Euronav’s acquisition of the ULCC Seaways Laura Lynn from International Seaways for US$32.5M brings together the last two remaining ULCCs that originally formed a quartet operated by Hellespont Steamship.
Euronav chief executive Paddy Rodgers said “Bringing the only other ULCC in the world fleet under our control will provide us with a significant strategic opportunity.”
These words echo those of Basil Papachristidis, who first operated Seaways Laura Lynn (ex-Hellespont Fairfax) and whose strategy was built around the operation of ULCCs.
Mr Papachrisitidis’ strategy commenced in the 1990s, when Hellespont Steamship bought a 51% stake in the six Loews Corporation turbine-engined 420,000-dwt ULCCs Capitol, Embassy, Grand, Orpheum, Paradise and Paramount, named after cinemas run by the diverse Loews group.
These were built between 1975 and 1977, and valued at around US$50M each at the time of the sale. They were reputedly the best engineered tankers of their day and the last was not scrapped until 2003.
The mid-1990s tanker downturn nearly brought the company to its knees, but Mr Papachristidis bounced back. In a joint venture with Loews, the company ordered a series of four new ULCCs at Daewoo for a reported US$98M. These were the first ULCCs ordered in 20 years.
The Hellespont group were impressed by the quality of the original Loews ULCCs and paid Daewoo an extra $10M above the normal standard for this type of tanker, with extra steel, a wider beam, Japanese (not Korean-built) engine beds and a secret weapon against corrosion in the ballast tanks.
The secret weapon turned out to be continuous inert gas injection and venting to remove oxygen from the rusting equation.
A more obvious novel feature was the white hull topsides. A known issue for VLCCs and ULCCs sat for months on storage duties in the broiling heat of the Middle East sun was the extreme expansion of deck plates. The reflective paint was said to keep the expansion within acceptable ranges, but inevitably, the ULCCs were labelled white elephants.
The 'white elephants' of Hellespont | |||
Current Name | TI Name | Type | Company |
TI Europe | TI Europe | ULCC | Euronav |
Oceania | TI Oceania | ULCC | Euronav |
FSO Asia | TI Asia | FSO (converted 2009) | International Seaways / Euronav |
FSO Africa | TI Africa | FSO (converted 2010) | International Seaways / Euronav |
The label also fitted due to the limited trading pattern available to ULCCs that could only fully load or discharge in a handful of ports. This could be extended by lightering operations, but generally ULCCs were more sensitive to market conditions than smaller tankers.
Designed almost exclusively to run between the Middle East and the US, in weak markets many ULCCs spent months on storage duties, or on bizarre voyages. The epic Jahre Viking (built 1976, 550,000 dwt) was employed on regular voyages around the Arabian Peninsula from Ras Tanura to Yanbu, even though these ports are connected by pipeline.
Unfortunately the new Hellespont ULCCs entered a weak market and the debut voyage of Hellespont Alhambra was only two Worldscale points above that of its 1970s-built cousins.
Nonetheless, the Papachristidis/Loews-owned ULCCs defied critics and found regular employment.
It was in 2004 that Euronav first became interested in the quartet. Later that year Euronav and OSG announced that together they has paid US$450M for the four vessels which were then renamed TI Asia, TI Europe, TI Oceania and TI Africa to indicate their employment in the Tankers International pool.
Four years later it emerged that TI Asia and TI Africa were to be converted into floating offshore production and storage units (FSO). The other two ULCCs continued to trade spot and sporadically as storage units.
By 2016, only TI Europe still seemed to be actively trading, with tracking services showing TI Oceania virtually stationary in the Gulf of Oman for the last 12 months.
As if to underline how much crude oil trading has changed since the quartet of ULCCs were built in 2002, in 2017 TI Europe was used to test run ULCC berthing at Daxie Bay Shihua No 2 oil terminal and Nianyu Bay oil terminal in China. In theory, TI Europe (or the rumoured orders for Chinese-built ULCCs), could load US shale derived crude oil and deliver to the refurbished Chinese ULCC-capable oil terminals.
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