Shipping News - Oil tanker rates rise as firms replace Venezuelan imports - Strike in Venezuela worrying US crude importers

business-times.asia1.com.sg January 13, 2003

(OSLO) Oil tanker rates rose as companies and traders booked ships to carry oil from the Persian Gulf to the US at a faster pace to offset the halt in imports from strike-hit Venezuela.

A total of six very large crude carriers, or VLCCs, were booked for discharge in the US Gulf Coast as late as Feb 6, compared with two ships on Tuesday, R S Platou Shipbrokers AS said in note to clients. An additional 10 vessels were booked for discharge at Asian ports.

The 'situation is really worrying for US crude importers that normally take some 1.5 million barrels a day from' Venezuela, shipbroker Lorentzen & Stemoco said in a note. 'They have no choice other than approaching producers' such as Saudi Arabia and Kuwait to replace Venezuelan oil, it said.

Freight tariffs for two million-barrel supertankers, or VLCCs, measured in Worldscale points, an industry standard, rose to WS130 for cargoes of about 260,000 tons on the Persian Gulf to Japan leg, shipbrokers said. On Tuesday they were fixed as high as WS122.5, according to Bloomberg data.

Tanker demand has picked up as the strike in Venezuela, the fourth-biggest supplier to the US, is forcing oil companies and traders to book cargoes from other regions to cover their needs. The strike, now in its sixth week, is boosting utilisation rates of the crude oil fleet. The Organisation of Petroleum Exporting Countries may boost output to offset the loss of Venezuelan exports.

The VLCC market has 'rebounded strongly partially because of production increases by Middle East Gulf producers and also because of the vacuum created by the absence of Venezuelan crude in the market', shipbroker Fearnley's said in a market report.

Rates for one million-barrel ships, known as Suezmax tankers since they are the biggest to navigate the Suez Canal fully loaded with crude, rose 4.5 per cent to WS172.5 on the West Africa to US Gulf coast leg.

At Wednesday's rate levels, a modern VLCC will earn about US$70,000 a day, after deducting voyage-related costs such as fuel and port fees, analysts said. Frontline Ltd, the world's biggest operator of supertankers, had a break-even point of about US$21,000 in the third quarter for its VLCCs. - Bloomberg