Saturday, 16 May 2009

BLT - Indonesia’s world-class tanker operation

Marcus Hand charts the rise and rise of Berlian Laju Tankers

The success story in Indonesian shipping is Berlian Laju Tankers, which has grown from a domestic owner and operator to a global player with a leading position in the chemical tanker business.

Looking back on the evolution of the company, Kevin Wong, BLT’s chief financial officer, says: “The home market is good for a start, but only after we got beyond [Indonesia] could we realise the company’s full potential.”

Starting out with two tankers chartered out to Indonesian state oil and gas firm Pertamina in 1981, BLT today owns and operates a fleet of 85 tankers, totalling 2m dwt with an average age of nine years. The company’s core business is in chemical tankers, which account for 70% of its business, oil tankers make up around 25%, with gas tankers at 5%.
Acquisition trail

Late 2007 BLT realised a long-planned move to acquire another tanker owner to expand its geographic coverage, with the $850m purchase of US-based Chembulk Carriers further boosting its chemical tanker business. The acquisition of Chembulk saw BLT expand into the North American market for the first time, making it a truly global player.
With Chembulk, the Indonesian shipowner has also expanded into South America, with an office in Sao Paulo, Brazil, where it sees major opportunities for its chemical tanker business, in particular in the biofuels sector.

The purchase made BLT the world’s third largest owner and operator of chemical tankers with a fleet of 59 vessels totalling 920,586 dwt. While the acquisition was made at close to the top of the market, with ship prices having fallen off sharply as the global financial crisis has bitten, BLT believes it was the right move.

Peter Chayson, general manager of investor relations BLT, says that it is an opportunity that only comes along once and if the company had not taken it, most likely one of its competitors would have.

The company remains confident about the outlook for its chemical tanker business and expects freight rates to remain stable and possibly rise 10%-15% over the next few years.
In terms of fleet expansion, BLT has 13 chemical tankers on order, four liquefied petroleum gas carriers and one liquefied natural gas carrier in a joint venture with Teekay.

Opportunities in LPG sector

The company is particularly keen on expanding its presence in the LPG carrier sector, where it sees strong demand in the sub-9,000 cu m category in which it largely operates. “The sector in which we are interested to grow is the gas sector,” says Mr Chayson.

In Indonesia, the government is encouraging its citizens to make greater use of LPG as the country looks to reduce its dependency on oil. The four LPG carriers BLT has on order are a pair of 5,000 cu m tankers and two 3,500 cu m vessels ideally suited to the domestic market.
The one area in which the company has no expansion plans is in the oil tanker sector. However, it remains reasonably optimistic about this oil transportation despite some pressure on rates now being seen.

“We think there is reason to believe oil tanker rates won’t crash,” says Mr Wong.
As vessel prices and the value of companies come down across the board, BLT will also be eyeing opportunities for acquisitions over the next year. “If a shipping company grows in a depressed market, it can grow at a cheaper rate,” says Mr Chayson.

Source: Lloyd's List

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