TUGS &OPERATIONS TOWBOATS TANKER
Why Tanker Operators Have Their Eyes on OPEC and IMO
T
anker operators are at a crossroads. Those that are in it for the long haul have to make critical investment decisions on what technology they will put into ships ordered today that will have to meet IMO emissions curbs that will get ever tighter throughout their service lives. Meantime, though, tanker owners are paying as much attention to the oil producers in the so-called “OPEC+” group as they are to IMO. That’s because what happens to oil production and oil prices will be key to future tanker demand. Right now, as major tanker companies file their financials for the full year and fourth quarter of 2020, most are telling a story of a year that started off well, but that ended in pain. Euronav, for example, reported a net loss of $58.7 million for the quarter compared to a profit of $154.2 million in the same quarter last year. “The last quarter of 2020 and the present market conditions are amongst the most challenging 26 Marine Log // March 2021
in recent memory for crude tanker operators,” said CEO Hugo De Stoop. “COVID-19 restrictions continue to impact operations and more importantly the demand for crude oil. This has led OPEC+ to extend production cuts. As a result, the market remains unbalanced with too many ships chasing too few cargoes.” “In 2020, Frontline recorded its strongest result since 2008, but the fourth quarter of the year reflect the challenging conditions tanker markets experience, as record volume of oil inventories are drawn,” Lars Barstad, Interim CEO of Frontline Management AS commented as that company released its full year and fourth quarter 2020 results. “When global oil markets switch from drawing on inventories, to call on equal volumes from the marketplace, growing demand for freight should be expected,” said Barstad. “At this point in the curve, we believe Frontline is well positioned to capture a recovery for tankers with our low cash breakeven levels and a spot exposed fleet of
modern fuel-efficient vessels.” At Teekay Tankers, President CEO Kevin Mackay commented that “crude spot tanker rate weakness persisted into the fourth quarter of 2020 as a result of OPEC+ production cuts resulting from reduced oil demand related to the COVID-19 pandemic and the unwinding of floating storage.” “Despite the pronounced weakness in the fourth quarter and unprecedented challenges faced throughout 2020,” he continued. “Teekay Tankers, nevertheless, reported one of our best ever annual results.” Looking ahead, said Mackay, “we believe that the underlying tanker supply fundamentals remain positive and should result in meaningfully improved tanker market conditions as the global economy and oil demand return to more normal conditions. Based on our forward view, we opportunistically entered into a seven-year in-charter agreement for a newbuilding eco-Aframax at an attractive rate, which we anticipate will deliver into a strong
Photo Credit: Shutterstock/ Montenegro
By Nick Blenkey, Web Editor
