Norden has relaunched what was known as the Norient Product Pool and is out to find prospective new members at a time when product tanker markets are on the up.

The pool has been known as Norden Tanker Pools (NTP) since the beginning of September to reflect the more open nature of the business — the days of it being a joint venture with Interorient are long gone, although the company remains a key partner in the pool, according to Soren Huscher, Norden’s head of pool management.

NORDEN TANKER POOLS: KEY FIGURES
  • Established in 2005 as the Norient Product Pool, in partnership with Interorient. Norden bought out its partner’s stake in 2019.
  • Currently comprises around 130 product tankers, of which 24 are handysizes and the rest are MR vessels.
  • Some 14 members at present.
  • Around 46% of the tankers in the pool have been contributed by Norden. Interorient has 22 tankers in the pool, which accounts for around 17%.

Work has started again in earnest to expand the membership, following six months of work to refresh and modernise the structure of the pool and how it operates.

The starting point was to overhaul its pool document to make it more user-friendly. The preceding document had been in use for the past 17 years.

“It was certainly high time that we had to do something about that,” Huscher said. “The [new] pool document is a much simpler one, the entry and exit terms of the pool are much easier, and we have reduced the requirement for working capital.”

Norden has put internal financing in place to guarantee that the majority of vessel earnings will be distributed to pool participants within three days of the end of the month.

“We are offering an accelerated distribution facility, which is financed by Norden, that you can choose to subscribe to or not, which means that we will always pay at least 80% of any earnings, whether the freight payments have been done or the disbursement payments have been done or not,” Huscher said.

Such a service would have been in high demand a year ago when product tanker rates were depressed, but right now only 15 of NTP’s 117 spot ships subscribe to the accelerated distribution facility. Huscher thinks the pool’s commercial results mean that few people are going to pass up the chance to receive more money more quickly.

“We can make a premium to most other owners in any market, whether it’s high or low,” he said. “And if we can persuade our participants or potential participants that there is actually another $1,000 here for you, whether the market is $30,000 or $13,000, then that $1,000 has as much value in a high or low market.”

Norden has also developed a reporting platform to give its pool partners more visibility of vessel earnings, both current and expected.

But there have been ups and downs in bringing in new members, particularly following Russia’s invasion of Ukraine.

Some partners wanted to continue trading with Russia after 24 February, but Norden decided it would cease business with the country.

“We told pool partners if they wanted to take benefit of the potential upside and premiums in the [Russian] market, they were free to withdraw their ships with no notice,” Huscher said. “And a few did that and have taken the opportunity.

“Obviously once the 100% sanctions [on EU imports of Russian crude and products] kick in in February next year, I’m hopeful that these partners will return to us.”

GREEN AMBITIONS

Norden has also been at work in monitoring the environmental performance of its sizeable fleet of close to 500 vessels, including pre-voyage estimates and post-voyage calculations of vessel emissions. This service is available to Norden’s pool partners too.

“Very few of our clients actually demand these emission statements,” Soren Huscher said. “But we do it because we want to practise and we want to be ready by the time it’s going to be an industry demand.

“I think it has opportunity for emissions control and limitations on a broader scale than if we only did it for ourselves and our own ships.”

Norden has also been making moves into carbon-neutral transportation and has been experimenting with the use of edible oils as bunker fuel for its vessels.

Eight new partners have joined the pool over the last six months, generally small participants with between one and three ships, Huscher said, “but nevertheless they have more appetite”.

Marketing to smaller shipowners is just a fact of life — there aren’t many big companies such as International Seaways who can contribute a large number of ships — but is also a pivot in NTP’s strategy.

“An important criteria for us is that we add members that we find compatible with our values, with our way of looking at risks, the way we trade ships, with how we do operational optimisation,” Huscher said.

Norden thinks that the next two years will be good for product tankers, but “for all the wrong reasons”.

“The thing is that we actually, already a year ago, planned for an upswing in the market because there were so many indications that that was going to come — low production, there were low stocks all over the world for a lot of products — and it just never really kicked into our markets,” Huscher said.

“But those conditions are still there and still part of why the market has a lot of strength, but obviously kick-started by the invasion of Ukraine and sanctions.”

Contracts of Affreightment

The pool has succeeded in building scale and taking on more contracts of affreightment (COAs) for products such as diesel oil and gasoline, both for handysizes and MRs, which was not the case four or five years ago, Soren Huscher said.

“But we’ve also seen new clients entering that area and demanding — or at least marketing — COAs. Now we have them actually both in the Atlantic and the Pacific for the MRs and we have a little bit on handies — we had a lot on handies before 24 February, but obviously we decided to leave those contracts.”

Some COAs are on fixed terms and with fixed rates, and some are more about access to cargo and come at rates linked to current market levels, which are decided from lifting to lifting, he said.

“It gives us great access to cargo and during the downtimes — only six months ago, and a lot of years ahead of that — access to cargo has been extremely important,” he said. “Fortunately, we’ve found that the [clients] that we’ve partnered up with on those contracts, they have been willing also to extend those contracts into the good markets without demanding huge sort of discounts on rates, which is important.”

Although issues related to trade with Russia have had certain negative impacts for Norden Tanker Pools this year — members leaving the pool, the cancellation of certain COAs — Huscher also expects sanctions to provide opportunities in tanker markets.

“We are buyers and we are sellers and, right now, we believe there’s a lot more to come and, obviously, a lot of it is based on the sanctions because that means that Russian oil will have to travel further to find a home,” he said.

“Likewise, the imports that Europe has been used to getting from Russia will have to come from further afield, so we think that the demand for particularly MRs and upwards in the product segment will grow a lot ... I think with the sanctions kicking in 100% in February next year, that will be even more pronounced.”