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Arctic shuttle tanker Mikhail Ulyanov.

Sovcomflot cites 'severely testing' market conditions for falling profits

Russia’s largest shipping company PAO Sovcomflot saw profits fall in 2016, and admitted the year had "severely tested the industry". 

The organisation reported net profits of 206.8m, compared with $354.5m in 2015.

Lower time charter equivalent revenue (TCE) fell to $1.14bn (2015: $1.24bn), while it reported EBITDA of $706.5m (2015: $780.1m).

“Sovcomflot has delivered a solid set of results for 2016, despite market volatility in a year that has severely tested our industry,” said Sergey Frank, president and ceo.

“As growth in oil refinery throughput and up-front demand ran ahead of end-consumption underpinning tanker rates in 2015, so 2016 witnessed a material softening in demand that impacted negatively spot tanker freight rates, albeit with some respite in the final quarter.”

Frank added that Sovcomflot had strengthened its position as the world’s largest harsh environment tanker operator through the acquisition of nine well-maintained tankers that became available as part of the PRISCO bankruptcy proceedings.

The company also launched three Arctic shuttle tankers to serve the Novy Port project.               

In addition, the Christophe de Margerie – a 172,600 m3, double-acting, Arc7 LNG carrier designed to serve Russia’s Yamal LNG project – was also introduced to its fleet.

Despite a fall in profits, the company has signalled its intent to continue investing in its fleet.

Sovcomflot has ordered four 114,000-dwt LNG-fuelled ice-class aframax tankers worth a total of $240m at Hyundai Samho Heavy Industries on the back of charter contracts from oil major Shell.

The contracting parties said the orders will mark the world’s first LNG-fuelled aframax tankers and deliveries are scheduled from the third quarter of 2018.

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