RUS

Sovcomflot slips into the red on weak oil tanker businesses

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Lloyds' List

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.