Page 37: of Maritime Reporter Magazine (April 1998)

year at 310 vessels of just under 13 million grt, compared with 234 newbuildings of a total of 7.7 mil- lion grt secured in 1996.

JSEA calculates that the export orderbook in its widest sense stood at 19.2 million grt, comprising 472 vessels under construction or in the work backlog of December 31.

The large tanker market continues to be dominated by the Far East.

On the surface, there can be little doubt that history is repeating itself in this niche.

With orders during 1997 of more than 32 million dwt account- ing for all of the increase in the total world orderbook, fears have been sparked that the tanker industry is over-ordering, and thus in danger of upsetting the delicate balance of supply and demand.

This was broadly the motion debated at Seatrade's recent

Tanker Convention in London.

Pitched against each other were

Golden Ocean's Robert Knutsen,

Freddie Cheng's right-hand man whose company has more VLCCs on order than any other — and only two with long-term employ- ment — and Lars Carlsson whose company, Concordia, runs 'elderly' supertankers and who has been the most consistent supporter of long-term relationships with oil companies and life extension for older well-maintained vessels.

Others in the debate were

Citibank's Michael Parker and

Gibson's Eric Shawyer (against history repeating itself) and Peter

Bassoe and Paul Slater (for).

However, when the tanker indus- try's great and good had listened to the various arguments, the vote was surprisingly close — 79 for the motion compared with 67 against.

Mr. Knutsen argued that fears of shipyards turning to large-scale

VLCC constructions were being exaggerated. But some maintain that the figures are not in his cor- ner: last year there were approxi- mately 44 VLCCs ordered, taking the orderbook from eight million to nearly 21 million dwt.

He pointed to Asian oil demand and, even considering the present downturn, saw no reason for long- term worries. Certainly, recent

International Energy Agency analysis which still include bullish news for consumption supports the arguments for new vessels (although IEA has consistantly downgraded consumption num- bers each of the last few months).

Since most OPEC producers have pumped oil at maximum lev- els in recent years, those countries with spare production capacity provide the sources of marginal crude.

Saudi Arabia, Kuwait and Abu

Dhabi are all located in the

Middle East and are served princi- pally by VLCCs. Any increase in demand for OPEC crude, there- fore, results in increased demand for VLCCs. Yet, at a more opera- tional level, there are plenty of well-maintained older tankers —

VLCCs and ULCCs — which are theoretically capable of trading up to their 30th birthdays.

Afterall, there is now a substan- tial backlog of orders for new

Suezmaxes (about 17 percent of

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April, 1998 Circle 294 on Reader Service Card 29