Frontline Chief Says Fujairah Ban Will Spur Tanker Scrapping

By Alaric Nightingale

Nov. 13 (Bloomberg) -- Owners of single-hulled tankers are more likely to scrap their ships, buoying freight rates, after the Port of Fujairah said it would ban them next year, according to Frontline Ltd., the biggest supertanker company.

Fujairah, in the United Arab Emirates, is the most common regional refueling point for ships carrying crude from the Persian Gulf. About 90 supertankers, or 17 percent of the global fleet, have single hulls, according to Lloyd’s Register-Fairplay data on Bloomberg.

“It’s another nail in the coffin for single-hull ships,” Jens Martin Jensen, Singapore-based chief executive officer of Frontline’s management unit, said by phone today. Fujairah’s ban is “a push in the right direction” that may contribute to the fleet shrinking next year, he said.

The International Maritime Organization, a United Nations agency with 169 members, will implement a global ban on single- hull tankers from next year. Nations can opt out until 2015. The European Union called the ship design “more accident-prone” in 2003 and London-based BP Plc says it won’t hire them because of the risk of leaking, favoring double-hulled ships instead.

Frontline operated a fleet of 84 tankers including seven single-hull carriers according to its quarterly earnings report on Aug. 28. The majority of its single-hulled ships are leased out on fixed fees until the end of next year.

Daily returns from the Saudi Arabia-to-Japan voyage rose 16 percent to $21,584 yesterday, according to the Baltic Exchange.

To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net