Direct VLCC load at LOOP expected again as early as March: sources

VLCC-tanker

With the first direct loading of a VLCC, the Shaden, at the Louisiana Offshore Oil Port by Shell earlier this month, market sources say it is only a matter of time before the move is repeated.

“I am not sure what the next one will be, but I am confident it will happen in March,” a shipping source said.

Shell confirmed Tuesday that LOOP successfully loaded Mars crude directly onto a VLCC. This was made possible by recent port modifications that allow for the bidirectional flow of crude oil. The company would not confirm the destination of the vessel.

The Bahri-owned vessel was sailing towards Rizhao, China, according to market sources and cFlow, S&P Global Platts trade flow software.

The freight rate for the Caribbean-China voyage for the VLCC segment was assessed by Platts at lump sum $4.25 million Tuesday, up $100,000 day on day, the equivalent of approximately $3.95 million for the US Gulf Coast-China run, accounting for higher port costs in the Caribbean.

The Saudi-flagged crude carrier was steaming off the Northeastern coast of South America late Tuesday, Platts cFlow showed, and is expected to dock at Rizhao on April 8.

Platts reported a fixture for the Shaden on February 16.

According to Platts fixture logs, the vessel was booked by Shell to carry 270,000 mt of crude on a LOOP-East voyage, with February 16 loading. A rate was not reported for the fixture.

According to the PIRA World Refinery Database, an S&P Global Platts Analytics product, there is a 225,000 b/d refinery at Rizhao, Shandong Province, that is owned by Sunrise Chemical, Landbridge Petchem, Shandong Shi Da Science and Technology, and Shtar Science and Technology Group.

DEAL VALUE

The million dollar question in the market regarding the first-ever VLCC direct load from LOOP remained: At what price did Shell do the deal.

“If you load offshore at Galveston through reverse lightering, that costs $700,000 to $1 million,” a second shipping market source said.

No matter the price paid, charterers would be saving time by directly loading, which in turn would mean cutting out lightering and demurrage fees. “[LOOP] could charge $1 million and people would still do it because they save on time,” the second source said.

The charterer was heard to have paid $300,000 in loading fees, or 20 cents/b, the source said.

A LOOP spokesman did not respond to a request for comment.

A third shipping source said shipowners typically pay less than $15,000 to discharge at LOOP, adding that owners are likely to be charged at a similar rate for loading.

“I don’t know what they charge for using their pipes, that’s between them and the supplier/receiver,” he said.

Market players were in agreement that it was likely that Shell has a contract of affreightment, or COA, with Bahri.

“In the past both parties have referenced a COA,” the third shipping source said.

An earlier ship, which was on subjects to load the cargo at LOOP had run late and was replaced by the Shaden.

“I’m not sure if it was covered under the COA [though],” the third shipping source said.

Shell has recently been pushing a VLCC open in the Persian Gulf for options in the Atlantic Basin, the source said. The company could be exploring the possibility of using its own relet for a future LOOP call, he added.

LOOP might be trying to cut traders out entirely, the source said, as compared with lightering in the Gulf of Mexico there is no need for setting up ship-to-ship transfers.

Source: Platts

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