Mercator, GE Shipping Buy

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Mumbai, May 11: Within seven days, two Indian shipping companies have bought second-hand VLCCs (very large crude carriers). Mercator Lines had announced the purchase of a second-hand VLCC here on Tuesday, while GE Shipping bought a second hand VLCC on May 5.

The development gains significance since none of the Indian shipping companies were able to participate in the crude transportation on the west coast of India by Indian Oil Corporation and Reliance Industries. The two refineries import crude through 15 VLCC parcels in a month.

The addition of two VLCCs would take the overall tally of VLCCs under Indian flag to four. GE Shipping had earlier in November 2003 bought a second-hand VLCC, while Essar Shipping had bought a VLCC a month back.

Though the companies are tight-lipped about the prices at which these VLCCs were bought, industry sources said the prices for a 10-year old VLCC varies between $35-50 million.

The new building prices of VLCCs in shipyards are projected at $82 million. The 12-year high and low prices for new building VLCCs are $105 million and $65 million. The Shipping Corporation of India had late last year placed orders for two VLCCs at a cost of $65 million.

Mercator Lines chairman and managing director HK Mittal said that the acquisition of VLCCs is a step towards adding one million tonnage during the year. The 1993 built VLCC of 2,87,875 DWT will take the company’s overall tonnage to 7.5 lakh DWT.

Meanwhile, charter freight rates in the spot market for VLCCs has dropped to around $35,000 per day in the first week of May 2004 from $54,000 in early April 2004.

According to GE Shipping general manager (planning) Rajat Dutta: “The future of crude transportation augurs bright, if the acquisition of VLCCs is any indication. Moreover, economics drive refineries to carry crude in large parcel sizes through VLCC.”