straitstimes.asia1.com.sg Rebecca Lee

With the deal in the bag, American Eagle Tankers could fetch a higher price if ailing NOL decides to sell it, say analysts

AMERICAN Eagle Tankers (AET) - Neptune Orient Lines' (NOL's) only profitable subsidiary, of which it is looking to divest - has clinched a US$220 million (S$383.46 million) contract to transport fuel from Venezuela to Asia.

The shipping line, which last week unveiled record losses of US$330 million, yesterday said that it had won the tender to transport orimulsion for Bitor, a unit of Venezuela's state-owned oil company, Petroleos de Venezuela.

Orimulsion is a bitumen-based fuel used for electricity generation.

AET will deliver the fuel to Singapore power company Power Seraya for seven years, starting from next year, with an option to extend the contract for another three years, NOL said in a statement.

The deal will require a fleet of five Very Large Crude Carriers (VLCCs), of which three will be new ships to be delivered from the end of next year to the beginning of 2005.

In shipping parlance, VLCCs are oil tankers with a capacity of 200,000 to 320,000 deadweight tonnes (dwt).

'We negotiated with Far Eastern shipyards last year to book capacity to build an additional three VLCCs with the possibility of winning this tender in mind,' NOL chairman Cheng Wai Keung said.

AET's president and chief executive officer, Mr Joseph Kwok, also highlighted the fact that the contract made use of otherwise unused capacity in the backhaul - or return route - transportation leg from the Americas to Asia.

'We are able to fully utilise capacity on both legs of the journey, so instead of returning empty back to Asia, the vessels will be earning revenue,' he said.

Analysts yesterday agreed that the deal was welcome news for troubled NOL.

Kim Eng Ong Asia analyst Ong Seng Yeow upgraded the stock to a 'trading buy' from 'market perform', saying in a research report yesterday that the announcement was 'positive for NOL as AET is a wholly owned subsidiary'.

He said: 'We anticipate that AET will continue to be a major beneficiary of rising crude prices, which are correlated to charter rates.

'As of December last year, 12-month Aframax charter rates stood at US$19,000 a day, and there is still more upside considering the historical peak of more than US$30,000 a day,' he said.

An Aframax carrier is an oil tanker of about 80,000 to 120,000 dwt.

DBS Vickers transport analyst John Casey also pointed out that the new deal would mean that AET could fetch a higher price if NOL indeed decided to sell it.

NOL said last week that it would complete its ongoing review of its investment in AET by the end of this month.

It had said previously that it would not sell AET for less than its book value of US$400 million.

Malaysian International Shipping Corp - the shipping arm of national oil corporation Petroliam Nasional - is formulating its bid for AET after a lengthy due diligence process, said Mr Casey.

Yesterday NOL's stock closed up 1.5 cents at 90.5 cents with 2.2 million shares changing hands.

sg.biz.yahoo.com Tuesday March 4, 1:32 AM

CARACAS (Dow Jones)--Venezuela's state-owned oil monopoly Petroleos de Venezuela (E.PVZ), or PdVSA, over the weekend failed to restart one of its catalytic cracking units at the massive Paraguana refinery complex, a PdVSA spokesman said Monday.

Due to acts of sabotage and troubles to establish a stable natural gas feed, one of the catalytic cracking units at the Amuay plant that should help achieve a production of around 140,000 barrels per day of gasoline couldn't be started up, the PdVSA spokesman said.

He added that by the end of next week all units should produce 140,000 b/d of gasoline. A total of around 200,000 b/d, including the Cardon plant that together with Amuay makes up the Paraguana refinery complex, is produced at the Paraguana complex.

At Cardon, some 60,000 b/d of gasoline is produced. If the Paraguana refinery complex were to fully produce gasoline, domestic supply would be almost fully restored.

PdVSA is slowly recovering from a two-month strike aimed at the ouster of Venezuelan President Hugo Chavez. While oil production and exports are gradually recovering, refineries haven't been able to ramp up their processing capacity. The problems have caused a serious domestic gasoline shortage which only could be overcome with gasoline imports.

Separately, the PdVSA spokesman further said he expects the company to have 500,000 barrels per day of crude production that was shut in Friday back online later this week. The production was shut in as storage tanks have filled and exports from the Jose port in eastern Venezuela had to be slowed down.

By Fred Pals, Dow Jones Newswires;58414-2887461; fred.pals@dowjones.com;

www.vheadline.com Posted: Monday, March 03, 2003 By: Patrick J. O'Donoghue

Petroleos de Venezuela-West (PDVSA-Occidente) general manager, Felix Rodriguez reports that there was a sabotage attempt on the Ule-Amuay pipeline last Friday night.

Calling the incident an act of terrorism, Rodriguez says 6 valves in four pipe-flow sub-stations were shut off and obstructed to prevent them from being opened … “it could have caused a serious explosion and would have cut off supplies to the Paraguana Refinery.”

According to the general manager, the plot was discovered after the company’s air vigilance service spotted and reported that substation gates have been forced open. "A similar action took place at La Salina yard’s 22nd tank where valves were closed to cause a spill."

www.vheadline.com Posted: Monday, March 03, 2003 By: Robert Rudnicki

Petroleos de Venezuela (PDVSA) has cut its oil production back by 500,000 barrels per day as storage facilities stood at capacity, due to a reduction in recent export levels. According to PDVSA manager Luis Marin, production now stands at 1.6 million barrels per day, down from 2.1 million.

The bottleneck should be resolved this week once tankers that have been contracted by the company arrive to lift export levels.

However, rebel PDVSA executives question these figures, insisting current production to be around 1.1 million barrels per day.

In the run up to the upcoming Organization of Petroleum Exporting Countries (OPEC) meeting later this month, President Hugo Chavez Frias has said that he feels $30/barrel to be the perfect price for a barrel of petroleum.

www.vheadline.com Posted: Monday, March 03, 2003 By: Robert Rudnicki

The Energy & Mines (MEM) Ministry has issued a statement in which it guarantees the supply of gasoline across the whole country. "There are sufficient supplies at various refineries that allow us to guarantee supply of gasoline to all the national territory for the next few days."

PDVSA will also be releasing around three million barrels of gasoline from storage at Guaraguao, "which demonstrates the are stability in terms of gasoline supplies," Minister Rafael Ramirez said.

The Minister also said that PDVSA is expecting to ramp-up operations at the giant Amuay facility next week, which would further increase national gasoline production, with Cardon producing 60,000 barrels of gasoline a day and Amuay expected to be producing 140,000.