Sohmen-Pao noted that there were around 450 VLCCs in the market in 2005, rising to around 610 at the beginning of 2013. “Another 82 (VLCCs) are expected this year and next,” he told delegates at the Sea Asia 2013 conference held in Singapore.
“Demand for very large oil tankers has grounded to a halt. But the significant rise in VLCC fleet has to be seen in the context of demand,” he said.
Asia is expected to account for approximately 63% of the world's energy consumption, lending support to tanker demand in the region. The downside to demand is the softening US crude import market, according to Sohmen-Pao.
“US consumption has reduced significantly over the last five years as the nation is aiming for energy self sufficiency by 2035,” he noted. The VLCC market has lost the tonne-mile advantage made by voyages to the US from the Middle East – almost twice the distance made from Middle East to Europe, he highlighted.
The sovereign debt crisis in the eurozone has also dashed hopes of any possible strong consumption from the region to help absorb any excess tanker tonnage.
Sohmen-Pao told Seatrade Global that BW Group is not looking to aggressively expand its fleet during the present oversupply market, but he does not rule out taking advantage of opportunities when they present themselves. BW Group has not ordered any new ships, except for LNG carriers, over the past six years.
Within the oil tanker segments including VLCCs, aframaxes, suezmaxes and product tankers, VLCC owners are getting hit the hardest as operating expenses are slicing away the remaining thin profits. For instance, daily losses for VLCCs on the Middle East to Asia voyage widened to $3,534 from $2,931, according to the Baltic Exchange.
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