Marketing, Shipping Trends Studied
Posted: 04 April 2005
Executives and staff of Saudi Aramco's Marketing and Supply Planning (M&SP) organization and Vela International Marine Ltd. gathered recently to learn about emerging trends in the global crude-oil and shipping markets.
Saleh B. K'aki, president of Vela, said it was the first time key personnel from the company's marketing and shipping arms and other related organizations joined to consider important trends.
The Saudi Aramco Marketing and Transportation Forum was titled "A New Paradigm Shift: Implications for Saudi Aramco." Joining M&SP and Vela delegates were representatives of the company's international offices and Joint Venture Development and Coordination, Finance, New Business Development, Corporate Planning and Management Development organizations.
Saudi Petroleum International Inc. (SPII), New York, conceived and organized the forum, under the auspices of M&SP. During the event, industry experts gave a series of presentations - each trying to glimpse the future of the crude-oil transport industry.
Khalid H. Al-Dabbagh, SPII president and CEO, said conventional wisdom likely will not apply to the energy industry of the future. "The energy industry is probably headed toward what could be characterized as uncharted territory, with global crude-oil demand reaching 100 million barrels per day in the next few years," Al-Dabbagh said.
He said supply dynamics will change along with oil-trade flows. "It is especially challenging for Saudi Aramco, given the possibility that the forces that drove crude oil and shipping markets in the past may no longer be applicable in the future," Al-Dabbagh said. "And historical business practices in these two fields may not be the most successful methods to be applied in the future."
Yahya A. Al-Zaid, M&SP vice president, urged forum participants to consider and debate this question: "After decades of considerable surpluses and underinvestment in global shipping and refining capacity, are today's high oil prices and high transportation costs reflective of a global market structure or merely a short-term imbalance?"
Experts who presented at the forum included:
- Richard Joswick, PIRA Energy Group, New York: Joswick projected that strong petroleum demand should continue at least until decade's end, and he suggested that non-OPEC production and global refining will have difficulty keeping pace. He said he fully expected prices for crude and marine shipping to remain robust in the foreseeable future, as producers will need to ship oil to markets increasingly distant from producing countries.
- David Saginaw and John Schmidt, McQuilling Services LLC, New York: Major oil companies in the past few years have been shedding their shipping assets and relying on spot chartering from independent or pooled ship-owners, they said. Ship supply will come under pressure as shipyards favor building more profitable liquefied natural gas and dry-cargo tankers at the expense of crude tankers.
- Basil Mavrolean and James Ford, Charles R. Weber Co., New York: Mavrolean said the world's shipbuilding facilities are already fully committed through 2009 to deliver marine vessels, while single-hull vessels are becoming obsolete and need replacement, and costs of new ships have jumped from $50 million to $60 million a few years ago to $130 million today.
Patrick Tye, E.A. Gibson Shipbrokers Ltd., London : Tye suggested that current high freight rates may not spur owners and investors to build new vessels because previous years of poor returns do not bode well for the economics of new tankers.
Posted by Editor Pipeline Magazine
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