Bahri Annual Report-2011

The National Shipping Company of Saudi Arabia

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Crude Oil Transport Segment

the global market at the time of signing the charter contract. Due to the poor spot market rates during the year 2011 and their direct impact on the time charter contract rates, Bahri refrained from entering into medium- or long-term time charter contracts at low rates, pending the issuance of clear market indices. In the meantime, Bahri has devoted its best efforts to improve the relationship with its major customers, reduce the vessels speed to minimize bunker fuel consumption and aims to maximize the returns by establishing its presence in various markets and taking advantage of the timely presence of Bahri vessels in those markets.

The crude oil transport segment is the largest operating segment of Bahri. This segment operates a fleet of (17) Very Large Crude Carriers (VLCCs) in the spot market and long term contracts (time charter) basis. The risk management strategy is to balance between fixed and variable income, i.e. to benefit from the high revenue in the spot market and fixed revenue generated from time charter contracts. In 2011, (3) VLCCs completed their time charter agreements and were deployed in the spot market as a result (14) VLCCs were operating in the spot market by the end of the year 2011. Charter rates are set according to the mechanisms of supply and demand in Bahri started the operation of crude oil transportation during 1996. The company presently owns a fleet of (17) VLCCs. The total DWT capacity of these VLCCs reached (5,256,605) tons which is equivalent to about (36) million barrels of crude oil.

Facts and Figures

Number of VLCC Voyages completed during 2011 was as follows:

Percentage at the beginning of the year

Percentage at the end of the year

Number of Voyages

Vessels operating in the Spot Market

66%

80%

79

Vessels operating on Time Charter Contracts

34%

20%

28

Total

100%

100%

107

In 2011, VLCCs made 320 ports call. The main routes on which these VLCCs operated were as follows: • Arabian Gulf / Far East (45%). • Arabian Gulf / United States of America (30%). • West Africa / Far East (25%) Technology systems installed on VLCCs fleet include: • Energy-saving technology; • Electronic control system in the main operational engines.

Global VLCCs market (new construction and exit from the service): • By the end of 2011, the total number of VLCCs operating in the global market reached (575) vessels and (127) vessels are under construction. • (61) VLCCs are expected to be delivered during 2012. • (12) VLCCs are expected to exit the market during 2012 and 2013.

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