16th July 2010 - Singled Out

With less than six months to go before the mandatory curtain falls on the single-hull tankers, the current debate appears to be how many more will be removed and perhaps more importantly, how quickly. The arrival this month of the latest two VLCCs for drybulk conversion in China reduces the number of ‘available' single-hull VLCCs to a mere 53, which equates to just 10% of the existing fleet. A similar picture exists for the Suezmaxes, with 20 single-hull units remaining representing just 5% of the trading fleet. Our own analysis shows just 33 single-hull VLCCs are still actively trading, with the vast majority of these in the MEG-East trade. Slowly but surely the ‘screw' is tightening on the single-hulls and recent events in the US Gulf may prompt further sanctions against these vessels. Even the US, with their more liberal approach to the phase-out (OPA-90), has just one single-hull VLCC remaining under US flag and even this 1987 built vessel is currently laid-up. In addition to this, a number of units which were originally purchased for offshore projects are also in lay-up awaiting developments in the oil sector.

9 VLCCs and 6 Suezmax single-hulls are presently employed in semi-permanent oil market storage commitments off Malaysia and are extremely unlikely to re-enter the tanker market due to age and their prolonged absence from the sector. Of course there is no phase-out stipulations relating to hulls used in storage projects, so there is no reason why these tankers cannot remain in place after the phase-out. Temporary floating storage employment by oil companies/traders also seems to have eluded single-hulls, with our records showing just one Suezmax currently employed.

With 14 single-hull VLCCs currently under conversion to drybulk in China and another due to be redelivered this month as a double-hull conversion, these have been excluded from this analysis. The lack of market opportunities for the singles will only intensify with 33 VLCC newbuildings and 31 Suezmaxes scheduled to be delivered over the remainder of the year. Thus, we are on the verge of writing off the larger single-hulls as they are well on their way to being confined to history. After this, what's next on the agenda: older double-hulls?