The world of oil shipping and tanker vessels is big money. Tankers will cost millions to buy, so are obviously a very specialized product limited to only a few buyers. Among the huge sales that take place, one of the largest this year will be a plan for Euronav to spend US$1.2 billion on a massive 18 tankers. Euronav is the world’s largest listed crude oil tanker operator. They’re talking to Metrostar in Greece to buy eight large vessels, known as very large crude carriers or VLCCs. The other ten boats will be smaller ones. The will come from Principal Maritime Tankers Corp., based in Southport, Connecticut.
Behind this massive purchase is the increase in demand for crude oil, due to recent weak oil prices. Tanker owners are pushing to add to their fleets, competing against each other to secure more vessels. Euronav has already received their small boats. The larger ones are under construction by Hyundai Heavy Industries Co. They will receive the between September 2015 and January 2017. Euronav will then have 81 crude oil carriers, including 15 VLCCs it bought last year for $980 million. There’s no doubt that Euronav and other companies will be looking at both used tanker vessels for sale and new carriers in the next few years.
With such huge numbers being thrown around, it can be easy to wonder how companies operating oil tankers make their money, and how much they make. Aside from the charter costs, a company needs to pay for the vessel’s crew and other expenses. A large tanker can have about two dozen people in the team, costing $100 million or even more. But even these extremely high costs don’t stop VLCCs profiting to the tune of about $60,000 a day.
The business of buying oil tankers is a complicated one, with vast amounts of money and lots of competition. For the last few years, there were too many tankers and not enough demand, but record oil imports from China have meant that the industry is recovering. Companies were unable to get the enormous amounts of credit they needed to buy and run a tanker after the financial crisis. But things have changed now that the global demand for oil is rising. It could be a great time for investors to get involved in the industry and attempt to profit from the recovering market.
Owning a tanker might be out of reach for all but a select few, but investing in the companies that own and use them is more realistic. Some of the investment opportunities experts recommend to investors include Nordic American Tankers. Another one is Ship Finance International. However, don’t rush into investing in either of these two companies or anyone else. Anyone considering it needs to do substantial research before making a decision.
The crude oil industry has had a rocky ride since the global financial crisis, but it appears to be on the mend. While some people won’t see this is a positive, it’s good news for many others.
