 |
Print page |
||||||||||||||||||||||||||||||
| Lauritzen Tankers President Anders Mortensen
JL acquired Quantum Tankers early in 2004, thereby fulfilling the strategy of adding a fourth activity to the business portfolio. The first acquisition, the MR size product tanker, “Freja Atlantic”, was delivered from the STX Shipyard at the end of November 2004. In Lauritzen Tankers’ first year of operations, EBITDA was USD 0.5 million and the net result was USD 0.0 million. Since considerable efforts have been committed to integrating the organisation and implementing the strategy, the result for the year is satisfactory. Market development  The early part of 2004 saw normal seasonal behaviour of spot markets declining for crude and subsequently for product tankers as well. During the second and third quarters, the market was unpredictable, but at the end of the third quarter, spot rates rose dramatically ending at a very high level. Period rates have developed along the same lines. Prices on tonnage saw a similar development with second hand prices rising 40% or more, and newbuilding prices by 25-40%. Several factors contributed to this development. The global fleet grew by approx. 28 million dwt of new deliveries. Almost eight million dwt have disappeared, mainly for scrapping. Net fleet growth, thus increased by 6%, almost double the previous year. The tanker market benefited from a surge in OPEC oil production during the second half of 2004. Arabian Gulf producers had the capacity to increase their production most which had a major impact, as this is long haul oil movements. During the year, it became difficult to source adequate grades of oil which had the effect of increasing the mismatch from refineries in terms of local market demand. As a consequence, movements of products shot up. Imports of products into OECD rose by 13% from third quarter 2003 to third quarter 2004, with movements of gasoline rising by 37%, of jet fuel and kerosene by 23%, and other oil products by 25%. The fleet During 2004, Lauritzen Tankers managed an average of five vessels. In November, Lauritzen Tankers took delivery of Freja Atlantic, a 45,000 dwt newbuilding from STX shipyard. The fleet increased further in December when Lauritzen Tankers took delivery of a 37,000 dwt ice class clean product tanker on a three-year time charter. The scene is now set for expansion in coming years but the volatility of the market dictates caution. Two 60,000 dwt newbuildings have been committed on long-term charter with deliveries in 2006 and 2007, bringing the fleet up to nine MR size tankers. Events after year-end Lauritzen Tankers has concluded period charters for two MR product tankers from Japanese owners on five and seven year charters respectively with delivery early 2007 and first half 2008. The latter charter party includes optional periods and a purchase option. Prospects for 2005 The existing order book will imply additions of the order of 30 million dwt in 2005 and scrapping rates are expected to stay at the same level as in 2004, especially as demand is poised to remain strong.  Early in 2005, OPEC reined in oil production but with the scaling back of projected non-OPEC oil production in 2005, we may see a surge in demand again for OPEC production. This will positively influence demand for crude oil tankers. Further, the problems experienced by refineries in 2004 seem not to have disappeared. All in all, many indicators suggest a fairly strong market balance in 2005, though some deterioration is likely towards the turn of the year. The comfortable level of orders, the declining dollar, and the high level of steel prices make it likely that ship yards will maintain or even raise newbuilding prices. This will, in particular, support the prices of modern tonnage. Lauritzen Tankers is expected to make a modest profit in 2005. |