* May reduce 44-strong fleet by another 10 vessels
* Will take delivery of 2 newbuilds next year
* VLCC market up to 60 vessels oversupplied
(Adds detail, CEO comment)
By Balazs Koranyi
OSLO, Nov 29 Frontline, the world's
largest independent oil tanker operator, said it will sell more
vessels as the loss-making company fights to survive a depressed
The firm, part of billionaire tycoon John Fredriksen's
shipping empire, could sell another 10 older vessels from its
44-strong fleet following a major restructuring earlier this
year, Chief Executive Jens Martin Jensen told investors on
The global tanker business, much like dry bulk and container
shipping, has been in the doldrums for several years as dozens
of new vessels ordered before the 2008 global financial crisis
came into service after demand had fallen.
With most firms bleeding cash, several shipping companies
have been forced to restructure, including Frontline, Italy's
Deiulemar Shipping, Indonesia's Berlian Laju Tanker
and Sanko Steamship in Japan.
Shipholding Group Inc, the world's No. 2 independent
tanker operator, filed for bankruptcy protection last month.
"It's just a very difficult market and will remain so,"
Jensen told an analyst conference call. "We can only hope next
year will be better."
TOO MANY SHIPS
Jensen said that 50-60 very large crude carriers (VLCCs),
about a tenth of the global fleet, would need to be taken off
the market, to restore its balance.
However, that will be difficult as 44 vessels are scheduled
to be delivered next year.
"We think it is a negative tanker market, and that Frontline
will report huge losses for the next several years," Erik
Folkeson, an analyst at Swedbank First Securities said.
Frontline has already shed more than 10 vessels and got rid
of most of its contracts for new ships to improve its balance
Its two remaining tankers on order will arrive in the second
and third quarters of next year and the company expects to take
delivery of the vessels.
Jensen said decisions about financing will be made depending
on market conditions.
"We're all depending on the market developments... we'll try
to slim down the fleet, weather the storm and then see how the
market develops," Jensen said.
Although Frontline will need to spend $94 million on its new
vessels next year, some analysts said its cash position was
stronger than it first appeared.
"Their cash situation is a bit better than I had expected so
it's not as negative as you might think," equity analyst Erik
Stavseth at Arctic Securities said. "I think the company will
survive through 2013 without having to raise new capital."
In the third quarter, Frontline's operating loss narrowed to
$26 million from $136 million a year ago but was above
expectations for a $13 million loss.
(Additional reporting by Vegard Botterli; Editing by Erica