1 AUG, 2006
Tanker Rush
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According to Drewry, shipbuilders have received more than three times as many orders for oil tankers in the first quarter of 2006 as they did last year.
As per Drewry's figures :
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1st Q, 2006
Total new building contracts 377 tankers, with a capacity of 38.4 million DWT
vs
1st Q, 2005
Total new building contracts 101 tankers of 7.5 million DWT
In terms of DWT, the figure is whooping 5 times.
Reasons believed for this spurt:
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Introduction of regulations in April that increased building costs. Tankers built under 'common structural rules' (which came into effect on April 1 for vessels over 150 metres in length) may require up to 9 percent more steel to satisfy the new requirements.
Earlier an increase in orders for container ships restricted the capacity available for tanker construction.
Silver lining for the new buyers
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If demand for crude is not the bottom line:
- Exports from BP's new one-million barrel-a-day Caspian Sea pipeline
- Hugo Chavez's decision to shift the flow of Venezuelan crude from the US to Asia.
- Sakhalin Project
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13TH MARCH, 2006
INDIAN CRUDE IMPORTS - 2006 -2007
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India is likely to import 110 million tonnes of crude oil in 2006-07 (April-March), the Petroleum Secretary, Mr M.S. Srinivasan, said. "Our crude oil import is projected to increase to 110 million tonnes," he told media persons on the sidelines of the promotional road show for the sixth round of the New Exploration Licensing Policy (NELP) here. The Government estimates the domestic demand for oil products in the next financial year at around 118 million tonnes compared with 112 million this year, he said.
India's oil product exports in the next financial year are expected to touch 21 million tonnes, up from 18 million tonnes in the current year.
As regards supply of LNG for the Ratnagiri Power and Gas Ltd (RP&GL), Mr Srinivasan said Qatar had indicated its willingness to help India meet its requirement of 2.2 million tonnes of LNG for RP&GL, formerly known as the Dabhol power plant. The supplies are expected from December. Stating that the talks were progressing well, Mr Srinivasan said Rasgas had agreed to supply an additional 2.2 million tonnes of LNG, which is the requirement for full operation of the 2,150-MW Ratnagiri plant.
This is to be a short-term supply for two-and-a-half years till mid 2009 by which time GAIL (India) Ltd should have tied up long-term supplies.
By mid-2009 there is expected to be some spurt in global LNG production followed by the next increase in production expected in 2011-12. Australia, Nigeria, Indonesia and Malaysia, besides Qatar, are being looked at for additional LNG supplies by India, which is currently facing a 50 per cent shortfall. The Secretary, however, declined to comment on the price. "We hope to start receiving the LNG supplies for the Ratnagiri terminal by December. It depends on our preparedness to receive that LNG. We are gearing up for that," he added.
The work on the Ratnagiri terminal, which is of five million tonnes capacity, would be monitored on a fortnightly basis to ensure its preparedness by November to begin trial runs before the first shipment arrives from Qatar in December.
Earlier, speaking at the road show, the Minister of State for Petroleum and Natural Gas, Mr Dinsha Patel, said, "Our adverse demand and supply position for petroleum products and gas has led us to take several measures to augment the availability of oil and gas. Some of the key steps taken include increasing domestic exploration by offering more and more areas under the NELP."
One of the attractive features of NELP is that the companies had been given freedom to market oil and gas in India at market-determined prices, he said.
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10TH FEB, 2006
Indian OIl Corporation - Development update
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The commissioning of Indian Oil Corporation's usd 260 million Paradip-Haldia crude pipeline inclusive of single buoy mooring and storage facility at Paradip may be delayed. The project was scheduled to be commissioned by March 2006.
"The commissioning of the pipeline and allied facility is in the last leg of completion. However, the project may be delayed by one or two months as construction could not progress at the desired pace due to heavy rains during monsoons," an official said. The 700-km pipeline will join Haldia-Barauni crude pipeline at Haldia, thereby replacing the existing system of supplying crude to Haldia and Barauni refineries of six million tonnes each through Haldia port.
Apart from ensuring assured supply of larger volume of crude, the project will reduce the crude transportation cost to both the refineries substantially. Haldia refinery will benefit the most from this and is expecting a net positive impact of $1 per barrel in its gross refining margin.
IndianOil has decided to expand the refinery capacity to 7.5 million tonnes. The company was allowed to acquire part of the unused land of the closed facility of Hindustan Fertiliser Ltd at Haldia for carrying out the refinery expansion. A separate project has also been taken up to produce Euro-III grade fuel at Haldia refinery.
Panipat refinery: Meanwhile to augment crude supplies from Gujarat Adani Port to expanded Panipat refinery (12 million tonnes), IndianOil has taken up a Rs 305-crore pipeline project in the west coast.
The project includes setting up of adequate storage facility at Mundra, commissioning of greenfield crude pipeline from Mundra oil terminal to Kandla and conversion of Kandla-Panipat section of the existing product pipeline (from Panipat to Bhatinda in Punjab) into a crude pipeline.
Petroleum products: On the product side, projects lined up for commissioning are Koyali-Dahej (112 km) and Koyali-Ratlam (274 km) pipelines. The projects will ensure cost effective assured supply of petroleum products from IndianOil's largest refinery at Koyali in Gujarat to the hinterlands of Western and Central India.
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10TH NOV, 2005
In lighter vein...
Wonder what would be the safety advise for chartrers, while KateRita pounds the tanker freight market?
Think, charterers, like the trees(cant run away or evacuate), would have to weather the spiraling rates and frenzy of the market till it passes away...
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18 OCT, 2005
SCI plans to invest usd 1.3billion to buy 34 vessels in 5 years
SHIPPING Corporation of India (SCI) plans to invest about usd1.3billion in about five years for acquiring 34 vessels, including usd 270million this year, told Mr S. Hajara, Chairman and Managing Director.
The corporation would focus on sectors such as crude products, LNG transportation, and bulk carriers, with special emphasis on offshore segment.
To increase its presence in offshore oil segments, Mr Hajara said the company could consider joint ventures with foreign shipping companies.
Presently, SCI owns a fleet of 84 ships, with 49,34,847 dwt.
Meanwhile, some senior officials in Reliance Industry have brushed aside reports regarding the company planning to invest in acquiring 25 tankers as baseless.
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28 AUG, 2005
Katrina ravages US Gulf
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NEW ORLEANS: The fringes of potentially catastrophic Hurricane Katrina began whipping Louisiana today as about 1 million people fled from the low-lying New Orleans area.
The brunt of Katrina, which had 265kmh winds on Sunday evening, was expected to crash ashore around sunrise on Monday (about 10pm NZT). Its winds, tides and heavy squalls had already started arriving before nightfall. The storm had weakened slightly from the morning, when it boasted 280kmh winds, but it remained a savage Category 5 storm on the five-step Saffir-Simpson scale.
"This is an unprecedented storm with incredible power," Nagin said on CNN as estimated 1 million of the area's 1.3 million people were believed to have evacuated. Several roads were turned one-way outbound to speed the evacuation and Louisianians lined up at gasoline stations and convenience stores to buy water and other supplies.
Only two of the dozens of bars along notorious Bourbon St remained open, serving stragglers who wanted to squeeze in a last bit of revelry at discount before Katrina barreled in.
Offshore, the hurricane forced energy companies to evacuate personnel and shut platforms in its path. The US Gulf of Mexico is home to 25 per cent of the nation's domestic oil and gas output and widespread damage to facilities was possible. US crude futures had jumped about 5 per cent to $US69.65 a barrel after briefly touching a record high of $US70.80 as traders reacted to lost production and fear of damage. Unleaded gasoline futures were up around 8 per cent to $US1.99 a gallon.
Katrina also endangered the port serving New Orleans, one of the most important in the world, and could do billions in damage to the city's tourism infrastructure.
US President George W Bush declared an emergency in Louisiana, Mississippi and Alabama and a major disaster in Florida, where a weaker Katrina caused damage around the Miami area last week and killed seven people. "We cannot stress enough the danger this hurricane poses to Gulf Coast communities." New Orleans has not been hit directly by a hurricane since 1965 when Hurricane Betsy blew in, flooding the city and killing about 75 people in the United States.
The last Category 5 to strike the area was Hurricane Camille in 1969. Camille, which just missed New Orleans but devastated parts of Mississippi, Louisiana and Alabama, killing more than 250 people. Hurricane Andrew, which destroyed the city of Homestead south of Miami in 1992 and ranks as the costliest natural disaster in US history, also was a Category 5.
Remember, oil prices soared 22% after Ivan hit the US Gulf last year and tanker freights went up in an unprecedented tizzy. But at the same time one should honour the fact that climb from 40 to 55 was easy, whereas 65 to 80 may be suffocating for most economies...
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8 JUNE, 2005
Tanker Market Call
After an all time high of last year, we see shipping in doldrums now. Sky looks overcast. Bears are said to have taken long positions. Personally, I would not like to take any long call right now, primarily because of following reasons:
I.
As we all know, China has been the leading world market mover in recent past. Obviously, more than a billion people, mostly living under poverty line till recently, would have a great appetite for natural resources/commodities depending on their buying power. Then, what has been holding these billion people from going all out for their needs?
Socialism-defined as a centrally planned economy in which the government controls all means of production. Since 1978, along with the dismantling of the planned economy system and the deepening of the reform of the economic system, commodity, capital, labor service and technology markets have appeared one after the other in China. Now China has transformed its planned economy system into an INITIAL SOCIALIST MARKET economy system. As a result the regulatory function of the market has been strengthened tremendously. Also, the Chinese leadership remains fairly conservative in their "liberalization" or "reform" efforts. They continue to follow the approach embodied in Deng Xiaoping's phrase "Mozhe shitou guo he" or "Crossing the river by feeling for stones."
While they feel for stones, markets would sweat and once they find one, say cheers.
II.
Crude oil supply and demand are delicately balanced at the moment. With not much scope left on the supply side, crude prices shoot up at the slightest worry on the supply side or flurry on demand side. If we observe crude price curve over last few months, we find it occillating between $46 to $55 a bbl, which is a huge variation.
III
High crude prices have put a question mark over world economy growth. Also, the futures of crude prices have rendered the world economy in a state of confusion. And such confusions are generally a signal for war in the offing.
Basing my judgement on above factors, I feel tanker market is still open to huge variations in short to medium term with double hull tonnage scoring well over their single skin sisters.
For long term, indications are not favourable for tanker owners, unless:
- Crude oil supply fears are proved wrong.
- Scrapping activity gains momentum.
- Stability in Iraq/AG.
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28 APRIL, 2005
VLCC Giant wheel has tanker owners side on upturn now, as charterers are siting tight with held breath on the opposite side. Opec's decision to maintain supplies and sting from retreating cold season built up the fresh sentiments and demand.
Current rally would certainly restore owner's confidence in the market. Yet, they can not relax in arm chairs as sun is already northbound and once again demand-supply equation would reverse. And so this large seesaw of demand and supply will go on.
But tanker owners hold the key to this giant-wheel. They just got to shed some numbers by jettisoning old tonnage and they would have gravity on the other side to their advantage as numbers on ships, inversely relate to numbers on worldscale.
We envisage that's the guru mantra to transit the dark Abyss and reach over the vast abrupt plateau, 2004 had shown.
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20 JAN, 2005
Bubble of 2004
Just few days back, we saw off an unprecedented year in the history of shipping as whole and tankers in particular. The way rates were moving up, one thought even four figure worldscale was achievable. But then comes 2005, reversal of sentiments, bears woke up from hibernation. Bulls made hasty retreat.
Countries like India and china are on fast track of economic growth. Growing demand for oil/energy is a reality. And this growing demand is 100% translating into growing imports because of receding self supplies in these countries. Thus there is a need to invest heavily in shipping and expansion of the existing fleet to meet the future . Year 2004 did the trick. World took notice and investment flowed in. Lots of buying -selling, new orders were booked. Big expansion projects took birth. An eventful and remarkable period in shipping was on.
But just then… everybody was hit by dysphoria of oversupply. As law of nature, every crest is followed by equally low trough. But every fall has a lesson to teach. Scrapping old tonnage is the need of the hour. Specially, owners with large fleet, need to scrap their older tnge in the wider (self)interest. They should make sure that these oldies-goldies rest in peace and bless us all a happy new era.
