Global Crude Oil Production
The Dhandho Investor : The Low - Risk Value Method to High Returns
by Mohnish Pabrai
This book is a bit pricey for its length and content, but it contains an extremely interesting case study on Knightsbridge (VLCCF) and Frontline (FRO) in 2002. Short enough to read over a cup of coffee in your local Barnes and Noble. Highly recommended. It's too bad this account wasn't available in 2001.
Link to Amazon for Dhando Investor
Persian Gulf Oil-Tanker Rates May Extend Decline on Ship Supply
By Grant Smith
June 13 (Bloomberg)
The cost of shipping Middle East crude oil to Asia, which rose for the first time in 18 days yesterday, may extend this month's 10 percent decline because of excess supplies.
A surplus of spare supertankers has accumulated after routine maintenance among Chinese refiners in May damped oil imports. There are almost as many ships available for the first two weeks of July as will be needed for the entire month, according to an e-mailed report today from Paris-based shipbrokers Barry Rogliano Salles.
``Rates are taking a small step forward but are still under pressure, with plenty of tonnage available for the remainder of June and into early July,'' Nikolaos Varvaropoulos of Optima Shipbrokers said in an e-mail from Athens.
Freight rates for very large crude carriers, or VLCCs, on the benchmark route to Japan, rose 0.1 percent yesterday to 69.14 Worldscale points. Rates have lost 22 percent in the past four weeks, according to the London-based Baltic Exchange.
Rates temporarily halted their slide yesterday as owners refused to offer further discounts on the vessels they hire, Halvor Ellefesen of shipbrokers SeaLeague AS said in an e-mail.
China's crude oil imports rose at the slowest pace in four months in May, customs figures released in Beijing yesterday showed. The imports rose 4.7 percent to about 3.1 million barrels a day. There are 91 supertankers free to July 13, compared with 103 cargoes that typically load in the Persian Gulf each month, Barry Rogliano said.
Break Even
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.
At 69.14 Worldscale points, owners of modern VLCCs can earn about $41,337 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 bunker prices.
Frontline Ltd., the world's biggest oil-tanker company by capacity, said May 30 that it needs $29,500 a day to break even on each of its VLCCs.
by Alaric Nightingale
Frontline Ltd., the world's biggest oil-tanker company by carrying capacity, said first-quarter profit fell 26 percent after ship-hire rates dropped because of OPEC production cuts and the warmest winter on record.
Net income declined to $158.8 million, or $2.12 a share, from a restated $214 million, or $2.86 a share, a year earlier, Hamilton, Bermuda-based Frontline said today in a statement to the Oslo Stock Exchange. That beat the $100.3 million median estimate of 10 analysts surveyed by Bloomberg.
``Underlying trading looks a bit better than we expected,'' said Robin Byde, an analyst for HSBC Securities in London who has an ``underweight'' recommendation on the shares. Earnings ``look like a small positive,'' he said in an interview.
December to February was the warmest winter period on record, according to the U.S. National Oceanic and Atmospheric Administration, lowering refinery demand for crude oil. Tanker bookings also were curbed by the 1 million-barrel-a-day output cut that members of the Organization of Petroleum Exporting Countries started implementing in the fourth quarter of 2006.
Shares of Frontline climbed 0.5 Norwegian kroner, or 0.2 percent, to close at 255 kroner in Oslo, valuing the company at 19 billion kroner ($3.2 billion). They have climbed 37 percent this year. The profit included a $39.8 million gain from the sale of shares in Sea Production Ltd., a company that converts aging tankers into storage-and-production ships. Stripping out that gain, profit still beat analysts' estimates by $18.7 million.
Frontline deferred a gain of $155 million from the sale of shares of another company, Sea Lift Ltd., which will convert tankers to transport oil rigs, rig parts, bridges and other ships. Sales fell 25 percent to $362 million.
The profit decline was Frontline's first in three quarters. It reported a 0.6 percent increase in earnings in the fourth quarter after selling two vessels for gains of $73.2 million.
Frontline declared a cash dividend for the quarter of $1.50 a share. The payout is ``slightly disappointing,'' said Arne Roenning, an analyst for Fondsfinans AS in Oslo.
Earnings from Frontline's very large crude carriers, or VLCCs, slumped 31 percent to $50,200 a day while those from its 1 million-barrel carriers declined 29 percent to $34,900 a day. Break-even levels are $29,500 and $22,000 a day respectively.
Declines in freight rates are being exacerbated by a surge in shipbuilding, led by China and South Korea. Vessels equivalent to 34 percent of the world's existing tanker fleet are under construction, Frontline, led by Norwegian billionaire John Fredriksen, said today. The expansion ``gives some reason for concern,'' it said in the statement.
Employment of the global supertanker fleet may decline this year to 93 percent, from 96 percent last year, according to London-based shipbroker Galbraith's Ltd.
OPEC cut production by 1 million barrels a day by February as part of its commitment to trim excess supplies. OPEC is pumping enough crude to satisfy world consumption and has no need to review quotas before its September meeting, group president Mohamed al-Hamli said May 15.
The cost of shipping Middle East crude oil to Asia may snap an 11-day slide as bookings by Exxon Mobil Corp. help reduce a surplus of vessels.
Exxon, the world's biggest publicly traded oil company, hired five tankers to collect cargoes in the last week of April, leaving 13 loads to pick up this month, according to an e-mailed report today from Paris-based shipbrokers Barry Rogliano Salles. There are about 18 so-called double-hulled tankers available to collect them, Athens-based Optima Shipbrokers said in an e-mail.
``There are plenty of ships to be honest but also plenty of cargoes,'' Mathieu Philippe, a broker for Barry Rogliano in Dubai, said in an e-mail. ``Some owners are ready to resist'' further discounts in freight rates.
Rates for Very Large Crude Carriers, or VLCCs, on the benchmark route to Japan fell an eleventh day yesterday to 58.6 Worldscale points, according to the London-based Baltic Exchange. One tanker, hired at a discount because it has only one layer around its cargo tanks, was booked at WS 52.5, Barry Rogliano said.
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.
At 58.6 Worldscale points, owners of modern Very Large Crude Carriers, or VLCCs, can earn about $33,015 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 bunker prices.
Frontline Ltd., the world's biggest oil-tanker company by capacity, said on Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs. It made $56,500 a day hiring out its double-hulled tankers, 50 percent more than for its single- hulled vessels.
Black-Sea Tanker Rates Fall to Lowest in More Than Three Years
By Grant Smith
March 8 (Bloomberg)
The cost of hiring oil tankers to ship 1 million-barrel cargoes of crude from the Black Sea to European ports fell to its lowest in more than three years because too many ships are available.
The fleet of so-called suezmax-class ships expanded 7 percent last year, according to London-based Drewry Shipping Consultants Ltd. Availability widened this month as increasing daylight hours speeded the passage of ships on the route from Russia to the Mediterranean.
``There are lots of vessels available,'' said Luis Mateus, an analyst with shipbrokers Riverlake RLS in Geneva. ``I don't see rates going up in the next few days.''
Freight rates from Black Sea terminals to ports in the Mediterranean were assessed at 91.3 Worldscale points yesterday by London's Baltic Exchange after declining for 11 consecutive days. That's the lowest since Sept. 10, 2003.
Delays through Turkey's 17-mile Bosporus Straits, which can reach about three weeks for a round-trip during the winter, have shortened to eight days. The waterway is the only sea route between Russia, the world's second-biggest oil exporter, and the Mediterranean.
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.
Oil shipments from Russia's main ports are due to fall 1.3 percent this month to 2.95 million barrels a day, according to schedules obtained by Bloomberg.
Based on a rate of 99.7 Worldscale points, operators of double-hull suezmax vessels can earn about $30,489 a day on the 12-day round trip between Novorossiisk, Russia, and the Italian port of Augusta, Sicily, according to a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.
Frontline Ltd., the world's biggest tanker company by capacity, said Feb. 27 that it needs to make $22,600 a day on each of its suezmaxes to break even.
I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/
By Grant Smith
March 2 (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20602099&sid=aXvljKXZBpKU&refer=energyThe cost of shipping 2 million-barrel consignments of crude to Asia from the Middle East may end a week of gains on expectations that supplies of ships will build as refiners start maintenance programs.
More than two-thirds of the expected cargoes from the Persian Gulf this month have been assigned ships, according to a report today by Paris-based shipbrokers Barry Rogliano Salles. It's another two weeks before new supplies will need to find vessels, the report said.
``In April refineries will close for maintenance so oil companies re-let'' vessels they don't need, Nikolaos Varvaropoulos of Athens-based Optima Shipbrokers said in an electronic message.Freight rates for supertankers on the benchmark route to Japan were assessed at 69.3 Worldscale points yesterday by London's Baltic Exchange, up 13 percent from Feb 23. Two tankers were hired to Taiwan at WS 65, Barry Rogliano said in its report.
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.
At 65 Worldscale points, owners of modern, double-hulled Very Large Crude Carriers, or VLCCs, can earn about $40,022 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 bunker prices.
Frontline Ltd., the world's biggest operator of supertankers, said Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs. I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/