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Tanker chartering rates to recover

Tanker chartering rates to recover
Tanker chartering rates in the spot market will be ?good? or possibly ?great? this year, according to Euronav chief financial officer Hugo de Stoop.

Tanker chartering rates in the spot market will be ?good? or possibly ?great? this year, according to Euronav chief financial officer Hugo de Stoop.

Tanker chartering rates in the spot market will be ?good? or possibly ?great? this year, according to Euronav chief financial officer Hugo de Stoop.

But the NYSE Euronext-listed tanker owner and operator does not expect rates to revisit the sky-high levels seen last year.

Euronav described 2008 rates for very large crude carriers as ?exceptional? when it reported its fourth quarter financial results this week. The company saw a profit of $36m, compared to a loss of $21m for the same quarter in 2007.

Mr de Stoop said he remained optimistic for 2009, despite contracting global crude demand. ?It"s true that rates were exceptional and better than previous years and what we believe we will see in the next couple of years,? he said.

?We don"t have a crystal ball, but what we would like to say is that we remain fairly optimistic for the year.
?We believe that it"s going to be another good year ? not exceptional ? but a good year and we hope that the couple of things that makes it a good year remain in place.

?Whether it"s a storage issue, or a weather issue... or simply seeing the economy going back to shape, that should make it a great year, an okay year or just a good year.?

Euronav, like most tanker owners, achieved record-breaking earnings in the spot market in 2008, despite an unseasonally weak fourth quarter, as average revenues surpassed the boom times of 2004.

Euronav"s 2008 average time charter rates for VLCCs were $95,700 per day ? more than double its 2007 levels. The fourth quarter average for the VLCCs it has in the Tankers International pool was $59,000 per day.

Mr de Stoop also moved to counter rising concern that VLCC rates would drop in the second half of this year, when tankers currently storing oil return to the spot market.

The oil price contango has seen oil traders book VLCCs for oil storage in recent weeks, with 22 from the global fleet of 520 presently used as floating storage according to London broker Gibson.

The move has boosted the Baltic Exchange"s average time charter for VLCCs to $47,600 per day by Friday, up from $28,000 seen earlier this month.

Mr de Stoop rejected fears that VLCCs will flood the market when the oil price contango ended, depressing rates.

?All those ships will be in storage at different places in the world, not in the same location and they will all be booked for a voyage [when the contract ends],? he said.

?Let"s assume that we have a ship at anchorage in the Arabian Gulf, so it will not be in storage anymore and will perform a voyage and delivery to Asia or the US. Not all the ships will arrive at the same time.?

But he acknowledged the size of any rates fall depended on whether VLCCs were released mid-year, when Northern hemisphere tanker activity was lower.

?But what is more important to understand is when the contango effect will not be there any more, we will be in a more normal situation which is [oil price] backwardation, and this means that the demand for oil will be there again,? Mr de Stoop said.

?One might compensate the other. I"m not going to say that it is one for one, but there will be a positive message when we are not in a positive contango situation anymore.?

Euronav has a fleet of 22 VLCCs including 15 owned and seven on long-term time charters, with two newbuildings on order. It owns and operates 27 suezmaxes, with a further six on order.


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