Transcript the presentation

Evgeniy Dolgikh
Condition and tendencies
of the tanker market
II Baltic Oil and Gas Week
29th October 2014, St. Petersburg, Russia
TANKER MARKET AT A GLANCE
 The crude tanker market is in better shape
than a year ago.
 Market is still suffering from massive
oversupply.
 Tanker industry (as well as the whole
shipping industry) is undergoing a process
of transition driven by a combination of
technological advances related to fuel
efficiency
and
environmental
requirements.
TIMECHARTER RATES ARE UP, BUT REMAIN
LOW IN A HISTORICAL PERSPECTIVE
Aframax Earnings
2014 vs 2013
Suezmax Earnings
2014 vs 2013
VLCC Earnings
2014 vs 2013
World seaborne oil trade
DEMAND
• SEABORNE CRUDE OIL TRADE IS DECLINING.
• The main reason for this decrease was that
both North America and Europe reduced
imports of crude oil, albeit for very different
reasons.
• The decrease in US and European crude oil
imports from West Africa has made the crude
oil available to the Asian market instead.
SUPPLY
Tanker fleet development in million tons DWT
SUPPLY
Order book in percent of existing fleet ‐ Tankers in excess of 10.000tons DWT
SUPPLY
Newbuilding contracting activity is being
warmed up by
 Vast shipyard capacity
 Low newbuilding prices
 Support from local export credit agencies
SUPPLY
Investments in Shipping
Average newbuilding price 12%
above the low of 2013
Average scrapping age
continues to decline
Pressure from
environmental requirements
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SOx (MARPOL Annex VI)
NOx (MARPOL Annex VI)
Ballast Water (BWM Convention)
Recycling (Ship Recycling Convention)
CO2 (MARPOL Annex VI)
From 01.01.2015 the sulphur content allowed in the
Emission Control Areas (ECA) will decrease from the
currently allowable 1% to 0.1%
ECAs: Cost of Compliance
In practice (obviously
dependent on bunker prices
at the time) there are
estimates that an Aframax
doing a cross North Sea
voyage will incur an additional
cost in excess of $100,000
basis a round voyage of 9
days.
Economic Pressure
Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price
Increasing the performance
of existing vessels
OUTLOOK
 Fleet growth is unlikely to exceed 2% p.a. on
average through 2016 (1/3 of the average
growth rate seen between 2009 and 2013).
 Changing trade dynamics and longer travel
distances could potentially absorb the
increasing inflow of vessels.
 The crude tanker fleet is young and premature
scrapping seems inevitable if future supply
outperforms demand by a large margin.
Thank you for your attention!