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Tuesday, August 8,
2000
Rising tanker rates boost
OSG income
Overseas Shipholding Group, Inc. today reported net income for
the quarter ended June 30, 2000 of $10,979,000, or $.32 per share,
compared with net income of $8,433,000, or $.23 per share, in
the second quarter of 1999. Income from vessel operations in
the second quarter of 2000 increased to $25.7 million versus
$13.1 million in the same quarter of 1999.
The company says increased OPEC production
during the second quarter boosted VLCC and Aframax rates to levels
not seen since the 1991 Gulf War. For the April through June
period, time charter equivalent ("TCE'') rates for VLCCs
averaged $40,000 per day, compared with $19,000 per day for the
first quarter and $13,000 per day in the last quarter of 1999.
Similarly, Atlantic Basin Aframax TCE rates showed continued
improvement, with Caribbean - U.S. Gulf rates increasing to an
average of $27,000 per day in the second quarter from average
rates of $22,000 and $12,000 per day in the first quarter of
2000 and the fourth quarter of 1999, respectively.
During the second quarter, OSG's VLCC fleet
continued to benefit from its participation in the new Tankers
International ("TI'') pool. Established by OSG and five
other leading tanker owners at the start of this year, the TI
pool consists of 48 modern VLCCs.
Similarly, OSG's 20-vessel Aframax pool
with PDV Marina, the marine transportation subsidiary of the
Venezuelan state oil company, has a leading position in the Atlantic
Basin and continues to operate at heightened efficiency levels
as it supplements base Venezuelan cargoes with a number of backhauls
and COAs.
OSG notes that the world tanker orderbook
increased by some 3.6 million dwt in the second quarter. The
VLCC orderbook remained at 19% of the existing fleet, while the
Aframax orderbook increased from 7% to 9% of the existing fleet.
As a practical matter, few newbuilding berths can now be secured
for delivery prior to 2003. At the same time, increasing demand
among charterers for modern, double-hulled vessels continues
in the aftermath of the disastrous oil spill off the coast of
France in December 1999. While strong tanker rates caused scrapping
to fall off in the second quarter from the strong pace earlier
in the year, the age profile of the world tanker fleet (and in
particular VLCCs) and the strong environmental and regulatory
concerns associated with older tonnage should result in an increase
in scrapping. There are 98 VLCCs totaling 30.4 million dwt (representing
24.5% of the fleet), which turn 25 years old in 2000 to 2002,
and face ever decreasing trading opportunities and extended waiting
time for cargoes.
Pacific Carriers makes $5.6 million on
newbuilding
sale to OMI
As tanker prospects brighten and newbuilding prices firm, there's
a growing tendency for owners to take a profit by selling newbuildings
even before delivery. Today's Singapore Business Times reports
that Pacific Carriers' associate, Malaysian Bulk Carriers Sdn
Bhd (MBC), has entered into agreements to sell two product tankers
currently under construction in Japan to OMI Corporation of US
for US$30.3 million apiece. Completion of the sale of the two
vessels is expected to take place concurrently with their delivery
from the shipyard at end-September 2000 and end-November 2000
respectively. PCL's share of the net profit from the sale of
the two vessels for the financial year ended Dec 31, 2000 is
estimated to be US$5.6 million.
This fills out some gaps in an announcement
by OMI Corporation on July 31 that it had agreed to acquire from
"another shipowner" two 47,000 dwt product carriers
currently under construction at Japan's Onimichi Dockyard. OMI
said that following delivery in September and late November,
the vessels will commence two year time charters to an oil company.
OMI is selling the last of its Polish built
vessels, Tiber, a 29,996 dwt product carrier built in 1989,
Chairman, CEO and president Craig H. Stevenson,
Jr.commented "We are pleased to be able to continue upgrading
our fleet. The addition of these two new double-hulled product
carriers reflects our belief that modern product tankers will
be a strong and profitable market in coming years. Cash flows
for the next two years are secured with profitable time charters.
The acquisition was made using the sale of an older vessel, internal
cash flow and bank financing, demonstrating the company's stronger
financial position.''
OMI will book a loss of approximately $1.5
million in the third quarter in connection with the sale of the
Tiber.
H&W might still build Tikoo's giant
cruise liner
Remember Ravi Tikoo. Back in the 1970's his Globtik Tankers built
the world's largest tankers, including the 483,000 dwt "Globtik
Tokyo". Back in 1988, Tikoo was back in the headlines with
plans to build a 3,000 passenger, 160,000 gt cruise ship, at
Northern Ireland's Harland & Wolff.
The design allowed all passengers to be located in outside cabins
with private balconies, achieved by a zig-zag type The plan foundered
when the British government refused to provide more than $170
million in subsidies for the project.
Now, reports the Irish News, after 10 years
in the Bahamas, Tikoo has returned to the U.K .determined to
get the project up and running again. He says it has a better
chance of succeeding this time and could create thousands of
jobs at the shipyard.
The attitude of government and the ability
to raise the huge sums necessary to finance the $600 million
cruise ship have changed dramatically in the last 12 years, he
said.
Speaking to the Irish News last night,
Taco said: "We are talking to Harland and Wolff and we have
declared our firm intent that we wish to build our ship with
them."
Tikoo said he was confident the ship would
be built but it had to be in Belfast. "Harland and Wolff
designed the Ultimate Dream. No other shipyard is going to undertake
a ship that has been designed by another yard," he told
the newspaper/
If everything goes to plan he said building
on the ship could start within 18 months with delivery in 2003
or 2004.
A spokesman for Harland and Wolff confirmed
it has been approached by Tikoo. He said the shipyard would look
at all opportunities for work but added that the Ultimate Dream
was a long-term prospect.
At 160,000 gt, the Ultimate Dream would
still be the world's largest cruise ship. Unless, that is, the
World City project gets off the ground. Sitting in the Marad
Title XI in tray is an application for $1.3 billion in loan guarantees
to build the 6,200 passenger ship. Current plans are for hull
modules to be built by the Halter Marine Group, then assembled
at Aker Gulf Marine's Ingleside, Texas, facility.
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