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Offloading SPT helps narrow IM Skaugen loss in 'unsatisfactory' Q2

IM Skaugen have reported a loss of $500,000 in the second quarter, as the sale of its ship to ship transfer and lightering business improved its results.

The loss compares to a $4.6m loss in Q2 2014, and brings its first half result to negative $5.1m from a $13.4m loss in the first half last year.

Further cost reductions through reducing office staff numbers were also reflected in the company's expenses, with shorebased overheads falling over 30%.

Despite LNG spot voyages earning some of the company's multigas vessels a premium, moving LNG from large-scale terminals to smaller distribution hubs, overall the company viewed Norgas Carriers' performance as "unsatisfactory".

Revenues of $15.9m were down from $17.9m in the corresponding quarter last year and outweighed by voyage expenses, charter hire and other expenses, resulting in a operating loss of $4.5m.

According to IM Skaugen, the poor performance in the quarter was down to a shortage of major petrochemical gasses, and subsequent drop in transport demand. Skaugen's fleet was largely positioned in Asia, and suffered idle time as Japan and Korea permanently scaled-down their export activities.

The company is continuing its strategy of shifting from LPG and petrochemicals to small scale LNG transportaion.

"Our revenue base will from this gradually change from short term spot and COA business into long term contract business for small scale LNG logistics. Transport of LNG is more demanding than other gas products and will require special ships. The prospective LNG contracts in the energy field are thus more rewarding, both in terms of rates and in terms of duration," the company stated in its outlook.

In the meantime there are promising signs for the LPG and petrochemical fleet, as repositioning vessels to a better market West of Suez should reduce idle times. The prospect of China sourcing its petrochemicals from further afield should be good news for tonne-mile demand, and Skaugen expects the likely easing of sanctions on Iran will see it eventually retake its position as the largest exporter of ethylene on the planet.

Posted 21 August 2015

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