Flex LNG is on track to become the only Fredriksen Group firm with in-house ship management by the fourth quarter in a move aimed at meeting charter demand and reducing costs for the long run.
In the TradeWinds Shipowners’ Forum, the Norway-based owner’s chief executive Oystein Kalleklev said the process in bringing ship management in-house is time-consuming but worthwhile.
“It started last year and it takes up two years. We will aim to have it in place by the fourth quarter,” Kalleklev said.
“[We] are moving the document of compliance in-house. [We] have to make sure [we] have handbooks, procedure, people and everything in place.”
“So when [major charterers like] Shell or Total comes knocking for anything like inspection, they will see everything in order…This is not easy.”
In its quarterly report, Flex LNG said it had hired a team of experienced technical personnel to fill key roles in a new management company.
Bernhard Schulte, which currently manages the Oslo-listed owner’s 13 LNG carriers, will continue to provide services including crewing, procurement, information technology, and health, safety, environment and quality after the transition.
“We actually have been the first one to in-source shipmanagement in all of the companies in our group. Others have outsourced,” Kalleklev said.
However, Kalleklev added the Fredirksen Group also brought the shipmanagement of Golar LNG in-house when the company was still under John Fredriksen’s control.
Tor Olav Troim took a major shareholding in Golar when he left the Fredriksen system in 2014.
As handling LNG cargoes requires a high level of expertise, Flex LNG would be able to meet demand from its customers by having in-house management, according to Kalleklev.
“[Handling] LNG is much more complex than handling crude oil,” Kalleklev said.
“We have lots of demanding customers. LNG transport cost has a much bigger share in the cost of the value chain [versus oil].”
“In order to have long term charters…we have to demonstrate we are committed to the business.”
Moreover, Kalleklev suggested the average operating costs can be lower for the long run with in-house management.
“The average life of an LNG carriers is 40 years. So we going to hold them for a long time,” Kalleklev said.
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