India’s state-owned oil refiners have issued tenders seeking to charter tankers
for at least five years with the right of first refusal to Indian shipping
lines as asked by the government, according to sources familiar with the
This deal would
give millions of dollars in tanker contracts to the Indian carriers and
certainly it would help companies like Shipping Corp of India, Mercator
Ltd, Great Eastern Shipping Co and Essar Shipping particularly in a depressed
market with imbalance between supply and demand of ships, having resulted in
dismal freight rates.
According to the tender documents sent
out by Bharat Petroleum Corp, they are only seeking bids from Indian-flagged Suezmax
tankers capable of carrying up to 1 million barrels of oil for a five-year
Indian Oil Corp’s (IOC) tender document
includes similar language but is seeking global bids for VLCCs capable of
carrying Iraqi Basra Light crude for five years and grants Indian shippers the
right of first refusal.
The prices for the charters will be
linked to the average of the one-year time charter rate published in Clarkson
Research’s Shipping Intelligence Weekly, the documents showed.
The country’s shippers are pleased with
“Granting five year shipping tenders to
Indian companies will help the growth of India’s fleet.. It will help us in
arranging funds for acquisition of new vessels,” said Capt. Anoop Kumar Sharma,
chairman of India’s top shipper SCI.
Shares of some Indian shipping firms rose. SCI climbed as much as 11.8 percent,
its biggest intra-day gain in a month. Mercator rose as much as about 4 percent
while the overall market was down.
The companies, however, may have to face
some challenge in fulfilling the tender requirement that stipulates that the
vessels should not be more than 10 years old at the time of the charter.
SCI has only two VLCCs that satisfy the
condition, the Desh Viraat and Desh Vishal, which were built in 2008 and 2009,
respectively, according to fleet data on its website. While Great Eastern
Shipping does not have any VLCCs in its fleet, according to its website, Essar
Shipping has only one eligible for the tender, being 12 years old.