Offshore News

Maritime Press Collection
News reports taken from various internet news sites
Wednesday, April 15, 2009/ 2009‐006
OHT semisubmersible vessel “Ospry” with a Dry Dock on board
Shipbuilding News

Leading Korean yards face restructuring

Leading shipbuilding groups are among the 10 or so chaebol facing restructuring in Korea. Korean
banks are reviewing chaebols' 2008 balance sheets in order to determine which have the smallest
chances of making it through the economic crisis. Highly‐leveraged conglomerates are already
exploring the option of selling off units, bringing life to the local M&A market, which has been in a
lull since the global financial turmoil began last year.
The lenders, including the industry's largest, Kookmin Bank, hope to complete the credit risk
assessment of 45 major business groups by the end of April and draw up a restructuring plan by the
end of May for those that come up short.
The debt ratio, interest coverage ratio, total asset turnover ratio and operation income to sales ratio
are said to be the key yardsticks in determining which of the groups will be placed under a creditor‐
driven revamp program, bank officials said.
Some five or six of the 45 business groups were found to have problems in a pre‐review conducted
in February. But that review was based on conglomerates' financial statements only until September,
when financial turmoil swept the world.
The ongoing review, based on the full‐year data, is likely to find more conglomerates in need of a
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Maritime Press Collection / 2009-006 Wednesday, April 15, 2009
complete overhaul.
Seen as the most likely to fail the review are Daewoo Shipbuilding and Marine Engineering Co. and
GM Daewoo Auto & Technology Co., which have debt ratios over 500 percent, based on their
consolidated financial data.
Business groups such as Hyundai Heavy Industries, Tong Yang, Hanjin, Dongbu, Kolong, Doosan, STX
and Taihan Electric Wire also have relatively high ratios of over 200 percent. The debt ratios of
Himart and Eugene Corp., are high at 260 percent and 360 percent.
Hynix Semiconductor Inc., which suffered nearly 2 trillion won in operating losses last year, is also
mentioned as a possible candidate.
As growing economic and financial difficulties spread in Korea and around the world, some
conglomerates are trying to offload some of their sprawling affiliates.
Kumho Asiana is trying to sell its unlisted life insurance unit, Kumho Life Insurance Co. in order to
secure cash, but its talks with potential buyers have not made much progress.
Eugene Group has virtually given up its search for a possible buyer of Eugene Securities Co. after a
deal with a private equity fund fell apart late last year.
Dongbu Group has asked creditor Korea Development Bank to take over ferro‐alloys maker Dongbu
Metal Co. in a bid to clean up the balance sheet of its flagship Dongbu HiTek, which owns 100
percent of Dongbu Metal.
Taihan Electric Wire has a plan to raise nearly 3 trillion won by selling its affiliates Taihan ST, a
stainless steel products maker, Try Brands Inc., a clothing and underwear maker, and Korea Rental
Corp.
Doosan Group, which has sold Techpack in December and its beverage business in January, is now
seeking to offload Doosan DST, a defense business arm.
Source: SeaTradeAsia‐Online
Korean Landlocked Masu Salmon
(82) 51 463 8250 • mpc@ohtkr.com 2 / 23
Korea's Shipbuilders Turn to Offshore

Plant to Stay Afloat
Hit by the global economic crisis, the shipbuilding industry is in rough waters. According to industry
researcher Clarkson, the shipbuilding price index dropped one point to 157 as of April 3, the lowest
this year. Also global orders for new vessels stand at just 26 so far this year, a whopping 96 percent
drop from a year ago. Korea's big three shipbuilders Hyundai Heavy Industries, Daewoo Shipbuilding
and Marine Engineering, and Samsung Heavy Industries have not secured a single order this year.
Now plummeting prices and falling orders are forcing Korea's largest shipbuilders to turn to offshore
plants, specifically FPSOs, to stay afloat. FPSOs are floating production and storage units that the
companies are now focusing on for orders.
The three companies are concentrating on moving forward their construction capabilities in this area
to secure their share of a market that is expected to take off in the second quarter of this year.
So far, the outlook is bright. Hyundai Heavy recently completed the world's first FPSO‐specific dry
dock. Samsung Heavy Industries, which started construction on the world's first FPSO for storing
liquefied natural gas, still leads that market.
Source: Arirang News
Swiber's Dalihao completes the Mampak platform installation for Brunei Shell.
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Shipbuilding key driver of South

Australia's economy
A KEY sector driving economic growth in South Australia is entering the stage where preparation
transforms into visible action. The Techport Australia shipbuilding complex at Osborne on the Port
River is ready for work to begin cutting steel for the air warfare destroyers.
Millions of dollars have been spent on the complex. Mostly this has been out of view, building the
huge concrete apron where the ships will be assembled, a 213m wharf and dredging for the massive
shiplift. This is big‐scale industry generating hundreds of jobs ‐ and there's lots more to come. The
first of three destroyers, HMAS Hobart, is due to be completed by 2014 with the HMAS Brisbane and
HMAS Sydney to follow. By then, Techport will be gearing up for the next major contract, the new
generation of submarines.

Building the submarines in Adelaide was a federal election promise by the Australian Labor Party
which must be honoured. With the air warfare destroyers behind it, ASC will be favoured to build
the submarine work though still will have to win the contract on merit.
While unconventional conflicts such as Afghanistan are likely to dominate military deployment in the
near term, Australia cannot afford to lose its place as a significant player on the conventional stage.
The Federal Government's Defence White Paper, due out later this month, is expected to say
Australia must be cognisant of the rise of China and the potential for tension with the U.S. as the two
grapple with being the most powerful nations this century.
Australia, as a good friend of both countries, will want to help soothe any tensions but needs to
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come to the table from a position of strength. That is why the Federal Government will keep up
spending on big‐ticket items such as destroyers and submarines.
For SA, this vindicates the strategy of successive governments to make Adelaide a centre of
excellence in naval shipbuilding. It began with the Bannon government's drive for the Collins‐class
submarine project. It was revived through SA Cabinet members of the federal Coalition government,
such as Robert Hill, supporting the destroyer contract and has been taken further by the Rann
Government's facilitation of the industry.
The work has created high‐value jobs and helped buffer the manufacturing sector from the financial
downturn ‐ welcome outcomes for the state economy.
Foley's land tax challenge
TREASURER Kevin Foley, now committed to the job for the long haul, faces a tough decision on the
land tax issue.
The long‐running and well‐organised campaign to lower the impost is gathering pace, rather than
ebbing away. Yet Mr Foley is wrestling with sinking revenues and the need to stimulate the state
economy when he delivers the Budget in June.
The Motor Trade Association, for example, wants more than $100 million land and payroll tax cuts,
warning jobs will be lost in the automotive sector if these do not occur.
It will almost certainly be the toughest Budget Mr Foley has had to prepare in his seven‐year stint as
Treasurer.
Source: Adelaide News

Photo: http://blog.naver.com/speedymeyer
(82) 51 463 8250 • mpc@ohtkr.com 5 / 23
S.Korea KAMCO to revisit Daewoo

shipyard sale in H2
Korea Asset Management Corp (KAMCO), a state
debt clearer, said on Tuesday it would consider the
best time later this year to sell a stake in Daewoo
Shipbuilding and an energy developer. The planned
sale of Daewoo Shipbuilding & Marine Engineering,
estimated to have fetched $5 billion, fell through in
January due to a dispute over financing terms with
South Korea's Hanwha Group.
Hanwha had been picked as the buyer of a 50.4
percent stake in the world's No.3 shipbuilder, which
was owned by state‐run Korea Development Bank
(KDB) and KAMCO.
'In consultations with KDB, we will review the timing
of the sale in the second half of 2009,' the debt agency said in a policy report to parliament.
KAMCO will also mull the timing to put its 35.5 percent of Daewoo International Corp, a energy
developing firm, later this year, together with other creditor banks.
The stake is worth 923.4 billion won ($696 million) by Tuesady's closing.
Previous efforts by the state agency and other banks to sell equity holdings in three companies ‐‐
Daewoo shipyard, unlisted Daewoo Electronics and Ssangyong Engineering & Construction ‐‐ all
collapsed due to pricing differences as the global credit crisis took a heavy toll on potential
buyers.
Separately, KAMCO will seek to offer 9.9 percent of unlisted Kyobo Life Insurance, one of South
Korea's top three life insurers, in the second half, taking into consideration progress in Kyobo's
planned IPO.
Source: Reuters
Bangladesh breakers to fight another

day
BANGLADESHI breakers’ yards are not expected to close as a result of last month’s High Court
ruling, according to the trade’s main opponents, writes Justin Stares in Brussels.
Despite ruling that all yards without environmental clearance must be shut down by tomorrow,
there is little expectation of immediate change.
“We don’t think they will shut down,” said Ingvild Jenssen of the Brussels‐based non‐government
organisation Platform on Shipbreaking. “But there is a feeling that change is coming.”
(82) 51 463 8250 • mpc@ohtkr.com 6 / 23
Ms Jenssen has just returned from Bangladesh, where
she met with government officials. “I was well
received,” she said. “The whole issue is moving from
the shipping ministry to the environment ministry,
which has been asked to draw up new rules.”
Local media report that the head of the directorate‐
general for shipping has been ousted as a direct result
of the March 18 ruling, which revealed that almost all
the Chittagong breakers’ yards were operating
without environmental clearance.
But Lloyd’s List market reports indicate that the
judges’ decision has not stopped yards doing new
deals over the last two weeks to break up ships. The scrapping industry is booming due to poor
demand for older vessels.
Attention is now focusing on the International Maritime Organization’s attempts to create new
worldwide rules for the industry. A key meeting will be held in Hong Kong next month.
The most controversial issue on the agenda is beaching, or driving a vessel on to a tidal beach to be
broken by hand, often in dangerous and polluting conditions. Chittagong yards specialise in beaching.
The US, Denmark and Norway, supported by the European Commission, are among nations
understood to be pushing for the practice to be banned, although there is said to be resistance from
other countries, including Japan.
“There are unclear signals on whether beaching will be compatible with the convention,” said Ms
Jenssen. “People are afraid of pushing Bangladesh away.”
The European Union has promised separate legislation on shipbreaking, although no new proposals
are expected before the end of this year.
Written by: Justin Stares Brussels

STX scores Chinese funds for Dalian

expansion
South Korea's STX Group said Tuesday its Chinese affiliates have secured 2.85 billion
yuan (US$417 million) in loans from Chinese lenders to fund the construction of its
industrial complex in Dalian. STX Dalian Shipbuilding borrowed 1.35 billion yuan from
the state‐run China Construction Bank, while STX Dalian Engine clinched the
remainder from another Chinese bank, the business group said without naming the second lender.
The debts carry an interest rate of 6.14 per cent and mature in nine years, according to STX.
The money will be used to complete the second phase of its shipbuilding industrial base in Dalian,
northeast China, STX said.
The industrial base will be completed within the year to include vessel‐engine facilities and industrial
plants, it said.
STX Group shares soared on the news. STX Corp rose 8.25 percent and STX Engine leapt 5.56
percent.
Source: SeaTradeAsia‐Online
(82) 51 463 8250 • mpc@ohtkr.com 7 / 23
Offshore News
Shell in talks with China for Iraq oil bid

BEIJING (Reuters) ‐ Royal Dutch Shell said on Tuesday it is holding discussions with Chinese state oil
firms to jointly bid for oil projects in Iraq.
The Anglo‐Dutch oil major has said it wants to expand its presence in the vast fuel retail and refining
businesses in China, which are currently dominated by state‐run Chinese giants who are keen to
boost oil reserves overseas.
Chief Executive Jeroen van der Veer made the comments to reporters while in Beijing. He did not
elaborate.
Shell, the world's second‐largest non‐government controlled oil company by market value, has been
downsizing its refining and retail assets in Europe and Africa as demand falls in the regions.
But it has been eager to have a bigger presence in China, the world's No.2 oil consumer, after setting
up a small joint‐venture fuel marketing firm with top Chinese refiner Sinopec Corp.
Petrobras Reports Two Natural Gas

Finds to ANP
Brazilian state‐run energy giant Petroleo Brasileiro
SA (PBR), or Petrobras, notified the National
Petroleum Agency late Monday that it had
discovered traces of natural gas in two exploration
wells.
Petrobras said it found traces of gas in a wildcat
well drilled at the ES‐T‐505 inland block in the
Espirito Santo Basin. The 4BRSA722ES well was
drilled by the BCH Energy 1 rig at a target depth of
816 meters, according to drilling data.
Traces of natural gas were also found in the
offshore BCAM‐40 block in the Camamu Basin, off
the coast of northeast Brazil's Bahia state. Drilling
data showed the Petrobras XVII rig operating at a water depth of 295 meters, targeting 4,625 meters.
In January, Petrobras reported a similar natural gas find in the block.
Petrobras is lead operator of the block with a 35% stake. Local oil company Manati holds a 45% stake,
while Brasoil Manati Exploracao Petrolifera and Rio das Contas Produtora de Petroleo each hold a 10%
share.
Oil companies operating in Brazil must inform the ANP of indications of oil, gas or hydrocarbons in
any exploratory well within 72 hours. The disclosures are routine and do not indicate commercial
viability.
Copyright (c) 2009 Dow Jones & Company, Inc.
(82) 51 463 8250 • mpc@ohtkr.com 8 / 23
Sevan to continue Shelley work after

Premier purchase
ABERDEEN, U.K.: Sevan Production UK Ltd., a wholly‐owned subsidiary of Sevan Marine ASA, has
entered into a Memorandum of Understanding with Premier Oil and Gas Services for the continued
provision and operation of the floating production, storage and offloading vessel FPSO Sevan
Voyageur by Sevan for the development of the Shelley field, in the event that Premier or one of its
affiliates becomes the successful purchaser of either Oilexco North Sea Ltd or the Shelley field.
The FPSO Sevan Voyageur is already moored at the field. The hook‐up of the field subsea facilities is
expected to take place mid‐2009 to enable production start up of the Shelley field.
The FPSO Sevan Voyageur will be operated under a production sharing contract whereby Sevan will
be compensated for its actual operating cost and will in addition receive a tariff payment based on
actual monthly revenue from oil production from the field.
The Shelley field is on blocks 22/2b and 22/3a in the UK sector of the North Sea and was 100 percent
owned by Oilexco North Sea.
Oilexco North Sea entered administration in January and its joint administrators are attempting to
sell the company or its business and assets. Premier has entered into a contract to acquire all the
shares of Oilexco North Sea for around US$410.4 million, or all the business and assets for US$337.2
million. Source: Energy Current

EIA Estimates OPEC's Oil Export Earnings at

$476B in 2009
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Based on projections from the EIA April 2009 Short‐Term Energy Outlook (STEO), members of the
Organization of the Petroleum Exporting Countries (OPEC) could earn $476 billion of net oil export
revenues in 2009 and $598 billion in 2010.
Last year, OPEC earned $970 billion in net oil export revenues, a 42 percent increase from 2007.
Saudi Arabia earned the largest share of these earnings, $287 billion, representing 30 percent of
total OPEC revenues. On a per‐capita basis, OPEC net oil export earning reached $2,686 in 2008, a 40
percent increase from 2007.
Methodology
This report includes estimates of OPEC net oil export revenues. For each country, estimates of oil
production and consumption from the latest version of the EIA STEO are used to derive net oil
exports. For countries that export several different crude varieties, we assume that the proportion
of total net oil exports represented by each variety is equal to the proportion of the total domestic
production represented by that variety: in other words, if we assume that Arab Medium represents
20 percent of total oil production in Saudi Arabia, then we assume that Arab Medium represents 20
percent of total net oil exports from Saudi Arabia.
Source: Rigzone
Cabot to Sell Canadian Operations for

Combination of Cash, Stock
Cabot Oil & Gas Corporation announced today a definitive agreement to sell its Canadian operations
to a private Canadian company for a combination of cash and stock. Total consideration
(denominated in Canadian dollars) for this transaction is CAD$78 million in cash, along with CAD$24
million in new equity. The sale is expected to close on, or before, May 1, 2009 and is subject to due
diligence and other customary closing conditions.
"We announced our intent in February to explore the market for a Canadian asset sale, and we are
pleased that in this market an agreement was reached," said Dan O. Dinges, Chairman, President
and CEO. "Once closed, this further focuses Cabot's regional extent and provides capital to reduce
our debt position."
At year end 2008, Cabot's reserve report included 40.4 Bcfe of proved reserves in Canada. "This
figure was limited to some extent due to our plans to suspend capital investments in Canada for
2009," commented Dinges. "Over the last several years, Cabot had assembled a nice asset package
in Canada, but with our recent success in other basins, Canada became less strategic, long‐term."
The effective date of the sale is April 1, 2009 and therefore does not impact first quarter production
expectations.

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(82) 51 463 8250 • mpc@ohtkr.com 10 / 23
Ocean Rig Finalizes Contract with

Petrobras for Leiv Eiriksson
DryShips announced today that on April 8, 2009, pursuant to the previously announced letter of
award, its wholly owned subsidiary Ocean Rig ASA signed a 3‐year employment contract with
Petrobras for exploration drilling in the Black Sea for its semi‐submersible rig, the Leiv Eiriksson.
The contract is expected to commence in direct continuation from the current contract with Shell.
The contract value is approximately US $630 million, including an estimated 60 days of mobilization,
disassembly and reassembly of the derrick structure, and an incentive bonus of 8%.
Source: Rigzone

The Leiv Eiriksson semisubmersible
Heidi Peterson Steps Down from Aker

Soultions' Board

Heidi Petersen has informed the Board of Directors of Aker Solutions ASA of her intent to resign
from the Board with immediate effect. The Board has accepted her resignation and will move to
elect a new Board member following standard procedures.
"We understand Heidi Petersen's choice," said Jannik Lindbaek jr., SVP Corporate Communications,
(82) 51 463 8250 • mpc@ohtkr.com 11 / 23
Aker Solutions, "and can only regret that she did not choose to take part in the Board's discussions at
their meeting on March 30." Source: Rigzone

SCAN plans 2-D seismic program in

Caribbean for Petrobras

OSLO: Oslo‐based seismic data acquisition company
SCAN Geophysical has received a letter of intent
from Petrobras for 2,500 kilometers (1,552 miles) of
2‐D seismic acquisition in the Caribbean region.
The confirmation and letter of intent for the
acquisition came from Petrobras Middle East B.V.
The data will be acquired with 2‐D seismic vessel
M/V Geo Searcher. Mobilization is set for early May
2009. The Geo Searcher will acquire 120 fold hi‐
density 2‐D data. This vessel is equipped to handle
ultra long streamers for high‐end 2D applications
including long offset and large source
configurations for 2‐D surveys worldwide.
A SCAN spokesperson said the company is especially pleased as this marks the second contract
opportunity to provide services to "an important and major client" such as Petrobras. SCAN
expressed confidence that the vessel and crew will carry out this survey in the same professional
manner as it did in the previous project for Petrobras in the southern North Sea last year, with
completion as scheduled.
The specific area of the survey has not been disclosed. However, according to BNamericas, last year
Petrobras Middle East, a subsidiary of Brazilian federal energy giant Petrobras (NYSE: PBR), and
Cuba's state oil company Cupet signed a US$8 million oil E&P agreement for block 37 off the
Caribbean island.
The deal entails seven years for exploration and 25 for production. Block 37 covers an area of 1,600
square kilometers (617 sq miles) in the Varadero region at depths ranging from 500 to 1,600 meters
(1,640 to 5,249 ft) near Cuban onshore oil reserves. Source: Engrgy Current

Fire delays Prosafe FPSO

A FIRE on the floating production storage and offloading conversion Ningaloo Vision at the weekend
was caused when the owner, Prosafe Production, was installing equipment, Keppel Shipyard
has said, writes Marcus Hand in Singapore .
The electrical fire started in the instrument and technical room, said Keppel Shipyard.
No one was hurt in the fire, but it is expected to delay the completion of the conversion by several
months.
(82) 51 463 8250 • mpc@ohtkr.com 12 / 23
A spokesperson for Keppel said the incident
“happened when the owner was commissioning
their equipment in the instrument and technical
room”.
According to the shipyard, the room had already
been handed over to the owner Prosafe and it was
installing its own equipment.
“While it is too early to ascertain the
full impact of the fire, preliminary assessment
indicates that completion will be delayed by a few
months, pending delivery times on critical
equipment,” said Prosafe.
Prosafe said it was insured against such incidents
and did not expect any significant losses apart from charter hire.
The conversion had originally been expected to be delivered in early 2009 for a seven‐year contract
with Apache Northwest offshore Australia.
Source: Lloyd’s List

Photo: http://blog.naver.com/speedymeyer

World Awash in Oil; Demand Lacking

Says IEA

On Friday the International Energy Agency (IEA) cut its forecast for global oil demand by one million
barrels per day (b/d) to 83.4 million b/d. That means the world will be using approximately 2.4
million b/d less than in 2008, or roughly a 3% decline from a year ago. This matches the first year
decline experienced during the 1979‐1983 period, but the IEA does not expect this industry
downturn to last four years like the earlier one. The downward demand revision was made as the
IEA used sharply
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reduced economic growth forecasts to project oil consumption. Much of the demand reduction is
due to weaker oil consumption expected in developed economies such as the United States, but
demand is falling in developing economies, also.
The IEA is now anticipating China's oil demand to shift from a small increase to about a 1% decline,
or roughly an 80,000 b/d decline from its prior consumption forecast. The IEA pointed out that
China's oil consumption fell about 6.9% in January‐February from last year. China's news last Friday
that its crude oil imports hit a one‐year record high, suggesting better consumption for March was
not available at the time the IEA made its revised forecast. If the IEA's projection for an oil demand
decline in China proves accurate, it will mark the country's first annual decline in 19 years.
We found the chart of the growth rate in China's construction and its implied steel demand
interesting when considered against the country's oil demand. What one sees is that in the first
years of the period, 2000‐2004, construction and steel demand growth was quite high, peaking in
early 2004 at close to a 40% annual growth rate. In the following four years, the growth rate was
considerably less than in the earlier period with the brief exception of the pre‐Olympics period in
2007 and 2008. Construction demand fell steadily throughout most of 2008 until demand went
negative in the last half of the year. Demand has rebounded in early 2009, but clearly the IEA doesn't
believe this is a measure of healthy future oil demand.

The annual growth in China's oil demand follows the pattern of growth for the country's
construction and steel demand. In the early years of the period, annual oil demand growth was
noticeably stronger than in the recent years.
(82) 51 463 8250 • mpc@ohtkr.com 14 / 23
Global oil demand remains the key to oil prices in 2009. Falling oil production will become a greater
factor in the supply/demand balance as we move through 2009 and into 2010. OPEC's continued
discipline in holding its output to the cartel's reduced December production quotas will be important,
but with surplus capacity of roughly 5.5 million b/d out of total global demand of 83.4 million b/d, or
6.6% of the total, the world is not very far out of balance. The IEA says it expects non‐OPEC supply to
fall by 320,000 b/d in 2009. Based on the report released Friday by the Alaska Department of
Revenue, North Slope production will fall by 5% in the next fiscal year starting in June, and the drop
would represent about 10% of the IEA's forecasted fall in non‐OPEC supplies. But possibly more
important is the IEA's identification of about one million b/d of gross pumping capacity of new
supply that would have come into production in 2009‐2010 that has been either delayed or canceled.
We believe there is sufficient uncertainty about a number of demand and supply drivers that one
has to have a low level of confidence in forecasting the direction of the global oil market over the
next five to ten years. While many people will focus on the supply challenges facing the petroleum
industry, we remain convinced that understanding demand dynamics may be the most helpful in
charting the future course for the oil markets. We are only confident in knowing that whatever we
forecast, it will most likely be wrong. Hopefully we can at least get the direction right.

Reprinted with permission from PPH & B

Source: Rigzone

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(82) 51 463 8250 • mpc@ohtkr.com 15 / 23
Shipping News

Tanker market faces worse slump than

first thought

Dahlman Rose scraps its projection of a rebound for spot rates in the fourth quarter
Writer: Rajesh Joshi
THE tanker market is set to face a “much more prolonged downturn” than previously thought,
according to New York investment bank Dahlman Rose.
The outlook for tanker rates this year is worse than previously expected, after a larger‐than‐
anticipated fall in oil demand and high inventories, the bank’s research team said. “We are no longer
projecting a fourth quarter rebound in spot rates,” Dahlman Rose said. “We are revising our spot
rate forecasts lower for the remainder of the year and expecting further pressure on tanker values.”
Dahlman Rose has slashed its average spot rate for 2009 for very large crude carriers by 20%, from
$40,000 a day to $32,000 per day. It has also revised down average 2009 suezmax rates by $4,625 to
$28,375 per day.

www.richard‐seaman.com/Wallpaper/Travel/MiddleEast/BosporusOilTanker.jpg

Rates for medium range product tankers are expected to average $11,375 per day this year,
compared to $18,000 per day previously forecast.
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“We remain concerned that spot tanker rates will face continued pressure as we proceed through
2009, as Opec may need to take more aggressive action at its next meeting in late May,” said the
report.
In making this forecast, Dahlman Rose analysts Omar Nokta and Sam Margolin have issued a blanket
revision for tanker industry shares traded in New York, with a few price target reductions and
predictions of further erosions in ship values.
The stockpiles of crude oil in Organisation of Economic Co‐operation and Development countries are
expected to remain at historically high levels throughout the current year, with the current inventory
of 61 days being the highest in 16 years.
The production cuts by the Organisation of Petroleum Exporting Countries may have come too late
to ward off the threat to tanker markets, Dahlman Rose said. In fact, OECD inventories have
increased by 100m barrels, to 2.7bn barrels, since Opec began its cuts.
These factors, as well as lower demand projections by the International Energy Agency, have caused
the serious re‐think.
“We are no longer projecting a fourth quarter rebound in spot rates, as OECD oil stocks are unlikely
to break 55 days before the end of the year,” said the report.
“The IEA’s new demand forecasts imply OECD inventories will fall to just 59 days by year‐end, based
on current Opec output, and would take nearly a year to fall below 55 days.”
The US bank expects further pressure on tanker values, and has forecast that the current price
valuation of $89m for a five‐year‐old VLCC will slump to $75m by the year‐end. “While the drop in
[tanker] values has not been as sudden as in other shipping segments, tanker prices have been on a
continued decline,” Dahlman Rose said.
The bank referred to the Baltic Exchange’s sale and purchase assessment for a modern VLCC, which
has fallen from $160m in September to $89m currently. “We remain cautious on tanker stocks,
though most have positioned themselves strongly to withstand market pressures,” Dahlman Rose
added.
However, in accordance with their new circumspection, Mr Nokta and Mr Margolin have run the rule
over New York‐listed tanker companies covered by their firm.
Omega Navigation has been reduced from Hold to Sell, thanks in large part to loan covenant
problems and because almost half the company’s fleet of nine comes off‐charter by the middle of
the year, when market weakness is expected to be in full force.
DHT Maritime has been reduced from Buy to Hold. Dahlman Rose has maintained its Buy ratings on
Teekay Tankers, General Maritime and Ship Finance, but adjusted its price targets downwards.
Prior Hold ratings remain in force on Frontline, Overseas Shipholding Group, Teekay, Nordic
American, Tsakos Energy and Knightsbridge.
Dahlman Rose 2009 daily tanker earnings forecast
Tanker size Newestimate Oldestimate Change
VLCC $31,875 $40,000 ‐$8,125
Suezmax $28,375 $33,000 ‐$4,625
Aframax $21,500 $26,000 ‐$4,500
Panamax $16,500 $22,000 ‐$5,500
MR product $11,375 $18,000 ‐$6,625

(82) 51 463 8250 • mpc@ohtkr.com 17 / 23
Dry bulk market shows signs of

life
After 22 straight falling sessions for dry bulk freight rates, the
Baltic Dry Index (BDI) finally headed back up, during the last
couple of days. The BDI rose a further 14 points yesterday at
1,492, coupled with another 15 point gain of 1% last Thursday,
the last day of trading before the Catholic Easter Holidays.
Thus, the longest slide of the Index since the previous
November ended. Of course, the market sentiment remains
bleak, as proved by the retreat of the smaller handysize vessels’
index (BHI) at 628 points (down by 7), even at yesterday’s rising
session. The lead of the increase was mostly noted at the
panamax sector which suffered during March. The relative
index (BPI) recovered at 1,185 points, up by 41 from last week.
Capesizes, the gauge's biggest vessels, climbed to US$18,035 up by $49 from the previous session,
while panamaxes daily spot average rates gained $327 on a day‐to‐day basis, reaching $9,494.
Capesize forward freight agreements for the third quarter, used to bet on future shipping rates,
closed at US$19,375 last Wednesday, a 7.8 per cent gain this month. Panamax FFAs for the same
period were at US$11,750, a 4.3 per cent advance for this month. The data are from broker Imarex
NOS ASA.
Meanwhile, Brazilian iron ore miner Vale has registered a rise in Chinese demand for ore and other
metals, despite the global economic crisis, the company's financial officer, Fabio Barbosa, said in the
beginning of the week. He said shrinking stocks in the world's largest importer of iron ore had helped
demand but added there was still considerable uncertainty over demand globally. "It seems that
there is a sign of recovery, of improvement, and in the case of China, it's more pronounced,"
Barbosa said.
But there is contradiction to these remarks, since earlier on Monday, China's vice chairman at the
Commerce Ministry's trade department, Liang Shuhe, said his country's iron ore imports surged in
February and March due to "fake demand" brought about by stockpiling. Liang said imports would
likely fall over the rest of 2009.
Nikos Roussanoglou, Hellenic Shipping News

Shipping shares up on renewed

investor confidence
The bringing of news of further rebound in earnings proved enough to spark
investor interest towards listed dry bulk stocks. The relative Dry Bulk Shipping
Stock Index moved forward yesterday by about 3.5%, while in terms of
comparison with the S&P 500, it remains ahead by 7.6% this month. Dryships
alone was pushing the Index higher yesterday, by gaining 11%. The company
announced yesterday that its Ocean Rig ASA unit signed a deepwater
exploration contract with Petrobras for $630 million.
(82) 51 463 8250 • mpc@ohtkr.com 18 / 23
Similarly, on Monday, Diana Shipping said that it will exchange its subsidiary, Eniwetok Shipping
Company, plus $15 million for ownership of Gala Properties. In the deal, Diana will gain possession
of a contract for the completion of a Capesize dry bulk carrier, valued at over $60 million. The ship
already has a minimum of 59 months of business booked at $55,000 per day, and Diana expects it to
generate close to $100 million in revenue over that period. These developments were enough to
propel the sector’s stock higher, with Eagle Bulk Shipping, Excel Maritime, Paragon Shipping and
OceanFreight Inc. trading upwards by more than 6%.
Source: Nikos Roussanoglou, Hellenic Shipping News

Singapore March bunker sales

jump 17 pct vs Feb
Marine fuel sales in Singapore rose a stronger‐than‐expected 17
percent in March from the previous month to a record high, after
falling 11.5 percent in February, government data showed on
Monday. Bunker sales in the world's top bunker port rose to 3.13
million tonnes last month, as cheaper rates boosted demand,
traders said. This compares with 2.67 million tonnes in February
and 3.02 million tonnes in January, the Maritime and Port
Authority said on its website.
Bunker sales were up 2.8 percent from the same period a year
earlier.
For the January‐March period, 8.82 million tonnes of marine fuel
were sold in Singapore, up about 2.8 percent from 8.58 million tonnes in the year‐ago quarter.
Cheaper rates in Singapore, compared to other ports in East Asia, have drawn more ships to the city‐
state over the past month.
Bargain‐hunting also set in when Singapore bunker prices fell to a more than six‐week low of $235
per tonne in mid‐March <BK380‐B‐SIN>, compared with a one‐month high of $283 a tonne on Feb. 6,
traders said.
Prices have since rebounded in line with improving demand to $268 per tonne on March 31.
Source: Alibaba
Idle Box Capacity Falls

Idled ocean container capacity fell for the first time in six months as carriers re‐
activated larger vessels amid a seasonal increase in cargo volume, but the
jobless figures likely will surge again later in the year. As of April 13 the idle fleet
stood at 486 ships of 1.31 million TEUs representing 10.4 percent of the global
fleet. Two weeks ago 485 vessels were idle, representing 1.42 million TEUs and
11.3 percent of the fleet, according to AXS‐Alphaliner, the Paris‐based container
shipping consultant.
"The fall signals the start of the summer peak season and expectations of higher volumes in the
coming months," Alphaliner said.
(82) 51 463 8250 • mpc@ohtkr.com 19 / 23
Several seasonal loops suspended a few months ago have been re‐activated while larger ships are
being introduced on other loops. This has led to a fall in the number of idled very large container
ships from 23 to only 10 today.
The idle fleet likely will shrink over the coming month as several carriers, including K Line, Cosco,
OOCL, Hanjin and MOL, are expected to redeploy laid up tonnage as cargo volumes pick up in key
trade lanes.
A marginal increase in freight rates on the Asia‐Europe and Asia‐Middle East routes in early April also
has prompted the return of some idled ships, according to Alphaliner.
But the idle fleet could ramp up again to over two million TEUs when the peak season ends in
September/October if the global economy does not recover, Alphaliner forecasts.
"With new capacity expected to be added at a faster pace over the next three quarters, a surplus
fleet oversupply of three million TEUs may appear at the end of the winter season if the economy
remains sluggish."
MSC, the Geneva‐based carrier, has idled just one percent of its fleet and only 2 percent of French
carrier CMA CGM's fleet is jobless, according to Alphaliner figures. APL has idled 23 percent of its
capacity, and 24 percent of Zim's fleet is jobless.
Source: Journal of Commerce
Green technology raises its game

www.seatradeasia-online.com/News/3882.html
The advent of more stringent environmental legislation around the world is focusing the minds of
researchers, especially in the field of propulsion, writes Craig Eason

(82) 51 463 8250 • mpc@ohtkr.com 20 / 23
THE development of technical solutions to the shipping industry’s environmental challenges has
been gathering pace as a number of important regulatory deadlines loom.
Marpol Annex VI, with its new limitations on nitrogen and sulphur oxide emissions, and the
imminent reductions in CO₂ and other greenhouse gas emissions are going to create challenges for
the shipowner.
Bar a few notable exceptions, however, owners are not going to create the solutions. The work to
reduce these three main emission groups revolves around engineering efforts, both incremental and
more radical.
There is an urgent need for more collaboration between companies, such as engine makers Wärtsilä
and MAN Diesel, as they look at collectively tackling their common challenges.
The whole environmental technology industry could be worth more than $5bn by some estimates as
various deadlines approach, forcing owners to invest in new onboard technologies.
Experts agree that hydrocarbon combustion can only be improved so much. But with theoretical
maximum limits not yet met, projects such as the European Union‐backed Hercules partnerships are
looking at approaching these targets.
Brussels has recently approved the second phase of the €24m ($31.8m) Hercules project, Hercules
Beta.

Green Turtle
(Chelonia mydas)
Photo: Andy Bruckner, NOAA

The targets of the second project are to improve efficiency by 10% and, in doing so, go some way
towards meeting the tough emissions goals that are being set by the International Maritime
Organization.
According to project co‐ordinator Nikolaos Kyrtatos, while there are other things that can be done as
far as the total propulsion plant is concerned, on the engine itself further improvements are
becoming more difficult as these theoretical limits are approached.
Prof Kyrtatos will co‐ordinate the range of projects being developed under the auspices of the
Hercules Beta project. Some will look at turbocharger improvements, others at further gains from
waste heat recovery technology.
(82) 51 463 8250 • mpc@ohtkr.com 21 / 23
Other projects will look at new material composites for engines, higher temperatures and friction
issues as the teams work to squeeze out the last drops of improvements in efficiency from diesel
combustion.
The Beta phase is a direct follow‐on from the first three‐year project, which ended in 2007, where 30
organisations worked together including many competing engineering firms.
Collaboration to overcome common obstacles during the first phase proved so successful that there
were immediate requests for it to be continued.
“The initial achievement was the structural engineering that allowed us all to sit side by side and talk
with each other,” says Prof Kyrtatos.
“People in the project realised that the goals in general were the same, so by talking together they
could avoid the pitfalls although the final design and actual reliability would be different between
companies,” he adds.
By working in parallel on common problems, engineers were able to assess quickly if they were on
the right track with their developments.
“This kind of research is extremely expensive, and if you are on the wrong track you could spend a
lot of time and money doing something useless, so the general feeling is they would like this broad
parallel working to continue, even beyond the project, which ends in 2011,” adds Prof Kyrtatos.
With the idea being circulated that there could be a permanent forum for research to continue,
there is a belief that the green maritime technology industry is gaining a level of maturity similar to
that which helps fuel advances in the aerospace sector.
While work develops on improving diesel propulsion efficiency, and debate rages over the
availability and implications of low‐sulphur fuel oils, a number of other alternative fuel source
projects have gained prominence recently.
Fuel cell development has led to two projects in Europe making significant steps, with on board trials
due to be undertaken to assess suitability as an alternative auxiliary power source. Methanpu and
the FellowSHIP projects both hope to demonstrate the capabilities of the cleaner fuel sources in the
marine sector.

Computer generated green ship http://www.instablogsimages.com
(82) 51 463 8250 • mpc@ohtkr.com 22 / 23
There have also been developments in the production of electrical power from solar panels. Japan’s
NYK Line has a spread of more than 300 panels on board a car carrier, testing whether they can
provide enough auxiliary power for lighting and other low‐level power needs.
On a more dramatic scale — and perhaps to make more of a political standpoint — Planet Solar, a
team of Swiss and French designers, is developing a solar‐powered trimaran that will attempt to
circumnavigate the globe in 2010. The 31 m, 60 tonne multihull will have its 470 sq m deck area
covered in photovoltaic cells with the aim of creating up to 13 kn for the record attempt.
While not purporting to be a forerunner of merchant vessel propulsion, it will certainly raise the case
for solar power in the maritime sector.
Another proponent of solar power, Solarsailor, a small company in Australia that has the patronage
of the country’s former prime minister, Bob Hawke, is attracting interest in its solar sails.
Solarsailor specialises in hybrid marine power, an integrated hybrid electric technology, and solar
panels that harness renewable solar and wind energy.
It has already created a number of designs for in‐harbour craft and yachts, and has signed a contract
with China’s Cosco shipping to develop large solar sails suitable for tankers.

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Maritime Press Collection

Korea's Shipbuilders Turn to Offshore

Shipbuilding key driver of South

S.Korea KAMCO to revisit Daewoo

Bangladesh breakers to fight another

STX scores Chinese funds for Dalian

Petrobras Reports Two Natural Gas

Sevan to continue Shelley work after

EIA Estimates OPEC's Oil Export Earnings at

Cabot to Sell Canadian Operations for

Ocean Rig Finalizes Contract with

Heidi Peterson Steps Down from Aker

SCAN plans 2-D seismic program in

Fire delays Prosafe FPSO

World Awash in Oil; Demand Lacking

Tanker market faces worse slump than

Dry bulk market shows signs of

Shipping shares up on renewed

Singapore March bunker sales

Idle Box Capacity Falls

Green technology raises its game

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