Amit Mitra

Mumbai, Feb. 22

WITH an increase in demand for ice-class tankers, domestic shipping companies are exploring the possibility of increasing their ice-class ships, which are used to move oil to ice-bound regions.

Ice-class tankers, which cost about $1.5-$2.5 million more than the ordinary Suezmax and other tankers, also command a premium in the freight market. Industry analysts say that the demand for these tankers peak during the second half of the year, when the owners of such tankers earn between 10 per cent and 30 per cent more than the prevailing tanker freight rates.

India joined the club of countries owning ice-class ships when Essar Shipping introduced Suezmax ice-class tankers in its fleet however, the company has subsequently sold the ships.

Great Eastern Shipping, the country's largest shipping company in the private sector, took the leap when it acquired two ice-class Suezmax tankers. The company is now planning to acquire two more ice-class product carriers, which are expected to join the fleet in 2007.

Industry sources said other shipping companies are also on the look out for such tankers, which are finding increasing favour from charters worldwide. Ice-class ships have a different hull and are made of stronger steel, with an equally stronger propulsion system to steer the vessel through icy-waters.

As late as in 1992, ice-class tankers formed only 3 per cent of the total global tanker fleet. But with increasing demand for oil and growing significance of non-conventional production areas, demand for such tankers has risen. At present, about 8 per cent of the global tanker fleet are ice-class vessels, and it is estimated that by 2008 the share will cross the 10 per cent mark.

Industry analysts say the rise in ice-class segment can be primarily attributed to expansion in Russian sea-borne exports from ice-bound regions. Far East Russia's ongoing Sakhalin project, and increasing oil exports from Primorsk (Russian Port) are the pointers towards increasing requirement of ice-class ships.

Reports indicate that oil exports from Primorsk for the first 11 months of 2005 stood at 52 million tonnes (mt), with monthly loadings averaging at about 5 mt. This is a considerable jump from the 2004 levels of 44.6 mt and around 17.7 mt in 2003. The expected target for 2006 is about 65 mt. To achieve such optimistic marks, it is important for the port to be operational throughout the year, which in turn triggers requirement for ice class tankers.

Apart from the Baltic Sea ports, increasing oil exports from Barents Sea, along with exports commencing from Sakhalin Island routed via De Kastri Port are also becoming critical sources for supplying oil to the oil-consuming nations.

Industry analysts say that in the light of the steadily rising share of oil exports from ice-bound regions, many shipowners have placed orders for the ice-class ships.

(This article was published in the Business Line print edition dated February 23, 2006)
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