Thursday, March 26, 2009
Dubai Port World sacks 100 people
Thursday, 26 March 2009
Dubai's flagship port operator Dubai Port (DP) World has retrenched 100 staff, as its business fell as a result of the global downturn. The company, one of the world's largest container operators, reported in its year-end results that it had seen an eight per cent drop off in trade volumes in the first two months of 2009.
However, no more redundancies were expected, the company said, adding that it was looking to perform better than any of its competitors in the market this year, the Arabian Business said.
''It is such an insignificant number of this global business.
There are really no redundancies. We have high levels of capacity utilisation in our business even as we speak today,'' Yuvraj Narayan, DP World chief financial officer said. Last year the company saw a 48 per cent rise in its profit after tax, with continuing operations rising to 621m dollar , but only after a sharp contraction in the last quarter of the year.
Nabil Ahmed, analyst at Deutsche Bank, however, cut the company's sliding share price target to 0.30 dollar. DP World operates 48 marine terminals and 13 new port developments in 31 countries.
Source: WebIndia123
Jaxport welcomes its biggest ship yet
Thursday, 26 March 2009
The biggest ship to ever call at the Port of Jacksonville unloaded pulp products at Blount Island Wednesday afternoon. The 983-foot Catania was able to call on the port because it was only carrying about 10 percent of its capacity, allowing it to traverse the channel. It’s the first time the Port has hosted a post-Panamax ship, meaning one that is too large for the Panama Canal as it is currently configured. Typical ships calling on the Port are about 650 feet.
“You’re getting a snapshot of what Jacksonville can be,” said Rick Ferrin, the Jacksonville Port Authority’s executive director.
Ferrin is hoping the Port Authority can land about $14.5 million from the federal stimulus package to deepen the channel to 40 feet. The channel will have to deepened about another five feet to be able to receive post-Panamax ships.
The Catania can carry about 4,900 twenty-foot equivalent units (TEUs), but was much lighter when it called on Jacksonville. The Brazilian pulp products delivered by the Catania were scheduled to be delivered by another ship, but that vessel ran aground.
The Catania, which is owned by Mediterranean Shipping Co., is scheduled to return to the Bahamas.
Source: American City Business Journals, Inc
DryShips Inc. Reports Its Financial and Operating Results for the Fourth Quarter
Thursday, 26 March 2009
Year Ended December 31, 2008. DryShips Inc, a global provider of marine transportation services for drybulk cargoes, announced its unaudited financial and operating results for the fourth quarter and year ended December 31, 2008. George Economou, Chairman and Chief Executive Officer of the Company, commented: "Since the collapse of the world economy in the latter part of 2008 we have taken a pro-active approach implementing innovative steps to address the current market environment. DryShips has dramatically reduced its capital expenditures while minimizing the use of cash. The cancellation of 17 contracts associated with vessels previously announced worth $2 billion have dramatically reduced remaining CAPEX in 2009 to $149.6 million excluding payments associated with our newbuilding drillships. We have shored up the balance sheet by raising significant amounts of fresh equity for DryShips in an extremely difficult environment enhancing our liquidity position. These actions have garnered the support of our bankers as demonstrated by the waiver obtained by our three main lenders on the Primelead facility. These three lenders, acting as agents or direct lenders, represent 75% of the total loans outstanding. The latest fixture of the Leiv Eiriksson justifies the decision taken about a year ago to diversify into the ultra deep water offshore drilling segment by acquiring Ocean Rig ASA. In combination with the fixed revenue from the second operating rig and the period employment secured at the peak of the drybulk market for over 50% of our vessel operating days, we estimate our fixed EBITDA for the next three years will total approximately $1.70 billion. DryShips is ahead of the curve in facing the challenges of tomorrow. We remain cautiously optimistic about the future as we continue to build the Company for the long term."
Fourth Quarter 2008 Results
Following our acquisition of Ocean Rig during 2008, we have two reportable segments, the drybulk carrier segment and the offshore drilling rig segment. For the quarter ended December 31, 2008, Net Voyage Revenues (Voyage Revenues less Voyage Expenses) amounted to $117.1 million as compared to $223.5 million for the quarter ended December 31, 2007. For the quarter ended December 31, 2008, revenues from drilling contracts following the acquisition of Ocean Rig amounted to $87.5 million. We did not earn any revenues from drilling contracts in the quarter ended December 31, 2007, as Ocean Rig was not part of DryShips. Operating Loss from both segments was $794.3 million for the quarter ended December 31, 2008, as compared to Operating Income of $211.9 million for the quarter ended December 31, 2007. Total Net Loss, from both segments, for the quarter ended December 31, 2008 was $1.02 billion or $18.42 Loss per Share calculated on 55,230,433 weighted average fully diluted shares outstanding as compared to the Net Income of $194.4 million or $5.35 Earnings per Share (EPS) calculated on 36,323,586 weighted average fully diluted shares outstanding for the quarter ended December 31, 2007. Total EBITDA(1), from both segments, for the quarter ended December 31, 2008 was $(932.2) million as compared to $228.0 million for the quarter ended December 31, 2007.
Results for Year ended December 31, 2008
Following our acquisition of Ocean Rig during 2008, we have two reportable segments, the drybulk carrier segment and the offshore drilling rig segment. For the year ended December 31, 2008, Net Voyage Revenues (Voyage Revenues less Voyage Expenses) amounted to $808.1 million as compared to $550.9 million for the year ended December 31, 2007. For the year ended December 31, 2008, revenues from drilling contracts amounted to $219.4 million. The Company did not earn any revenues from drilling contracts in the year ended December 31, 2007, as Ocean Rig was not part of DryShips. Total Operating Loss, from both segments, was $14.0 million for the year ended December 31, 2008, as compared to Operating Income of $531.8 million for the year ended December 31, 2007. Total Net Loss, from both segments, for the year ended December 31, 2008 was $361.3 million or $8.11 Loss per Share calculated on 44,598,585 weighted average basic and fully diluted shares outstanding as compared to Net Income of $478.3 million or $13.40 EPS calculated on 35,700,182 weighted averages fully diluted shares outstanding for the year ended December 31, 2007. Total EBITDA(1), from both segments, for the year ended December 31, 2008 was $(100.4) million as compared to $601.0 million for the year ended December 31, 2007.
Other Significant Events
Bank Update
The Company has previously reported a definitive and a preliminary agreement with certain lenders relating to the waiver of breaches of loan covenants. The Company remains in discussions with its other lenders concerning current breaches of loan covenants. Pending the outcome of such discussions, the Company has reclassified approximately $1.8 billion in debt as short-term.
Disposal of Three Capesize Newbuildings
The Company has previously announced the cancellation of agreements to acquire three Capesize newbuildings from unaffiliated third parties in exchange for the retention by the sellers of cash deposits and cash payments in the amount of $66.4 million, and the payment by the Company to the sellers of an additional $50.0 million in cash or common shares. In connection with the closing of the transaction, the provision regarding the $50.0 million additional payment was modified so that the Company issued a total of 11,990,405 common shares to the sellers. We expect to incur a loss of approximately $116.4 million associated with this transaction which will be recorded in the first quarter of 2009. As of March 24, 2009, the Company has issued and outstanding 153,855,405 common shares.
Cancellation of Nine Capesize Vessels
We expect to close the previously announced cancellation of the nine Capesize vessels next month. We expect to record losses in association with the cancellations in the first quarter of 2009.
Source: DryShips Inc
Korea reveals reason for Hebei Two detention
Seoul: Korean Register and current IACS Chairman, Kong-Gyun Oh has revealed that master and chief officer of the Hebei Spirit were detained for 16 months for withholding information rather than creating the situation that resulted in Korea’s largest oil spill.
Although the precise nature of the alleged information remains undisclosed, Oh is reported as claiming that the seafarers “hid some information that was revealed to be untrue and they manipulated some VDR information,” and is said t have added that the western media were not fully appraised of all the facts in the case.
Oh’s reluctance to reveal the details of the charges has angered industry members, particularly those in charge of a weblog demanding justice for the Hebei Spirit. “Given Mr Oh’s failure to provide any supporting information or evidence for his statements it would be surprising if anyone, let alone the western media, were fully across all the facts in this case,” the blog states.
“In light of the above, Mr Oh’s comment that he was now trying to pressure the Korean government and industry to change laws to ensure ‘this kind of ill treatment of seafarers does not happen’ seems rather cynical,” it concluded. [26/03/09]
Shanghai to be international financial and shipping centre by 2020
Beijing: China’s State Council yesterday gave the green signal to speed up the process of turning Shanghai into a major international financial and shipping center by 2020, write China Daily and Xinhua.
"Accelerating Shanghai's development in modern services, manufacturing, finance and shipping would be of great advantage for the Yangtze River Delta and the whole nation at large," the council said at an executive meeting.
It urged Shanghai to be developed into a multi-functional financial center by 2020 to keep up with "China's economic influence and the yuan's international position." To achieve the target, Shanghai would be required to open up more financial sectors and improve services.
Shanghai can now expect strong growth momentum after the city's industrial output dropped by as much as 12.7% year-on-year in the first two months of the year due to dwindling exports.
Shanghai's GDP growth dropped to 9.7% year-on-year in 2008, the first time it fell below 10% since 1992. [26/03/09]
Swire Shipping sends Australian government apology letter
Sydney: China Navigation Company subsidiary Swire Shipping has apologised to Premier Anna Bligh and Governor Penelope Wensley for the oil spill from its vessel Pacific Adventurer, which have affected beaches across southeast Queensland. In a letter written by Swire Shipping md Richard Kendall and John Swire & Sons Australia chairman and ceo Bill Rothery, the company stated that it accepted its responsibilities and would continue to do so.
“We write to you to express our sincere regret to you, your government and all the residents of, and visitors to, Queensland -- in particular those that have been directly affected -- for the fuel oil spill from our cargo vessel,” the letter said.
The company said it appreciated the effort that the locals had made to clean up the spill and it would do all it could to help mitigate the spill and to ensure another such incident was avoided.
"All relevant staff have made themselves available to the appropriate authorities involved in this most regrettable accident," the letter read. "We have accepted our responsibilities in relation to it and continue to do so."
According to local media, the company fines of up to A$1.5m in addition what is shaping up to be a very expensive clean up operation. Additionally, the ship's master may be fined up to A$500,000.
This letter comes just as the Australian navy has confirmed the location of 24 of the 31 containers that fell overboard during the incident. [26/03/09]
Topaz-DVB sign $23m vessel finance agreement
Dubai: Topaz Energy and Marine has signed a $23m agreement with Germany’s DVB Bank to finance the acquisition of the $38m ‘Rem Server’ Platform Supply Vessel (PSV). The vessel, to be renamed ‘Caspian Server’, will be deployed in the Caspian Sea in support of a ten-year $225m contract signed with BP in September 2008.
“Being able to secure finance facilities for the expansion of our fleet in this turbulent economic environment is a testament to Topaz’s financial solidity, our blue-chip Client base and the great trust placed in our growth by our bankers,” said Topaz ceo Fazel A. Fazelbhoy.
The handover of the ‘Caspian Server’ is the first in a series of vessel deliveries in support of the BP contract. An Emergency Recovery and Response Vessel (ERRV) with three daughter craft and an Anchor Handling Tug Supply Vessel (AHTS) are currently under construction and will be delivered in 2010.
“The addition of the ‘Caspian Server’ will contribute to a further reduction of the average age of our already modern fleet”, said Roy Donaldson, ceo of Topaz Marine Division. The vessel is a DP2 PSV. The overall length is 73.6 meters with a moulded beam of 16 meters. It was built by Simek, Norway and will be mobilized from Frederikshavn, Denmark via the Volga-baltic canal to Baku in Azerbaijan.
Topaz Energy and Marine reported a 39% increase in revenues for 2008 with EBITDA up by 42%. [26/03/09]
Grand Alliance-ZIM to jointly operate South China - US EC service
Tokyo: Grand Alliance members Hapag-Lloyd, Nippon Yusen Kaisha (NYK) and Orient Overseas Container Line (OOCL) and Zim Integrated Shipping Services have agreed, that beginning April, the lines will cooperate on the service from South China to US East Coast via the Panama Canal.
Subject to filing with the Federal Maritime Commission (FMC), the new port rotation of the South China East Coast Express (SCE) service will be: Kaohsiung - Shekou - Hong Kong - Kingston - New York - Norfolk - Savannah - Kaohsiung on a 56 day round trip.
The new service will consist of eight vessels of 4,200teu, with the Grand Alliance providing five vessels and Zim will providing three vessels. [26/03/09]
Cement exports may keep growing: company official
Wednesday, 25 March 2009
Cement exports are growing and the present momentum will likely be maintained in coming months, says Lucky Cement Chief Executive Officer M Ali Tabba. However, analysts’ opinions are contrary to that projection, who said that though margins of many cement companies had recovered, cement demand would remain under pressure both in domestic and export markets.
Lucky Cement, the country’s largest manufacturer and exporter of cement, has recently started production from its new line with a capacity of 1.25 metric tons per annum, taking the company’s total capacity to 7.75 metric tons.
“It is an assumption that cement exports will decline in coming months, but what we see is that exports have been maintained and we are also hopeful for the future,” said M Ali Tabba.However, cement companies, which have been expanding their production capacities, are now encountering difficulties owing to high interest rates and low demand.
M Rehan Khan of First Capital Equities said local cement companies had successfully met regional demand “but now owing to slowdown in economic activities in countries dependent on oil revenues, cement exports are under pressure.”
This year, he added, margins of cement companies had recovered to over 30 per cent from 15 per cent due to better market prices. A lot of cement companies went for expansion last year, and “these will benefit in coming months owing to the likelihood of a cut in benchmark interest rates.”
Increased cement prices in the local market coupled with better export prices due to depreciation of Pak rupee against US dollar had helped the commodity’s exports.Officials of cement companies said that demand in the Gulf region would remain buoyant owing to huge housing requirements in many regional countries.
The cement companies’ cost of sales has increased owing to a rise in production cost. The cost rose despite a decline in international coal prices as old coal stocks purchased at higher prices were being consumed.
Cement companies use imported coal, which has a major share in the production cost. Fortunately, coal prices have come down from over $190 per tonne to around $130 per tonne in the last couple of months, which will help cement companies reduce production cost.
Though coal prices in the international market have declined considerably, their positive effect would be felt in the months to come because generally cement companies place import orders four months in advance.
Regional countries are trying to improve cement production in a bid to increase their share in exports. Besides, leading European cement companies are planning to park their excess capacity in this region as demand in Europe and the US has dropped sharply due to slowdown in construction activities.
This will probably result in a tough competition for Pakistani cement manufacturers because international cement prices are now under pressure in the wake of a price war between cement suppliers.
Cement demand owing to liquidity crisis amid global recession and completion of pending expansions has started tapering off. Under these unfavourable circumstances, Pak cement exports are likely to take a major hit in fiscal year 2010.
Source: The News
Indonesia's KPC agrees first major China coal deal
Wednesday, 25 March 2009
Indonesian miner PT Kaltim Prima Coal last week agreed its first major long-term deal to sell thermal coal to China, with 1 million tonnes to be shipped in the first year, a top company official said on Tuesday. "It is a long-term deal for supplying coal up to five years. In the first year we'll be supplying 1 million tonnes, in the second year it will rise to 2 million tonnes and will go up to 5 million tonnes," Evan Ball, director of KPC, told Reuters on the sidelines of a mining conference in Singapore.
He did not give any details on prices, saying they were in line with current spot market prices.
KPC is a unit of the country's biggest miner, PT Bumi Resources Tbk. It produced nearly 40 million tonnes in 2007, about a fifth of Indonesia's total output.
Indonesia's coal exports have surged over the past few years, making it the world's biggest seller of thermal coal and forcing miners to seek new markets including China, the world's biggest consumer and producer of coal, which is on the cusp of becoming a permament importer of the power plant fuel as well.
China imported over 11.5 million tonnes of Indonesian coal last year, accounting for more than a quarter of its total.
Imports in February rose to their highest in 22 months as a deadlock over domestic price details drove power plants to buy from abroad, where prices have fallen sharply. Benchmark Australian prices slumped last week to a 21-month low of $60, less than one-third their record high last year.
Source: Reuters
Apeejay Shipping acquires 67,359 DWT gearless Panamax
Wednesday, 25 March 2009
Apeejay Shipping Ltd, an Apeejay Surrendra Group company, on Tuesday announced the acquisition of a 67,359 DWT (deadweight tonnage) gearless Panamax of Japanese make for an undisclosed amount. The ship will be renamed as ‘APJ Mahalaxmi’. This is in line with Apeejay Shipping’S target to become a one million DWT company offering total sea logistics solutions by 2010.
The expansion plans of Apeejay Shipping is also as per schedule with ‘APJ Kais’ — the first of the three geared Supramaxes that the company has ordered from China’s Cosco Shipyard Group — which is expected to join by April 2009.
This will increase the fleet size of the company to six with a total DWT of 3,57,653. Apeejay Shipping expects the other two ships to be delivered in 2010 and 2011.
"Ship values being what they are today, provide a good opportunity for a company like us. Even though markets remain bleak and have been pretty much at the bottom for the last two quarters, judicious addition to the fleet with second hand tonnage, at prices that would have been unimaginable, will definitely provide an upside.
This strategy is to ensure our expansion and growth plans are intact," Apeejay Shipping Ltd CEO Captain Mahapatra said in a statement issued here on Tuesday.
Apeejay Shipping has been augmenting and upgrading its fleet to meet the requirements of global trade. Specialising in dry bulk cargo, the fleet comprises a mix of panamax, handymax and supramax vessels.
Currently in operation are the 71,037-dwt APJ Suryavir, 64,100-dwt APJ Sridevi, 52,454-dwt APJ Jad, and 45,703-dwt APJ Akhil. The company is also working towards enhancing value by growing technologically and improving operational efficiencies to reduce turnaround time.
Source: Economic Times India
Container Shipping Industry to Raise Freight Rates
The deteriorating container shipping industry amid the ongoing recession is taking actions to increase freight rates in a bid to counter difficulties stemmed from plunging freight rates as negotiation season nears. Hanjin Shipping and Hyundai Merchant Marine Co,Ltd., the nation’s leading container shipping companies, sent an official document to shippers, announcing the increase in freight rates on a route between Asia and Europe to approximately $250 to $300 from April 1 this year. The world’s largest shipping companies such as Denmark-based Maersk Line, Tokyo-based Mitsui O.S.K Lines (MOL) and Taiwan-based Evergreen Line have all decided to raise their freight rates on the route between Asia and Europe to $300 starting the next month as well.
The decision was inevitable as the plunge in freight fees dropped to break-even point due to a sharp decline in cargo volumes. It has been conveyed that freight rate between Asia and Europe which is determined in every quarter has soared to around $500 per 1 twenty-foot equivalent unit (TEU).
A source from the container shipping industry cautiously warned the possible collapse of container shipping industry saying that, “If the current circumstance continues further, this industry will soon collapse, and thus raising the rates to reduce the burgeoning gap between the surging cost of shipping and the actual freight rates is the only way for the industry to survive.”
Source: Maeil Business
20,000 workers strike in Alang
Mumbai: Nearly 20,000 workers here have gone on an indefinite strike in Alang, India’s premier shipbreaking centre, to protest the reduction in their wages. The global economic slump and downturn in the shipping industry has flooded Alang with ships with over 100 in waiting to be cut. Moreover, India’s rival for recycling Bangladesh has been hit by a court ruling threatening the imminent closure of more than 30 shipbreakers on environmental grounds. Sources in Alang said that since last two months around 110 ships beached at various plots for dismantling resulting in sudden spurt in demand for manpower. But, due to shortage of migrants, most of them from Orissa, Bihar and Uttar Pradesh, the wages of workers was hiked from around Rs 200 per day to over Rs 300. But, on Monday after a series of meetings, the ship breakers decided to go for no-poaching agreement to control increasing wage bill and not to pay daily wage more than Rs 240 in any circumstances. Some of the plot owners also put the decision on their notice boards, which prompted the labourers to congregate and ultimately they went on indefinite strike. Even the ship breakers have decided not to pay over time wages and stick to the schedule of 8 am to 5 pm. [25/03/09]
Tonnage tax for Japan
Tokyo: Japan will apply the tonnage tax system to 10 domestic ocean-going shipping companies over five years from fiscal 2009, which starts in April. The Ministry of Land, Infrastructure, Transport and Tourism made the announcement March 24 after it approved earlier in the day the 10 shipping companies' plans to increase Japanese registered vessels and sailors. This brings to an end a frustrating decade for owners trying to get this tax in place. [25/03/09]
Shanghai and Ningbo ports to merge?
Shanghai: Buried deep in article by the China Daily newspaper today on port consolidation along the China coast is the admission that two former port foes are talking to each other, with a possible view to merge.
“Major ports in the country are holding consolidation talks with regional rivals as resource duplication and stifling competition threaten to destroy profits at a time of dwindling business,” China Daily reported, citing the recent merger of two competing port operators in Tianjin.
Intriguingly the article continued: “In the Yangtze delta region, the competition between Shanghai's Yangshan deep-water port and neighboring Ningbo-Zhoushan port was widely perceived as healthy when exports from the region were growing at a breakneck pace… Now, the two rivals are reportedly talking to each other about a possible partnership, or even a merger.”
These two ports have sparred with each other for much of the past decade, especially since Shanghai’s Yangshan development got underway. Yangshan, a pair of islands to the south east of Shanghai, technically falls in Zhejiang province, Ningbo’s territory. Both ports grew incredibly fast this decade but are now suffering in the downturn. [25/03/09]
LR opens $8m surveyor training facility in Shanghai
Shanghai: Lloyd’s Register Asia today opened its first dedicated marine surveyor training centre in Shanghai.
The Maritime Surveyor Training Institute (MSTI) represents more than an US$8 million investment for the organisation in the first five years of operations, during which time 200 newly trained surveyors are expected to graduate from the program.
“Quality staff training provides the most significant contribution to the continued development of our core product -- the provision of independent technical assurance to the maritime industry,” said Roy Ellams, Lloyd’s Register Asia’s Marine Training Manager – North Asia. “It ensures that we always will have the right skills to support the provision of maritime transport services that are safe for both mariners and the environment.”
Ellams says the MSTI represents a new approach to the development of technical competency for the industry, offered at a time when commercial pressures are driving the need for innovation. With the recession shrinking access to new capital for companies in the maritime industry, he says new solutions are required for old problems.
“Innovation doesn’t just happen, it has to be stimulated and encouraged,” Ellams says. “The development of technical competencies is a key ingredient in that mix. It at once fulfils our responsibility to our staff, our clients and the greater public.”
A key element in that new approach is the appointment of experienced “surveyor-mentors” who will guide the trainees through the one-year program. Each program will feature 20 trainees and two programs will be held each year. [25/03/09]
Malaysians to buy C&Heavy Industries
Seoul: Distressed South Korean shipbuilder C&Heavy Industries said on Tuesday it had signed a non-binding agreement for its sale to an unidentified Malaysian company. Local banks had ended a creditor-led rehabilitation programme for C&Heavy, a unit of C&Group, after the company failed to find a buyer by mid-March. In a filing to the Korea Exchange, C&Heavy said a possible deal would see the entire company or part of its businesses being sold. It did not name the potential buyer citing confidentiality. [25/03/09]
Expert warns over shortage of lay up space
Keith Wallis, Hong Kong - Wednesday 25 March 2009
FINDING space to lay-up increasing numbers of containerships, bulkers, tankers and other vessels could become a “big issue”, with fewer benign locations than during the last major industry downturn in the 1980s.
The warning was sounded by Lloyd’s Register Asia shipping head David Power, who said that bays around Piraeus had been used in the 1980s and that the Mediterranean still had “some places”.
But he questioned if local governments in the area were “willing to see rusting ships off their coastline”.
Norwegian fjords were not a solution as they had been previously, he told delegates at the Marine Money forum. Expert warns over shortage of lay up space
Mr Power said environmental concerns, which had not existed 25 years ago, meant the number of possible sites had reduced.
He said waters off the Philippines, which were convenient for the Asian trades, were suitable for hot lay-up for about two months but were unsuitable for longer because of the threat posed by typhoons and severe storms during the rest of the year.
He said potential locations needed a “benign anchorage that was somewhere which was not threatened by bad weather”.
Pointing to the potential cost savings, Mr Power said putting a vessel into hot lay-up would save around 40% compared with a vessel’s daily running costs. By comparison cold lay-up could see a 75% saving although there were costs associated with mothballing and reactivating the ship. He estimated it would take about 30 days to prepare a vessel for cold lay-up.
Shipping firms at risk of hostile takeovers
Michelle Wiese Bockmann - Wednesday 25 March 2009
PUBLIC shipping companies have been warned they are vulnerable to hostile takeovers by shareholder activists engaging in damaging proxy fights to gain greater control.
Blank Rome attorney Keith Gottfried told the Connecticut Maritime Association that shareholder activists posed a “significant threat” to listed shipping companies and forecast they would find new targets in 2009.
“Many companies are sitting ducks,” he said.
Largely driven by hedge funds, shareholder activists activity has risen substantially in the US in 2009, with Mr Gottfried recording 64 new cases so far this year. This nearly exceeded activity for the whole of 2008, when shareholder activists gained seats on 86 boards in New York-listed companies.
“These folks decide they know better than you how to run your company,” Mr Gottfried said.
“They tend to be very arrogant and very confident.
“They will not easily go away. It is possible for a company to be stolen by a shareholder activist right under their noses.”
Nasdaq-listed offshore marine company Trico Marine Services is the highest profile maritime transport company to be targeted by shareholder activists.
The company is embroiled in a row with rival Oslo-based Kistefos, which has a 22.9% stake, and is trying to gain greater board control and overthrow the incumbent chairman and chief executive.
The proxy fight has focused on corporate governance issues, as the company’s shares have fallen 90% in the last 12 months.
Kistefos controls Viking Supply, which supplies offshore supply vessel and anchor handling vessels in the North Sea.
Mr Gottfried said many other companies had been hit by proxy fights and shareholder activists.
“I do believe that this will continue to be a significant threat for companies in the shipping industry,” he said. “Trico will not be the first.”
A typical shareholder activist had a 5%-10% stake in the company, had already approached major investors and lenders before making any moves, and believed the company was under-performing, he said.
He advised companies to review their certificates of incorporation and bylaws, and consider adopting a shareholder rights plan, as a form of defence against any hostile takeover.
Companies should also review their shareholder profile to identify hedge funds and investors likely to target the company, and to know their voting strategies.
“Be prepared to defend the company’s board nominees,” he said.
Shipping companies should also anticipate who is likely to target the company and demonstrate a commitment to shareholder value.
Wednesday, March 25, 2009
Need for New Investments in Oil Sector
Wednesday, 25 March 2009
A decade ago, oil companies cut investments after crude fell as low as $10.72 a barrel. That led to restrained supply capacity, which boosted prices to a record $147.27 on July 11 last year. Eight months later, the situation is totally different. The severe economic crisis flattered demand for oil and sank crude prices to levels under $50 per barrel. Now the ghost of oil underproduction in the coming years has returned. This fear is one of the most sound OPEC’s arguments when it is discussing about its future production policy.
According to OPEC’s leadership “prices below $50 a barrel are “too low” because they don’t allow producers to invest in expanding capacity”. This is true, and is not just a speculative response to the falling prices. Except oil major production nations, major oil companies are cutting their investments on new fuels or to increase their production in future.
The combination of low prices and financial crisis do not allow huge spendings in new investments. But this, creates a very dangerous scenario. When the world economy recovers, the production maybe will not be able to satisfy demand. And this could send the fragile economy back in to a new recession, an energy crisis this time. If this scenario becomes a reality, both economy and the shipping market, not only the tanker sector that is directly connected with oil demand, will suffer again.
OPEC members have every reason to worry, and they are not alone. Russia, worries too. Russian overall output fell for the first time in a decade last year. It may fall by almost 8 percent by 2013 without measures to spur investment, Russian Energy Minister Sergei Shmatko said on Feb. 12.
Officials from Russia’s two largest oil companies OAO Rosneft and OAO Lukoil, last week said they aimed to grow output in 2009. Rosneft, which is chaired be Sechin, plans 2 percent growth. Lukoil plans a 1.5 percent gain this year.
Russia’s third- and fourth-largest producers TNK-BP and Surgutneftegas both plan flat production.
By their side, major oil companies trimmed their investments for future production in order to save money, reduce their cost and support their shares. Following is a list of oil and gas projects and oil refinery expansion plans that have been delayed so far in 2009 according to Reuters Factbox. The global financial crisis, falling oil demand and a slide in prices have prompted many in the industry to scale back spending and delay projects.
* March 20 - Kuwait said it scrapped a tender to build a $15 billion refinery project, the second multibillion-dollar major deal to be cancelled in three months after facing opposition in parliament.
* March 17 - Royal Dutch Shell Plc said start-up of the Perdido platform in the Gulf of Mexico had been pushed back to the beginning of next year from this November.
The Forcados Yokri and Bonga North West projects in Nigeria which were due to come onstream sometime during 2010 or 2011 will now come onstream in 2012 or later. Bonga North West is being re-tendered.
The Motiva Port Arthur refinery expansion is now expected to be completed in 2012 or later, rather than 2010 as earlier planned.
The Pearl GTL plant in Qatar could also be delayed. Shell said it was expected onstream "at the very end of 2010 or early 2011" rather than late 2010 as earlier targeted.
* Feb 3 - Marathon said it would delay the completion of a 15,000 barrel per day expansion at its Detroit refinery to mid-2012 in an effort to cut spending. The project had been scheduled for completion in late 2010.
* Jan 28 - ConocoPhillips said it would defer refinery upgrade projects at two of its plants to reduce capital spending, but did not identify which projects.
* Jan 27 - Leading U.S. refiner Valero Energy Corp said it was cutting capital spending in 2009 by $800 million by delaying construction of a diesel hydrotreater and aromatics unit at its Norco refinery in Louisiana and the upgrade of an FCC at its Memphis refinery in Tennessee.
* Jan 22 - Peru's state-owned energy company Petroperu S.A. has placed under review a $1 billion plan to modernize its Talara refinery because of low crude oil prices, Peru's mining and energy minister said.
* Jan 20 - Suncor Energy Inc, Canada's No. 2 oil sands producer, halts construction of its C$20.6 billion oil sands expansion called Voyageur, including the planned upgrader and new stages of its steam-assisted production operation known as Firebag.
* Jan 19 - The $2.2 billion Al Dur power and water project in Bahrain is delayed. The Al Dur project is 50 percent owned by the Gulf Investment Corp, with France's GDF Suez owning the other 50 percent.
* Jan 17 - Canada's Enbridge Inc shelves plans for a C$346 million ($277 million) pipeline reversal that would have shipped 170,000 barrels per day of oil sands crude from Sarnia, Ontario, to a tanker port in the state of Maine, supplying refineries in Montreal en route and replacing the imported oil the line now carries.
* Jan 13- Russian oil pipeline monopoly Transneft said contractor problems caused by the global financial crisis pose a threat to its launch of a major oil route to China this year.
* Jan 9 - Suncor delays a C$120 million expansion of its St. Clair ethanol plant at Sarnia, Ontario, scheduling completion for 2011 instead of late 2009.
* Jan 8 - Ecuador plans to delay some gas and oil projects while it seeks loans and investment to boost its key sector.
* Jan 5 - North Sea gas pipeline operator Gassco says the 10 billion crown ($1.81 billion) Skanled gas pipeline project to Scandinavia could be delayed from its planned 2012 launch, partly due to worries over investment plans by British chemicals group Ineos, a key client.