Monday, August 6, 2007

Caribbean Tanker Rates Decline

Caribbean Tanker Rates Decline as Availability Exceeds Demand
By Todd Zeranski
Aug. 6 (Bloomberg)

Rates to transport oil from the Caribbean basin fell for a third day as the number of ships available for transport exceeds demand.

Rates have declined about 37 percent since July 23, falling for 10 of the last 11 business days.

Shipbrokers including New York-based Poten & Partners and Houston-based Lone Star, R.S. Platou listed an average rate of Worldscale, or WS, 105 and 110, respectively, to contract an Aframax tanker, which can carry about 600,000 barrels of oil. That's an average decline of about 11.3 percent from August 3.

London-based Galbraith's didn't list a rate as of 10:45 a.m. New York time today.

With other tanker markets also declining, shipowners have little option but to wait in the area.

The market is characterized by an ``abundance of tonnage available to charterers,'' Galbraith said in an August 3 note. Tanker owners are seeing ``no refuge in the Mediterranean or North Sea.''

Three Aframax tankers, the most common vessels used to transport oil in the region, were contracted today.

One each was contracted to transport oil to the U.S. Gulf Coast from the east coast of Mexico by Royal Dutch Shell Plc and Valero Energy Corp., respectively, according to Lone Star's daily listing.

Three Tankers Contracted

Petroleo Brasileiro SA contracted an Aframax to move oil between St. Lucia and the U.S. Gulf Coast, the broker said.

A rate of WS 105 is equal to about $8,017 a day after expenses such as fuel and port fees, according to Poten & Partners.

General Maritime Corp., the second-largest U.S. tanker owner behind Overseas Shipholding Group Inc., has a break-even rate of about $12,000 per day. The New York-based company operates many of its vessels in the Caribbean.

Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

The Caribbean is the world's third-largest Aframax market after the Mediterranean and Southeast Asia.

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