Sovcomflot has announced the purchase of 6 tankers Primorsk International Shipping Limited (PRISCO), in a deal worth about $270 million which the company says could boost revenues by $5 billion.
Sovcomflot first deputy general director, Nikolai Kolesnikov, said that the fleet expansion will help the company keep up with market growth."It is worth noting that with the continuing depression of the freight markets, the Group's fleet is being expanded by ships which are already employed on long-term industrial projects with blue-chip customers and generating steady revenues and cash-flows," Evgeny Ambrosov, Senior Executive Vice-President at Sovcomflot, says the company will spend about $270 million on six tankers with the average price per tanker $43-45 million. Kolesnikov believes the move could help boost revenues by up to $5 billion. All the tankers are currently engaged in transporting crude from fields in the northern part of Sakhalin. Two of the six tankers are now under time charter for Exxon Neftegas Ltd for transporting Sakhalin-1 oil for export. Three tankers are operating under a time charter with Sakhalin Energy Investment Company Ltd. One tanker is currently operating on the spot market.Evgeny Ambrosov, Senior Executive Vice-President at Sovcomflot, said that the purchase of vessels from PRISCO would help strengthen Sovcomflot's leadership in providing transportation and logistics support for offshore energy projects, especially difficult areas of Russia's Artic and Far East."This market segment and the Far Eastern region are well-known to us. Six vessels of our existing fleet, including Aframax shuttle-tankers, LNG gas-carriers and offshore supply vessels are already successfully serving the Sakhalin-1 and Sakhalin-2 projects. By enhancing the Group’s fleet with these technologically advanced shuttle-tankers, Sovcomflot will further strengthen its leadership in providing transportation and logistics support for offshore energy projects. This move is fully in line with Sovcomflot Group’s Strategy, which envisages the company’s growth as the national shipping and logistics champion and a leading international operator providing comprehensive servicing of offshore field developments and offshore oil and gas production, above all in the extra harsh climatic regions of the Arctic and Subarctic. We believe that as a result of this consolidation in the transportation component of the Sakhalin projects, we shall be able to improve the quality of services offered to our customers due to the available synergies.”Sergey Popravko, Executive Board Member Sovcomflot, hailed the deal, noting that new tankers will open new horizons for hydrocarbon transportation and strengthen company position in the Far East providing mutual partnership“The shuttle tankers we have acquired are among the best in their class, with an average age of about 6.5 years. Their bow-loading systems, ice class and the use of winterisation systems, enable year round transportation of hydrocarbons from the Sakhalin offshore fields. We have successfully reconciled all the issues related to technical management with our compatriots from PRISCO. We have also defined that for these ships, Sovcomflot will give preference to seafarers from the Primorsk region, who has already gained experience in the transportation of cargoes from the terminals at the ports of Prigorodnoye and De-Kastri. When the transaction is implemented, this will strengthen our Group’s role in the Maritime Cluster of the Russian Far East.”The transaction should be completed in February 2011 with the Group’s fleet increase by one million tones deadweight. The PRISCO Group is the biggest hauler of liquid freight in Russia's Far East. The group operates 21 vessels (19 tankers and two bulk carriers) with total deadweight of around 2 million tones. The average age for the company's vessels is three and a half years. Oil accounts for 78% of the company freight, The deal will make Sovcomflot the second largest world tanker company with 157 vessels and over 12 million tonnes deadweight. In addition to transporting oil, gas and petroleum products, Sovcomflot provides technical management and bulk storage services.VTB Capital Georgy Tarakanov, believes the deal is worthwhile despite the recent slump in spot market demand.“The Freight market situation is quite dubious: spot rates since last December dropped by half to $4000-6000. On one hand, it allows leaders of the sector strengthen their position, on the other – leaves no options for other participants.”