SCF posts $10.1 million profit in “challenging” tanker market

Gennadiy Nevelskoy.

Russia’s largest shipping company PAO Sovcomflot (SCF Group) has deliveref a $US10.1 million profit in an “extremely challenging” year for tanker markets.

Reporting a 3.4 per cent increase in gross revenue to US$1.43 billion, the St Petersburg-based SCF Group said 2017 mirrored 2011 and 1992 in being one of the worst years for the conventional tanker market in the past 25 years.

“Conventional tanker freight rates fell by almost 50 per cent year on year, reflecting an oversupply of speculative orders after the 2015 market spike, and the effect of sustained production cuts by OPEC and other oil-producing nations and a backwardation in the oil trade,” the SCF Group said.

The total share of group revenue from industrial shipping activities amounted to 51 per cent of its revenue base in 2017.

The group’s time-charter equivalent revenue declined by only 7.4 per cent, while Offshore Services and Gas Transportation increased their revenues by 48.7 per cent and 17.4 per cent respectively.

Profit before tax, when adjusted for a US$108 million fleet impairment reserve and non-operating cost (including litigation in England for 2002-2004 transactions), amounted to US$10.1 million in 2017.

Refinancing deals amounted to US$367 million, including a US$150 million bond issue and a US$174 million long-term facility with Sberbank for the two Arctic shuttle tankers (Mikhail Ulyanov and Kirill Lavrov) servicing the Prirazlomnoye Project (Pechora Sea), and a US$43 million refinancing with Unicredit and Nordea.

Contracted future revenues stood at US$8.1 billion as at December 31, 2017.

Among the highlights were the deliveries of ice-breaking platform supply vessel (IBSV) Gennadiy Nevelskoy in March, Stepan Makarov (June) and Fedor Ushakov (October) – all of which are contracted to operate on the Sakhalin-2 Project, under 20-year time charters to Sakhalin Energy Investment Company.

The world’s first ice-breaking LNG carrier, Christophe de Margerie (Arc7 class, 172,600-cubic-metre cargo capacity), was delivered into a long-term time charter with Yamal LNG.

An agreement was also reached with Shell in April to supply liquefied natural gas (LNG) for the first of a new generation of gas-powered Aframax crude oil tankers. Sovcomflot will take delivery of six ice-class vessels (114,000DWT, Ice 1A) between the third quarter of 2018 to the first quarter of 2019.

Also in April, a deal was signed with Admiral Nevelskoy Maritime State University (MSUN, Vladivostok) to establish a joint educational and research project entitled the “Floating Laboratory” to be based aboard Gennadiy Nevelskoy.

Sovcomflot’s fleet comprised 150 owned and chartered vessels (including vessels in joint ownership with third parties) amounting to 13.1 million tonnes deadweight in total.

Vessels under construction included one MIB standby vessel, six ice-class LNG-fuelled Aframax crude oil tankers, one Arctic shuttle tanker and one LNG carrier scheduled for delivery between January 2018 and February 2020.

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