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Pandemic continues to hamper shipping lines

The Covid-19 pandemic is still causing operational challenges in the shipping industry, Bermudian-based crude oil tanker company, DHT Holdings Inc, has reported.

DHT said the pandemic is hampering its seafarers and the ability to change crews at regular intervals and at convenient locations.

The company said: “The situation has improved but several areas still have restrictions affecting crew changes with transit and quarantine procedures, limiting the number of geographical options to execute crew changes.”

DHT said the near-term market outlook is being impacted by the Covid-19 situation in China and its lockdowns have delayed the demand recovery.

It added: “This coincides with an inflationary environment, and in particular high oil and gas prices, weighing down on certain economic activities and oil demand.”

DHT said trade disruptions resulting from the Russia/Ukraine conflict are driving transportation distances longer and are supportive of certain freight routes for smaller sized vessels.

It added: “The trade disruptions are also changing sourcing of refined oil products, supporting freight rates for product tankers. This happens at a time of low inventories of both crude oil and refined products, possibly suggesting demand for feedstock and thus crude oil transportation to improve in the not too distant future.”

The company has agreed to sell DHT Hawk, built 2007, and DHT Falcon, built 2006, for $40 million and $38 million, respectively.

The sales are expected to generate a combined profit of about $12 million.

The company will repay the outstanding debt on the two vessels, equal to about $13 million in total.

Thus far in the second quarter, 69 per cent of the available very large crude carrier days have been booked at an average rate of $24,800 per day on a discharge-to-discharge basis (not including any potential profit splits on time charters).

***

Teekay Tankers Ltd, the Bermudian-based owner and operator of mid-sized crude oil tankers, has reported strong second quarter spot tanker rates of $27,400 per day for the Suezmax fleet, $30,900 per day for the Aframax fleet, and $30,400 per day for the LR2 fleet.

The company sold three older vessels for a total of $44 million.

Teekay has completed the previously announced re-financings of 13 vessels with new, low-cost sale-leaseback financings that increased the company’s liquidity position by approximately $75 million.

The company said crude tanker spot rates were relatively weak during the first two months of the year due to the impact of the Omicron Covid-19 variant on oil demand, lower than expected oil supply growth due to temporary production outages, and high crude oil prices which led to an increase in bunker costs.

However, it added: “Russia’s invasion of Ukraine in late February led to a spike in crude tanker rates, particularly in the Aframax and Suezmax sectors, due to trade disruptions and the rerouting of cargos.

“Since then, the tanker market has exhibited significant rate volatility and stronger crude tanker spot rates.

“Although the near-term outlook is highly uncertain, the longer-term outlook appears positive due to a small tanker order book, very low levels of tanker ordering, and an ageing global tanker fleet, which together should lead to an extended period of very low tanker fleet growth.”

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Flex LNG Ltd, the Bermudian-based liquefied natural gas shipping company, in the first quarter signed a $375 million term and revolving credit facility, with an accordion option to increase this by $125 million, secured against an additional vessel.

The facility will be secured by the vessels Flex Ranger, Flex Rainbow and Flex Endeavour, while Flex Enterprise is a candidate for the accordion option.

Last month, Flex Ranger and Flex Rainbow completed their re-financing with net cash provided to the company of $11.5 million.

Also in April, the company signed aggregate $320 million sale and leaseback agreements for the refinancing of the existing facility for the vessels Flex Constellation and Flex Courageous.

The financing is expected to release approximately $99.6 million to the company.

***

Nordic American Tankers Ltd has taken delivery of a newbuilding Suezmax tanker from Samsung Heavy Industries in South Korea.

The Bermudian-based oil tanker company said the vessel has been named Nordic Harrier, which was the name of the first NAT ship when the company was listed on the New York Stock Exchange in 1995.

The ship will commence a contract for six years to Asyad Shipping Company of the Sultanate of Oman.

NAT said: “The contract is producing earnings and cashflow as from delivery from the yard, creating financial stability and a further foothold in this important area.

“Another newbuilding from Samsung is coming at the end of June. This vessel also has a contract for six years to the Sultanate of Oman.

“Our experience over many years is that everything is on schedule when Samsung shipyard is involved.”

Flex Enterprise: part of the Flex LNG Ltd fleet

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Published May 16, 2022 at 7:41 am (Updated May 16, 2022 at 7:41 am)

Pandemic continues to hamper shipping lines

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