Novoship to build four Aframax in Japan

Novorossiysk Shipping Company (Novoship) is to build four 106,000 dwt aframax tankers at Japanese NKK's Tsu yard for delivery between November 1998 and May 1999. It not only marks a first for the Japanese yards, but also a key further strategic move to renew Novoship's fleet. Formed 30 years ago as the Soviet Union's tanker specialist on the Black Sea oil port of Novorossiysk, Novoship today controls a fleet of 91 ships totalling 4.2 mm dwt, with a surprisingly young average age of 12.2 years. Novoship's success in managing change so far comparatively well has unquestionably been aided by continued central government backing, that reflects its strategic significance as the region's largest tanker company. Some shares have been sold to employees, but insiders acknowledge that while the firm has adapted commercially, it remains effectively government controlled.
Novoship has now redefined its strategy to concentrate on the tanker sector, labelling its collection of general cargo vessels "bits and bobs". They obviously do not hold a key strategic role. A major first step was to order 12 double-hull products tankers from Croatian yards, in a $ 370 mm deal, part funded by a $ 225 mm loan arranged by the EBRD, ABN Amro and MeesPierson, with which Novoship has developed a close relationship. The first vessel, Trogir, was delivered in 1995 while the final ship is due to be handed over in May. To avoid the continued uncertainty of the Russian legal system, and worries over the non-enforceability of mortgages, the vessels are controlled by Novoship's London subsidiary Novoship (UK), led by former Maersk executive Niels Iversen. The London arm now carries out the technical and commercial management of 30 Novoship vessels. The newly-ordered aframaxes will also be operated from London, though finance has yet to be arranged. Japanese trading house Sumitomo has acted as an intermediary, and is not linked with Novoship's plans to finance the estimated $ 160 mm order, which will be arranged nearer delivery. Novoship sources make clear that as new vessels are delivered old vessels will be scrapped to make way. Obvious scrapping candidates are its three suezmax crude carriers, driven by costly steam turbines.