Monday, October 8, 2007

Persian Gulf Tanker Rates May Extend Slump

Persian Gulf Tanker Rates May Extend Slump Amid Glut of Vessels
By Alaric Nightingale
Oct. 8 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may fall for a seventh day as a surplus of ships compete for cargoes.

Refineries still need to arrange shipping for about 11 more cargoes this month while 74 very large crude carriers, or VLCCs, can reach the region's ports by Oct. 31, according to a report today from Paris-based shipbroker Barry Rogliano Salles.

``I'm somewhat worried,'' Per Mansson, a tanker broker at Nor Ocean Stockholm AB, said in an e-mailed note today. ``We are already knocking on the November door and rates are very low. We might be in for a bad couple of years.''

Exxon Mobil Corp., the world's biggest oil company, hired the tanker Shinyo Navigator at a rate of 52.5 Worldscale points, according to a report today from Athens-based Optima Shipbrokers. That's 3 percent below the London-based Baltic Exchange's Oct. 5 assessment of 54.16 points for voyages to Asia.

Shinyo Navigator is fitted with two steel hulls separating its cargo tanks from the ocean. Such vessels usually cost more to hire than the benchmark because they cut the risk of an oil spill in the event of an accident. The exchange's price also takes single-hull tankers into account.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, 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.

Negotiating Rates

Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.

At 54.16 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $20,197 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine fuel prices.

Black Sea, Africa Oil-Tanker Rates May Slump on Surplus Ships
By Alaric Nightingale
Oct. 5 (Bloomberg)

The cost of shipping 1 million-barrel consignments of crude oil from ports in the Black Sea and west Africa may extend two weeks of declines as a surplus of tankers compete for cargoes.

There is a ``long'' list of tankers available to meet ``very little'' demand, Luis Bernar, a tanker broker for Medco Shipbrokers in Madrid, said in an e-mailed note today.

``Everyone is hoping that the last quarter of the year will improve but I'm starting to think this is wishful thinking,'' Bernar said. Rental rates will only improve if there are weather- related delays and cargo demand accelerates, he said.

Rentals from the two ports, the biggest for 1 million-barrel tankers globally, began falling on Sept. 21, with rates from the Black Sea dropping 17 percent and those from west African ports losing 12 percent, according to benchmark data from the London- based Baltic Exchange.

Black Sea hire rates declined to 81.96 points and west African bookings slipped to 82.62 points, according to the most- recent prices from the exchange.

Based on a rental rate of 81.96 Worldscale points, operators of double-hull suezmax vessels earn about $15,508 a day on the 12-day round trip between the Black Sea port of Novorossiisk and Augusta, Italy, according to a formula by R.S. Platou, an Oslo- based shipbroker, and Bloomberg bunker prices.

At 82.62 points, a west African cargo would pay $16,579 a day, according to the same formula.

Frontline Ltd., the world's biggest supertanker operator, said Aug. 22 it needs $22,000 to break even on each of its suezmaxes.

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