Euronav Nets Q3 Loss of $34.9 Million

The VLCC Algarve will be converted to a FPSO unit

With demand for crude oil down and the total supply of tonnage up, independent tanker company Euronav NV (Euronav) [EBR:EURN] had a net loss of $34.9 million for the three months ended September 30, 2012.

The Q3 loss was less than in the same quarter last year, when the company lost $40.5 million, but its year-to-date net loss was up 20 percent from the same period last year to $54.9 million.

Euronav also announced that it sold the very large crude carrier (VLCC) Algarve for $35.9 million and that the new owner will convert the ship to a floating production and storage offloading (FPSO) unit, taking it out of the worldwide VLCC trading fleet.

The company said a glut of ships has contributed to problems in the current market.

"In the third quarter, the oil market was characterized by a fall in demand for crude oil particularly from the Middle East Gulf caused by worldwide economic slowdown and the seasonal refinery turnarounds," the company said.

"Since the start of the year, the supply of tonnage has increased as newbuilding vessels, ordered before the crisis, continue to be delivered, although in most cases with some considerable delay."

Euronav noted that tanker demolitions increased in the third quarter, partly mitigating the new deliveries.

"One can only hope that older ships will follow the same trend and that the global supply of tankers will be more balanced with the demand for transportation," the company said.

"Until that moment, seasonal demand, and strictly applied slow speed policies should allow a modest recovery in earnings during the winter."

In the fourth quarter so far, the company said its VLCC fleet operated in the tankers International pool has earned only $11,100 per day and only 57 percent of available days have been fixed, with rates "extremely low" for this time of year.

Meanwhile, Euronav's Suezmaxes trading on the spot market have earned $11,150 per day with 34 percent of available days fixed.