Five months after entering the tanker market to hedge its freight risk, U.S. oil giant Exxon Mobil
has finally clinched two single-hulled VLCCs for five years time charters
- the first such deal for at least three years, brokers said Thursday. Exxon is taking the 11 year old Taos from Singapore-based World-wide Shipping at about $33,500 per day and the 12 year old Saudi-owned Samco at about $32,500 per day.
"The deals are still on subs (subject to charterers' approval), but bar some total disaster, the deals are done," said one London tanker broker. He said the deals were more complicated than commonly reported, with the possibility of newbuilding VLCCs replacing the two ships at some point during the charters.
Exxon first entered the market for a five year VLCC charter back in August, brokers said, and at that point it was offering around $27,000 for single-hulled units. Tanker owners by contrast, would not go below $35,000 per day, their confidence buoyed by a spot market at its highest ever levels.
"The fact that owners were prepared to compromise shows that the market has lost its way a bit," said a broker. "Even the Tankers International pool (the world's biggest VLCC fleet) is being beaten down by charterers these days."
Before Christmas, he said, charterers were keen to do deals, but shipowners were reluctant to walk away from the profitable spot market. "But recently, there's been a bit of a rush by owners to put their ships out on long-term charter," he said. Other sources suggested that the rush towards time-charters was a good thing. "It's a symptom of the end of a horrible era for the last generation of ships," said one London tanker analyst.
He said charterers had long been content to use the spot market, which had been at bargain basement rates for several years because ship owners had built too much tonnage. "I expect we'll see more time-charter deals over the next three, four or five years," he said. Also reported on Wednesday an 18 month time-charter and a two year time-charter of two 95,000 tonners to Glencore.
Exxon Wednesday posted a profit of $17 billion, the biggest profit ever by any company. "The increase in time-charter interest is all very good, but I find it strange that such a profitable company can't afford a double-hulled tanker," said a broker. – (Reuters)