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Oil Supertankers May Avoid Suez on Somalia Piracy
Shippers controlling almost a quarter the global fleet of crude-oil supertankers may avoid Egypt's Suez Canal after an increase in piracy off east Africa, potentially raising the cost of delivering the commodity.A.P. Moeller Maersk A/S, Europe's biggest shipping line, today became the first company to say it will divert oil tankers to sail around South Africa, following the lead of Norwegian chemicals shipping line Odfjell SE. Euronav NV, TMT Co. Ltd., BW Shipping Managers Pte, and Frontline Ltd. say they are reviewing whether to reroute their oil tankers. "We've always told our captains to stay far from the coast in that region, but that may not be enough now," Euronav's Chief Financial Officer Hugo De Stoop said by phone from Antwerp, Belgium, yesterday. "Terrorists or pirates, I don't really see the difference." Maersk, Frontline, Euronav, TMT and BW control 117 supertankers, enough to carry 2.7 days of global demand, according to Athens-based Optima Shipbrokers and data from the companies. Avoiding the Suez Canal, Egypt's third-biggest foreign-currency earner, will delay oil deliveries and reduce the supply of available vessels.
Three supertankers are currently navigating the canal and two more are scheduled to, according to ship-tracking data. The vessels have to offload part of their cargoes into an adjacent pipeline for collection on the other side to avoiding scraping the floor of the canal. Maersk owns 10 such ships, known as very large crude carriers, or VLCCs, as well as 60 refined oil tankers and 10 vessels designed to haul gas, spokesman Michael Storgaard said by phone from Copenhagen today. Most of its tanker fleet will be affected by the decision, along with three container ships. Somali pirates on Nov. 15 seized their largest ever prize, a Saudi Arabian supertanker laden with 2 million barrels of crude, worth about $104 million at current prices. The ship itself is worth about $148 million. The Sirius Star is now anchored in Somalia's northern Eyl coastal region with the hijackers negotiating a ransom payment with Vela International Marine Ltd., a Saudi Arabian state- backed oil-tanker company. There have been at least 88 attacks against ships in the area since January and Somalian pirates are holding 250 crew hostage on board 14 merchant vessels. Shippers sailing to the U.S. and Europe from the Middle East would instead have to take vessels around South Africa's Cape of Good Hope rather than the Suez Canal. The waterway links the Mediterranean and Red Seas. Bergen, Norway-based Odfjell SE, the world's largest owner of chemical transporters, already said it won't sail past Somalia while BW Gas Ltd., the biggest liquefied-gas shipper, may do the same. Customers have been given "the option to safeguard their cargo," BW Gas CEO Jan Hakon Pettersen said from Oslo yesterday. "For us, we would prefer them to use the cape route." BW Shipping, operator of 17 supertankers, may soon direct ships under its control away from Suez, CEO Andreas Sohmen-Pao said by phone from Singapore today. The Joint Hull Committee, representing ship insurers, is advising shipowners to "seriously consider" avoiding Somalian waters, Chairman Simon Stonehouse said Nov. 18. Insurance premiums will rise and unless the Egyptian government becomes "more actively interested" in combating piracy in the region they risk damaging the business of the Suez Canal, Stonehouse said. "If they stop shipping through the Suez, going round Africa instead, that's going to reduce supply," said Glenn Lodden, an analyst at DnB NOR Markets in Oslo. "There's a clear incentive for owners to go around Africa." Other shipowners are likely to follow should Frontline, Euronav and TMT choose to divert vessels and after the Joint Hull Committee urged companies to do so, Lodden said. Tanker owners may elect to charge more for sailing through Somalia's waters rather than rerouting, Per Mansson, managing director of shipbroker Nor Ocean Stockholm AB, said in an e- mailed note yesterday. "Maybe one or two will avoid, but most will go there against a premium to start with," Mansson said. Still, "one more hijacking of a tanker and the situation is in a different light." The fact owners say they are considering rerouting is buoying demand for derivatives used to bet on the future cost of shipping, said Ben Goggin, a broker at SSY Futures Ltd., a unit of the world's second-biggest shipbroker. Posted by: john frum 2008-11-21 |
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