The lone VLCC in SBM Offshore’s fleet has reportedly been chartered for floating storage use amid growing appetite among oil firms for contango plays.
Brokers reported that the 300,985-dwt Gene (built 2003) was fixed to BP at $20,500 per day on a three-month charter. The deal has options to extend by another three months at $22,000 per day.
The vessel is due to be delivered in Singapore to store oil.
TradeWinds reported the Dutch contractor acquired the Hyundai Samho Heavy Industries-built vessel from Gener8 Maritime for $31m in late 2016.
The ship had been expected to be converted into a floating production, storage and offloading vessel, but SBM has instead opted to continue trading it in the tanker market.
The Gene has been deployed to Navig8’s VL8 pool since February 2017. It is still on the pool operator’s VLCC fleet list as of Thursday, according to Navig8’s website.
BP has decline to comment on the fixture. TradeWinds has approached SBM for comment.
Appetite for floating storage
With the contango in crude futures markets gradually widening in recent weeks, some analysts expect oil firms to charter more tankers for storage play.
Trafigura has reportedly fixed at least eight VLCCs on short charters in the last two weeks, and some of the vessels are speculated to be used to store oil.
Among them, New Shipping’s 281,050-dwt New Kassos (built 2000) was said to be chartered for six months at $25,000 per day.
“I think some charterers are taking vessels on time charters for six months with storage option, plus betting on some rate upticks in the fourth quarter and first quarter,” said a London-based analyst.
Spot VLCC earnings have shown signs of bottoming out this week, supported by charter activity in West Africa and weaker bunker prices, brokers said.
Clarksons Platou Securities, the investment banking division of broker Clarksons, estimated global average VLCC earnings at $21,600 per day on Thursday, compared with $12,200 per day on Tuesday.
“Rates are up and bunker prices down, a winning combination for owners’ earnings,” the investment banking arm of Clarksons said in a note.
Earnings on the West Africa-China route were assessed by Fearnley Securities at $23,600 per day, up 24.9% from Wednesday’s level.
“With earnings approaching opex [operating expense] costs, there was little downside left and the drop in oil prices has shifted the forward curve into a meaningful contango,” Arctic Securities said.
“Charterers and traders thus both came down from fence and rates are off their lows. Whether this will turn into a rally with legs or is merely a short-term positional move remains to be seen.”
