Friday, January 7, 2011

Dubai shipper soars with tanker purchase

Farah Halime

Shares in Gulf Navigation Holding steamed ahead after it acquired a supertanker as part of its expansion strategy in the crude oil market.

Dubai's only publicly traded oil shipper jumped nearly 4.9 per cent during intra-day trading, the most since November 1, after it said in a statement on the Dubai bourse website on Sunday that it would buy a very large crude carrier (VLCC). Gulf Navigation closed 3.3 per cent higher at 44 fils.

The company bought the oil tanker at a "competitive rate", a spokesman said, without disclosing how much it had paid.

VLCCs are the most expensive type of oil tanker and can cost around $100 million each.

Gulf Navigation disclosed the purchase as oil prices rose to a 27-month high, touching $92 a barrel. The new crude carrier, called Gulf Eyadah, has a capacity of 2 million barrels of oil.

It is the second VLCC for the company and will be managed by Gulf Stolt Ship Management of Dubai, Gulf Navigation's joint venture with the Norwegian ship owner Stolt-Nielsen

But analysts were cautious about the impact of the purchase on the share price.

"People are perceiving they're back on track with the original plan during its initial public offering [in 2006].

"But in light of the latest release, there is nothing to read from it in terms of charter rates, vessel cost or financing," said Kareem Murad, a transport and logistics analyst at Shuaa Capital.

"Whether they bought it second-hand or brand new is not clear. They definitely tapped into debt to pay for it, but how much did they finance from the total amount?"

The ship is expected to be delivered next month and will be chartered the same day "to a reliable international firm for two years at an attractive rate".

Neither the name of the firm nor the rate was disclosed.

Net profit for Gulf Navigation fell to Dh8.29 million for the first nine months of last year compared with Dh11.61m for the same period in 2009.

Vessel repair costs and the redelivery of one vessel cut into its bottom line, the company said.

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