International tanker market-Sepec’s fleet welcomed for cleaner seas |18 November 2005

Seychelles Pioneer, Sepec’s second tanker which was delivered earlier this year, has featured in both the Up Inside and Fairplay publications.

Fairplay used the picture of the Seychelles Pioneer on its maiden voyage from the German shipyard of Kiel in April, to illustrate an article on the tanker business across the Atlantic. The magazine also announced in the 20th October 2005 issue that the Seychelles Pioneer was fixed during the week from Algeria to the United States of America.

Interestingly, the article gave the years the tankers were built when mentioning the vessels doing the trans-Atlantic crossings.

Sepec’s chief executive director Captain Guy Adam said the exposure in the specialized publications boosted the business potentials for Seychelles’ tankers which are among the newest and safest on the international petroleum transportation market. 

It is big news in the shipping industry and also the communities every time a new vessel is built. The launchings of the Seychelles Pride and Seychelles Progress received media coverage in Germany where the vessels were built and in industry publications.

A picture of the Seychelles Pioneer cruising in mid-ocean has been splashed in the June 2005 issue of Up Inside, a newsletter dedicated to energy and the environment. The article reminded readers of the dangers the single-hull tankers pose to the environment in the event of oil spills caused by collisions and other damage to the body of the petroleum carriers.  According to statistics over 700 tonnes of polluting petroleum products are discharged into the sea and along coastlines whenever a big single-hull tanker suffers damage to its body.

In 1993 the International Maritime Organisation (IMO) announced the decision that all new petroleum tankers to be built would have to be double-hull. All non double-hull tankers would be withdrawn from the transportation business by 2015.

Up Inside said the 185-metre MT Seychelles Pioneer which it described as ultra-modern, “is exceptionally ecological”. Apart from its double hull, the ship’s other environment friendly facilities include waste water treatment and fire control system.

In April this year the recommendations in favour of double-hull tankers were reinforced. It was during the same month that the Seychelles Pioneer became the first tanker in the world to receive the IMO certificate from Germanischer Lloyd to confirm that the vessel’s design and installations comply with stringent environmental standards of the 21st century. Captain Adam said the IMO certificate was similar to an environment passport, giving the Seychelles’ tankers easier access to ports where environmental measures are strict.

Sepec’s choice of the German shipyard Lindenau as the builders of its tankers is producing high quality ships for Seychelles. These tankers are not only cheaper to build in the German shipyard than in Asia but would fetch higher resale value on the world market.

Fairplay of 6th October 2005 reported that the 96,099dwt Pacific Wave, built in the Far East in 1992, was sold for $23.5 million, whereas the smaller 23,400dwt WELS built in the same year by Lindenau fetched $24 million.

Meanwhile the resale value of the Seychelles Pride alone could earn Sepec a profit of $20 million after loan repayment has been effected. Captain Adam said the tanker could be sold in a week for $46 million. Seychelles Pioneer and Seychelles Progress could be sold for $50 million.

But Captain Adam noted that Sepec is in the petroleum product transportation business to stay and selling one of its tankers would send the wrong signal to the industry although in the short term the country would earn good money.

“We’ve started establishing good business deals and relationships. Now they will think we are not serious. It will be a long time before we get another tanker to replace the one sold,” he said and added that the investments in the tankers were for long-term benefits to the country.

On the financing of the tankers’ construction, the payment terms from builders in Asia are costlier. Lindenau is charging $46.684 million and $47.031 million for the construction in 2007 of the 45,000dwt Seychelles Prelude and Seychelles Patriot.

Payments terms are 1% on contract signing, 4% after six months, 10% on keel laying, 15% when ship is 30% completed, and the balance of 70% upon delivery.

Hyundai MIPO of South Korea wants $47 million for a 47,000 dwt tanker of basic design, to be delivered in 2008. The payment terms are 20% upon signing of contract, 20% within next six months, 20% upon keel laying, 20% upon launching of vessel and the remaining 20% upon delivery of the vessel.

Lindenau shipyard is subsidized by the German government and the major part of the financing for the tankers comes from a German bank at favourable terms.   

The other good news coming from Sepec is that a Swedish company that has approached Lindenau to build its tankers has shown keen interest in the design of the Seychelles Pioneer and Seychelles Progress. Because Captain Adam had an important input in the design of the two tankers Sepec will benefit from some fees in the event the Swedish company uses it.

The Seychelles Pride, the Seychelles Pioneer and Seychelles Progress are all registered in Port Victoria and fly the Seychelles’ flag.  The Seychelles Pioneer and Seychelles Progress were, for easier access to loans and cheaper servicing of the borrowings, initially registered in the Isle of Man. The Financial Supervision Commission in the Isle of Man also allowed for the parallel registration of the ships in Port Victoria and the flying of the Seychelles flag.

Sepec, one of Seychelles’ most successful parastatals, is responsible for the import and redistribution of petroleum products in the country. Its re-export business and the returns from the tanker operations are helping Seychelles to cushion the costs of fuel and electricity in Seychelles despite record prices on the world market recently.