SOURCE: LLOYD’S LIST
Lloyd’s List 24/3
• Thursday 23 March 2017, 21:55
• by Lloyd’s List Editorial
Last minute tanker news shakes the power list, but the Saudis hold the top spot.
THE changing dynamics in the tanker spectrum have been duly reflected in our annual list of the 10 most influential figures in oil and gas shipping.
On the one hand, those with large exposure to liquefied natural gas transport are generally moving up the ranks, with a firm recovery expected to take hold in the segment. On the other, falling earnings bring lower rankings for those focused on crude and product carriers. Unless your name is John Fredriksen, of course.
Unsurprisingly, national interests prove to be more resilient in a market downturn than commercial firms, with top executives of MISC and Sovcomflot joining our list this year.
What remains unchanged is the status of Saudi Arabia, with its weight over global oil production and large national tanker fleet. A Saudi has again taken the top spot this year.
Note: When determining on who shall be the 10 most powerful figures this year, our specialists gave each candidate a score of 1 to 10 in two metrics, “market weight” and “aura”.
Market weight refers to the general influence of the candidate’s company. Aura is the so-called soft power by the candidate and his or her company; whether we feel the industry often follow the candidate’s investment decisions, public calls in conferences and other behaviours.
Any feedback on this experiment is welcome.
Deputy crown prince Mohammed Bin Salman, Saudi and Opec oil
Market weight: 8.7/10; Aura: 8.3/10
No one can deny the influence of the Organisation of the Petroleum Exporting Countries, led by Saudi Arabia, on the global oil market. Equally, no one can deny how complex Opec’s situation and internal workings have become.
An Opec meeting in April 2016, led by Saudi Arabia, was called to discuss a production freeze among the cartel’s members, amid low oil prices.
Saudi Arabia’s oil minister at the time, Ali al-Naimi, who was at our top spot last year, was keen to rebalance the market. He said a freeze could be possible, even without Iran’s agreement.
However, Saudi Arabia’s deputy crown prince Mohammed bin Salman disagreed with the move, replacing Mr al-Naimi with Khalid al-Falih, chairman of national oil company Saudi Aramco. That dramatic move showed that the deputy crown prince pulls the strings — the power behind the executives, if you like.
As such, he can also change his mind on output strategy.
As Saudi Arabia and Opec figured out the best way forward with some non-Opec producers, an agreement to limit production in the first half of 2017 has been reached. Initial evidence shows it has been implemented pretty well.
Meanwhile, tanker owners will feel the impact of a cut to oil output from Opec — likely on the negative side.
The deputy crown prince holds these dynamics in his hands, hence his position among shipping’s élite powerbrokers.
On top of that, he oversees Saudi Arabia’s plans make an initial public offering of shares in oil giant Saudi Aramco. Saudi Arabia will sell less than 5% of Aramco’s shares via a partial IPO, the deputy crown prince has said.
Aramco has been raising sales of crude delivered to customers in recent years, even as it does not have direct exposure to shipping. National Shipping Co of Saudi Arabia, 20% controlled by Aramco and one of the world’s largest crude carriers, is tasked with transporting Saudi oil to the buyers.
Also, Aramco has teamed up with Lamprell and Hyundai Heavy Industries to develop a mega yard project in Ras Al-Khair, aiming to construct rigs, offshore support vessels and commercial ships.
Saudi Arabia is evidently on the cusp of major changes to its energy industry as the deputy crown prince forges ahead with modernisation — changes that astute owners operating in the tanker industry would do well to monitor closely to keep a step ahead of the competition.
Andreas Sohmen-Pao, BW Group
Market weight: 8.3/10; Aura: 8/10
In the turbulent energy transport segment, BW Group remains an industry stalwart, with one of the world’s largest fleets of oil, gas carrier and offshore units.
The former chairman of BW Group, Helmut Sohmen, was awarded the lifetime achievement award at the Lloyd’s List Asia Awards for 2016. His son Andreas Sohmen-Pao now heads up the group, even though much of its day-to-day operations have been passed on to chief executive Carsten Mortensen.
In a move widely praised by analysts and peers, BW agreed to sell all the 11 very large crude carriers on its fleet to DHT Holdings (news, data) for 33.5% of the New York-listed company, cash and transfer of debt obligations. With one stroke from Mr Mortensen, BW Group managed to gain access to public capital and maintain exposure to the VLCC market while not owning the physical assets.
For himself, Mr Sohmen-Pao has taken on the added responsibility of promoting Singapore’s maritime ambitions.
Having been appointed chairman of the Singapore Maritime Foundation, in September 2016 he was asked by the Maritime and Port Authority of Singapore to chair the strategic IMC 2030 advisory committee that is charting the future direction of Singapore as an international maritime centre.
BW Group itself has been undergoing changes, and each of the individual business segments has been clearly delineated under business verticals such as product tankers, liquefied petroleum gas and liquefied natural gas.
Recent appointments included Jakob Bergholdt as the group’s chief financial officer and Tina Revsbech as the head of BW Pacific.
Oslo-listed BW LPG has expanded its position as the world’s biggest very large gas carrier fleet owner to 49 vessels with the takeover of Aurora LPG, and further industry consolidation cannot be ruled out.
BW Group’s venture into the floating vessel market saw it win a 15-year deal to supply a floating storage and regasification unit for the second Pakistan LNG terminal.
However, the group was not immune from the decline in the upstream oil sector, with BW Offshore reportedly laying off a large number of employees last year. Still, the company was able to successfully complete the balance sheet restructuring of BW Offshore.
John Fredriksen, Fredriksen Group
Market weight: 7.3/10; Aura: 8.7/10
It is fair to say that 2016 will not go down as a vintage year for shipping tycoon John Fredriksen, whose tanker assets suffered falling earnings and valuations in the latest market downturn.
The flipside is the opportunity to sniff out the best deals.
Historically low tanker prices mean the market will continue to present attractive opportunities, with Mr Fredriksen’s flagship tanker unit determined to look at snapping up on-the-water and resale assets. Low cash breakeven levels and access to attractively priced capital have long given Frontline significant operating leverage to take advantage of price dislocations in the market.
That said, not every one of his attempts turns out to be successful.
Frontline (news, data) has made two unsolicited all-share offers to acquire rival crude carrier DHT since late January. But DHT has rejected both offers and gone on to buy BW Group’s VLCC fleet.
With BW set to become DHT’s largest shareholder, Frontline’s takeover bid hangs in the balance. DHT robustly rejected Frontline’s takeover attempts, and if its shareholders approve the BW deal, Frontline’s takeover attempts are all but dead in the water.
But don’t write the tycoon off on the expansion trail. Frontline bought 16.4% of DHT prior to the announcement of its first offer, and the shareholding could prove to be a profitable investment, even if it’s to be diluted in the BW deal. And Mr Fredriksen has the war chest for acquiring secondhand or newbuilding tonnage.
There is everything to play for, and few in shipping have as much experience of successfully navigating the industry’s dizzily high peaks and depressingly low troughs as Cyprus’ very own Mr Fredriksen.
Grahaeme Henderson, Shell Shipping & Maritime
Market weight: 8.3/10; Aura: 7/10
A busy year for Shell’s head of shipping saw him start handing over management of Nakilat’s liquefied natural gas carrier fleet to Nakilat Shipping Qatar in October.
Before that, another milestone event was the tie-up with BG Group.
Having completed the $70bn BG acquisition in February 2016, Grahaeme Henderson said he was focused on improving efficiency and safety when transporting cargoes via his new-look fleet.
With more production points and customers across the globe, the efficiency gained from more flexibility in moving cargoes is at least one of the benefits that result from such scale, he argued.
Shell Shipping — with its 2,000-strong fleet that includes oil and gas carriers, barges, drilling rigs and offshore vessels — has recognised its wide exposure to potential high risk, and the damaging headlines that can bring.
Therefore, Shell’s Maritime Partners in Safety programme is highly cherished and an area that Mr Henderson places right at the top of his agenda. The programme is a network of 500 maritime partners with whom Shell does business, with the focus on raising safety standards. The partners include shipowners, supply boat operators, charterers and a range of others.
As a result of the programme, Shell’s serious actual and potential incidents have been reduced threefold since 2011.
It is hard to change an ingrained culture in the shipping industry. But Shell and Mr Henderson are evidently making headway when it comes to safety and efficiency, meriting a high place among shipping’s top influencers and power brokers.
John Angelicoussis, Angelicoussis Shipping Group
Market weight: 7.3/10; Aura: 7.7/10
John Angelicoussis steams serenely on as the world’s largest purely private and independent shipowner.
He equates public money and investment funds with binges of overordering that have ruined the freight market, and in this respect he shows resemblances to the “old ways” of traditional Greek shipowners.
But these are not necessarily the all-defining characteristics of his shipping group, which includes a 32-ship LNG carrier fleet as one of its three branches.
Not much more than a decade in existence, Maran Gas Maritime is now viewed as one of the very best LNG carrier managers around and is one of the owner’s chief sources of pride.
At the same time, the group has been investing in big tankers for its Maran Tankers operation, with a programme of 10 very large crude carriers and six suezmaxes at favoured builder Daewoo Shipbuilding & Marine Engineering.
If recent, rare public pronouncements are to be believed, he discerns good reasons for taking a positive view of the outlook for each of his three chosen sectors — LNG shipping, tankers and dry bulk. Indeed, he favours further growth rather than inaction for the Angelicoussis Shipping Group.
While many shipowners have made a point about diversifying heavily into other sectors, Mr Angelicoussis cites cautionary experiences that suggest it is better to stick to what he knows.
“In the shipping industry, I know how to correct my mistakes,” he said at a Marine Money forum in New York in 2016. “If you have good relationships with first-class yards and then you have clout, you can always correct mistakes.”
Those close to Mr Angelicoussis say the owner is harder-working than ever and he has said he is, if anything, increasingly passionate about the shipping business.
Stamina is an important ingredient on the business side, too. “You have to stay there for the long run, as you may enter the cycle at the wrong time,” he said. “Many people throw in the towel when they shouldn’t. The market quickly changes.”
Yee Yang Chien, MISC
Market weight: 8/10; Aura: 6.7/10
Since his appointment as MISC’s president and chief executive in early 2015, Yee Yang Chien has positioned the company for growth with a five-year master plan focused on the four core businesses of LNG, petroleum, offshore solutions and marine and heavy engineering.
“Last year , MISC was a $10bn asset company with no debt. One year on, we are a $12bn asset company with only a net debt of about $1bn,” Mr Chien said. He said MISC’s financial capacity to grow was its greatest strength and it continued to find ways to grow despite tough markets.
In 2016, S&P Global Ratings upgraded MISC to ‘BBB+’ from ‘BBB’ on the back of strong solid cashflows and tighter capital spending in a tough market.
MISC’s core advantage remains in its LNG carrier business, with 28 carriers, having transported 8.3% of the world’s LNG in 2015. In 2016, it took delivery of the first of five Moss-type LNG carriers from Hyundai Heavy Industries.
Its tanker unit AET renewed its lightering contract of affreightment amid stiff competition. The company’s lightering business in the US Gulf has been a key revenue source, which was helped by the lifting of ban on US oil exports.
Surprisingly, MISC has also made inroads in the beleaguered oil upstream industry.
MISC completed the acquisition of the Gumusut-Kakap semi-floating production system, a major deepwater oil project contributing up to 25% of Malaysia’s oil output.
Its unit MISC Offshore Floating Terminals has made its maiden venture into Thailand’s offshore oil and gas market with a 10-year contract for Chevron and it also deployed its MaMPU 1 unit, an oil tanker converted into a production and storage vessel.
Mr Chien said growth opportunities were scarce, given cutbacks in the oil sector, but there were still opportunities to be exploited.
Sergey Frank, Sovcomflot
Market weight: 7.7/10; Aura: 7/10
Reports that 100% Kremlin-owned Sovcomflot is about to be privatised have circulated at regular intervals since at least 2004, the same year in which Sergey Frank took over as chief executive.
More than a decade later, it still has not happened, while Mr Frank retains his firm grip on the top job. At least as far as anyone can ascertain from the outside, he has no obvious internal rivals, so the position is likely to be his for just as long as his allies in high places want him to have it.
Obviously, he has succeeded in keeping what SCF euphemistically refers to as its ‘shareholder’ sweet, especially on the financial front. Even at the peak of the tanker downturn, losses tended to be lower than would be expected for a company of SCF’s size, and it has been consistently profitable since 2013, despite the vicissitudes of the LNG market.
No doubt it helps to be a national champion concern, with implicit state backing and close working relationships with Russian energy giants such as Rosneft and Gazprom.
But let’s put it like this: SCF is one of the few shipping companies that has very little problem borrowing from western banks, with a series of deals last year netting it a $253m credit line and a $750m bond issue.
Other highlights include the company’s decision to unwind SCF Swire Offshore, its offshore supply vessel joint venture with Swire Pacific, with the Russian concern now in control of all three of the three-vessel fleet.
Mr Frank’s early career CV includes stints as chief financial officer of Far East Shipping Co, chairman of state airline Aeroflot and director of Novorossiysk Shipping.
After accumulating this wide array of high-level transport experience, he entered the world of Russian politics in 1998, when he became transport minister under Boris Yeltsin’s presidency.
He stayed in that post for four years after Vladimir Putin took over in 2000, before switching to his current employer.
Junichiro Ikeda, Mitsui OSK Lines
Market weight: 8.3/10; Aura: 6/10
Into his second year as president and chief executive of MOL, Junichiro Ikeda has shown he will not shirk from making tough calls as the group confronts challenging market conditions.
The Japanese shipping giant is cutting its dry bulk fleet size significantly, and its containership operation is being spun off into a joint venture with Nippon Yusen Kaisha and Kwasaki Kisen Kaisha.
The moves suggest the oil and gas shipping business, which has provided steady cash flows for the diversified group in recent years, will play an even more important role.
MOL has targeted to have 81 LNG carriers and five offshore units in its fleet by end-March, compared to the year-ago levels of 69 LNG carriers and three offshore units.
Its “energy transport fleet”, composed of crude, product, chemical, LPG and coal carriers, is set to consist of 212 vessels, only slightly down from 218 ships a year ago.
Perhaps the robust response from Mr Ikeda is only to be expected. He is no stranger to shipping cycles, having joined MOL in 1979 and rising through the ranks to head its liner division in 2010. He then became a director and senior managing executive officer in 2013 before assuming his current position in June 2015.
Mr Ikeda is looking beyond the current challenges. “The priorities for non-containership businesses after the transfer of containership operations will be to restructure global networks and deepen relationships with customers,” Mr Ikeda said in this year’s New Year speech.
Paddy Rodgers, Euronav
Market weight: 6.3/10; Aura: 8/10
If there is one role Paddy Rodgers can be relied upon to adopt with alacrity, it is to be tub-thumper-in-chief for the big crude tankers.
The Euronav chief executive has a point. Rates have been in a downward trend since last year, but tankers such as very large crude carriers are still often pulling in earnings healthily above operating costs on most occasions.
People within the sector tend to listen when Mr Rodgers talks these days. How did he and Euronav assume this role, when during the last downturn they were one of the companies suffering the most, with heavy losses quarter after quarter?
Opportunism played a large part in the company’s rise to prominence, he explained to Lloyd’s List in late-2016.
In the last downturn, “lots of people fell by the wayside”, placing Euronav further up the tanker pecking order. By simply surviving, Euronav’s status rose.
As an industry leader, running a large fleet, Mr Rodgers is acutely aware that the tanker market is not all roses. While dips should not spell doom and gloom, they equally cannot be ignored. You could call it bullishness tempered slightly by clear-eyed realism.
In this vein, he predicted that 2017 would be more volatile than 2016, with rate weakness in the second and third quarters.
He forecast there would be pockets of elevated vessel supply, which would impact freight pricing and owner sentiment.
Set against this freight market environment, liquidity is king, and Euronav is liquid enough to ride out the rough times and consider investing to expand its asset base in readiness for the uptick.
Expansionist moves are born from Mr Rodgers’ belief that we are not in for a prolonged tanker market downturn. According to him, freight market improvement could come at some point towards the end of 2017, as the balance of vessels and cargoes comes more into line.
Xu Lirong, China Cosco Shipping
Market weight: 8.3/10; Aura: 6/10
In 2016, Beijing decided to merge Cosco Group and China Shipping Group, two Chinese state-owned shipping firms, to create the world’s largest shipping conglomerate in terms of fleet size.
With the birth of China Cosco Shipping, China Shipping Development, a CSG subsidiary, took over Dalian Ocean Shipping, a Cosco subsidiary, to become Cosco Shipping Energy Transportation.
It was mainly the sheer state will, rather than market forces, that resulted in the world’s largest listed tanker firm. Shanghai- and Hong Kong-listed Cosco Shipping Energy owns 144 oil, gas and chemical carriers and shuttle tankers with almost 20.3m dwt, including newbuilding ships, according to Clarksons.
With its superior access to cargoes shipped by China’s state energy firms, some of the world’s largest charterers, the Chinese tanker giant is Beijing’s jewel in the crown of Cosco’s shipping empire. And it will likely be a great asset for group chairman XU Lirong, who still has four years to go before his mandatory retirement age.
He will surely want to end on a high note.
The previous two Chinese shipping moguls were Wei Jiafu, the renowned former chairman and chief executive of Cosco, and Li Kelin, founder of China Shipping and dubbed the founding father of the country’s container shipping industry.
Both Capt Wei and Capt Li had established themselves by successfully capturing the trade boom created by China’s extraordinary economic growth before the 2008 global banking crisis. But neither of them resigned from their positions without regrets, partly due to the market slump thereafter.
While the same kind of industry flourish is unlikely to return during Capt Xu’s tenure, the merger has created a timing of his own.
The clock is ticking for Capt Xu to leave his handprints on the ‘Avenue of Stars’ of China’s shipping history. He just needs the right effort, plus a bit good fortune