Hansson Warns Against Losing Our Heads over Coronavirus Impact
Despite the indirect effects from the outbreak of the coronavirus on the short term outlook for the oil market, tanker owner Nordic American Tankers does not expect the virus to affect its operations.
“We do not see any implications for NAT from the virus,” Herbjørn Hansson, NAT’s Chairman & CEO, said.
The company believes that although the outbreak can have short term negative implications on the world economy and energy demand, it also creates inefficiencies in the energy logistical chain which could increase demand for its ships.
“We have learnt over the years that we do not necessarily see negative implications for NAT in times when there is political uncertainty. Political uncertainty may create positive implications for NAT,” Hansson added.
NAT bets on the continuation of exports of crude oil from the USA, which over the past few years converted from being a net importer of crude oil to a net exporter. As such, NAT sees considerable employment opportunities for its Suezmaxes in this trade.
The company’s fleet is comprised of 23 Suezmax tankers with a cargo lifting capacity of 1 million barrels of crude oil each.
In NAT’s view, Suezmax vessels are more versatile and the one-million-barrel market offers more options in trading than the very large crude carriers (VLCC) with their two-million-barrel lifting capacity.
Hansson warned against overreacting to the ongoing developments, preferring a rather cautious approach.
“Reduced world oil trade in itself is negative for NAT. On the plus side there are several positive factors. Observers must not lose their heads – tendencies we see now. Situations like these create irrational behavior by many parties, among investors, financial institutions and others,” he said.
“As a tanker company, we are cautious and do not wish to stimulate such irrational behavior.”
NAT said that the overall situation has opened different opportunities for its ships, including providing storage for oil.
The company’s CEO said that due to an increased demand for storage space, several of its ships are employed in this way.
“In tough times, you always have cans of reserve food in your basement. Now we have ‘reserve’ oil.”
“The NAT tanker business has a solid future – short term bumps in the road, caused by Virus or other contingencies, do not distort our expectations in this regard. The East/Far East remain the area of growth in the years to come – the economic machine of international business, stimulating the NAT tanker business,” Hansson concluded.
For the 4th quarter of 2019, NAT’s net result stood at USD 12.7 million, a substantial improvement from the same quarter of 2018 that saw a net loss of USD 10.5 million.
For the 12 months of 2019, NAT had a net loss of USD 10.4 million, shrinking the loss recorded for the full year of 2018, which reached USD 95.3 million.