BW Luck vlcc

BW Group Left Holding the Bag as Saudi Aramco Gets Ridiculous VLCC Charter Deal

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January 29, 2013

BW Luck, image (c) David Broderick

(Bloomberg) — Saudi Arabian Oil Co., the world’s biggest state-owned crude producer, booked a tanker to haul a cargo to the U.S. Gulf Coast next month at what may be this year’s lowest rate.

The BW Luck will load in the Persian Gulf on Feb. 18, Athens-based Optima Shipbrokers Ltd. and Marex Spectron Group said in e-mailed reports. It was chartered at a cost of 18.75 industry-standard Worldscale points, they said. That would be the lowest rate so far in 2013 for the route, according to figures compiled by Bloomberg.

Hire costs for tankers hauling Middle East crude to the Gulf Coast were assessed yesterday at 19.23 Worldscale points, according to the London-based Baltic Exchange. That’s down 23 percent from the start of the year. Saudi Aramco, as the oil producer is known, booked at least five vessels in December and eight in both October and November, according to shipbrokers.

An e-mail and phone call to the press offices listed on Saudi Aramco’s website weren’t immediately returned today. An e- mail and phone call to BW Group’s offices in Singapore outside of regular hours weren’t answered. The BW Luck is a very large crude carrier, able to hold 2 million barrels.

The Worldscale system is a method for pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a ton, is set once a year. The booking means the BW Luck’s hire cost is 18.75 percent of the nominal Worldscale cost for that voyage. Brokers report tanker bookings when the accords are provisional, and charters are sometimes canceled.

Port Arthur

Units of Saudi Aramco and Royal Dutch Shell Plc are partners in Motiva Enterprises LLC, which has three refineries on the Gulf Coast. Motiva restarted a 325,000 barrel-a-day crude unit at its Port Arthur plant in Texas over the weekend of Jan. 19-20, Houston-based spokeswoman Kimberly Windon said by e-mail Jan. 22.

The unit was expected to be processing around 200,000 barrels a day last week, according to two people familiar with operations, who asked not to be identified because the information isn’t public. It’s the largest of three units at the site and a key part of a $10 billion expansion that will almost double the plant’s daily capacity to 600,000 barrels.

VLCCs plying the Middle East-to-Gulf Coast route were losing $25,527 daily as of yesterday, according to the exchange, the most since Aug. 28. Its assessments don’t reflect speed cuts aimed at reducing fuel costs, vessel owners’ largest expense.

– Rob Sheridan and Christine Harvey, Copyright 2013 Bloomberg.

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