there, it doesn’t mean the
supply of each type of product will, or can, be
matched exactly with domestic demand. As a
result there will be ‘surplus’ products to
export and ‘deficit’ products to import.
However, for each country, this position will
be constantly changing.
Assessing market changes between 2007-
09, Asia/Pacific oil demand increased by less
than 3% and yet annual average product trade
to/from key countries increased by 17%.
Ordinarily this would have led to a stronger
MR market, but the market fundamentals in
the west have been far weaker than the east. In
addition, we have seen a 20% increase in the
MR fleet over the past two years, Gibson
commented.
Nonetheless, Asian product trade is
expected to continue to rise and growth in MR
numbers will slow, but not until 2012. Thus,
the basis for an MR turnaround is there, but
we will still have to wait for a while, Gibson
concluded.
At the INTERTANKO seminar, some
experts thought that owners would shy away
form the more sophisticated vessels, due to
higher operating costs. Nobody thought that
carbon fossil fuels would be significantly
replaced in the near future with one speaker
saying that renewable energy would only
account for 1% in 50 years time and he did
not believe in the concept of carbon capture.
OCIMF’s and Shell’s Jan Kopernicki thought
that by 2050, there would be a 70% energy mix
of oil and gas. The main challenges were
security, trade and the environment, he said. He
also warned; “there is a paradigm shift – the
old doesn’t apply any more.”
TO
06
TANKEROperator June 2010