Seychelles Oil Tankers In A Bad Patch

Extract from The Indian Ocean Newsletter 23/05/2009

RT - On the 18th of May 2009 we wrote this: "The same has occurred for the oil shipping business idling many oil tankers. Instead of sailing and delivering ships are being used as storage!" Enough said. Now read an extract from the 'Indian Ocean Newsletter'.

The crisis has been very bad for Seypec’s business of transporting oil products. But it still has to repay the loans it contracted to buy its five tankers.

The Seychelles Petroleum Company (Seypec) which manages the five double-hull tankers purchased in the last few years from Germany by the Seychelles government is going through a sticky patch. The company’s CEO, Guy Adam, admitted as much last week in an interview with pro-government magazine Isola Bella. He estimated that revenue from the business of transporting petroleum products by the five tankers of the company enabled merely “about breaking even now.” Demand for oil products is falling because of the global crisis and transport prices have fallen relative to the middle of last year. As a result, revenues from the rental of these tankers have dropped. So much so that according to information obtained by The Indian Ocean Newsletter, some of these vessels in Seychelles are now used for carrying other products, domestic oil or chemicals for example.

However, Seypec’s CEO expects that the activity of tankers will become more profitable next year when the International Maritime Organization (IMA) will begin to gradually withdraw from circulation single-hull tankers, an operation that will last five years. Adam hopes that with fewer boats in circulation, Seychelles tankers will increasingly be chartered. This is desirable because the government of the Seychelles, which bought each of these 40,000 tonne vessels for $ 50 million through loans from German banks, is indebted for their acquisition until 2018.