World News
Fredriksen Places $2.6 billion Bet on Fuel-Saving Vessels
Tanker company Frontline 2012 Ltd. (Frontline 2012) has almost doubled its orders for new ships to 53, representing a decision to invest $2.6 billion in vessels that use 30 percent less fuel, Bloomberg reports.
The company, which counts shipping magnate John Fredriksen as its biggest investor, says the new vessels will be profitable at charter rates that would not cover costs for existing carriers since fuel represents about 75 percent of an average ship's running costs.
"Betting on Frontline 2012 is like betting on the future of shipping," said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo
"Even if there is only a moderate recovery over the next five years or so, Frontline 2012's earnings potential is substantial."
On average, analysts predict that Frontline 2012 will swing from a net loss of $3.94 million this year to a $32.3 million profit in 2014 and $151.4 million in 2015.
Tor Olav Troeim, an aide to Fredriksen, said the company could become one of the most profitable shippers.
"Low capital cost, low operating cost gives us a good start," he said.
Frontline 2012 announced in January that it has raised $310 million, partly to pay for newbuildings.
In the same month Fredriksen said he expected oil and fuel tankers, particularly product tankers, to lead the shipping industry toward recovery over the next 15 to 20 months.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 649.00 | 0.50 | 775.00 | 3.50 |
| Rotterdam | 603.50 | 1.50 | 759.50 | 11.50 |
| Houston | 626.50 | 2.50 | 794.00 | 2.00 |
| Fujairah | 649.00 | 0.50 | 904.50 | 6.50 |
| Global 20 Ports Average | 664.00 | 2.00 | 855.00 | 0.00 |
| Global 4 Ports Average | 632.00 | 1.00 | 808.00 | 4.00 |
| Global Average Bunker Price | 716.50 | 1.00 | 901.00 | 12.50 |
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