Sovcomflot tailors fleet to support energy operations



Specialised ships now form the bulk of the Russian owner’s fleet, with its sights trained on developing the LNG business “It is all about energy,” said the president of SCF Group (Sovcomflot) Sergey Frank as he described what he regards as a transformation of the Russian state-owned carrier.

Although the former Russian transport minister has been at the helm for 10 years, changes in the company have been ongoing for a long time. Some 25 years ago, Sovcomflot controlled a fleet of 122 ships totalling 1.6 million dwt.

Today, it has grown to 158 vessels of 12 million dwt. The ships have become much bigger and there has been a fundamental change in the composition of the fleet. In the past, it included everything from cruise vessels to river barges, combination carriers (OBOs), boxships and tankers.

Now, says Frank, it is predominantly made up of specialised vessels including LNG and LPG carriers, shuttle tankers, supply ships and seismic vessels, as well as crude and products tankers. Referring to data from Clarksons, Frank now says SCF is the world’s biggest owner both of ice-class tankers, Arctic shuttle tankers and aframax tankers. But now the main focus is on developing the LNG business.

This week, Frank attended the naming ceremony of the 170,000-cbm LNG carrier Velikiy Novogorod at STX Offshore & Shipbuilding in South Korea. The ship has been fixed on long-term charter by Gazprom. Ice-class leader SCF now has 11 gas carriers and three more newbuildings on order. It is the largest operator of ice-class LNG tonnage.

The company is regarded as a front-runner for the Yamal LNG project, which involves Arctic operations. Frank is optimistic about the company’s chances. “I am more than confident,” he told TradeWinds. The Sovcomflot president claims the race is not first and foremost about money. “It is about delivering in the ice and we have collectively 1,000 years of experience, [whereas] our competitors’ experience is limited,” he said.

Frank says that prior to embarking on the project the company devoted considerable time to studying meteorological matters in cold environments and even how changes in ice colour can impact vessel operations.

The newbuilding Velikiy Novogorod is also contributing to bringing down the average age of Sovcomflot’s fleet, which now stands at eight years.

In November, the company took delivery of the 320,000-dwt tanker Svet (built 2013) from Bohai Shipbuilding Heavy Industry, its first VLCC and one of two sisterships fixed long term to PetroChina. Sovcomflot is also shedding elderly vessels, many of which were taken over in its merger with compatriot owner Novoship.

Since 2010, the company has sold 10 medium-range (MR) products tankers built in the 1990s since 2010 for further trading.

This year, it is expected to sell the 71,000-cbm LNG carriers SCF Arctic and SCF Polar (both built 1969) for demolition. Now only 19 of the 158 ships in the fleet were built before 2000 — seven aframaxes, nine products and chemical tankers, one bulker and two LNG carriers.

Aiming for younger fleet Frank says the policy is to phase out tankers that are 15 to 20 years old. However, he adds that “this policy can be overruled on an ad-hoc basis subject to economic considerations and chartering agreements”.

Sovcomflot has the majority of its ships, some 65% in total, fixed out on time charters. But for the gas and offshore fleet, period coverage is 100%. For the crude and products tankers, spot exposure has reduced in the last year to 44% and 40%, respectively.

But Frank stresses the importance of a balanced chartering policy in these segments. “We have to have the spot exposure [so as] not to lose the flavour of the market,” he said. But these conventional markets are also segments where the top man at Sovcomflot is worried about the current world orderbook. “We are cautious ordering conventional tankers for the spot market,” he said. “We must have a good reason to put more supply into the market. There seem to be too little discipline amongst owners in holding back on new orders.”

On the issue of fuel savings from new designs, Frank claims it is a complex issue. “It is not all about design but also about technical management and organisational issues,” added Frank, who in a few years’ time is likely to take Russia’s dominant shipping company public in the US.