Talk Of Tanker Age Limits Gives Markets A Lift

Friday, February 25, 2000
Tanker markets continued strong at the end of last week with talk of new French oil company age restrictions on acceptances said likely to put further pressure on rates. Major French oil major Elf has adopted a 20 year age limit policy on terminals as well as tanker chartering, several brokers said. This was on top of the immediate imposition of last week's French government safety charter calling on oil companies only to accept ships over 15 years if they had a drydocking report in the last 30 months and had been inspected in the last six. "This will definitely move the goal posts if other European companies join in," one broker said. Up to a third of the fleet could be affected, he said. So far the impact had been greatest for Aframax and Suezmax tankers, rather than VLCCs. However, another broker said: "This rule hits older VLCCs and will lift the West Africa market as units move out of that location where there are more terminals that belong to Elf/Total." Although he had not heard Elf was definitely imposing the age restraint, another said he had not seen the company fix a 20 year ship for some weeks. "The application of their tanker vetting rules is definitely fierce at the moment," he said. The shortage of modern ships for late February dates in the North Sea, post-Erika, had caused a 20 year high for Aframax tankers of W200 ($7.50 per ton) through most of last week. But rates would fall back, brokers said. Although strong midweek activity in the Middle East had only had a limited affect this week - raising VLCC rates about five Worldscale points to around W64.5 ($7.00 per ton) for Japan and W55 ($9.50) for the U.S. Gulf - confidence was high that rates could lift even if activity quieted this week. With just 55 VLCCs, and only 12 of them modern, due in the Mideast in the next month, there was scope for rates to improve, broker E.A. Gibson said in its weekly report. Owners of modern vessels were showing more resolve in holding out for higher rates, Galbraiths said in its report. - (Reuters)

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