Euronav Says Merger with Gener8 Maritime on Track

Belgium’s tanker shipping company Euronav expects to complete its merger with Gener8 Maritime in the second quarter of 2018 as activities on making the deal possible are going as planned.

The merger plans were revealed in December last year and will see the creation of an independent large crude tanker operator with 75-strong crude tanker fleet, subject to regulatory clearance.

The consolidation move is being pursued as both tanker owners struggle with market headwinds arising mainly from newbuilding deliveries in VLCC and Suezmax sectors coupled with restricted crude supply.

Commenting on the company’s full-year results for 2017, Euronav’s CEO Paddy Rodgers said the way to beat the challenging freight rate environment is to leave the market to sort out the issue itself.

“If the illness is low freight rates then the cure is low freight rates as that should drive more ships to be removed from the active global fleet. Euronav notes an encouraging recent rise in recycling activity but it needs to be sustained before an inflection point in the cycle can be reached,” he added.

“Medium- and longer-term prospects for the tanker market remain constructive, underpinned by a solid recurring demand for crude, structural change in financing likely to constrain future vessel supply growth and a likely acceleration in the retirement of older ships from 2017 onward encouraged by environmental legislation on ballast water treatment and particularly from sulfur emissions in 2020.”

Namely, a total of 16 very large crude carriers (VLCC) are reported to have been scrapped so far this year, according to VesselsValue’s data, breaking already last year’s total of 13 VLCC sent for scrap.

This equals to a total 4,682,800 dwt having been scrapped since the start of the year.

Rodgers concluded that the duration of the current challenging freight rate environment will depend on the owners’ willingness to scrap older ships and refrain from ordering.

For the full year of 2017, Euronav’s profit stood at USD 1.38 million, a huge drop when compared to 2016 profit which reached USD 204 million.

The U.S.-based crude oil shipping company Gener8 Maritime ended the year with USD 168.5 million net loss amid considerable losses stemming from vessel disposal.

The red ink was reported on the back of net income booked for 2016 which came at USD 67.3 million.