Monday, June 19, 2017

Frontline Boss On Oil: "Fredriksen Expects Rise In Storage Of Oil On Tankers" (FRO)

The guy controls the world's largest tanker fleet so you have to at least listen. He might be talking his book but you still have to know what messages he's sending, sort of like Goldman on retail oil pitches.

From Reuters via gCaptain, June 16:
by Ole Petter Skonnord (Reuters)
Tanker firm Frontline, controlled by billionaire investor John Fredriksen, expects a growing number of supertankers to be used for storing crude in anticipation of higher oil prices, its chief executive told Reuters on Friday.

While none of Frontline’s own vessels are currently used for this purpose, independent shipbrokers estimate that around 10 of the world’s very large crude carriers (VLCCs) have recently been contracted for oil storage.

“It sounds correct, and the number is rising,” Frontline Chief Executive Officer Robert Macleod said.
“It’s always an option,” he added.

Frontline has 20 VLCCs, each of wich can carry around 2 million barrels of oil.
VLCC spot rates are currently below Frontline’s cash break-even level of $22,300 per day, trading at just $15,000-20,000....MORE 
Also at gCaptain:

In Latest Sign of Crude Glut, Ageing Supertankers Used to Store Unsold Oil

Whenever you see the market with enough contango to make the cash-and-carry storage trade worthwhile I think of this sucker (now broken for scrap):

Capacity‎: ‎4,240,865 barrels o'crude.

From the Wikipedia page:
Seawise Giant, later Happy Giant, Jahre Viking, Knock Nevis, Oppama, and finally Mont, was a ULCC supertanker that was the longest ship ever built. It possessed the greatest deadweight tonnage ever recorded. Fully loaded, its displacement was 657,019 tonnes (646,642 long tons; 724,239 short tons), the heaviest ship of any kind, and with a laden draft of 24.6 m (81 ft), it was incapable of navigating the English Channel, the Suez Canal or the Panama Canal. Overall, it was generally considered the largest ship ever built. It was sunk during the Iran–Iraq War, but was later salvaged and restored to service. It was last used as a floating storage and offloading unit (FSO) moored off the coast of Qatar in the Persian Gulf at the Al Shaheen Oil Field....MORE
Here's how it stacked up against some other big boats (and buildings):

File:Building and ship comparison to the Pentagon2.svg