Noble seeks 2-yr supertanker lease to store fuel oil
By Jennifer Tan
SINGAPORE, July 1 (Reuters) - Noble Group is seeking to lease a supertanker for at least two years to store fuel oil to beef up its trade, joining a slew of companies venturing into the residue fuels market to capitalise on potentially firm trade margins.
Singapore-listed Noble (NOBG.SI) aims to secure a Very Large Crude Carrier (VLCC) by the October-December quarter, which will likely be anchored in southern Malaysian waters near Pasir Gudang or Tanjung Pelepas, industry sources said on Wednesday.
"Their trading team has grown in size, so it's not surprising they are looking for a floater, especially when there are no landed tanks available," said one trading source.
The company could not be immediately reached for comment.
Hong Kong-based Noble started trading physical fuel oil globally for the first time in April, after employing at least five traders, on hopes of gaining from potentially firm trade margins as residual fuel supply tightens following the upgrade of Asian and European refineries.
The five hires were formerly from Trafigura, who had left the European trading house in the past year.
Sources said Noble has been enquiring on the availability of long-term storage terminals for a few months, but all existing tanks have been taken on long-term leases, despite the jump in commercial capacity to 5.5 million cu m from 2.95 million cu m.
Other firms that are also venturing into the fuel oil market include Southern Petrochemical Co Ltd, an affiliate of China's Sinopec Group, Asian-based trader Strong Petroleum and Japan's Itochu Petroleum.
Guangzhou-based Southernpec will start selling bunker fuel in Singapore next month after it paid about $15 million for a 284,000-tonne supertanker to store fuel oil. The tanker is already anchored off southern Malaysia's Tanjung Pelepas port.
Strong has also leased a VLCC, while Itochu took on landed tanks recently to beef up its fuel oil trading operations.
Noble had made a foray into Asia's physical fuel oil market three to four years ago, before abandoning the move after less than two years, with both its traders leaving the firm. But it continued to trade in the derivatives market.
Noble, which had total revenues of around $36 billion in 2008, told the Reuters Global Energy Summit last month it also plans to expand into the Asian and European distillates market later this year.
It is also building up storage capacities around the globe, particularly in Brazil and China.
The company posted a 46 percent fall in net earnings to $90.2 million for the three months ended March 31, as commodity prices slumped and global economies slowed.
But it achieved record tonnage volumes of over 49 million tonnes in the quarter, up 26 percent from a year ago. As at end-March, it held $1.2 billion in cash, while cash plus trade receivables and inventory totalled $3.8 billion. (Editing by Ramthan Hussain)
