The Hindu Business Line : SCI's new crude carrier may fetch $32,000 a day

THE maiden voyage of `Desh Ujaala', the newly built very large crude carrier (VLCC) owned by State-run Shipping Corporation of India (SCI), will fetch a Worldscale rate of 72.5 (about $30,000-32,000 per day) for hauling crude oil for Indian Oil Corporation (IOC) from Ras Tanura in Saudi Arabia to Sandheads near Kolkata.

"The Worldscale rate of 72.5 is in tune with the prevailing freight rates for VLCCs for shipping oil in the spot market," industry sources said.

The 3,00,000-dead weight tonne (dwt) tanker, built at the yard of South Korea's Hyundai Heavy Industries Co Ltd at a cost of $65 million, was taken delivery on January 21. Desh Ujaala has sailed from Korea on January 25 and would arrive at Ras Tanura on February 13. The two-million barrel capacity oil tanker will sail for Sandheads on February 15 after loading 2,90,000 tonnes of crude oil for IOC.

Desh Ujaala will incur a standing cost comprising interest, depreciation and operating costs of about $32,000 per day during the entire voyage from Korea-Ras Tanura-Sandheads spanning 32 days. " At the Worldscale rate of 72.5, the tanker earnings will just about break even," he added.

SCI officials said that the company had offers from several oil majors and first class charterers to hire the tanker on one-year time charter basis at $60,000-70,000 per day. But, the company declined the offers, instead preferring to deploy the tanker in the spot trade.

The freight market for shipping crude oil from the Persian Gulf to Asia and the US has hit a 14-month low in the face of an oversupply of tonnage. The demand for tankers has also suffered from OPEC's decision to cut back production in December.

Industry sources said that tanker earnings have plummeted by more than three quarters after touching a peak of Worldscale 343 (about $250,000 per day) on November 10 last year.

Worldscale points are a percentage of a nominal rate, or so- called flat rate, for a specific route. Flat rates, quoted in $/tonne, are revised annually by the London-based Worldscale Association to reflect changing fuel costs, port tariffs and exchange rates.

Another VLCC of 300,000 dwt, currently being built at the Hyundai yard, will be added to SCI's fleet in October this year.

With domestic oil importers preferring VLCCs to ship their crude cargoes for economies of scale, domestic ship owners such as Great Eastern Shipping Company, Essar Shipping and Mercator Lines have added VLCCs to their fleet to grab a slice of the business.

IOC, the biggest crude oil importer among PSU oil firms, had since April 2002 decided as a matter of policy to import almost all of its crude cargoes only on VLCCs to achieve economies of scale since larger quantities can be shipped at a time leading to savings in transportation costs.

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