Greek Shipping News Cuts
Week 13 - 2005


Oil tankers: Short on supply, long on profits

---By Jon D. Markman, Fact of life: There aren't enough oil tankers to meet the world's demand for crude oil. That's not good for consumers, but it's great for shipping executives and shareholders alike.
One of the lessons of recent market action is that you generally want to own companies in industries where supply is tight and sell companies in industries where supply is plentiful. That may sound elemental, but it provides a pretty square framework for making decisions about investment capital allocation.
The framework would lead you to be long natural resources and trucking stocks, to be sure, and short the makers of dime-a-dozen stuff like commodity semiconductors. But the idea also takes longs into the fabulous and mysterious world of oil tankers.
To supply all of the world's crude-oil needs today, there are only about 3,500 tankers steaming out on the open seas or anchored at ports. Demand for their services far exceeds this supply, and, as a result, tanker rates have soared in the past year much faster than the price of crude oil itself. According to a report by McQuilling Services, an ocean-transport consultant, the world will be 26% short of big oil tankers, known as "very large crude carriers," or VLCCs, through the end of this year. (A VLCC is a crude-oil tanker of at least 200,000 tons deadweight. It is big, larger than an aircraft carrier.) When you consider not just the number of tankers afloat but also the extent to which they are actually available due to port congestion, the supertanker industry appears even more tonnage deficient, according to a Bloomberg report on the McQuilling finding.
As a result of the shortage, the oil-shipping business has been exceedingly profitable. Rates on the big bruisers that haul 2 million barrels of oil from the Persian Gulf to Japan hit as much as $250,000 per day last fall and are not too far off that pace today. That's a rate said to be 10 times the break-even point for tanker owners.
Even as crude oil prices appear to have topped this month, it's important to realize that these high rates are being locked in for half a decade. A great many tankers are owned by the big oil companies like Saudi Aramco and ConocoPhillips (COP, news, msgs). Increasingly, however, more are leased on one- to five-year charters or picked up on the spot market for one-way or round-trip runs. That gets a big capital expense off the oil companies' books, not to mention liability in the event of a spill. The folks behind the leasing are typically powerful private trading firms like Glencore International of Switzerland or Vitol of the Netherlands -- which might each have 175 ships under lease at any given time -- or major oil companies like Exxon Mobil or ChevronTexaco.
Most oil-tanker companies are still privately held and are based either in the Scandinavian countries or in Greece. Several have made spectacular public debuts in the past year, however, and I spoke to the chief executive of one of them last Thursday: Evangelos Pistiolis of Top Tankers.
Pistiolis is the fourth shipping company CEO with whom I've spoken, and they are all cut from the same cloth: Upper-crust British accents, Continental engineering degrees, smooth Mediterranean temperaments, rich families and homes in some sunny port along the coast of Greece. Life is good for the shipping magnates, and, fortunately, the same can be said for their shareholders.
Source: MSN Money - Mar 29, 2005,,

Med cargo ship operators blast the Government
---Greek owners of Mediterranean trading cargo ships are to press the government to clarify rules governing the entrance onto the Athens Stock Exchange for companies operating cargo ships, plus get a clarification of proposals tabled in 2003 regarding the creation of a parallel register.
"Proposals for entering the stock exchange and the bareboating of ships are still on the table.
Getting these two issues sorted out is the first priority," said Nikolaos Varvates, president of the Union of Shipowners of Mediterranean Cargo Vessels.
"Unless measures are taken to make the Greek flag more competitive, the Mediterranean cargo ship fleet will follow the cruise sector into demise," Varvates told the recent Med shipowners' agm.
He said the previous government had announced a package of proposed measures [44 of them in November, 2003] but that they have remained just that, and nothing has been done. He picked out three of them in particular: a pledge to subsidise social security payments; examine rules for a listing on the Athens stock market; and promotion of the bareboating of ships. "The union believes the climate is positive for measures like these," said Varvates.
"We insist on our demand the improved competitiveness of the Greek flag vessel be promoted and the renewal of the fleet take place through the utilisation of the provisions of the European Union's Third and Fourth packages of support," said Varvates. He said the issue of crew composition also has to be re-examined so that "the re-newed fleet can again play an important role in the Mediterranean". He said existing legislation has seen the average age of the Greek-flag Med fleet rise to 32 years while the number of vessels flying the flag has dropped to a third of what it was 30 years ago. "At the same time Cyprus and Malta have increased their fleets and now that they are in the EU their ships can freely call at any mainland port and some of the island ports," he said.
He also noted that "poor political decisions in the past" had seen the fleets of Italy, Spain, the Netherlands and Germany "greatly reduced" but said that today the "opposite is happening as they work with their European partners to increase their national fleets".
He said "we are lucky charter rates have been good in all sectors" but insisted "a year has been lost" as the government has done nothing, though the Prime minister said "the government will support shipping". He warned the government "should not simply rely on foreign exchange
increasing", but that "it should look ahead and take measures to ensure it does".
He said the union is about to put forward new proposals regarding the financing of the re-newal of the fleet using the same tenplate as that adopted by other countries. "We have to take advantage of EU financing programmes, that they exist is of no consolation to us, we need to use their support to renew," has said.
Source: Newsfront, 1 April 2005 Vol. 6 / No. 12 []

Tender for Greece-Turkey pipeline to be re-launched in April
---Energy minister Hilmi Guler said that the tender for the construction of Turkey-Greece natural gas pipeline on Turkish territory would be re-launched in April.
The construction will be completed in 15 months, rather than the initially foreseen 18 months, he also said. The first tender for the construction of the 209-km pipeline, where Peker Insaat with its Polish partner Maxer Sa gave the lowest bid of USD 55.7mn, was annulled.
Reportedly, the tender was annulled since Peker Insaat's name was mentioned in connection with corruption allegations in the energy sector. Erhan Peker, owner of Peker Insaat was taken under custody during the so-called "Energy Operation" investigation. The the natural gas from the Caspian region will be transferred to the European countries via the Turkey-Greece pipeline.
Botas revises natural gas demand projection down to 25bn m3 for 2005. The state-run petroleum pipeline corporation Botas revised its projections for natural gas demand and supply. Accordingly, the natural gas demand was revised down to 25bn m3 from 25.8bn m3 for 2005 whereas it is revised up to 32.2bn from 29.3bn m3 for 2006.
The demand would be 35.4bn m3 in 2007 and 37.1bn m3 and 38.3bn m3 in the following two years, indicates projections by Botas. The natural gas supply, according to the current contracts would be 30.1bn m3, 35.8bn this year and next year.
The corresponding figures in the following three years will be 40.6bn m3, 43.6bn m3, and 51.1bn m3, respectively. Ak Enerji posts TRY 16.9mn loss last year. The consolidated financials of energy
Source:, 30 March 2005

Ferry firm partnerships
---Minoan Lines' new CEO, Antonis Maniadakis, said yesterday he would not rule out future partnerships between coastal shipping companies, within the guidelines of the Capital Market Commission.
In a press conference made at sea on the Pasiphae Pallas ferry, Maniadakis argued that the profitable period for tapping the Aegean market has shrunk now to just a few months per year, driving coastal shipping companies to redefine their strategy and tactics.
"We have come closer and are discussing the existing problems, seeking solutions, without ruling out some forms of cooperation," Minoan's head said. "By cooperation, of course; we do not necessarily mean mergers or acquisitions, but possibly some route and fleet restructuring in companies to achieve better results of scale."
Maniadakis further stated that his company is orientated toward expansion into new markets, such as those in Central and Western Europe where it could be active by itself or in association with local shipping companies in order to provide transport services for passengers and vehicles. Finding new markets, he added, will assist the company's profit and convey a positive message to shareholders that there is a long-term growth strategy.
The Minoan CEO also considered positive the decision by Merchant Marine Minister Manolis Kefaloyiannis to proceed with the liberalization of services for any companies choosing to use Lavrion, Rafina, Elefsina or Kymi as their departure ports.
He clarified, however, that Minoan Lines is not interested in expanding "to other routes in the Aegean besides the existing ones to Iraklion and Thessaloniki."
Source:, 31 Mar 2005, NIKOS BARDOUNIAS

Greek bulk carrier salvaged by SvitzerWijsmuller
Following the salvage, both the bulk carrier and the lightering vessel were taken to Kalundborg fjord for an underwater inspection by divers and to reloadi the coal. The "Alexia M" was on a voyage from Ventspils, Latvia, to Amsterdam. The 29,500 ton bulk carrier was built in 1979 in Varna. No oil spil was observed during the salvage operation. (31.03.05)
Source: SSG Newsletter 12/05, Maritime News for Northern Europe

Cargo ship engineer gets jail for ocean pollution
---The chief engineer of cargo ship M/V Katerina was sentenced to eight months in federal prison Thursday after admitting he allowed oily waste to be pumped into the ocean.
Edgardo A. Guinto, 49, pleaded guilty in January and was convicted of obstruction of justice charges. He was sentenced Thursday in Los Angeles by United States District Judge Florence-Marie Cooper. According to the district attorney's office, the Philippines resident admitted he told crew members to remove and conceal the bypass pipe when the ship came into port in Long Beach.
The DA's office also said Guinto admitted he made fraudulent entries in the ship's pollution-prevention records -- known as the Oil Record Book.
Ship Captain Ioannis Kallikis, 65, of Athens, Greece, pleaded guilty in February to an obstruction of justice charge. Kallikis admitted his actions meant to impede a Coast Guard investigation into pollution violations. He allegedly advised other crew members they needed to destroy incriminating messages. Kallikis is scheduled to be sentenced on April 4.
The ship's second engineer, Rolan O. Sullesta, 42, pleaded guilty in January to one charge of obstruction of justice for concealing one of two bypass pipes. Sullesta is scheduled to be sentenced April 11.
The ship is operated by DST Shipping Inc. of Thessaloniki, Greece. According to the DA's office, the company pleaded guilty to obstruction of an official proceeding and failing to maintain an accurate Oil Record Book. DST was sentenced to probation, in which it will be subject to special scrutiny. The company also paid a $1 million fine.
The Katerina is a Maltese-flagged, 600-foot-long, 16,320-ton cargo ship that arrived at the Port of Long Beach on Sept. 10.
Source:, March 25, 2005

DST Shipping's roots run deep
---The Tsolakis clan has been in the business since the days of sail.
DST Shipping founder Dimitris Tsolakis traces his family's shipowning roots back to the end of the 19th century - when it operated two-masted wooden caiques capable of carrying up to 20 tonnes of wood from the nearby Holy Mount to Thessaloniki.
DST is the only shipping company with ocean-going vessels based in Thessaloniki, one of the oldest cities in Europe and the second largest in Greece.
In the time of Tsolakis's father, the family moved to coasters, working first in Greece and moving out into the Mediterranean. After Tsolakis himself joined the operation, he bought his first ship in 1980 and became active in shortsea shipping. He served as a master on a number of company ships. It was not until 1994 that the company bought its first handysize vessel suitable for deepsea trades.
DST Shipping was founded in 1998, as a shipmanagement company replacing the formerly named Dimitrios Tsolakis Shipping Enterprises.
Today, DST operates two bulkers, having sold a third at the end of last year, which was delivered in January. The 28,000-dwt bulker Magda (built 1977) proved a good buy for the company. It was purchased in 2000 for just $1.7m and reported sold for $5.2m.
The company's handymax bulker, Bianco Zealand (built 1994), is on a three-year time charter to Norden, while the 25,000-dwt bulker Katerina (built 1983) is working the spot market.
The Katerina recently made headlines when DST Shipping was fined a thumping $1m in the US for oily-water separator and oil record offences, discovered when the bulker arrived at Long Beach, California, last September.
It is a touchy subject for Tsolakis. "Things are different from what they said," he claimed, refusing to be drawn into further discussion. "I'd prefer not to talk about it," he said. "It annoys me."
However, the company is now headed in a different direction and it is making its first move into the wet sector. It recently purchased a 5,850-dwt chemical-tanker resale hull from Turkish interests, due for delivery between September and October. DST is believed to have paid a little over $14m for the vessel under construction at Istanbul's Torgem Shipyard.
Tsolakis is hoping to negotiate the purchase of a second hull from the same owners. He also talks of placing an order for two firm and two optional vessels of similar size with another Turkish yard, Marmara Shipyard.
Although Tsolakis is enthusiastic, the route to these acquisitions may not be easy. Tukish sources are doubtful that DST will achieve its stated aims.
Tsolakis says negotiations on the second Torgem hull are "at a good stage" but that the owners, understood to be a leading containership operator, want to start work on a container-feeder vessel, which would delay construction of the chemical tanker. "We are pressing them to build the tanker first," he said. As far as ordering from Marmara, Tsolakis concedes that it is not necessarily so easy. Foreign operators have a hard time ordering directly from Turkish yards because of financing issues, which have led to the phenomenon of Turkish companies ordering for their own account and later reselling.
In the past couple of years there has been a spate of resales from Turkish owners to foreigners and Tsolakis says that continuing demand is pushing prices up.
DST was the second Greek company in quick succession to buy a chemical tanker from Torgem. The first was Trefintankers, which purchased an identical newbuilding due for delivery in June.
Tsolakis says he researched the possibilities of building in China or Korea. "We found we would be better off in Turkey," he said.
He believes that the Turkish builders have gained their technical know-how from northern Europeans. "Another thing that won us over was that all the equipment on the ship, navigational or equipment, is European," he said.
DST's contact with the Turkish shipbuilding industry came through Tsolakis's son Stavros, who as well as serving as vice- president of DST also devotes about 20% of his time to an academic career. Stavros acts as assistant professor of maritime economics and assistant academic director of the Msc in Maritime Economics and Logistics at the Erasmus Research Institute of Management.
Tsolakis ruefully admits that his son - whose doctoral thesis was titled "Econometric Modelling of Bulk Shipping Markets: Implications for investment and financial decision making" - had forecasted the market rise. "I thought he was too young at the time and I didn't listen to him," he said. When DST sold its 21,000-dwt bulker Litohoro (built 1976) for demolition in 2003, it brought in $1.4m. However, Tsolakis added: "Two months later I could have sold it for $4.5m."
With the move into chemical tankers marking an exciting development for the company, Tsolakis says DST will remain faithful to the bulker sector where it began. But he admitted: "At the moment, the way prices are we cannot do newbuildings or buy secondhand, they are overvalued."
As president of the Union of Greek Shipowners of Northern Greece, Tsolakis is keen to boost his home town and looks set to continue flying the flag in Thessaloniki for some time to come.
Source: Gillian Whittaker Thessaloniki published: 01 April 2005 ,

Hellenic Petroleum imports shadow double-hull trend
---Following a general industry trend, more modern vessels are starting to show up at Greece's discharge terminals- Wednesday March 30 2005
ALTHOUGH small in the overall scheme of Greek tanker custom, Greece's own refineries are following a general industry trend in chartering more modern tonnage, which inevitably is drawn mostly from the locally controlled fleet.
This was underlined by the Onassis Group's latest vessel at the Hellenic Petroleum Pachi terminal near Megara in January.
Olympic Future, the second of two 155,000 dwt suezmax tankers delivered by Japan's Namura Shipbuilding to Olympic Shipping & Management last year, discharged a cargo of 143,000t of Iranian light crude from Kharg Island.
According to broker Daniel Tapinos, the six month-old ship was among the youngest fixed for Greek business by his company Meridian Brokerage, but there were several other cases of HP chartering virtually new tonnage.
In general, HP is said to seek modern double-hull tankers although in common with many charterers often fixes non-double-hull tonnage if the freights are more competitive, as long as the vessels meet present minimum standards.
Tankers must be double bottomed, have segregated ballast tanks and be less than 20 years old.
However, prodded by European legislation and the general direction of the tanker industry, stricter regulations are not far away.
A merger with the Latsis-controlled Petrola Group at the end of 2003 left the Greek state with just a 25% ownership stake in Hellenic Petroleum, which is the country's most profitable industrial company.
The group owns about 35% with the balance of shares publicly held through the Athens stock market.
Since the merger, HP has controlled three of Greece's four oil refineries - at Aspropyrgos and Elefsis, both on the outskirts of Athens, and in Thessaloniki - while the fourth refinery, located at Agioi Theodoroi near Corinth, belongs to Vardinoyannis-run Motor Oil.
With the Motor Oil refinery reportedly being served predominantly by the Vardinoyannis clan's own Avin International, most of the fixtures for Greek crude imports that are seen in the market are conducted for HP.
Currently, the oil group's crude importing needs are said to run to about 8m-12m barrels monthly, with Russian, Iranian and other Arabic suppliers being the chief sources.
For the four to five suezmaxes and at least half a dozen aframaxes utilised each month, either by HP or other charterers, Pachi is said to be the main terminal by dint of its nearby storage capacity.
Of HP's other Attica region discharge terminals, Elefsis hosts mainly smaller tankers and shoreside installations by the Aspropyrgos refinery which are devoted chiefly to accepting heated Iraqi crude.
Today's HP Group, which includes a number of oil, gas and petrochemical businesses under its umbrella as well as subsidiaries in several nearby markets, also charters a variety of tonnage for imports and exports of clean and dirty products, including gasoil, motor gasoline, naptha, fuel oil and asphalt.
"Exports are generally in small parcels of up to 20,000 tonnes," says Mr Tapinos.
Meridian, which is the oldest name in a tiny community of specialist Greek tanker brokerages, says that it has arranged a majority of the open-market spot fixtures performed for HP.
It was also the broker for some past very large crude carrier liftings from Iran to the Red Sea for HP when it was calculated that hundreds of thousands of dollars could be saved on a single suezmax charter by breaking the passage of crude oil into two sea legs and using the Sumed pipeline ending in Sidi Kerir.
According to Mr Tapinos this was economically viable when VLCC rates were below W60 and has not been performed recently despite "very erratic" levels for the large tankers.
Aside from general spot activity, however, HP is also understood to charter vessels directly with the shipping arms of groups with which it has a more extensive commercial relationship, such as Vardinoyannis' Avin and Aegean Oil. It is also known to have a longstanding relationship with Piraeus-based Polembros Shipping, which is particularly strong in aframaxes.
Greek imports and exports account for only a small portion of Meridian's activities as a chartering broker, which Mr Tapinos says will increase with the arrival of a fifth broker this spring.
"It is interesting to see Greek owners expanding into all types and sizes of tankers, with newbuilding orders for ice-strengthened tonnage, sophisticated clean tankers, chemical tankers, LPG and LNG - you name it," he says.
But the real evolution has come in the rejuvenation and quality of the fleet. "When we were pushing tonnage to charterers 12 years back, our position lists had very few modern units - and these were apparently 15 years-old vessels.
"Nowadays we are really proud to be providing a genuinely modern fleet to our charterers. It is a really cracking list of ships," comments Mr Tapinos.

Top Acquires Nomikos - A Watershed Event
---For many years, Marine Money conferences have featured presentations asserting the theory that when public markets begin to value shipping companies at a premium to net asset value, the entire ownership structure of the industry will change. The change, it was said, would be inevitable because public companies would have a lower cost of capital and could therefore be more competitive on the single largest daily expense item - money.
After years of theorizing, this fundamental change appears to be underway. Although the larger and more established public companies such as Teekay and OSG have seen this situation for some time, we believe the emergence and aggressiveness of Top Tankers has really been the catalyst for a change of psychology in Greece - the change in psychology is that there are only three options: to be public, to sell to a public company, or to slowly liquidate assets. Although figures vary since foreign companies are able to make confidential filings for IPOs, we understand there are about 15 deals in registration, comments and drafting currently.
One of the most startling examples of the change that is taking place is the "broker talk" this week that Top Tankers has reached a deal to acquire AM Nomikos. Top has been an aggressive buyer since going public last July, but to date has picked up unwanted vessels such as the older ships owned by Sovkomflot and suezmaxes that Essar had been marketing for some time.
But the acquisition of Nomikos, if it is true, is something else entirely; the idea that a company like Top, which at this time last year was a private company with very few ships, can acquire the entire fleet of a company like Nomikos, a multi-generational blue chip shipping company with a premier fleet and reputation that was never even for sale, has been a real eye opener. We imagine that Top presented Nomikos with an offer the company simply couldn't refuse, about $50 million over already high asset prices from our rough and dirty calculations.If, as we mentioned above, sensible private shipping companies have three options, going public, selling to a public company or slowly liquidating, Nomikos chose option number two. In an effort to understand why this deal appears to have been consummated, we thought we'd do some math.
As you can see from the fleet list and valuation, the Nomikos ships are worth about $415 million. Using full employment, current spot rate estimates, the company would generate $174 million in cashflow in the current 12-month period. Using public comparables, if Nomikos had decided to go public, their fleet could have been valued at about 4x cash flow, or almost $700 million. The major difference, of course, is that when a company goes public, the selling shareholders generally extract a healthy valuation and keep control of the company and management of the vessels, which generally employs family members.
However, if the deal ever comes to fruition, judging from the valuation of Nomikos, it offers them a chance to get a full valuation from their fleet without taking the risk of doing a public offering. The IPO is a consuming process that can take as few as four months but much longer if there are accounting issues. Pre-funding expenses can be about $1.5 million, so if the equity market and/or the shipping markets do not cooperate, the entire effort can be made in vain.
Source: Freshly Minted, VOLUME 1, ISSUE 12 -March 31, 2005 []

DryShips Agree to Acquire 2 Additional Vessels and Delivery of 8 Vessels
ATHENS, GREECE -- (Market Wire - Apr 01, 2005) -- DryShips Inc. (NASDAQ: DRYS), announced today that it has taken delivery of the capesize bulkcarrier m.v. "Netadola," 149,475 dwt, built 1993, as well as the panamax bulkcarriers m.v. "Samsara," 73,688 dwt, built 1999, m.v. "Iguana," 70,349 dwt, built 1996, m.v. "Toro," 73,034 dwt, built 1995, m.v. "Paragon," 71,259 dwt, built 1995, and the handymax bulkcarrier m.v. "Alona," 48,640 dwt, built 2002. These vessels are part of 11 drybulk carriers that were referred to as "Identified Vessels" in the prospectus dated February 3, 2005.
In addition, the Company also took delivery of m.v. "La Jolla," 72,126 dwt, built 1997, one of the 8 Additional Vessels as described in the press release dated March 3, 2005. DryShips Inc. has also agreed to acquire 2 more Additional Vessels for approximately $102 million from unaffiliated third parties. These vessels are the panamax bulkcarriers m.v. "Catalina," 74,432 dwt, built 2005, and m.v. "Belmonte," 73,601 dwt, built 2004. The Company has already taken delivery of "Catalina."
After taking delivery of the 11 Identified Vessels, the 8 Additional Vessels as described in the press release dated March 3, 2005 and these 2 more Additional Vessels described above, DryShips will have a fleet of 27 vessels consisting of 4 capesize, 21 panamax and 2 handymax bulkcarriers aggregating 2.3 million dwt and with an average age of 9 years.
Source: Press Release, April 01, 2005, Distribution Source : Market Wire

Gourdomichaelis Signs Agreement with Trinity in Shipping SPAC Debut
---Gourdomichaelis-controlled Adventure Holdings signed what is known as a "Definitive Agreement" with Special Purpose Acquisition Vehicle Trinity Holdings this week. Now the SPAC will draft the proxy statement (which is similar to an F-1), submit the document to the SEC for comments and then go out for a shareholder vote.
Source: March 31, 2005 []

INTERTANKO Athens Tanker Event 10-13 April 2005
Incorporating the INTERTANKO Annual General Meeting as well as Executive Committee and Council Meetings, the Athens Tanker Event 2005 will be held at the Divani Apollon Hotel, 10 Ag. Nikolaou & Iliou Str. 166 71 Athens - Vouliagmeni, Greece.
The Athens Tanker Event 2005 will provide delegates with analyses and updates on the world economy, and on the energy, finance and tanker markets. Industry experts will share their views and forecasts and assist business leaders and executives in building sound foundations for future decisions. The programme will also include sessions focusing on technical and operational matters that will have an effect on the industry, such as the Joint Tanker Project from IACS, the Tanker Management Self Assessment programme (TSMA), as well as an update on the regulatory framework with emphasis on European and environmental issues. A separate session has also been dedicated to the growing volume and importance of derivatives trading in the tanker markets. For more information:
Source: Press Release