Shareholders’ meeting 8 May 2013 1
Agenda 1. Strategy 2. Tanker market Demand Supply 1. Offshore market 2. Q&A 2
2. Strategy Strategy 3
A Focused Fleet 2011 2012 2013 Vessel Type Euronav owned TC-IN Euronav owned TC-IN Euronav owned TC-IN FSO (2 x 50%) - (2 x 50%) - (2 x 50%) - V-PLUS 1 - 1 - 1 - VLCC 10 10 incl JV 10 7 incl 10 1 JV (9+2x1/2 in J/V) (9+2 x 1/2 in J/V) (9+2x1/2 in J/V) SUEZMAX 19 (14 ice class & - 20 (14 ice class & 4x - 20 (14 ice class, & 4x 1 2x1/2 in J/V) 1/2 in J/V) 1/2 in J/V) TOTAL 41 vessels + 4 NB 39 vessels + 1 NB 34 vessels (mix of spot and fixed contracts) (mix of spot and fixed contracts) (mix of spot and fixed contracts) Decreased exposure 4
A Balanced Strategy 2013/ YTD 2012 onhire days Forecast 2013: 12,162 onhire days 2012: 12,489 onhire days 3% 6% 30% 56% 33% 62% 5% 5% fixed 497 days fixed-ps 4,172 days fixed 343 days fixed-ps 3,616 days FSO 671 days spot 7,149 days FSO 647 days spot 7,556 days Break-even Of which OPEX Fixed Contract Backlog 2012: $486m $ 28,843 $ 8,175 VLCC $ 23,627 $ 7,667 Suezmax 5
Significant Events • Successful restructuring of the ship management organisation => savings on opex/overhead • Successful set up dedicated offshore department • Drawdown under USD 750 M and the USD 65 M loan (delivery Alsace) in difficult markets • Successful restructuring CB extending repayment of 84% of convertible with 3 years to 2018 • Extension FSO Africa contract to 2017 with possible further extension options up to 2019 • Sale Algarve to offshore contractor at premium to market value • Option fee in cash received in respect of purchase option for Antarctica and Olympia • Fixture Luxembourg at TC rate above market • TI Guardian redelivery • Successful conclusion of sale and leaseback of Cap Isabella brings Euronav’s capex commitments to an end without affecting the cash position. 6
Tanker Market 7
Tanker demand 8
Oil Demand Growth Actual Forecast + 670KBPD +960KBPD Apr-2013 Source IEA 9
Oil Supply Growth Forecast Actual +710KBPD +1930 KBPD Apr-2013 Source IEA Shaded area are non OPEC only 10
Gas vs Oil Prices 11
USG Crude Oil Imports by Type of Crude -Significant decrease in the Growth in domestic crude oil production volume of light crude seaborne imports into the US Gulf. Imports of light crude oil are now in the region of 0.5m b/d – the average for 2010 was 1.4m b/d - Heavy/Medium grades remain largely unaffected – this is due to refinery requirements in the US Gulf. Billions of USD were spent on gearing refineries towards the processing of heavier grades - Some USG refineries are able to process the lighter domestic crude oil… 12
Major Changes in Dirty Spot Market Trades 2012 Vs 2011 Data source: Clarksons /bases on Spot fixtures 13
Estimated VLCC Requirements for carrying Crude Condensate and Fuel Oil Import Data source: Clarksons /LLI 14
Net 62 VLCCs Required for carrying crude, condensate and Fuel oil import over next 4yrs Data source: Clarksons /LLI 15
Net 40 suezmax required for carrying crude, condensate and fuel oil imports over next 4yrs Data source: Clarksons / LLI. Tonnes discharged represents total volume on all vessel sizes 16
The Demand requirement for the next 4 years should increase by: • 62 VLCCs • 40 Suexmaxes 17
Large Tanker Supply 18
Tanker existing fleet and orderbook Data source: Clarksons 19
Tanker orderbook vs aging fleet 196 101 83 Data source: Clarksons 20
VLCC annual average Source: Gibson 21
Tankers orders placed each years 22 Source: Gibson
Tanker fleet age profiles Data source: Clarksons 23
Tanker removal analysis 2012 Note: Based on Tanker Age Profile at the beginning of 2012 Data source: Clarksons 24
Will owners scrap ? Depends on following factors: • debt profile • additional capex events • scrap price volatility Without any significant scrapping, Supply will balance Demand in 2016 25
VLCC Asset Prices Source: Clarksons 26
Ship recycling BOF EAF WORLD 70% 30% CHINA 90% 10% INDIA 40% 60% TURKEY 25% 75% Table below demonstrates the relative importance ship recycling industry has to the economy of each country 2011 Steel scrap Steel used Ratio produced (LDT) (LDT) Bangladesh 1,495/ 2,046 73% Pakistan 688/ 2,531 27% India 2,715/ 73,671 4% Turkey 522/ 28,700 2% China 1,800/ 649,850 0.3% 27 In crude steel equivalent thousand tonnes
Crude tanker demolition Average age trading vessels 2012 fell to < 20 years youngest fleet ever 28 16 44 tankers scrapped = inactive vessels + trading vessels 68% DOUBLE HULL 3 DH + 13 SH 27 DH + 1 SH average age for scrapping average age for scrapping average age for scrapping 20.7 years 22.8 years 19.5 years 28
Eco Ships • The concept of an Eco ship in Bulk trading as opposed to containerships is a sales project for the Ship yard. • Any ship ordered will increase world fleet size and reduce market levels • Most eco gains can be replicated through retrofitting saving devices which can be done in drydock to existing ships at a fraction of the cost of a newbuilding 29
Offshore Project Overview 30
In Operation • FSO Asia and FSO Africa delivered to MOQ in 2010 • FSO characteristics: - Storage Capacity: minimum 2,400,000 barrels of dry oil for export: largest FSO in the world - Stripped Water Capacity: minimum 200,000 barrels - Custody transfer to off-take tanker: 90,000 BPH - Discharge to export vessel every 2 to 3 days: in tandem mooring or in STS operations - FSO Crew - 52 persons; FSO accommodation for platform shift workers up to 84 personnel 31
In Tender Phase • Gina Krog (former Dagny) field project for Statoil in North Sea 1 FSO Suezmax size. Contract should be awarded in the course of this spring. 32
Euronav Offshore 33
Offshore Strategy • 2012: Set up of a dedicated offshore department. • Focus on FpSO units (Floating Storage Offloading) with small (p) production topsides for platform fluids treatment • Select vessels from our trading fleet when: – Becoming more difficult to trade due to age restrictions (older VLCC (1999) and older Suezmax (1998) – have unique characteristics: V+ or Cap Diamant • Use of experienced sub contractors for providing design, engineering and mooring systems . 34
Market Overview • Annual growth 5-10% • Most FSO/FPSO contracts are extended into option periods • Alternatively redeployed on new contracts • The complexity and size of new FSO/FPSO are increasing • Leased vs Owned – 50/50 35
THANK YOU FOR LISTENING www.euronav.com 36
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