Gulf Navigation Seeks to Acquire Oil Tankers as Economy Recovers, CEO Says
Gulf Navigation Holding PJSC, Dubai’s only publicly traded oil-tanker owner, is seeking to buy new crude carriers as an improving global economy boosts shipping volumes, the company’s chief executive officer said.
Gulf Navigation may acquire two very large crude carriers, or VLCCs, this year, Per Wistoft said in an interview Aug. 26. Oil output that’s set to rise by 2011 will bring enough added crude supply onto the market to necessitate 45 more VLCCs, Wistoft said at his Dubai office.
“If the price is right we can buy ships tomorrow,” he said. “I’d probably like to see another two VLCCs come into the fleet,” with delivery of the vessels before 2013, Wistoft said. A VLCC can haul 2 million barrels of oil.
The global economic crisis hurt shipping companies as demand for goods declined and previous orders for tankers brought too much supply to the market. Rates for shipping crude from the Middle East to Asia, the busiest route for supertankers, have fallen this year as there are still too many new ships coming to market. Gulf Navigation, which this year canceled orders for some ships, reported an 82 percent slump in 2009 net income.
The company is on target to ship 6 million tons of goods this year, compared with 4.5 million tons in 2009, Wistoft said. That increase is a result of a stronger economy, which will “definitely” raise profit this year, he said.
Diversification
“Having crude carriers is important for the company’s diversification in terms of revenue,” said Kareem Murad, an analyst with a “neutral” rating on Gulf Navigation at Shuaa Capital PSC in Dubai. “I am concerned about the impact on their profitability, depending how the vessels will be funded.”
Gulf Navigation shares declined 1.9 percent, the biggest drop in almost three weeks, to 50.6 fils at the close of trading at 2 p.m. in Dubai. The shares have dropped by almost half since the company sold them at 1 dirham apiece in 2006, giving it a market value of 837 million dirhams ($223 million).
Wistoft said new crude tankers would cost between $95 million and $105 million with China and South Korea the main providers of vessels. Low interest rates and costs made it a good time to buy ships, he said, without giving additional details on how Gulf Navigation would pay for any acquisitions.
The company owns one VLCC and another crude tanker in the Suez-max class that is capable of shipping 1 million barrels of crude. Gulf Navigation’s six vessels that can transport either crude or oil products had been refitted to ship dry cargoes like grain or steel, Wistoft said in January. The company doesn’t plan to buy more product tankers since excess capacity in that market is driving rates down, he said.
Gulf Navigation has four chemical tankers under a 15-year charter contract to Saudi Basic Industries Corp., the world’s largest petrochemical maker known as Sabic. The company in March agreed along with a partner to buy four chemical takers capable of transporting 44,000 deadweight tons of cargo and cancelled delivery of two other ships of that size.
To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.
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