Where oil travels first class Stena Bulk

WHERE OIL TRAVELS

FIRST CLASS

This year Swedish tanker company Stena Bulk celebrates 30 years of successful business. Peter Mercer looks at its continuing tradition of innovation in tanker operation and design.

Established in 1982, originally with a single employee, current president and CEO Ulf G Ryder, Stena Bulk AB is today one of the world’s leading tanker shipping companies with a fleet of some 100 vessels, totalling 9.5 million tonnes deadweight, and offices in Gothenburg (its headquarters), Houston, Rio De Janeiro, Singapore, Athens and Beijing. The company works with some of the world’s largest oil and chemical companies and is an industry leader in the development of new and unconventional vessel designs that increase efficiency and add value for both Stena Bulk itself and its long-term customers.

Ulf G Ryder was recruited by Stena in 1982 specifically to build up the company’s tanker and bulk business. Stena was already well-established as an operator of ferries and Ro-Ro carriers on the routes between Sweden, Denmark, Norway and Germany and had begun developing a fleet of offshore maintenance vessels to serve the fast-growing North Sea oil and gas industry. In fact, the timing of the decision to move into the tanker business was not very good since at the time the world tanker market was in poor shape but the up-side was that prices for second-

hand tonnage were very low. So after waiting a year Stena was able to buy six tankers at very advantageous prices followed in 1984 with the purchase of its first VLCC (very large crude carrier), the 265,000 ton Stena Atlantica, at a record low price of $3.6m (five years later she was worth $40m).

In the same year Stena’s management set up a new company, Concordia Maritime, to hold the assets of the bulk operation on the Stockholm Stock Exchange. All the vessels (except one) in the bulk fleet were transferred to the new company which continues to this day to work in partnership with Stena Bulk in buying, selling and chartering tonnage. Stena Bulk manages and mans these ships as well as the vessels it owns and charters itself.

Stena Bulk grew steadily over the following years and by 2007, its 25th anniversary, it had a turnover of some SEK 3bn and a fleet of some 70 ships. In 2008 it continued to expand with the $250m acquisition of 35 per cent of the Greek shipping company Paradise Tankers, which gave the company control of three newly built Panamax tankers and two dry-cargo bulk carriers, and the SEK 1bn purchase of three MR product tankers from an Italian shipowner. The ‘new’ Stena Bulk

The next year, however, brought huge challenges. “In 2009 freight markets fell to unheard-of low levels and our financial results plummeted,” said Ulf G Ryder. “Nevertheless, we prevailed and through foresight and tactical moves we managed to limit the long-term impact on the company. Unlike many other operators, Stena Bulk had no expensive newbuildings from the past on its books and we had sold off (and chartered back) the majority of our fleet before the market went into free-fall.”

To help to navigate the recession Stena Bulk also restructured its organisation. Its Moscow office was closed, new offices were opened in Helsinki and Rio de Janeiro and partly new organisation were established at it London, Singapore and Houston offices. “The launch of the ‘new’ Stena Bulk in January 2010 marked a milestone signalling that we are now ready to meet the challenges and opportunities ahead of us,” said Mr Ryder. “We have vast commercial ability, technical expertise and strong client relationships. Our in-house-developed innovative MAX tankers have been extremely successful, with all of them awarded long-term charters with major oil companies and traders long before the vessels were even close to being completed at the shipyard.”

The MAX concept

The Stena MAX concept is the latest product of the company’s constant drive for innovation and unconventional solutions in the design of new ships. Launched at the beginning of the new millennium, the MAX concept has been a huge success; these innovative, wide-body tankers, designed in-house by Stena Teknik, have a much larger beam than ships in the same size class, enabling them to operate in waters and ports with draft limitations; typically they can carry 30 per cent more cargo than traditional ships with the same draft. Their unique safety approach features a full double hull, two engine rooms with full fire and water integrity as well as double propulsion and manoeuvring systems.

So far, Stena Bulk has designed and built three vessel types within the MAX concept: V-MAX, P-MAX and C-MAX. V-MAX is a design in which relatively small changes increase cargo intake by 20–40 per cent compared with conventional VLCCs and

by 70–100 per cent compared to Suezmax tankers (the largest ships capable of transiting the Suez Canal). In effect a V-MAX vessel such as the Stena Victory or the Stena Vision has the shallow draft of a Suezmax and the length of a VLCC so that ports that have been limited to Suezmax tonnage are now open to VLCCs, with their huge economies of scale.

Stena Bulk’s P-MAX designs are MR (medium range) vessels that incorporate numerous features for minimising the risks of incidents and accidents. They are built with double hulls, two engine rooms, double systems for propulsion and manoeuvring and an integrated bridge layout to ensure safe navigation in narrow waters. P-MAX vessels also feature tank cleaning systems that enable them to carry clean products as well as crude oil.

The C-MAX is a 10,000 DWT coastal tanker that is a direct conceptual spin-off from the V-MAX design, featuring the same shallow draft combined with larger cargo intake and optimised safety and manoeuvrability. The first two C-MAX tankers have been designed specifically for the Caribbean clean-products trade; they are capable of carrying 17 fully segregated grades of products as well as two pressurised deck tanks for LPG cargoes.

Continuing innovation

Now Stena Bulk is developing the MAX concept to produce a vessel that will be optimised for the transportation of Russian crude oil through the Baltic Sea. Exports of Russian crude have, of course, boomed, from 12 million tons shipped out from ports in the Gulf of Finland in 2001 to around 120 million tons in 2012. The B-MAX is being developed in cooperation with the state-owned Russian shipping company Sovcomflot to have the usual MAX features of shallow draft, high capacity, double hull, double main engines, double rudders, steering gear, propellers and control systems. With a cargo capacity of 200,000 tonnes of crude, it will be able to load twice as much cargo as the Aframax tankers currently serving the route and will be, in effect, a ‘floating pipeline’ between the port of Primorsk in the Gulf of Finland and Rotterdam.

The commitment to innovation at Stena Bulk continues: two radical new ship designs are underway. AirMAX is a project aimed at reducing the water resistance of a ship and thereby dramatically cutting its fuel consumption. Stena has built a 15 metre model that is an exact replica of a 180 metre P-MAX tanker but with an air cushion on the bottom of the vessel and a patented bulbous bow. “We expect energy savings of 20 to 30 per cent when the technology is ready to be built into full-size ships,” says Ulf G Ryder.

The E-MAXair takes Stena Bulk’s focus on environmental challenges one step further. This tanker will run on pure LNG, giving it emissions of CO2 and NOx of 35 per cent and 90 per cent lower respectively than today’s tankers. With its optimised hull design, slow-rotating propellers and engines running on LNG, the Stena E-MAXair will probably be the greenest tanker in the world.

In addition to the MAX concept, Stena Bulk has also developed ultra-modern standardsized ships made for a more demanding market in regards to lower fuel consumption and better overall performance. A good example of this is the Suezmaxes they are now taking delivery of. These vessels are the most energyefficient Suezmax tankers ever built, with about 20 per cent better performance than a tanker built ten years ago. These ships marry well with today’s straitened market conditions, with fuel prices currently well above 600 dollars per tonne. There are also rumours that Stena Bulk is on its way to developing a Handysize product tanker along the same principles as it employed when the Suezmaxes were developed. Ulf G Ryder claims that this is just one of the many projects Stena Bulk is looking into right now, but at the moment it doesn’t have the highest priority.

In 2011, Stena Bulk made its most capitalintensive investment ever when it acquired three LNG tankers from a company in financial distress. The demand for natural gas transportation is expected to remain strong and to increase by around 10 per cent over the next 10 years, and capacity utilisation of Stena’s existing vessels is at a record high. It takes around three years from the order date for the technologically advanced LNG tankers to be delivered, and only a few vessels will be delivered over the next few years from the limited number of shipyards capable of building this vessel type. The shortage of tonnage in the medium-range perspective is also being reflected in the bullish market. Stena Bulk’s tankers have been signed to long-term charters generating a good return on the investment. At the same time, Stena Bulk is exploring further investments in order to secure profitable operation in the long term in the LNG segment.

Finally, Ulf G Ryder says that even though 2010 and 2011 were challenging years for most shipping companies, Stena Bulk has continued to strengthen its reputation as one of the strongest and most innovative tanker companies in the world. One of its major strengths is its strong financial position, which allows it to act when opportunities come up.

In 2012, intelligent energy management is expected to have a big impact on the tanker industry. It will be yet another challenging year, but Stena Bulk is both confident and enthusiastic about its prospects. The company is stronger than ever before and will continue to transport oil, products and chemicals in first class. n