as oil production increases, according to Bermuda-based London & Overseas Freighters Ltd.

President Mr. Miles Kulukundis said in the company's annual report to shareholders that increased oil production and consumption should benefit high standard tanker operators.

He made the statement yesterday as LOF confirmed its profits rose 315 percent to $4.2 million for the year ending March 31.

Mr. Kulukundis said: "As we look forward to the coming year, the continued high level of charter coverage and a full year's contribution from London Pride will underpin our earnings.'' The London Pride is the newbuilding tanker delivered to the company last July.

Mr. Kulukundis said that after evaluation of studies produced by oil and tanker analysts, they believe that the underlying trends in the oil market continue to be positive for the tanker industry.

He said: "World oil consumption is expected to grow by 4.6 percent. This incremental demand will be met by an expected 10.3 percent increase in OPEC (Organisation of Petroleum Exporting Countries) production, while non-OPEC production is expected to remain steady.

"Increases in OPEC production have historically been mirrored by similar increases in tanker demand, which is expected to grow by over 10 percent in the same period.

"These trends are accentuated in the United States, where, in the same period, oil consumption is expected to grow by 5.7 percent, oil production by 7.1 percent and oil imports to increase to meet this increased demand.'' Mr. Kulukundis said that the continued demand for higher standards of operation and higher specification for vessels, particularly in the US trades, will continue to constrain the supply of tankers available to meet these transport requirements.

He concluded: "Despite the weak tanker market, we are optimistic that the shortage of quality tonnage will manifest itself in improved earnings. We believe that an opportunity for good returns in the tanker industry will develop over the coming years and we have structured ourselves to meet that opportunity.'' He said: "We have achieved our long-held ambition of broadening our equity base with a successful share issue in the United States and Europe. This has resulted in a market price of our shares that better reflects the underlying value of the company.

"With the proceeds of the share issue, we have entered into a major expansion programme. We have syndicated our long-term debt and secured further finance for our expansion programme.

"Looking forward, we are optimistic that the structure that we conceived and built over the last six years will flourish as the demand grows for the product that we provide: High quality modern tankers operated to the highest standards by experienced personnel serving the crude oil transportation requirements of the United States.'' Mr. Kulukundis said "net freights and hire'' in the last financial year increased by 69 percent from $14.8 million to $25 million. Net operating income was up 165 percent, year over year from $2.8 million to $7.4 million.

The AGM for the company is scheduled for June 27 in London.