The sale of an almost 25-year-old crude oil tanker marks the end of the 4th longest streak of zero VLCC demolitions in history, lasting 512 days, BIMCO said.
The 300,500 dwt VLCC named Sam (formerly Zoya 1) experienced a fire while undergoing maintenance in January this year.
As Offshore Energy – Green Marine reported, two Indian seafarers lost their lives in this fire and four were missing including two Indians.
The cause of the fire is yet to be determined.
The last VLCC to be demolished was the 300,361 dwt Watban which was scrapped in Bangladesh in June 2019.
Since the last VLCC was demolished, 42 have been delivered, adding 12.8 million dwt to the fleet and bringing it to a total capacity of 255.3 milion dwt, BIMCO’s data shows.
Following the frontloading of demand for tanker shipping in the second quarter, as cheap cargoes flooded the market, crude oil tanker shipping now faces challenging times ahead.
BIMCO said that on November 13, an average VLCC could expect earnings of $ 11,395 per day, less than half of what is needed to cover financing and operating costs which average $ 25,000 per day for a VLCC.
Now that the first VLCC has been demolished, the question is whether it was a one-off, or whether it has opened the flood gates and more owners will choose to demolish their older tonnage, as a return to profitable rates is not currently on the horizon.
“The age and trading pattern of the ship in the past few years made the Zoya 1 a prime candidate for demolition, but there are plenty of other candidates that could follow,” says Peter Sand, BIMCO’s Chief Shipping Analyst
“These ships may have been kept active when they found employment at profitable rates, either for active trading or floating storage, but with the poor outlook, there seem to be little incentive to keep these ships sailing once their contracts expire.”