Three years after it was first launched, aframax tanker operator N2Tankers is looking to expand.

With its first contract of affreightment (COA) in hand, its management is keen to add aframaxes to its fleet via long-term time-charter deals.

The N2 in its name stands for the two companies — Reederei Nord and Nissen Kaiun — that contributed ships to the Synergy Marine-managed operation when it was established in September 2018.

Owned jointly by Reederei Nord and Synergy, the latter is the commercial manager of Nissen Kaiun’s aframax tanker fleet that is owned by special-purpose vehicles and subsidiaries including Singapore-based Pusaka Laut.

N2Tankers launched with 13 Japanese-built aframaxes and the size of its fleet has remained relatively stable. Today, it has 14 of the vessel type under its control.

Speaking exclusively to TradeWinds, N2Tankers managing director Madhu Vadakkepat was quick to stress that the company was not a typical tanker pool-type outfit, despite being described as such during the early days of its formation.

Spotlight on Madhu Vadakkepat

N2Tankers managing director Madhu Vadakkepat trained as a deck officer on Danish-owned tankers. His seagoing career culminated as a master mariner captaining BW Group VLCCs. Moving ashore in 2006, Vadakkepat spent 10 years in managerial positions in BW’s technical management department.

A move to the commercial side of the tanker business came in 2020, when he joined Brightoil Petroleum as a vice president, playing a lead role in setting up the Asian oil trader’s tanker fleet. Brightoil grew quickly to become a respected tanker player with a fleet that included newbuildings.

Vadakkepat moved to Synergy Marine in 2015, recruited by the Singapore-based ship-management powerhouse to “help on the commercial management side”. That role included helping to set up N2Tankers in 2018.

“We are a boutique aframax tanker operator, commercially managing vessels on behalf of owners,” Singapore-based Vadakkepat said. “Our objective is not to run the operation as a pool. The mechanism for the distribution of revenue is similar, but that is all.

“The structure of N2Tankers is more like a group of owners working together. We are not interested in operating vessels just for a fee or commissions. We may consider taking on more owner-partners but we are not keen unless they realise this is not a regular pool. We don’t want to be just an outsourcing vehicle.”

Vadakkepat said the company has kept a lean, efficient structure — it has a team of 12 employees working out of Reederei Nord offices in Amsterdam and Synergy’s office in Singapore.

The Dutch office handles ships west of Suez, while Singapore takes over when they head east.

Reederei Nord’s in-house ship-management team handles the technical management of its owned vessels, while Synergy provides the technical management for Nissen Kaiun’s ships.

“This set up keeps things simple as we don’t have to deal with a bunch of third-party managers scattered in remote parts of the world,” Vadakkepat said.

“Charterers are more comfortable talking directly to owners’ representatives, which we are. Decisions are quicker because there are no layers of approvals to be done.”

Growing through COAs

N2Tankers has a strong preference for Japanese-built aframaxes, such as Nissen Kaiun's Tsuneishi Shipbuilding-constructed,108,560-dwt Southern Leader (built 2019). Photo: N2Tankers

Until now, N2Tankers has been very spot-orientated, with the occasional short charter of up to a year thrown into the mix.

Vadakkepat said this approach was adopted because the company wanted to play the market.

“We’ve done quite well with this approach,” he said. “Our performance has always been a few dollars more that what some big owners have done.

“Our earnings are not too bad right now, even if the market is bad. This is largely because of fast turnarounds, which all goes back to optimum planning and efficient ship operations.”

As the company matures, it has begun to look at more long-term business and recently signed its first COA deal with what Vadakkepat described as a premium Japanese oil trader.

“We had been doing a lot of spot fixtures with them before,” he said.

Confidentiality clauses prevented Vadakkepat from sharing details of the deal, but he did say that the contract spanned multiple years and involved crude imports into Japan, and refined petroleum exports from Japan to South East Asia.

“This COA will involve one to two ships per month for the time being but might go up further when demand increases after Covid-19 subsides,” he said.

Oil demand

Vadakkepat said long-term COA contracts would help N2Tankers to grow its fleet size, and it is looking to do so through chartering in more aframaxes.

“It will be N2Tankers that charters in the ships directly,” he said. “We are well poised financially to charter in good-quality ships. The revenue will be earned by N2Tankers and distributed to stakeholders.”

Vadakkepat admitted that the company is among many charterers looking to take tankers on long-term period deals in a market where owners are hesitant to fix their vessels out for prolonged periods at low rates.

“A lot of people are asking for time charters,” he said. “It is very speculative as most charterers think demand for oil will increase next year as vaccination rates increase.”