Belgian oil tanker shipping company Euronav expects to complete the merger with Gener8 Maritime in the second quarter of 2018, as the merger transaction activity is proceeding as planned.
The merger plan was announced in December last year and will establish an independently operated large-scale oil tanker operator with 75 tankers, subject to regulatory approval.glenflange
The merger is underway as both ship owners are struggling to adapt to the contrarian market, mainly due to the large-scale delivery of VLCC and Suezmax oil tankers and limited supply of crude oil.
Regarding 2017 performance, Euronav CEO Paddy Rodgers said that the way to overcome the challenging freight market environment is to let the market solve the problem on its own.
“If the disease is low freight, then the treatment is low freight, because it causes more ships to leave the active global fleet,” said Euronav: “The recent increase in dismantling activities is encouraging, but it needs to be sustained. Return to the cycle inflection point."
“The medium and long-term prospects of the oil shipping market are still constructive. The fundamentals are the continuous growth of demand for cloud tourism. Changes in the financing structure and environmental regulations of the ballast water treatment system may limit the future growth of oil tanker capacity, especially the emission of sulfur by 2020. Regulations may accelerate the dismantling of older ships."
According to VesselsValue, more than 16 VLCCs have been dismantled this year, breaking the 13 ships dismantled last year. This is equivalent to a total of 4,682,800 dwt capacity scrapped since the beginning of the year.
Rodgers concluded that the current challenging time for the low-freight market environment depends on whether shipowners are willing to dismantle old ships and no longer build new ships.
Euronav’s net profit for the full year of 2017 was US$138 million, a sharp drop from 2016’s US$204 million.
Neter8 Maritime, headquartered in the United States, had a net loss of $168.5 million due to considerable losses from the disposal of the ship. The 2016 net profit was 67.3 million U.S. dollars.