joined the shake-out in the world's tanker market on Monday, announcing a merger to create one of the world's largest shipping groups.

With rates for Very Large Crude Carriers (VLCC) at record highs after 25 years dominated by excess capacity, the tanker market is dominated by a 'bigger is better' mentality.

Analyst Mats Liss from Swiss bank said the N&T Argonaut merger was expected and could signal the end of such alliances in Sweden although there could be further moves in Norway.

Interest in the tanker market is driven by tonnage levels remaining static for the past three years while the demand for global crude sea transportation has expanded seven percent.

This summer VLCC spot market rates fluctuated between $35,000-$45,000 a day while levels of $55,000 have been seen lately with rates forecast to rise.

VLCC availability is expected to be even tighter next year as more vessels are expected to undergo special survey which will remove them from the market for up to 20 days at a time.

The market pick-up has prompted a flow of VLCC new building orders, although shipyards will not be able to meet demand until late 1999, and interest in second-hand carriers has risen.

World-Wide Shipping, a major tanker operator, is controlled by the family of shipping magnate Helmut Sohmen, which is also the principal owner of N&T.

There also other players who make no secret of their desires to ride alongside the key tanker groups like Bergesen and World Wide. Bermuda-registered Frontline is known to be keen to up the size of its tanker fleet ahead of what it anticipates to be a lucrative 1998 for the sector.

Frontline merged with another Bermuda-based tanker group, London & Overseas Freighters, earlier this year but its advances to ICB have not been so well received.

ICB has done everything in its power since early September to fend off Frontline's unwanted advances but Fredriksen is refusing to abandon the bid, enlisting legal help to help his bid at an ICB extraordinary shareholders' meeting scheduled for next week.