Page 4: of Maritime Reporter Magazine (October 15, 1973)

Tanker Construction

Costing $18.2 Billion

Predicted By Banker

World tanker demand through 1975 will increase iby about 130 million deadweight tons, requiring some $18.2 billion in mew ships, according to Eric A. Fris Jr., vice president, Manufacturers Hanover

Trust Co., New York, N.Y.

Mr. Fris's comments appear in the latest issue of "Byline," an

MHT publication featuring inter- views with senior bank officers in question-and-answer format.

A specialist in maritime financ- ing, Mr. Fris sees the longer-term picture even more demanding.

From mid-1975 to 1980, he says about 30 million deadweight tons per year will be required, or a total cost of $29 billion and financing of $23 billion. He also expects a need for up to 80 new liquid natural gas vessels by 1985, costing well over $10 billion, if the current gas deals presently under discussion to carry

LNG to Western Europe, Japan and the United States materialize.

Emphasizing that "the money is going to have to be found, or the world is not going to get the energy it needs," Mr. Fris observed that the energy crisis isn't only confined to the United States. Japan and

Europe currently import more crude oil than the United States,

Mr. Fris says, and banks and other institutions will be forming vehi- cles for taking equity participations in the construction of some of the

LNG vessels.

Mr. Fris also looks for demand for other vessels, such as "many more very large and specialized grain carriers and the new type roll-on/roll-off car carriers that can transport upward of 4,000 vehicles at a time.

But he notes that the cost of these ships doesn't approach that of the tankers, pointing out 'that the building price of a 200,000-dwt very large crude carrier (VLCC) has almost tripled in five years, from $70 per ton to $190.

Mr. Fris attributes the increased shipbuilding costs in part to the devaluation of the dollar and up- ward revaluation of other curren- cies. "But the big factor," he says, "is the increased cost of labor and steel."

He also believes that "under-uti- lization" of shipbuilding yards in the late 1960s forced the yards to bid low for new building contracts.

Thus. Mr. Fris says, they now have to bid higher to recover the losses they suffered in previous years.

Asserting that American yards haven't been too successful until now in building the new tankers,

Mr. Fris reports that Japan, as of

June 30, has back orders and ves- sels under construction totaling 55.6 million gross tons, while the

United States ranks 10th with an aggregate volume of 4.6 million gross tons. Of the approximate 125

UL'OCs (ultra large crude carriers) on order, two-thirds of these will be built in European yards and most of the others in Japanese yards, he says.

But he speculates that the Unit- ed States might get more future orders for four reasons: (1) our yards are developing a more effi- cient building operation; (2) labor is better utilized; (3) the U.S. has attractive long-term financing, and (4) the dollar devaluation has made some U.S. prices more attractive.

Sohio Elects

Cazalet To Board

Peter G. Cazalet, president of

BP North America, Inc., New

York, N.Y., has been elected to the board of directors of The

Standard Oil Co. (Ohio) to serve a term that expires in 1975.

Mr. Cazalet succeeds Lord

Strathalmond, a director of The

British Petroleum Company Lim- ited, who resigned. Lord Strath- almond has been a Sohio director since 1970, when British Petrole- um's U.S. subsidiary, BP Oil Corp., was merged with Sohio.

Mr. Cazalet has been president of BP North America, another

British Petroleum subsidiary, since

December 1972. He joined British

Petroleum in London in 1959 and later served as assistant manager of BP's shipping department, gen- eral manager of the BP Tanker

Co., and in regional coordination work involving Australasia and the Far East.

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Maritime Reporter/Engineering News