Oil Glut Is a Boon to Shippers, as Buyers Stock Up at Low Prices
Time：2015-04-03
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Although petroleum prices are down worldwide, the business of sending two-million-barrel supertankers across the seas has never been brisker — or more global.
Mr. Lee, who works alongside colleagues in an office that could pass for a suburban stockbroker’s, pointed to an arrow on his computer screen. It showed the location of the supertanker Leonidas, under charter to a subsidiary of the giant Chinese oil company Sinopec.
The Leonidas, traveling empty from the northern China port of Qingdao, after a stop at Singapore for fuel, was on its way around the southern tip of Africa. Its destination was a port in Gabon in West Africa. There, it would load a cargo of crude oil and head back to China, a round-trip journey of about 75 days.
“Years ago, you never saw the Chinese chartering in West Africa; now they are the largest charterer there,” said Mr. Lee, chief executive of Tankers International. “You are seeing history change in front of your eyes.”
What’s happening with prices and distribution is a new chapter in the history of the oil industry. As with most products, the price of oil is based on supply and demand. But rather than any big slump in demand, the plunge in oil prices in the last year is more a result of a growing world supply — mainly from higher output in the United States and OPEC’s reluctance to cut production.
The lower price is in many ways stoking demand — particularly in big energy-importing countries like China and India, which are taking advantage of what may turn out to be a bargain opportunity to top off their petroleum reserves.
And so supertankers these days are making fewer relatively short jaunts from places like Gabon and Nigeria to the Gulf Coast of the United States, which no longer needs as much of their oil. Instead, the ships are making longer — and more lucrative — trips to India, China and elsewhere in Asia. Staging areas like the Malongo Terminal in Angola and ports as far from China as Venezuela and Brazil are also filling tankers that will deliver oil to Asia.
For Mr. Lee’s London firm and the shipping companies it serves, 2015 is shaping up to be a boom time, after a run of lean years for oil shippers. “What we do is sell space,” he said. “If our ships are utilized for considerable periods of time, the remaining ships can be sold at higher prices.”
Tankers International is the booking agent for a category of vessels known as Very Large Crude Carriers, state-of-the-art ships that are about 1,100 feet — almost one-fifth of a mile — long. Their two-million-barrel capacity is equivalent to the daily output of a midsize oil-producing country like Norway. At current prices, those cargoes would typically be worth around $120 million.
There are about 600 supertankers of this class plying the world’s waterways, and Tankers International books jobs for about 40 of them. Many shipowners line up work themselves, but Mr. Lee’s firm is the agent for a group of five companies with shipping interests.
One is Euronav, a European operator, which holds a stake in Tankers International. Others include Trafigura, a Dutch multinational commodity trader, and Oak Maritime, a shipping business based in Hong Kong.
The computer terminals at Tankers International provide the 17 agents here with extensive intelligence on the ships of competitors, including not only where they are but when they will reach their next destinations and how much money they are making or losing. The information is an algorithmic mash-up of GPS data, intelligence on the financial details of chartering transactions and even the results of safety inspections.
While Tankers International is wary of disclosing information on the ships it manages, it makes available a free mobile app with data on competing vessels called VLCC Fixtures.
“We used to trade on gut feeling,” said Henrik Sick, the firm’s vice president for chartering. “Now we have better information than other people.”
And, oh, by the way: Cheaper oil means big savings for the shipowners, whose supertankers are powered by a heavy, petroleum-based fuel that is cheaper than it has been in years. That makes those longer trips all the more feasible.
“A glut of oil has to be good for the tanker industry,” said Simon Toyne, a maritime analyst at Genscape, a market research firm.
Not only do the longer distances and times earn more money for tanker owners, but ships that are tied up on lengthy voyages cannot be used elsewhere like the Persian Gulf — further tightening the market, which in turn lets the owners charge higher rates.
According to Evercore ISI, an investment banking advisory firm based in New York, spot rates for chartering very large crude carriers have risen sharply in recent months. In January, when heating season in the Northern Hemisphere was keeping the supertankers especially busy, they were able to command charter rates as high as $69,000 a day. Recently they have eased off to the range of about $40,000 a day in anticipation of the second quarter of the year, which is almost always weak.
But even that is richer than the average rates of $22,000 last year and about $12,000 in 2013.