Wednesday, September 23, 2009

supertankers may halt oil trading

Bloomberg | Supertanker owners may start refusing cargoes within the next three months unless rates return to a profitable level, said Frontline Ltd., the biggest operator of the ships which carry almost half the world’s oil.

Ship owners are contributing $942 a day toward fuel costs to ship Middle East crude, according to the London-based Baltic Exchange. Rates have been below operating costs since July. Should the losses persist, some owners may choose to idle their ships, according to Jens Martin Jensen, Singapore-based chief executive officer of Frontline’s management unit.

“If you see another quarter, then I think owners have to do something,” Jensen said by phone today. “We are subsidizing oil companies.”

The Organization of Petroleum Exporting Countries has cut output by 4 percent this year to 28.4 million barrels a day, according to Bloomberg estimates. Over the same period, the fleet of in-service supertankers has advanced 5.8 percent to 528 ships, according to Lloyd’s Register-Fairplay data on Bloomberg.

The five-member Bloomberg Tanker Index, led by Frontline, dropped 19 percent this year, extending last year’s record 49 percent slump. Frontline rose 3 kroner, or 2.3 percent, to 132.50 kroner in Oslo, valuing the company at 10.3 billion kroner ($1.7 billion).

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