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Sovcomflot slips into the red on weak oil tanker businesses

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17 November 2017

Max Tingyao Lin

Lloyds' List

Russian state carrier suffers from weak crude and product tanker markets

SOVCOMFLOT slipped into the red for the first nine months of this year, mainly due to weakness in its crude and product shipping businesses.

The Russian state-owned tanker group posted a net loss of $6.3m, compared with $210.3m in the same period of 2016. Its net loss amounted to $20.5m in July-September against the year-ago profit of $51.2m.

Amid an expansion of its fleet, gross revenues reached $1.1bn in January-September, compared with $1bn in the year-ago period. Direct operating expenses increased to $307.3m from $247.8m.

“This year has proven to be a very challenging period for the tanker industry and the situation now faced by many conventional tanker shipowners is especially severe,” chief executive Sergey Frank said in a statement.

“An over-supply of tonnage and reduced demand, resulting from oil capacity cut-backs led by Organisation of Petroleum Exporting Countries, have resulted in low freight rates over a sustained period,” Mr Frank said.

Sovcomflot’s crude tanker segment reported an operating profit of $23.4m in the nine month period, much lower than the year-ago level of $162.2m, while that of its product tanker unit fell to $2.3m from $49.1m.

The offshore segment saw its operating profit increase to $131.2m from $87.1m while the gas segment, which welcomed the world’s first icebreaking liquefied natural gas carrier earlier this year, saw operating profit rise to $65m from $61.5m.

“Our offshore and harsh environment business segment was certainly the stand-out performer,” Mr Frank said.

From October 2017 to March 2018, the carrier will add two offshore vessels to its fleet to serve long-term charters, said Mr Frank, without elaborating further.

“Looking ahead into 2018, we anticipate a soft freight rate environment to remain in the conventional tanker sectors, while Sovcomflot’s industrial shipping model will remain a source of strength and balance,” Mr Frank said.

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