Statoil, the Norwegian oil and gas group, on Monday announced the sale of its Navion tanker business to Bahamas-based Teekay Shipping for $800m in cash.
The sale price exceeded analysts’ expectations and will see Statoil focus on production and exploration and downstream activities in the Nordic markets.
Analysts noted that market conditions in the oil transport market are expected to harden next year, with demand improving while supply remains stable.
Statoil is expected to use the cash to pay down debt but analysts said that, longer term, it was needed to help fund the group’s extensive development programme in West Africa and the Caspian Sea.
New York-listed Teekay already operates one of the world’s largest shuttle tanker fleets, carrying oil from fields and terminals to refineries, and the Navion purchase will more than double its transport capacity and give it a dominant position in the North Sea shuttle market.
Teekay moved into the region in March 2001, paying $123m for a 56 per cent stake in Ugland Nordic Shipping, the largest publicly-traded shuttle tanker operator.
The Navion business will add some 40 shuttle contracts with oil producers, and a fleet of nine owned and 17 chartered-in tankers dedicated to the business, to the 18 vessels acquired with Ugland.
Teekay also operates the world’s largest fleet of medium-size tankers, with 54 Aframax ships.
The Navion deal only adds four more time-chartered vessels of this type.
Navion’s fleet is relatively new, with an average age of seven years versus an international average age of 15. Only five of its vessels are single-hulled.
Erling Overland, Statoil’s executive vice-president and chairman of Navion, said the shuttle tanker market was now “more competitive”, meaning Statoil could secure services without having to run the ships. Statoil would retain certain long-term contracts with Navion.
Based on long-term contracts, shuttle operations provide a stable income flow in a broader tanker market that is liable to extreme fluctuations.
Modern Aframax vessels have earned an average of $17,000 a day for single voyages this year, against more than $31,000 in 2001, according to Clarkson Research. Teekay saw third-quarter net earnings drop to $643,000 against $64.4m a year earlier.
Saurabh Nakra at Drewry Shipping Consultants said it was rare for a whole tanker fleet to be sold in one deal although, in 2000, Bermuda-based Frontline bought the whole of Golden Ocean’s fleet from its creditors.
However, Mr Nakra said oil companies are distancing themselves from the shipment of oil, a business seen increasingly as a pollution liability rather than a profit-making business.
By Nicholas George and Toby Shelley, The Financial Times
