US energy firm Occidental Petroleum has aborted plans to charter a string of VLCCs from prominent Greek, Chinese and New York-listed shipowners, tanker market sources say.
TradeWinds reported on Wednesday that Occidental was understood to be chartering tankers from John Angelicoussis, Onassis company Olympic Shipping & Management, DHT Holdings and China Merchants Energy Shipping firm AMCL.
On Thursday the market was awash with talk Occidental had backed away from the move which would have seen it pay well in advance of $200m to take five or six ships over a three-year period.
"Yesterday it was a deal, today not anymore," said one source familiar with the matter, without elaborating further on the reasons for the development.
“The Occidental deal is dead. They released all of the ships,” a second tanker market player said.
Shipowners involved are understood to be shrugging off the cancellation, instead expressing confidence of clinching other lucrative deals in the current market, possibly even with the same client.
Occidental, which had previously declined to comment on the situation when contacted by TradeWinds, broke its silence today.
However, a spokesperson declined to reveal any details about the situation or the company’s future plans in the tanker market.
“Your article yesterday was inaccurate and so is the information you received today. No contracts were signed,” said Eric Moses, spokesman for Occidental Petroleum.
Brokers said they are unsure why Occidental had not gone ahead with the charters.
Some pointed to as yet unspecified “commercial reasons” potentially relating to board approval. However, this could not be confirmed with Moses stressing a policy of not discussing confidential business matters.
Given the development of the charterer’s infrastructure in the US Gulf it is still thought to have a demand for VLCCs.
It has previously been fixing from the spot market to export US crude since 2017.
The Occidental business, which was previously understood to have been signed off but now appears to have failed on subjects, was being executed at a time of rising demand from charterers seeking big tankers for longer periods at higher rates ahead of IMO 2020.
The trend has been observed in both the crude and product market in the past couple of months and is expected to continue ahead of the new sulphur emissions laws some expect to spark the next super-cycle in tanker shipping.
Had the charters been concluded, the highest paying would have matched the $43,500 per day NS Lemos secured from Mercuria for one of its VLCCs over a three-year period in the last month.
At the time the charter was the highest rate seen for around four years over that time-frame.
However, with asset prices rising and charterers showing appetite for vessels, further improvements in the market are expected with IMO 2020 legislation just months away.
Analysts at Clarksons Platou Securities believe the withdrawal of VLCCs from the market to fit scrubbers is already helping support rates in the spot market by reducing the supply of tankers.
Lucy Hine and Trond Lillestolen also contributed to this article.
