Shipbroker and consultant Galbraith's Ltd says that demand for Suezmax tankers is expected to grow strongly in the next five years in line with large-scale expansion of crude oil exports in three of the four main Suezmax markets.
In a new report on the Suezmax market, Galbraith’s notes that 2006 has seen major investment in tanker newbuildings – not least the Suezmax sector – where an estimated $4.5 billion-worth of new vessels has been ordered. Meanwhile, new oilfields and pipelines are being developed, altering the patterns of world trade.
Galbraith’s notes that West African oil production is rising, and that major growth in exports is also predicted from the Black Sea/Mediterranean region. Growing production from Libya and Algeria will also contribute to Mediterranean export growth. Finally, trade from the Arabian Gulf to both India and China will continue to grow, driven by increases in these countries’ demand and their development of substantial new refinery capacity.
The only major Suezmax market that is expected to see falling requirements, says Galbraith’s, is the North Sea, where production is in relatively steep decline. This will, however, lead to an overall increase in tanker demand since refineries in north-west Europe – and, to an extent, on the US east coast - will have to source cargoes from more distant regions such as West Africa and the Mediterranean/Black Sea.
Regarding the development of the fleet, the Galbraith’s report explains, “Until the middle of 2006, the Suezmax sector seemed to be under-invested as relatively few orders had been placed for delivery from 2008 onwards, while vessel demand seemed set to grow substantially. Owners were ordering large numbers of VLCCs and Aframaxes in the first half of the year, but the Suezmax sector seemed relatively neglected. However, this situation changed in the third quarter of the year, with shipyards taking firm orders for about fifty vessels.