Houston — A shift away from OPEC countries by Chinese crude buyers to importingmore Atlantic Basin crudes was helping increase ton-mile demand for tankers,International Seaways President and CEO Lois Zabrocky said Thursday.
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The shift in demand by the Far Eastern crude purchasers saw the companyagree to acquire six modern VLCCs for $434 million to be delivered in thesecond quarter of 2018.
"Modern VLCCs will earn higher rates," CFO and Senior Vice PresidentJeffrey Pribor said during the company's quarterly earnings call.
He added, however, the higher earnings would narrow as market conditionsimproved.
The acquisitions were part of a broad strategy the company was employingto rid itself of older tonnage in favor of newer, more modern ships.
In total, the company plans to invest $600 million dollars in fleetupgrades.
The company had no intentions of issuing equity to fund the purchasesinstead using a mixture of proceeds from sales of other tankers andsale-and-leaseback agreements, Pribor said.
Pribor said the company looked to "capitalize on market recovery" in thecrude and product tanker sectors by taking advantage of assets that are wellbelow historical values.
Zabrocky concluded the company would need to absorb the large VLCCtransaction before taking any other action in the tanker acquisition market.
"We are still in the process of concluding the VLCC transaction; we wantto digest that before making any other moves," she said.
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