Image courtesy Knightsbridge Tankers

Bermuda-based Knightsbridge Tankers Ltd (NASDAQ:VLCCF) reported yesterday a net income of USD 9.5 million (EUR 7.1m) for the fourth quarter of 2011, up from USD 6 million a year earlier.  Net income increased primarily due to an improvement in the results of the VLCC Kensington, which is operating in the spot market.  Last year at this time, VLCC Kensington was in drydock which resulted in a subsequent revenue loss of $3.6M.

The average daily time charter equivalents (“TCEs”) earned by the Company’s VLCCs and Capesize vessels were $26,900 and $36,500, respectively, compared with $25,300 and $36,800 in the preceding quarter.

Operating revenue grew to USD 25.9 million from USD 21.6 million. Earnings per share (EPS) improved to USD 0.39 from USD 0.25. The board of directors proposed a dividend of USD 0.50 per share for the fourth quarter of 2011.

Net income for the full 2011 declined to USD $34.4 million from USD $38.6 million in 2010. EPS fell to USD $1.14 from USD $2.02. Revenue rose to USD $96.2 million from USD $95.9 million.

BREAK-EVEN FIGURES

As of February 2012, Knightsbridge reports an average cash breakeven rate for the remainder of 2012 for its VLCCs and Capesize vessels, (excluding bareboat charters), of $14,100 and $7,600, respectively, per vessel per day.

The VLCCs which are on bareboat charters have a cash break even rate of $5,300 per vessel per day.

THE TANKER MARKET

The market rate for a VLCC trading on a standard ‘TD3’ voyage between the Arabian Gulf and Japan in the fourth quarter of 2011 was WS 54, representing an increase of approximately WS 7.5 points from the third quarter of 2011 and a decrease of approximately WS 4 points from the fourth quarter of 2010. Present market indications are approximately $20,000/day in the first quarter of 2012.

Bunkers at Fujairah averaged $672/mt in the fourth quarter of 2011 compared to $664/mt in the third quarter of 2011; an increase of approximately $9/mt. Bunker prices varied between a low of $629/mt at the beginning of October and a high of $711/mt on November 14, 2011.

The International Energy Agency’s (“IEA”) January 2012 report stated an average OPEC oil production, including Iraq, of 30.53 million barrels per day (mb/d) during the fourth quarter of the year. This was an increase of 0.6 million barrels per day compared to the third quarter of 2011 and an increase of 1.1 million barrels per day compared to the fourth quarter of 2010.

IEA further estimates that world oil demand averaged 89.53 mb/d in the fourth quarter of 2011, which is the same level as the previous quarter, and a decrease of approximately 0.25 mb/d from the fourth quarter of 2010. Additionally, the IEA estimates that world oil demand will average approximately 90 mb/d in 2012, representing an increase of 1.2 percent or approximately 1.07 mb/d from 2011.

The global VLCC fleet totalled 594 vessels at the end of the fourth quarter of 2011, up from 584 vessels at the end of the previous quarter. 11 VLCCs were delivered during the quarter whilst one was deleted. The orderbook counted 123 vessels at the end of the fourth quarter, down from 131 orders from the previous quarter. Three new orders were placed during the quarter, and the current orderbook represents about 21 percent of the VLCC fleet. According to Fearnleys the single hull fleet stands at 30 vessels.

Teekay Corporation (NYSE:TK) and König & Cie are pleased to announce that Diamond S Shipping Group has joined the Gemini Tankers Suezmax Pool as a full member. The Gemini fleet currently has 17 modern Suezmax vessels. This is expected to grow to 26 vessels by the end of 2012 as vessels redeliver from time-charters and Diamond S’ eight additional newbuildings are added to the Pool.

“We are delighted that Diamond S Shipping has joined the Gemini Tankers Suezmax Pool. The addition of their eight, high quality newbuild Suezmax tankers delivering over the course of 2012 further modernizes our fleet and solidifies our position as the premier Suezmax tanker pool,” commented Håkan Svedin, Gemini’s Managing Director.

“We have a great team in place providing a transparent, reliable and flexible management service to our customers, with whom we have long-term relationships. To them we can offer a fantastic modern Suezmax fleet operating across the globe, with a focus on the Atlantic spot markets,” Mr. Svedin added.

Craig Stevenson, CEO, Diamond S Shipping Group commented, “We are pleased to pool our Suezmax tankers with Teekay and König in the Gemini Tankers Suezmax Pool. We are excited by the opportunities this relationship will create for Diamond S. We were attracted by the modern fleet of Suezmax tankers operated by the Gemini Tankers Pool and their established track record of successfully managing that fleet in the key Suezmax tanker markets around the world.”

Bruce Chan, President, Teekay Tanker Services, commented, “Teekay is very pleased to continue with its long-standing cooperation with König, and excited about working with a first-class owner in the Craig Stevenson-led Diamond S Shipping. The addition of eight, high quality newbuild Suezmax tankers over the course of 2012 ensures that Gemini will be able to continue to provide excellent service to our customers.”

Tobias König, Managing Partner, König, agreed. “We have worked with Teekay for many years, and believe that the new relationship we have with Diamond S will support the long-term success of Gemini Tankers,” said Mr. König. “We have real competence in the pool: each partner brings a proven commercial record, strong financial backing, and long-term commitment to the Suezmax segment,” continued Mr. König.

“We have strong, reliable pool owners who are with us for the long-term,” added Mr. Svedin. “However, we will also consider taking further owners and tonnage into the Pool over time. The future for Gemini Tankers is exciting and the team will continue providing the best service in the market to our pool partners and customers.”

About Gemini

Gemini commercially manages a pool of Suezmax tankers. The Gemini team, including key chartering, commercial operations and post-fixture staff, operate from the pool’s headquarters in Stamford Connecticut, headed by Managing Director, Håkan Svedin, who has successfully led the Gemini Pool since 2009.

About Teekay

Teekay Corporation provides a comprehensive set of marine services to the world’s leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay is growing its operations in the offshore oil production, storage and transportation sector through its publicly-listed subsidiary, Teekay Offshore Partners L.P. (NYSE:TOO), and its investment in Sevan Marine ASA (OSE:SEVAN). Teekay also continues to expand its significant presence in the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P. (NYSE:TGP), and seeks to grow its conventional tanker business through its publicly-listed subsidiary, Teekay Tankers Ltd. (NYSE:TNK). With a fleet of approximately 150 vessels, offices in 16 countries and approximately 6,300 seagoing and shore-based employees, Teekay transports approximately 10 percent of the world’s seaborne oil and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.

Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.

About König:

König & Cie. is a leading privately owned developer of investment projects as well as a fund & asset manager in Germany, and has currently €4.2 billion assets under management. Investment projects have focused on the following industries: Shipping, Infrastructure, Real Estate, Private Equity & Renewable Energy. König currently controls a fleet of 83 vessels ranging from Container Vessels, Tankers, Bulk Carriers and a Car Carrier. König sponsors and manages the stock listed “Marenave Schiffahrts AG” that controls a fleet of currently 13 vessels. König issued over 80 KG-Funds approved by the German SEC, thereby investing into shipping investments valued at approx. €2.9 billion. The company is representing approx. 31,000 investors with about 42,000 KG-shares.

About Diamond S

Headquartered in Greenwich, Connecticut, USA, Diamond S Shipping Group is a global owner/operator of modern, efficient crude and refined product tankers. Diamond S Shipping’s current fleet consists of 30 medium-range refined product tankers on long-term charter, a newly built Suezmax tanker operated in the spot market and seven newbuild Suezmax and two LR2 tankers scheduled for delivery in 2012 and 2013. Diamond S Shipping has invested or committed US$2.0 billion in building its fleet.

SIFA, a sistership to DABA, was delivered to OSC in early 2011

Oman Shipping Company S.A.O.C. (OSC) took delivery of one of their latest Very Large Crude Carrier (VLCC) the DABA, at Hyundai Heavy Industries co. Ltd’s (HHI) Yard in Ulsan, South Korea on 6th Jan 2012.

DABA has a 317,000 deadweight ton (DWT) capacity, is 333 meters length overall, 60 meter in beam and a design draft of 21 meters.  This is OSC’s third VLCC delivery, out of an order of five, from HHI, and is the Company’s 11th out of a future fleet of 17 VLCCs.  DABA is going to be operated in the VL8 Pool, managed by NAVIG8, of which OSC is Shareholder. With this, OSC will have 6 vessels in VL8 Pool.  International Tanker Management (ITM), in Dubai, will technically manage the vessel.

Since commercial operations began in 2003, OSC now has afleet of 30 vessels, and an order book of 11 vessels to be delivered between now and 2013.  The DWT capacity of the current fleet is around 4.6 million DWT, increasing to around 8 million DWT once the order book is delivered.

Oman Shipping Company S.A.O.C. is a closed joint stock company, incorporated in 2003 and owned by the Government of the Sultanate of Oman through the Ministry of Finance (80%) and Oman Oil Company S.A.O.C.(20%).  Headquartered in Muscat, Oman, it was established to transport the Sultanate’s oil and gas products to world markets, provide Omani shipping services to the country’s trade partners in other commodities, and to re-vitalize Oman’s seafaring tradition.  The Company is involved in ship owning, chartering and management activities through its subsidiary companies: Oman Charter Company S.A.O.C., Oman Ship Management Company S.A.O.C., and Oman Container Line S.A..  In 2010, the Company’s profit was USD 19.5 Million, with a turnover of USD 238 Million, and total assets of USD 2.3 Billion.  OSC’s Omanisation ratio is 86%, and the Company has an active cadet program for Omani Deck and Engineering staff.

Oman Shipping Company’s fully owned subsidiary, Oman Ship Management Company (OSMC) is presently undertaking the technical management of 14 of Oman Shipping Company’s Vessels including 3 VLCCs. Going forward, OSC has plans to bring more of its vessels under Oman Ship Management’s technical management. Recently, in September 2011, OSMC was awarded ISO 9001 and ISO 14001 accreditation, recognising its adoption of international standards and best practices in Ship Management.

Image courtesy Mitsui OSK Lines

Following in the recent footsteps of the containership industry and their newly formed, G6 Alliance, the crude tanker industry is consolidating their assets by creating a “VLCC pool” named Nova Tankers that according to their press release will “offer relevant vessels of the highest standard to cater for our customers’ need for safe and environmentally friendly marine transportation.”

The VLCC Pool will operate a combined fleet of around 50 quality VLCCs by the end of 2012 with an average age of only 3 years and consists of ships from the following shipowners, MITSUI O.S.K. LINES, LTD. / PHOENIX TANKERS PTE. LTD., A.P. MØLLER – MÆRSK A/S (Maersk Tankers), SAMCO SHIPHOLDING PTE. LTD., and OCEAN TANKERS (PTE.) LTD., SINGAPORE.

MT SEEB, an Iranian-owned Very Large Crude Carrier (VLCC)

At about 2100hrs on 04 Jan 2012 (Singapore time), the Maritime and Port Authority of Singapore (MPA) received a report that a Singapore-registered containership, Kota Tenaga and a Malta-registered VLCC, M/T SEEB had collided at about 2.7km south of Pulau Sebarok.

The master of Kota Tenaga reported that about 5 metric tons of marine fuel oil had spilled into the sea.  An inter-agency effort, coordinated by MPA, was immediately activated to contain and clean up the oil spill. The spillage of oil from Kota Tenaga was contained and Kota Tenaga was moved to Raffles Reserved Anchorage. An oil boom was laid around the vessel as a precaution. There is no report of injury to crew members.

A total of 12 craft was activated to monitor and clean up the oil spill. Non-toxic and biodegradable oil spill dispersants were used to break up patches of oil sighted in the vicinity of Pulau Pawai, Pulau Senang, and Raffles Reserved Anchorage.

MPA continues to monitor the situation closely and will respond to any sighting of oil patches.

Traffic in the port and the Strait of Singapore remains unaffected.

MPA is investigating the cause of the collision.

SINGAPORE (Dow Jones)–European trader Vitol has provisionally chartered a supertanker to ship North Sea Forties crude to Asia loading early January, in what could be at least the third such arbitrage voyage in just over a month, according to a shipbroker and traders.

Vitol provisionally booked the Very Large Crude Carrier (VLCC), Great Lady, to ship 270,000 metric tons, or around 2 million barrels, of Forties crude loading at Hound Point Terminal, Scotland, on Jan. 3. A Singapore-based trader said the cargo may be loaded a few days later.

Exports of more North Sea crude will likely firm the European market, somewhat offsetting the bearish impact of Petroplus Holdings AG (PPHN.PB) recently shutting down three refineries.

The latest fixture would mean that a total of 6 million barrels of Forties will have left the North Sea for Asia between in just over a month.

Differentials in the North Sea market jumped on Tuesday as Shell sold two Forties cargoes to Vitol, one at a premium of 80 cents a barrel to Dated Brent, compared with quotes at discount of 15-30 cents for mid-January loading cargoes in the previous session.

The latest booking highlights rising crude flow from the West to East after resumption of Libyan crude exports, as Asian refiners try to take advantage of a surplus European market.

Cargoes of Brent-linked Russian Urals were also seen chartered to head to Asia in recent weeks.

Another cargo of North Sea crude will likely be shipped to Asia late January. Statoil ASA (STL.OS) was heard to have provisionally chartered VLCC Front Champion at $6.10 million for Jan. 21-23 loading from Mongstad port in Norway for shipping 2 million barrels to South Korea.

The Singapore trader said it could be carrying some Norwegian grades, presumably for storage in Asia, although this couldn’t be confirmed. Statoil operates storage facilities in South Korea.

South Korea is also a likely destination for the Forties cargo. Two similar December parcels shipped by Total SA (FP.FR) and BP PLC (BP.LN) were heard to be targeting Korean refiners.

A free trade agreement between South Korea and Europe that came into effect in July allows buyers to redeem 3% of the price, making arbitrage deals attractive at current levels.

A senior executive with a Korean refiner told Dow Jones Newswires in mid-December that the company was weighing the option of buying January-loading Forties crude as the arbitrage window appeared open.

The FTA with Europe and a sharp increase in crude prices by Middle East producers last month made the arbitrage attractive amid a narrow Brent/Dubai EFS, he said.

-By Gurdeep Singh, Dow Jones Newswires

Frontline's stock price has plummeted drastically since a peak of 362 in 2008, to 26.3 at the end of 2011.

The world’s largest tanker owner, Frontline Ltd., has just announced the completion of major corporate restructuring following a sustained weak global tanker market that crushed their stock price since its peak of NOK 362.50 in 2008.  The following is their press release:

Frontline Ltd. (“Frontline” or the “Company”) is pleased to announce that the restructuring of Frontline has been successfully completed. The major part of the restructuring consists of the following elements:

Frontline has completed the sale of five VLCC newbuilding contracts, six modern VLCCs including one time charter agreement and four modern Suezmax tankers to Frontline 2012 Ltd. at fair market value of $1,121 million. In addition, Frontline 2012 has assumed $666 million in bank debt attached to the vessels and newbuilding contracts and $325.5 million in remaining newbuilding commitments. Further, Frontline will receive payment for working capital related to the assets sold. The estimated book value of the assets sold, including the remaining newbuilding commitments, at December 31, 2011 is $1,428 million. The assets have been sold at fair market values assessed by three independent appraisals. The right to subscribe to shares in Frontline 2012 has thereby no instant economical value, and no subscription rights have thereby been given to Frontlines shareholders.

On December 16, 2011, Frontline 2012 completed a private placement of 100,000,000 new ordinary shares of $2.00 par value at a subscription price of $2.85, raising $285 million in gross proceeds, subject to certain closing conditions. These conditions have now been fulfilled and Frontline 2012 was registered on the NOTC list in Oslo December 30, 2011. Frontline Ltd. was allocated 8,771,000 shares at a subscription price of $2.85, representing approximately 8.8 percent of the share capital of Frontline 2012. Frontline 2012 has used the proceeds from the private placement to acquire the assets from Frontline, prepay bank debt with installments for 2012 and capitalize Frontline 2012.

Frontline has obtained the required consents from lenders whose loans are transferred to Frontline 2012 and has further obtained agreements with its major counterparts whereby the gross charter payment commitment under existing chartering arrangements is reduced by approximately $320 million in the period 2012-2015. Frontline will compensate the counterparties with 100 percent of any difference between the renegotiated rates and the actual market rate up to the original contract rates. Some of the counterparties will receive some additional compensation for earnings achieved above original contract rates.

As a consequence of the restructuring, Frontline’s sailing fleet, excluding the non recourse subsidiary ITCL, is reduced from 50 units to 40 units. The newbuilding commitments are reduced from $437.9 million to $112.4 million, which relates to two Suezmax tanker newbuiding contracts, and bank debt is reduced from $679 million to zero, following a prepayment of $13 million associated with a vessel which is not part of the transaction with Frontline 2012. The cash proceeds for Frontline following the completion of the transaction is approximately $70 million.

The Board of Frontline wants to thank all the parties involved, including counter parties and financiers who greatly have contributed to the solution. Without the flexibility on terms and timing shown by them, a successful restructuring would have been impossible.

Following the restructuring, Frontline should have significant strength to honor its obligations and meet the challenges created by a very weak tanker market. Through the sale of a limited number of the Company’s assets, Frontline has avoided a heavy dilutive new equity offering and will thereby keep significant upside for the existing Frontline equity holders if the market recovers in the years to come.

MT Venice, managed by Scorpio Commercial Management

MONACO – Scorpio Tankers Inc. (NYSE: STNG) announced that it has  signed a contract with South Korea’s Hyundai Mipo Dockyard Co. (HMD) to construct a 52,000 DWT Medium Range (MR) product tanker for approximately $36.4 million and at the same time, executed a $92.0 million credit facility with European banks, Credit Agricole (CA-CIB) and Skandinaviska Enskilda Banken AB (SEB), to partially finance four of their five newbuilding product tankers that they had contracted for in June 2011 with HMD.

Additional financing was also secured via an extension of a  2011 Credit Facility with Nordea Bank Finland plc, DnB NOR Bank ASA, and ABN AMRO Bank N.V.  This credit facility is aimed at financing one of the product tanker newbuilding orders from 2011, and the most recent MR product tanker ordered from HMD.

Emanuele Lauro, CEO of Scorpio Tankers, commented,

“Modernizing our fleet while securing financing for all of our newbuildings; expanding our relationship with our lenders; and taking advantage of what we believe are very attractive time charter opportunities all reflect that the Company will be positioned appropriately going forward. Our view of improving market fundamentals remains intact, highlighted by the recent strengthening in spot rates, and the steps we are taking to solidify our position for the future.”

Newbuilding Vessel Agreement

The sixth newbuilding vessel that the Company has agreed to acquire is scheduled to be delivered to the Company in January 2013. The agreement contains options for the Company to order up to three additional 52,000 DWT MR product tankers of the same specifications. The first option is for the construction of a single additional vessel at the same price as the sixth newbuilding, and the Company must notify the shipyard by the middle of January 2012 if it intends to exercise this option. In the event the Company exercises the first option, the Company shall have a second option for the construction of a further two vessels for a price of $37.2 million each, and the Company must notify the shipyard by the middle of March 2012 if it intends to exercise this option.

2011 Newbuilding Credit Facility

The 2011 Newbuilding Credit Facility with CA-CIB and SEB is for the partial financing of the pre-delivery and delivery installments for the four newbuildings that the Company contracted for in June 2011 and which are scheduled for delivery between July and October 2012. The facility is for an aggregate of $92.0 million to be made available in four tranches, one for each vessel, in the amount of $23.0 million, which is approximately 61% of contracted price for each vessel. Drawdowns will be available after the first 39% of the contracted price for each vessel is paid by the Company and subject to certain other conditions precedent. The four vessels will be collateral for the credit facility. The tranche relating to each vessel will be repaid after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years, and each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin of 2.70% per annum. A commitment fee equal to 1.10% per annum is payable on the unused daily portion of the credit facility. The covenants and other conditions are similar to those contained in the Company’s existing credit facilities.

Loan Modifications

Agreement to Extend the Availability Period on the 2011 Credit Facility

The Company agreed with its lenders to extend the availability period of its 2011 Credit Facility through May 2013. This will give the Company the ability to use this facility to finance up to 50% of the cost of the fifth newbuilding vessel contracted for in June 2011 (scheduled for delivery in October 2012) and the sixth newbuilding vessel. There is currently $115 million available under this facility.

Agreement to Amend Financial Covenants of the 2010 Credit Facility and 2011 Credit Facility

The Company has also reached an agreement with its lenders to amend its financial covenants in the 2010 Credit Facility and 2011 Credit Facility. The amended provisions provide in substance that:

• The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it will increase to 1.50 to 1.00 for the first quarter of 2013, then increase to 1.75 to 1.00 for the second quarter of 2013, then increase to 2.00 for the third quarter of 2013 and through the maturity date of the loans. Such ratio shall be calculated quarterly on a trailing four quarter basis.
• Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Credit Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

Other Modifications

The margin on the each of the 2011 and 2010 Credit Facility will increase to 3.50% per annum beginning with the first quarter of 2012. Beginning with the fourth quarter of 2013, this margin will be reduced to 3.25% per annum so long as the Company’s debt to capitalization ratio is less than or equal to 50%. If such ratio exceeds 50% then the margin shall remain at 3.50% per annum.

The Company is restricted from paying dividends until its EBITDA to interest expense ratio is 2.00 to 1.00 or greater.

An aggregate amendment fee of approximately $0.7 million will be assessed for the above mentioned modifications, which include the extension of the availability period of the 2011 Credit facility and the amendments of the financial covenants of both credit facilities.

Time chartered-in extensions

Histria Azure - This vessel is currently off-hire and is expected to be re-delivered to the Company in January 2012. We have extended the term of the charter for this vessel for one year after the vessel is re-delivered to us at $12,000 per day. Pursuant to this charter agreement, we have an option to extend the term of the charter for four additional months at $12,250 per day and a second option to further extend the term of the charter agreement for an additional year at $13,650 per day.

Krisjanis Valdemars - This charter agreement was extended two months to February 14, 2012 from its original expiry date. Subsequent to that, the Company has three consecutive optional periods of four, three, and three months, respectively, at the base rate of $12,000 per day. This agreement also contains a profit and loss sharing provision whereby 50% of the vessel’s profits and losses above or below $12,000 per day are split with the vessel owner.

Kraslava - This charter agreement was extended one month to February 26, 2012 from its original expiry date. Subsequent to that, the Company has three consecutive optional periods of five, three and three months, respectively, at the current base rate of $12,070 per day.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns a fleet of 12 vessels (one LR2 tanker, four LR1 tankers, four Handymax tankers, two MR tankers, and one post-Panamax tanker) with an average age of 5.9 years, time charters-in seven vessels (one LR2 tanker and six Handymax tankers), and has contracted for six newbuilding MRs, which are scheduled to be delivered to the Company between July 2012 and January 2013. Additional information about the Company is available at the Company’s website www.scorpiotankers.com.

M/T Eliza, Photo by Olivier Vitre

LONDON (Dow Jones)–Total SA (FP.FR) has booked a supertanker to ship North Sea Forties crude oil–the main component of global benchmark Brent–to Asia from Europe, in a second such move by an oil major this month, a shipbroker and crude traders said Thursday.

The Eliza Very Large Crude Carrier will load 2 million barrels of Forties crude around Dec. 24, with South Korea the likely destination, according to European traders and a shipbroker.

Total wasn’t immediately available to comment.

BP PLC (BP.LN) earlier chartered the Alexander the Great supertanker to ship 2 million barrels of Forties crude to South Korea in December.

A Korean refiner told Dow Jones Newswires Wednesday the arbitrage window for January loading of Forties crude appears to have opened up because Middle East producers increased their crude-oil official prices to record highs.

Asian refiners are looking for replacement grades, with Forties, Russian Urals and West African crudes as potential alternatives, traders have said.

Also, South Korea has a free-trade agreement with the European Union from July.

Forties differentials spiked two weeks ago, to a premium of 80 cents to physical Brent benchmark, with BP the key buyer. Traders attributed the rise in prices to the company buying Forties ahead of its 2 million-barrel shipment to Asia.

But differentials weakened significantly in December amid lackluster demand from European refiners due to low margins, or profits they make from processing crude into oil products, combined with a typical tailing off in activity at the end of the year.

In Wednesday’s price-setting window, Vitol sold two December cargoes to Shell at premiums of 20 and 25 cents to dated Brent.

Earlier this week, differentials were negative, even despite tighter market conditions, as more than 30% of the Forties barrels originally scheduled to load in December may leave the region, according to traders.

Apart from the two VLCCs heading to Asia, Statoil was heard to have booked a vessel to ship 1 million barrels of Forties loading Dec. 21 to Canada, although the move couldn’t be immediately confirmed.

-By Konstantin Rozhnov, Dow Jones Newswires

Almi Horizon, image courtesy Lloyd's Register

New fleet being built in Korea to the latest environmental standards and Common Structural Rules

Almi Tankers S.A, the expansion-minded Greek wet-market operator, took delivery today of its first of 10 Suezmax tankers during a ceremony at Daewoo Shipbuilding and Marine Engineering’s (DSME) main shipyard in Okpo, Korea.

The 157,787 dwt Almi Horizon is the first of seven tankers being built by DSME to Lloyd’s Register class. The remaining tankers in the order are under construction and are scheduled to be delivered, to the latest environmental and structural standards, in 2012.

“We share Almi’s excitement on their occasion of entering the Suezmax market with a fleet of ships built to high environmental specifications that are beyond the requirements of compliance,” said Luis Benito, Lloyd’s Register’s Country Manager for Korea. “Designed and constructed by DSME, the success of this newbuilding project is a testament to the commitment of all stakeholders in this project, which started at the pre-contract stage and continued throughout the design and construction of the ship.”

“We are proud to have made a contribution to this ground-breaking project, providing risk services beyond the scope our classification, particularly with regard to the implementation of the ballast-water management system,” Benito said. “Society is demanding safer, cleaner ships and we are using our experience and technical expertise to support their construction.”

The ship has been verified by Lloyd’s Register to be in accordance with the voluntary energy-efficiency requirements of the IMO’s Energy Efficiency Design Index (EEDI) for new ships. It is equipped with a UV ballast-water treatment system and features an Inventory of Hazardous Materials in accordance with Lloyd’s Register’s Green Passport service.

“We are proud to announce that today, December 14th, 2011, Almi Tankers took delivery of the MT Almi Horizon, the first green Suezmax tanker of our newbuilding project,” said Almi Tankers’ CEO Panagiotis Drosos. “This successful delivery was greatly assisted by Nikolaos Vaporis, New Construction Project Manager at Lloyd’s Register, whose excellent level of service greatly helped us. For this we wish to extend him and Lloyd’s Register our most heartfelt thanks.”

Almi Horizon and six of her sisterships have been designed to be built to Lloyd’s Register’s Environmental Protection ‘EP’ notation, which recognises their enhanced features and demonstrates the owner’s commitment to, and investment in, environmentally friendlier ships.

The tanker series was contracted in 2009 and is designed to comply with IACS’s Common Structural Rules and constructed in accordance with ShipRight Construction Monitoring procedures, while the accommodation arrangements comply with the Maritime Labour Convention (MLC, 2006).

The ship has been enrolled in Lloyd’s Register’s Ship Emergency Response programme.