Monday, March 28, 2011

OPEC boost pushes tanker cargoes to record-shipper

* VLCC fixtures at 5-yr high as OPEC pumps more: Heidmar

* Fixtures should fall in April on Japan crisis-Shipper

* Gulf producers still delaying Japan-bound cargoes

* Radiation fears in Japan give tanker operators pause

* Shippers foresee oil demand rising for power generation

By Joshua Schneyer

NEW YORK,(Reuters) - Global fixtures for Very Large Crude Carriers (VLCC), or tanker ships that carry around 2 million barrels each, rose to a five-year high of 125 in March as OPEC pumped more crude, Norwalk, Connecticut-based tanker operator Heidmar told Reuters on Thursday.

The number of fixtures is likely to fall significantly in April, however, as key refineries in the world's No. 3 crude importer Japan remain offline following the country's devastating earthquake and tsunami on March 11.

"Saudi Arabia especially appears to be producing a lot more crude and that has helped push the number of fixtures up," said Heidmar vice president Per Heilmann on the sidelines of a shipping conference in New York.

"But the number in April will probably fall with less crude headed for Japan since some of its refineries are idled."

Shipping sources had told Reuters that VLCC fixtures likely hit a record in March.

Shippers say the increase in fixtures doesn't necessarily equate to big profits for ship operators, since charter rates have been depressed by the large number of available VLCCs -- in part due to a sharp reduction in offshore crude storage -- and expensive bunker fuel has also eaten into profits.

Another tanker operator, George Saroglou of Tsakos Energy Navigation, said Japan's disaster is bearish in the near-term for crude carriers, since large Middle East Gulf producers, including Saudi Arabia, have delayed or stopped new crude shipments to Japan until the situation in its ports become more clear.

"This is bearish for now. Japan has less need to import crude for the time being," Saroglou said in an interview at the Capital Link Shipping Forum in New York.

"But over time with much of its nuclear power capacity offline we should see Japan taking bigger imports of crude, LNG, fuel oil and diesel."

Saroglou forecast that a resumption in large volume crude cargoes from the Middle East Gulf to Japan could come at the end of March.

"The Japanese are very efficient, so I expect the recovery will come soon," he said.

However, shippers also said that tanker sailings to Japan could remain heavily curtailed in the near term due to fears of radiation on the country's eastern coast. Already several operators have stopped sailing to major ports like Tokyo Bay and Yokohama

"We aren't going there," said Tobias Konig, managing director of ship operator American Feeder Lines.

"Unfortunately the radiation crisis is ongoing, and shippers do not want to risk a contaminated ship."

On a global scale, however, tanker cargoes may see a boost in the future as several countries consider halting or delaying nuclear power projects, which could necessitate higher volumes of oil product shipments to guarantee power generation, Konig said.

(Editing by David Gregorio)

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