CONSTRUCTION COSTS ELEVATE TANKER PRICES

CONSTRUCTION COSTS ELEVATE TANKER PRICES

The active life-span of tanker ships is being extended.

The construction price for tankers already is so high that few shipping companies can afford to order, according to Oslo shipbrokers P.F. Bassoe. The result is a strengthened position for existing quality vessels, and the demand for good secondhand ships is driving prices upward.The world's fleet of tanker ships today is well on the way to becoming overage, and this is having an effect on prices and employment for secondhand tankers in all size classes.

This tendency is particularly evident in the very- and ultra-large crude carrier classes (VLCC/ULCC). Although the freight markets for these classes are not returning very high earnings at the moment, there is an undertone of optimism for the values of these vessels.

Elf Aquitaine, the French oil company, is in the market for a 275,000 to 350,000-ton VLCC-ULCC built since 1977, for use as an oil storage facility off the coast of Angola. The French company is looking at five or six candidates, and is expected to close a deal by the end of March.

In the case of product tankers, there are very few modern ships currently up for sale. However, there is a lively business in older vessels. A Norwegian-built product tanker dating back to 1971, for example, just fetched $5 million on the Italian market. Prices for combination ships also are climbing.

Scrap prices are encouraging as well. A 1975 vintage 276,000-tonner damaged in the Persian Gulf conflict is expected to go to the breakers in Taiwan for $255 per light displacement ton, making the ship worth $10 million.

The P.F. Bassoe report covers the tanker market right up to the beginning of March.