Maritime Press Collection 2009-6

Maritime Press Collection News reports taken from various internet news sites

Wednesday, April 15, 2009/ 2009‐006

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OHT semisubmersible vessel “Ospry” with a Dry Dock on board

Shipbuilding News

Leading Korean yards face restructuring Leading shipbuilding groups are among the 10 or so chaebol facing restructuring in Korea. Korean banks are reviewing chaebols' 2008 balance sheets in order to determine which have the smallest chances of making it through the economic crisis. Highly‐leveraged conglomerates are already exploring the option of selling off units, bringing life to the local M&A market, which has been in a lull since the global financial turmoil began last year. The lenders, including the industry's largest, Kookmin Bank, hope to complete the credit risk assessment of 45 major business groups by the end of April and draw up a restructuring plan by the end of May for those that come up short. The debt ratio, interest coverage ratio, total asset turnover ratio and operation income to sales ratio are said to be the key yardsticks in determining which of the groups will be placed under a creditor‐driven revamp program, bank officials said. Some five or six of the 45 business groups were found to have problems in a pre‐review conducted in February. But that review was based on conglomerates' financial statements only until September, when financial turmoil swept the world. The ongoing review, based on the full‐year data, is likely to find more conglomerates in need of a

Maritime Press Collection / 2009-006 Wednesday, April 15, 2009 News reports taken from various internet news sites

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complete overhaul. Seen as the most likely to fail the review are Daewoo Shipbuilding and Marine Engineering Co. and GM Daewoo Auto & Technology Co., which have debt ratios over 500 percent, based on their consolidated financial data. Business groups such as Hyundai Heavy Industries, Tong Yang, Hanjin, Dongbu, Kolong, Doosan, STX and Taihan Electric Wire also have relatively high ratios of over 200 percent. The debt ratios of Himart and Eugene Corp., are high at 260 percent and 360 percent. Hynix Semiconductor Inc., which suffered nearly 2 trillion won in operating losses last year, is also mentioned as a possible candidate. As growing economic and financial difficulties spread in Korea and around the world, some conglomerates are trying to offload some of their sprawling affiliates. Kumho Asiana is trying to sell its unlisted life insurance unit, Kumho Life Insurance Co. in order to secure cash, but its talks with potential buyers have not made much progress. Eugene Group has virtually given up its search for a possible buyer of Eugene Securities Co. after a deal with a private equity fund fell apart late last year. Dongbu Group has asked creditor Korea Development Bank to take over ferro‐alloys maker Dongbu Metal Co. in a bid to clean up the balance sheet of its flagship Dongbu HiTek, which owns 100 percent of Dongbu Metal. Taihan Electric Wire has a plan to raise nearly 3 trillion won by selling its affiliates Taihan ST, a stainless steel products maker, Try Brands Inc., a clothing and underwear maker, and Korea Rental Corp. Doosan Group, which has sold Techpack in December and its beverage business in January, is now seeking to offload Doosan DST, a defense business arm. Source: SeaTradeAsia‐Online

Korean Landlocked Masu Salmon


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Korea's Shipbuilders Turn to Offshore Plant to Stay Afloat

Hit by the global economic crisis, the shipbuilding industry is in rough waters. According to industry researcher Clarkson, the shipbuilding price index dropped one point to 157 as of April 3, the lowest this year. Also global orders for new vessels stand at just 26 so far this year, a whopping 96 percent drop from a year ago. Korea's big three shipbuilders Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries have not secured a single order this year. Now plummeting prices and falling orders are forcing Korea's largest shipbuilders to turn to offshore plants, specifically FPSOs, to stay afloat. FPSOs are floating production and storage units that the companies are now focusing on for orders. The three companies are concentrating on moving forward their construction capabilities in this area to secure their share of a market that is expected to take off in the second quarter of this year. So far, the outlook is bright. Hyundai Heavy recently completed the world's first FPSO‐specific dry dock. Samsung Heavy Industries, which started construction on the world's first FPSO for storing liquefied natural gas, still leads that market. Source: Arirang News

Swiber's Dalihao completes the Mampak platform installation for Brunei Shell.


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Shipbuilding key driver of South Australia's economy A KEY sector driving economic growth in South Australia is entering the stage where preparation transforms into visible action. The Techport Australia shipbuilding complex at Osborne on the Port River is ready for work to begin cutting steel for the air warfare destroyers. Millions of dollars have been spent on the complex. Mostly this has been out of view, building the huge concrete apron where the ships will be assembled, a 213m wharf and dredging for the massive shiplift. This is big‐scale industry generating hundreds of jobs ‐ and there's lots more to come. The first of three destroyers, HMAS Hobart, is due to be completed by 2014 with the HMAS Brisbane and HMAS Sydney to follow. By then, Techport will be gearing up for the next major contract, the new generation of submarines.

Building the submarines in Adelaide was a federal election promise by the Australian Labor Party which must be honoured. With the air warfare destroyers behind it, ASC will be favoured to build the submarine work though still will have to win the contract on merit. While unconventional conflicts such as Afghanistan are likely to dominate military deployment in the near term, Australia cannot afford to lose its place as a significant player on the conventional stage. The Federal Government's Defence White Paper, due out later this month, is expected to say Australia must be cognisant of the rise of China and the potential for tension with the U.S. as the two grapple with being the most powerful nations this century. Australia, as a good friend of both countries, will want to help soothe any tensions but needs to


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come to the table from a position of strength. That is why the Federal Government will keep up spending on big‐ticket items such as destroyers and submarines. For SA, this vindicates the strategy of successive governments to make Adelaide a centre of excellence in naval shipbuilding. It began with the Bannon government's drive for the Collins‐class submarine project. It was revived through SA Cabinet members of the federal Coalition government, such as Robert Hill, supporting the destroyer contract and has been taken further by the Rann Government's facilitation of the industry. The work has created high‐value jobs and helped buffer the manufacturing sector from the financial downturn ‐ welcome outcomes for the state economy. Foley's land tax challenge TREASURER Kevin Foley, now committed to the job for the long haul, faces a tough decision on the land tax issue. The long‐running and well‐organised campaign to lower the impost is gathering pace, rather than ebbing away. Yet Mr Foley is wrestling with sinking revenues and the need to stimulate the state economy when he delivers the Budget in June. The Motor Trade Association, for example, wants more than $100 million land and payroll tax cuts, warning jobs will be lost in the automotive sector if these do not occur. It will almost certainly be the toughest Budget Mr Foley has had to prepare in his seven‐year stint as Treasurer. Source: Adelaide News

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S.Korea KAMCO to revisit Daewoo shipyard sale in H2

Korea Asset Management Corp (KAMCO), a state debt clearer, said on Tuesday it would consider the best time later this year to sell a stake in Daewoo Shipbuilding and an energy developer. The planned sale of Daewoo Shipbuilding & Marine Engineering, estimated to have fetched $5 billion, fell through in January due to a dispute over financing terms with South Korea's Hanwha Group. Hanwha had been picked as the buyer of a 50.4 percent stake in the world's No.3 shipbuilder, which was owned by state‐run Korea Development Bank (KDB) and KAMCO. 'In consultations with KDB, we will review the timing

of the sale in the second half of 2009,' the debt agency said in a policy report to parliament. KAMCO will also mull the timing to put its 35.5 percent of Daewoo International Corp, a energy developing firm, later this year, together with other creditor banks. The stake is worth 923.4 billion won ($696 million) by Tuesady's closing. Previous efforts by the state agency and other banks to sell equity holdings in three companies ‐‐ Daewoo shipyard, unlisted Daewoo Electronics and Ssangyong Engineering & Construction ‐‐ all collapsed due to pricing differences as the global credit crisis took a heavy toll on potential buyers. Separately, KAMCO will seek to offer 9.9 percent of unlisted Kyobo Life Insurance, one of South Korea's top three life insurers, in the second half, taking into consideration progress in Kyobo's planned IPO. Source: Reuters

Bangladesh breakers to fight another day BANGLADESHI breakers’ yards are not expected to close as a result of last month’s High Court ruling, according to the trade’s main opponents, writes Justin Stares in Brussels. Despite ruling that all yards without environmental clearance must be shut down by tomorrow, there is little expectation of immediate change. “We don’t think they will shut down,” said Ingvild Jenssen of the Brussels‐based non‐government organisation Platform on Shipbreaking. “But there is a feeling that change is coming.”


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Ms Jenssen has just returned from Bangladesh, where she met with government officials. “I was well received,” she said. “The whole issue is moving from the shipping ministry to the environment ministry, which has been asked to draw up new rules.” Local media report that the head of the directorate‐general for shipping has been ousted as a direct result of the March 18 ruling, which revealed that almost all the Chittagong breakers’ yards were operating without environmental clearance. But Lloyd’s List market reports indicate that the judges’ decision has not stopped yards doing new

deals over the last two weeks to break up ships. The scrapping industry is booming due to poor demand for older vessels. Attention is now focusing on the International Maritime Organization’s attempts to create new worldwide rules for the industry. A key meeting will be held in Hong Kong next month. The most controversial issue on the agenda is beaching, or driving a vessel on to a tidal beach to be broken by hand, often in dangerous and polluting conditions. Chittagong yards specialise in beaching. The US, Denmark and Norway, supported by the European Commission, are among nations understood to be pushing for the practice to be banned, although there is said to be resistance from other countries, including Japan. “There are unclear signals on whether beaching will be compatible with the convention,” said Ms Jenssen. “People are afraid of pushing Bangladesh away.” The European Union has promised separate legislation on shipbreaking, although no new proposals are expected before the end of this year. Written by: Justin Stares Brussels

STX scores Chinese funds for Dalian expansion

South Korea's STX Group said Tuesday its Chinese affiliates have secured 2.85 billion yuan (US$417 million) in loans from Chinese lenders to fund the construction of its industrial complex in Dalian. STX Dalian Shipbuilding borrowed 1.35 billion yuan from the state‐run China Construction Bank, while STX Dalian Engine clinched the

remainder from another Chinese bank, the business group said without naming the second lender. The debts carry an interest rate of 6.14 per cent and mature in nine years, according to STX. The money will be used to complete the second phase of its shipbuilding industrial base in Dalian, northeast China, STX said. The industrial base will be completed within the year to include vessel‐engine facilities and industrial plants, it said. STX Group shares soared on the news. STX Corp rose 8.25 percent and STX Engine leapt 5.56 percent. Source: SeaTradeAsia‐Online


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Offshore News

Shell in talks with China for Iraq oil bid BEIJING (Reuters) ‐ Royal Dutch Shell said on Tuesday it is holding discussions with Chinese state oil firms to jointly bid for oil projects in Iraq. The Anglo‐Dutch oil major has said it wants to expand its presence in the vast fuel retail and refining businesses in China, which are currently dominated by state‐run Chinese giants who are keen to boost oil reserves overseas. Chief Executive Jeroen van der Veer made the comments to reporters while in Beijing. He did not elaborate. Shell, the world's second‐largest non‐government controlled oil company by market value, has been downsizing its refining and retail assets in Europe and Africa as demand falls in the regions. But it has been eager to have a bigger presence in China, the world's No.2 oil consumer, after setting up a small joint‐venture fuel marketing firm with top Chinese refiner Sinopec Corp.

Petrobras Reports Two Natural Gas Finds to ANP

Brazilian state‐run energy giant Petroleo Brasileiro SA (PBR), or Petrobras, notified the National Petroleum Agency late Monday that it had discovered traces of natural gas in two exploration wells. Petrobras said it found traces of gas in a wildcat well drilled at the ES‐T‐505 inland block in the Espirito Santo Basin. The 4BRSA722ES well was drilled by the BCH Energy 1 rig at a target depth of 816 meters, according to drilling data. Traces of natural gas were also found in the offshore BCAM‐40 block in the Camamu Basin, off the coast of northeast Brazil's Bahia state. Drilling

data showed the Petrobras XVII rig operating at a water depth of 295 meters, targeting 4,625 meters. In January, Petrobras reported a similar natural gas find in the block. Petrobras is lead operator of the block with a 35% stake. Local oil company Manati holds a 45% stake, while Brasoil Manati Exploracao Petrolifera and Rio das Contas Produtora de Petroleo each hold a 10% share. Oil companies operating in Brazil must inform the ANP of indications of oil, gas or hydrocarbons in any exploratory well within 72 hours. The disclosures are routine and do not indicate commercial viability. Copyright (c) 2009 Dow Jones & Company, Inc.


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Sevan to continue Shelley work after Premier purchase

ABERDEEN, U.K.: Sevan Production UK Ltd., a wholly‐owned subsidiary of Sevan Marine ASA, has entered into a Memorandum of Understanding with Premier Oil and Gas Services for the continued provision and operation of the floating production, storage and offloading vessel FPSO Sevan Voyageur by Sevan for the development of the Shelley field, in the event that Premier or one of its affiliates becomes the successful purchaser of either Oilexco North Sea Ltd or the Shelley field. The FPSO Sevan Voyageur is already moored at the field. The hook‐up of the field subsea facilities is expected to take place mid‐2009 to enable production start up of the Shelley field. The FPSO Sevan Voyageur will be operated under a production sharing contract whereby Sevan will be compensated for its actual operating cost and will in addition receive a tariff payment based on actual monthly revenue from oil production from the field. The Shelley field is on blocks 22/2b and 22/3a in the UK sector of the North Sea and was 100 percent owned by Oilexco North Sea. Oilexco North Sea entered administration in January and its joint administrators are attempting to sell the company or its business and assets. Premier has entered into a contract to acquire all the shares of Oilexco North Sea for around US$410.4 million, or all the business and assets for US$337.2 million. Source: Energy Current

EIA Estimates OPEC's Oil Export Earnings at $476B in 2009


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Based on projections from the EIA April 2009 Short‐Term Energy Outlook (STEO), members of the Organization of the Petroleum Exporting Countries (OPEC) could earn $476 billion of net oil export revenues in 2009 and $598 billion in 2010. Last year, OPEC earned $970 billion in net oil export revenues, a 42 percent increase from 2007. Saudi Arabia earned the largest share of these earnings, $287 billion, representing 30 percent of total OPEC revenues. On a per‐capita basis, OPEC net oil export earning reached $2,686 in 2008, a 40 percent increase from 2007. Methodology This report includes estimates of OPEC net oil export revenues. For each country, estimates of oil production and consumption from the latest version of the EIA STEO are used to derive net oil exports. For countries that export several different crude varieties, we assume that the proportion of total net oil exports represented by each variety is equal to the proportion of the total domestic production represented by that variety: in other words, if we assume that Arab Medium represents 20 percent of total oil production in Saudi Arabia, then we assume that Arab Medium represents 20 percent of total net oil exports from Saudi Arabia. Source: Rigzone

Cabot to Sell Canadian Operations for Combination of Cash, Stock Cabot Oil & Gas Corporation announced today a definitive agreement to sell its Canadian operations to a private Canadian company for a combination of cash and stock. Total consideration (denominated in Canadian dollars) for this transaction is CAD$78 million in cash, along with CAD$24 million in new equity. The sale is expected to close on, or before, May 1, 2009 and is subject to due diligence and other customary closing conditions. "We announced our intent in February to explore the market for a Canadian asset sale, and we are pleased that in this market an agreement was reached," said Dan O. Dinges, Chairman, President and CEO. "Once closed, this further focuses Cabot's regional extent and provides capital to reduce our debt position." At year end 2008, Cabot's reserve report included 40.4 Bcfe of proved reserves in Canada. "This figure was limited to some extent due to our plans to suspend capital investments in Canada for 2009," commented Dinges. "Over the last several years, Cabot had assembled a nice asset package in Canada, but with our recent success in other basins, Canada became less strategic, long‐term." The effective date of the sale is April 1, 2009 and therefore does not impact first quarter production expectations.

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Ocean Rig Finalizes Contract with Petrobras for Leiv Eiriksson DryShips announced today that on April 8, 2009, pursuant to the previously announced letter of award, its wholly owned subsidiary Ocean Rig ASA signed a 3‐year employment contract with Petrobras for exploration drilling in the Black Sea for its semi‐submersible rig, the Leiv Eiriksson. The contract is expected to commence in direct continuation from the current contract with Shell. The contract value is approximately US $630 million, including an estimated 60 days of mobilization, disassembly and reassembly of the derrick structure, and an incentive bonus of 8%. Source: Rigzone

The Leiv Eiriksson semisubmersible

Heidi Peterson Steps Down from Aker Soultions' Board Heidi Petersen has informed the Board of Directors of Aker Solutions ASA of her intent to resign from the Board with immediate effect. The Board has accepted her resignation and will move to elect a new Board member following standard procedures. "We understand Heidi Petersen's choice," said Jannik Lindbaek jr., SVP Corporate Communications,


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Aker Solutions, "and can only regret that she did not choose to take part in the Board's discussions at their meeting on March 30." Source: Rigzone

SCAN plans 2-D seismic program in Caribbean for Petrobras

OSLO: Oslo‐based seismic data acquisition company SCAN Geophysical has received a letter of intent from Petrobras for 2,500 kilometers (1,552 miles) of 2‐D seismic acquisition in the Caribbean region. The confirmation and letter of intent for the acquisition came from Petrobras Middle East B.V. The data will be acquired with 2‐D seismic vessel M/V Geo Searcher. Mobilization is set for early May 2009. The Geo Searcher will acquire 120 fold hi‐density 2‐D data. This vessel is equipped to handle ultra long streamers for high‐end 2D applications including long offset and large source

configurations for 2‐D surveys worldwide. A SCAN spokesperson said the company is especially pleased as this marks the second contract opportunity to provide services to "an important and major client" such as Petrobras. SCAN expressed confidence that the vessel and crew will carry out this survey in the same professional manner as it did in the previous project for Petrobras in the southern North Sea last year, with completion as scheduled. The specific area of the survey has not been disclosed. However, according to BNamericas, last year Petrobras Middle East, a subsidiary of Brazilian federal energy giant Petrobras (NYSE: PBR), and Cuba's state oil company Cupet signed a US$8 million oil E&P agreement for block 37 off the Caribbean island. The deal entails seven years for exploration and 25 for production. Block 37 covers an area of 1,600 square kilometers (617 sq miles) in the Varadero region at depths ranging from 500 to 1,600 meters (1,640 to 5,249 ft) near Cuban onshore oil reserves. Source: Engrgy Current

Fire delays Prosafe FPSO A FIRE on the floating production storage and offloading conversion Ningaloo Vision at the weekend was caused when the owner, Prosafe Production, was installing equipment, Keppel Shipyard has said, writes Marcus Hand in Singapore . The electrical fire started in the instrument and technical room, said Keppel Shipyard. No one was hurt in the fire, but it is expected to delay the completion of the conversion by several months.


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A spokesperson for Keppel said the incident “happened when the owner was commissioning their equipment in the instrument and technical room”. According to the shipyard, the room had already been handed over to the owner Prosafe and it was installing its own equipment. “While it is too early to ascertain the full impact of the fire, preliminary assessment indicates that completion will be delayed by a few months, pending delivery times on critical equipment,” said Prosafe. Prosafe said it was insured against such incidents

and did not expect any significant losses apart from charter hire. The conversion had originally been expected to be delivered in early 2009 for a seven‐year contract with Apache Northwest offshore Australia. Source: Lloyd’s List

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World Awash in Oil; Demand Lacking Says IEA On Friday the International Energy Agency (IEA) cut its forecast for global oil demand by one million barrels per day (b/d) to 83.4 million b/d. That means the world will be using approximately 2.4 million b/d less than in 2008, or roughly a 3% decline from a year ago. This matches the first year decline experienced during the 1979‐1983 period, but the IEA does not expect this industry downturn to last four years like the earlier one. The downward demand revision was made as the IEA used sharply


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reduced economic growth forecasts to project oil consumption. Much of the demand reduction is due to weaker oil consumption expected in developed economies such as the United States, but demand is falling in developing economies, also. The IEA is now anticipating China's oil demand to shift from a small increase to about a 1% decline, or roughly an 80,000 b/d decline from its prior consumption forecast. The IEA pointed out that China's oil consumption fell about 6.9% in January‐February from last year. China's news last Friday that its crude oil imports hit a one‐year record high, suggesting better consumption for March was not available at the time the IEA made its revised forecast. If the IEA's projection for an oil demand decline in China proves accurate, it will mark the country's first annual decline in 19 years. We found the chart of the growth rate in China's construction and its implied steel demand interesting when considered against the country's oil demand. What one sees is that in the first years of the period, 2000‐2004, construction and steel demand growth was quite high, peaking in early 2004 at close to a 40% annual growth rate. In the following four years, the growth rate was considerably less than in the earlier period with the brief exception of the pre‐Olympics period in 2007 and 2008. Construction demand fell steadily throughout most of 2008 until demand went negative in the last half of the year. Demand has rebounded in early 2009, but clearly the IEA doesn't believe this is a measure of healthy future oil demand.

The annual growth in China's oil demand follows the pattern of growth for the country's construction and steel demand. In the early years of the period, annual oil demand growth was noticeably stronger than in the recent years.


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Global oil demand remains the key to oil prices in 2009. Falling oil production will become a greater factor in the supply/demand balance as we move through 2009 and into 2010. OPEC's continued discipline in holding its output to the cartel's reduced December production quotas will be important, but with surplus capacity of roughly 5.5 million b/d out of total global demand of 83.4 million b/d, or 6.6% of the total, the world is not very far out of balance. The IEA says it expects non‐OPEC supply to fall by 320,000 b/d in 2009. Based on the report released Friday by the Alaska Department of Revenue, North Slope production will fall by 5% in the next fiscal year starting in June, and the drop would represent about 10% of the IEA's forecasted fall in non‐OPEC supplies. But possibly more important is the IEA's identification of about one million b/d of gross pumping capacity of new supply that would have come into production in 2009‐2010 that has been either delayed or canceled. We believe there is sufficient uncertainty about a number of demand and supply drivers that one has to have a low level of confidence in forecasting the direction of the global oil market over the next five to ten years. While many people will focus on the supply challenges facing the petroleum industry, we remain convinced that understanding demand dynamics may be the most helpful in charting the future course for the oil markets. We are only confident in knowing that whatever we forecast, it will most likely be wrong. Hopefully we can at least get the direction right.

Reprinted with permission from PPH & B Source: Rigzone

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Shipping News

Tanker market faces worse slump than first thought Dahlman Rose scraps its projection of a rebound for spot rates in the fourth quarter Writer: Rajesh Joshi THE tanker market is set to face a “much more prolonged downturn” than previously thought, according to New York investment bank Dahlman Rose. The outlook for tanker rates this year is worse than previously expected, after a larger‐than‐anticipated fall in oil demand and high inventories, the bank’s research team said. “We are no longer projecting a fourth quarter rebound in spot rates,” Dahlman Rose said. “We are revising our spot rate forecasts lower for the remainder of the year and expecting further pressure on tanker values.” Dahlman Rose has slashed its average spot rate for 2009 for very large crude carriers by 20%, from $40,000 a day to $32,000 per day. It has also revised down average 2009 suezmax rates by $4,625 to $28,375 per day.

www.richard‐seaman.com/Wallpaper/Travel/MiddleEast/BosporusOilTanker.jpg

Rates for medium range product tankers are expected to average $11,375 per day this year, compared to $18,000 per day previously forecast.


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“We remain concerned that spot tanker rates will face continued pressure as we proceed through 2009, as Opec may need to take more aggressive action at its next meeting in late May,” said the report. In making this forecast, Dahlman Rose analysts Omar Nokta and Sam Margolin have issued a blanket revision for tanker industry shares traded in New York, with a few price target reductions and predictions of further erosions in ship values. The stockpiles of crude oil in Organisation of Economic Co‐operation and Development countries are expected to remain at historically high levels throughout the current year, with the current inventory of 61 days being the highest in 16 years. The production cuts by the Organisation of Petroleum Exporting Countries may have come too late to ward off the threat to tanker markets, Dahlman Rose said. In fact, OECD inventories have increased by 100m barrels, to 2.7bn barrels, since Opec began its cuts. These factors, as well as lower demand projections by the International Energy Agency, have caused the serious re‐think. “We are no longer projecting a fourth quarter rebound in spot rates, as OECD oil stocks are unlikely to break 55 days before the end of the year,” said the report. “The IEA’s new demand forecasts imply OECD inventories will fall to just 59 days by year‐end, based on current Opec output, and would take nearly a year to fall below 55 days.” The US bank expects further pressure on tanker values, and has forecast that the current price valuation of $89m for a five‐year‐old VLCC will slump to $75m by the year‐end. “While the drop in [tanker] values has not been as sudden as in other shipping segments, tanker prices have been on a continued decline,” Dahlman Rose said. The bank referred to the Baltic Exchange’s sale and purchase assessment for a modern VLCC, which has fallen from $160m in September to $89m currently. “We remain cautious on tanker stocks, though most have positioned themselves strongly to withstand market pressures,” Dahlman Rose added. However, in accordance with their new circumspection, Mr Nokta and Mr Margolin have run the rule over New York‐listed tanker companies covered by their firm. Omega Navigation has been reduced from Hold to Sell, thanks in large part to loan covenant problems and because almost half the company’s fleet of nine comes off‐charter by the middle of the year, when market weakness is expected to be in full force. DHT Maritime has been reduced from Buy to Hold. Dahlman Rose has maintained its Buy ratings on Teekay Tankers, General Maritime and Ship Finance, but adjusted its price targets downwards. Prior Hold ratings remain in force on Frontline, Overseas Shipholding Group, Teekay, Nordic American, Tsakos Energy and Knightsbridge.

Dahlman Rose 2009 daily tanker earnings forecast Tanker size Newestimate Oldestimate Change

VLCC $31,875 $40,000 ‐$8,125

Suezmax $28,375 $33,000 ‐$4,625

Aframax $21,500 $26,000 ‐$4,500

Panamax $16,500 $22,000 ‐$5,500

MR product $11,375 $18,000 ‐$6,625Source: Lloyd’s List


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Dry bulk market shows signs of life

After 22 straight falling sessions for dry bulk freight rates, the Baltic Dry Index (BDI) finally headed back up, during the last couple of days. The BDI rose a further 14 points yesterday at 1,492, coupled with another 15 point gain of 1% last Thursday, the last day of trading before the Catholic Easter Holidays. Thus, the longest slide of the Index since the previous November ended. Of course, the market sentiment remains bleak, as proved by the retreat of the smaller handysize vessels’ index (BHI) at 628 points (down by 7), even at yesterday’s rising session. The lead of the increase was mostly noted at the panamax sector which suffered during March. The relative index (BPI) recovered at 1,185 points, up by 41 from last week.

Capesizes, the gauge's biggest vessels, climbed to US$18,035 up by $49 from the previous session, while panamaxes daily spot average rates gained $327 on a day‐to‐day basis, reaching $9,494. Capesize forward freight agreements for the third quarter, used to bet on future shipping rates, closed at US$19,375 last Wednesday, a 7.8 per cent gain this month. Panamax FFAs for the same period were at US$11,750, a 4.3 per cent advance for this month. The data are from broker Imarex NOS ASA. Meanwhile, Brazilian iron ore miner Vale has registered a rise in Chinese demand for ore and other metals, despite the global economic crisis, the company's financial officer, Fabio Barbosa, said in the beginning of the week. He said shrinking stocks in the world's largest importer of iron ore had helped demand but added there was still considerable uncertainty over demand globally. "It seems that there is a sign of recovery, of improvement, and in the case of China, it's more pronounced," Barbosa said. But there is contradiction to these remarks, since earlier on Monday, China's vice chairman at the Commerce Ministry's trade department, Liang Shuhe, said his country's iron ore imports surged in February and March due to "fake demand" brought about by stockpiling. Liang said imports would likely fall over the rest of 2009. Nikos Roussanoglou, Hellenic Shipping News

Shipping shares up on renewed investor confidence

The bringing of news of further rebound in earnings proved enough to spark investor interest towards listed dry bulk stocks. The relative Dry Bulk Shipping Stock Index moved forward yesterday by about 3.5%, while in terms of comparison with the S&P 500, it remains ahead by 7.6% this month. Dryships alone was pushing the Index higher yesterday, by gaining 11%. The company announced yesterday that its Ocean Rig ASA unit signed a deepwater exploration contract with Petrobras for $630 million.


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Similarly, on Monday, Diana Shipping said that it will exchange its subsidiary, Eniwetok Shipping Company, plus $15 million for ownership of Gala Properties. In the deal, Diana will gain possession of a contract for the completion of a Capesize dry bulk carrier, valued at over $60 million. The ship already has a minimum of 59 months of business booked at $55,000 per day, and Diana expects it to generate close to $100 million in revenue over that period. These developments were enough to propel the sector’s stock higher, with Eagle Bulk Shipping, Excel Maritime, Paragon Shipping and OceanFreight Inc. trading upwards by more than 6%. Source: Nikos Roussanoglou, Hellenic Shipping News

Singapore March bunker sales jump 17 pct vs Feb

Marine fuel sales in Singapore rose a stronger‐than‐expected 17 percent in March from the previous month to a record high, after falling 11.5 percent in February, government data showed on Monday. Bunker sales in the world's top bunker port rose to 3.13 million tonnes last month, as cheaper rates boosted demand, traders said. This compares with 2.67 million tonnes in February and 3.02 million tonnes in January, the Maritime and Port Authority said on its website. Bunker sales were up 2.8 percent from the same period a year earlier. For the January‐March period, 8.82 million tonnes of marine fuel

were sold in Singapore, up about 2.8 percent from 8.58 million tonnes in the year‐ago quarter. Cheaper rates in Singapore, compared to other ports in East Asia, have drawn more ships to the city‐state over the past month. Bargain‐hunting also set in when Singapore bunker prices fell to a more than six‐week low of $235 per tonne in mid‐March <BK380‐B‐SIN>, compared with a one‐month high of $283 a tonne on Feb. 6, traders said. Prices have since rebounded in line with improving demand to $268 per tonne on March 31. Source: Alibaba

Idle Box Capacity Falls

Idled ocean container capacity fell for the first time in six months as carriers re‐activated larger vessels amid a seasonal increase in cargo volume, but the jobless figures likely will surge again later in the year. As of April 13 the idle fleet stood at 486 ships of 1.31 million TEUs representing 10.4 percent of the global fleet. Two weeks ago 485 vessels were idle, representing 1.42 million TEUs and 11.3 percent of the fleet, according to AXS‐Alphaliner, the Paris‐based container

shipping consultant. "The fall signals the start of the summer peak season and expectations of higher volumes in the coming months," Alphaliner said.


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Several seasonal loops suspended a few months ago have been re‐activated while larger ships are being introduced on other loops. This has led to a fall in the number of idled very large container ships from 23 to only 10 today. The idle fleet likely will shrink over the coming month as several carriers, including K Line, Cosco, OOCL, Hanjin and MOL, are expected to redeploy laid up tonnage as cargo volumes pick up in key trade lanes. A marginal increase in freight rates on the Asia‐Europe and Asia‐Middle East routes in early April also has prompted the return of some idled ships, according to Alphaliner. But the idle fleet could ramp up again to over two million TEUs when the peak season ends in September/October if the global economy does not recover, Alphaliner forecasts. "With new capacity expected to be added at a faster pace over the next three quarters, a surplus fleet oversupply of three million TEUs may appear at the end of the winter season if the economy remains sluggish." MSC, the Geneva‐based carrier, has idled just one percent of its fleet and only 2 percent of French carrier CMA CGM's fleet is jobless, according to Alphaliner figures. APL has idled 23 percent of its capacity, and 24 percent of Zim's fleet is jobless. Source: Journal of Commerce Green technology raises its game

www.seatradeasia-online.com/News/3882.html The advent of more stringent environmental legislation around the world is focusing the minds of researchers, especially in the field of propulsion, writes Craig Eason


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THE development of technical solutions to the shipping industry’s environmental challenges has been gathering pace as a number of important regulatory deadlines loom. Marpol Annex VI, with its new limitations on nitrogen and sulphur oxide emissions, and the imminent reductions in CO₂ and other greenhouse gas emissions are going to create challenges for the shipowner. Bar a few notable exceptions, however, owners are not going to create the solutions. The work to reduce these three main emission groups revolves around engineering efforts, both incremental and more radical. There is an urgent need for more collaboration between companies, such as engine makers Wärtsilä and MAN Diesel, as they look at collectively tackling their common challenges. The whole environmental technology industry could be worth more than $5bn by some estimates as various deadlines approach, forcing owners to invest in new onboard technologies. Experts agree that hydrocarbon combustion can only be improved so much. But with theoretical maximum limits not yet met, projects such as the European Union‐backed Hercules partnerships are looking at approaching these targets. Brussels has recently approved the second phase of the €24m ($31.8m) Hercules project, Hercules Beta.

Green Turtle

(Chelonia mydas) Photo: Andy Bruckner, NOAA

The targets of the second project are to improve efficiency by 10% and, in doing so, go some way towards meeting the tough emissions goals that are being set by the International Maritime Organization. According to project co‐ordinator Nikolaos Kyrtatos, while there are other things that can be done as far as the total propulsion plant is concerned, on the engine itself further improvements are becoming more difficult as these theoretical limits are approached. Prof Kyrtatos will co‐ordinate the range of projects being developed under the auspices of the Hercules Beta project. Some will look at turbocharger improvements, others at further gains from waste heat recovery technology.


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Other projects will look at new material composites for engines, higher temperatures and friction issues as the teams work to squeeze out the last drops of improvements in efficiency from diesel combustion. The Beta phase is a direct follow‐on from the first three‐year project, which ended in 2007, where 30 organisations worked together including many competing engineering firms. Collaboration to overcome common obstacles during the first phase proved so successful that there were immediate requests for it to be continued. “The initial achievement was the structural engineering that allowed us all to sit side by side and talk with each other,” says Prof Kyrtatos. “People in the project realised that the goals in general were the same, so by talking together they could avoid the pitfalls although the final design and actual reliability would be different between companies,” he adds. By working in parallel on common problems, engineers were able to assess quickly if they were on the right track with their developments. “This kind of research is extremely expensive, and if you are on the wrong track you could spend a lot of time and money doing something useless, so the general feeling is they would like this broad parallel working to continue, even beyond the project, which ends in 2011,” adds Prof Kyrtatos. With the idea being circulated that there could be a permanent forum for research to continue, there is a belief that the green maritime technology industry is gaining a level of maturity similar to that which helps fuel advances in the aerospace sector. While work develops on improving diesel propulsion efficiency, and debate rages over the availability and implications of low‐sulphur fuel oils, a number of other alternative fuel source projects have gained prominence recently. Fuel cell development has led to two projects in Europe making significant steps, with on board trials due to be undertaken to assess suitability as an alternative auxiliary power source. Methanpu and the FellowSHIP projects both hope to demonstrate the capabilities of the cleaner fuel sources in the marine sector.

Computer generated green ship http://www.instablogsimages.com


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There have also been developments in the production of electrical power from solar panels. Japan’s NYK Line has a spread of more than 300 panels on board a car carrier, testing whether they can provide enough auxiliary power for lighting and other low‐level power needs. On a more dramatic scale — and perhaps to make more of a political standpoint — Planet Solar, a team of Swiss and French designers, is developing a solar‐powered trimaran that will attempt to circumnavigate the globe in 2010. The 31 m, 60 tonne multihull will have its 470 sq m deck area covered in photovoltaic cells with the aim of creating up to 13 kn for the record attempt. While not purporting to be a forerunner of merchant vessel propulsion, it will certainly raise the case for solar power in the maritime sector. Another proponent of solar power, Solarsailor, a small company in Australia that has the patronage of the country’s former prime minister, Bob Hawke, is attracting interest in its solar sails. Solarsailor specialises in hybrid marine power, an integrated hybrid electric technology, and solar panels that harness renewable solar and wind energy. It has already created a number of designs for in‐harbour craft and yachts, and has signed a contract with China’s Cosco shipping to develop large solar sails suitable for tankers. Source: Lloyd’s List

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Maritime Press Collection 2009-6

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