OAO Sovcomflot Friday announced its financial and operating results for the first quarter ended 31 March 2013. Commenting on the Group’s results Sergey Frank, President and CEO of OAO Sovcomflot, said:
“The conditions in the tanker markets remained very challenging throughout the first quarter of 2013. Whilst some of the global macro-economic indicators are beginning to show signs of improvement, the benefits have yet to flow through to the tanker markets. Overall, we expect there to be no sustained improvement in these markets before 2014.
“SCF Group continued to focus on the provision of higher value-added specialist shipping services, and the development of offshore services, and providing support for Russia’s long-term industrial energy projects. The Group continues to invest for the future, and we are determined to ensure that our fleet remains one of the world’s youngest and safest, whilst incorporating the latest technologies to help protect the environment for future generations.”
Q1 2013 Highlights:
• Gross revenue (Freight and Hire) of USD 313.2 million, down 16.1 per cent on Q1 2012
• Group EBITDA of USD 91.3 million, a 29.9 per cent decline on Q1 2012
• Net profit of USD 2.0 million, 95.6 per cent below the comparable period last year
• SCF’s modern fleet continues to benefit from the addition of technologically advanced vessels Nikolay Zuyev acknowledged as a “Best ship of 2012”.
Business Segment Highlights
Crude Oil Transportation
This is the Group’s largest business segment, accounting for 43 per cent of total time charter equivalent (TCE) revenues in the first quarter of 2013. The quality of the Group’s fleet was underlined when, in March 2013, the Royal Institution of Naval Architects (RINA) named SCF’s tanker Nikolay Zuyev (120,600 tonnes DWT) one of its “Best Ships of 2012”. In particular, RINA was impressed with the vessels structural and technical features, including high fuel economy and the provision for long-term use of low-sulphur (0.1 per cent) bunker fuel. Overall, features such as these combine to make Nikolay Zuyev one of the most environmentally-friendly vessels of her class in the world.
Oil Products Transportation
This segment accounted for some 26 per cent of Group TCE revenues in the quarter ended 31 March 2013. The vessels operated include: products tankers; chemical; asphalt and bitumen carriers. On 23 January 2013, SCF Group took delivery of Anatoly Kolodkin, a LR2 Aframax tanker of 118,316 tonnes DWT. She is the third vessel of her type to be constructed, as part of an agreement between OAO Sovcomflot and the Zvezda-DSME shipyard – a joint venture involving United Shipbuilding Corporation (Russian Federation) and Daewoo Shipbuilding & Marine Engineering (Republic of Korea). The two other tankers – Nikolay Zuyev and Georgy Maslov – were already in service with SCF.
The adoption by the Group of the new accounting standard IFRS 11 has resulted in nine LR1 product carriers in joint ownership with Glencore to be equity accounted for, as from this reporting period, with the respective re-statement of comparative historical data.
Gas Transportation
The Group operates a fleet of LNG and LPG carriers, comprising four wholly-owned vessels in total, with a further six vessels on order (additionally, four LNG carriers are owned jointly with third parties and are equity accounted for, as of this reporting period, as per IFRS 11). The segment accounted for 5.4 per cent of TCE revenues in the first quarter of 2013. During the period, SCF’s new state-of-the-art LNG carrier Velikiy Novgorod was launched from STX Offshore & Shipbuilding Co. Ltd’s shipyard. This vessel was ordered by OAO Sovcomflot to operate under a long-term agreement with Gazprom Global LNG, and is due to enter service in December 2013. The vessel is an Ice2 (C1) Atlanticmax class gas carrier, with a cargo capacity of some 170,000 cubic metres. This makes her capable of transporting gas on a year-round basis from almost any existing LNG terminal in the world, including Russia’s first LNG project at Sakhalin-II.
Offshore Development Services
This business segment comprises the Group’s shuttle tankers and specialised icebreaking supply vessels. On 10 January 2013, the naming ceremony took place in St. Petersburg for Vitus Bering, the lead ship in a series of state-of-the-art icebreaking supply vessels. The ceremony was attended by the President of the Russian Federation, Vladimir Putin and other distinguished guests. The Vitus Bering series of vessels is a joint project involving both Russian and Finnish shipbuilders. Around 90 per cent of the structural components for the vessels were produced in Russia at the Vyborg Shipyard (part of OAO USC).
Vessels in the Vitus Bering series will be engaged in operations in Russia’s Far Eastern seas. This region is a hotspot for offshore oil & gas development. Ice-breaking supply vessels like Vitus Bering will ensure uninterrupted operations on oil platforms in the Arkutun-Dagi field, in the Sea of Okhotsk, as part of the Sakhalin-I project. On 7 March 2013, Vitus Bering set sail on her first scheduled voyage, from the port of Kholmsk, to work on the Sakhalin-I project, as part of a long-term agreement with Exxon Neftegas Ltd.
Other
This is the smallest of SCF’s business segments and it comprises multi-purpose and bulk cargo carriers, primarily for coal transportation, and also seismic vessels. On 22 January 2013, the Group took delivery of NS Yakutia, a 74,559 tonnes DWT Panamax bulk carrier. The vessel was built at the Hyundai Mipo Dockyard in South Korea and she has been chartered by SUEK for the transportation of coal in the Far East.
Both NS Yakutia and her sister-ship NS Energy have been classified as ENVIRO vessels, indicating a higher level of environmental protection and safety. They benefit from reinforced double hulls and double bottoms.
Fleet Summary:
As at 31 March 2013, the SCF Group fleet comprised 159 vessels (including vessels in joint ownership with third parties): 135 owned vessels, two chartered-in vessels, nine escort tugs which have been chartered-out on bareboat charter to an associate company – Rosnefteflot, and four LNG carriers and nine LR1 product carriers in JV. The average age of tanker is 7.9 years, compared with an industry average of 16.1 years.
Assets under construction at the period end comprised 10 vessels, with a total deadweight of some 1.2 million tonnes. This includes: two VLCCs; six gas carriers (four ice-class LNG, Ice 1C, 170,000 cubic metres; two LPG carriers, Ice 1B, 20,550 cubic metres); one Aframax tanker (LR2 type); one multifunctional ice-class supply vessel.
\\The Group retains its leading position in the major conventional tanker market segments, and remains one of the largest ship owners and tanker fleet operators. According to research from Clarkson, the Group is ranked: first in the world by DWT tonnage and the number of Aframax vessels; in the world’s top-five by DWT tonnage and the number of Suezmax vessels; first in MR-type oil product carriers; third in the number of shuttle tankers. SCF is also the world’s leading operator of ice-class tankers.