The Hindu Business Line : GE Shipping may buy third VLCC

Mr K.M .Sheth, Executive Chairman, Great Eastern Shipping Company Ltd (left) and Mr S. J. Mulij, Executive Deputy Chairman, at the company's AGM in Mumbai on Friday. — Paul Noronha

Mumbai , June 25

WITH the tanker freight market firming up at a faster pace than the dry bulk market, Great Eastern Shipping is considering a proposal to acquire a third Very Large Crude Carrier (VLCC). The company, which brought the country's first VLCC last year, will take delivery of the second one by this month-end.

The company's focus on the tanker market is in tune with the projected world oil demand of 1.7 million barrels per day in 2004, with the increase expected to be driven by economic activity in the US, Latin America, China and South-East Asia. Also, a tight US natural gas market and the decline of the US dollar that makes oil purchases in local currencies less expensive are believed to be the other factors for the surge in demand.

"We believe that the strong demand for oil currently being witnessed should be sustained, leading to strong tanker freight rates. The slowdown in Chinese imports has already impacted the dry bulk earnings, with freight rates having fallen between 30 and 40 per cent in recent months," Mr K.M. Sheth, Executive Chairman of the company, informed shareholders at an AGM here on Friday.

He said the company took up a Rs 1,000-crore capital expenditure programme during the last financial year, with its tanker fleet having more than doubled from 1 million DWT to 2.19 million DWT. The acquisition includes five single-hull Aframax tankers, a single-hull panamax tanker and a single-hull Suezmax tanker. During the year, the company placed order for one Suezmax crude carrier that is due for delivery in the third quarter of 2005 and two MR product tankers, which would join its fleet by the first half of 2007.

On the offshore front, the company placed orders for six new supply vessels during the year, which are likely to be delivered in 2005. With ONGC all set to commence five of the nine new platforms in the current fiscal, the company expects a healthy market in this segment.

Sailing on a firm freight market, the company clocked a net profit of Rs 467.47 crore during 2003-04, as against Rs 216.15 crore in the previous year. The company's total revenue during the year was Rs 1,426.35 crore, as against Rs 1,007.15 crore in the previous year.