Crude tanker rates strengthened significantly in 2014, to achieve the highest average level since 2007 which is due to the higher demand for tonnage with only a slight corresponding increase in supply. The upswing in rates reinvigorated the sluggish petroleum segment and gave it a new breath of fresh air. AET, our petroleum shipping arm, therefore capitalised on the improved rates by leveraging on the high premium lightering business through renewal of its term contracts at higher rates. AET continued to vary its portfolio by ven t ur i ng i n t o bus i nesses t ha t generated long-term recurring income. Their two Dynamic Positioning (DP) shuttle tankers chartered to Petrobras, namely Eagle Parana and Eagle Paraiba, operating since 2014 have been contributing a steady revenue to AET. In addition to the first Modular Capture Vessel (MCV), Eagle Texas in 2013, the second MCV, Eagle Louisiana was delivered in 2014. Both vessels had undergone Operational Readiness Testing (ORT) in 2014 and would service the contract with the Marine Well Containment Company (MWCC) in the US Gulf of Mexico, introducing a new stream of income to AET. 2015 will witness the delivery of two (2) new DP shuttle tankers to service the contracts for Statoil. They are fitted with Volatile Organic Compound (VOC) r e c ov e r y un i t s t o p r o t e c t t he environment from harmful emissions during loading and offloading of crude oil and in the Barents Sea. These DP shuttle tankers are contracted on a long-term charter, again, providing stability to AET’s income. Wh i l s t t h e i mp r o v e d ma r k e t e n v i r o nme n t h a s h e l p e d t h e performance of petroleum sector, AET has diligently continued with cost saving initiatives to further optimise the operating costs too. This includes savings in manning and dry-docking costs as well as cost avoidance due to zero accidents over the year as a result of conscientious observance to the highest Health, Safety, Security and Environment (HSSE) standards. The immediate term outlook for tanker demand remains very positive with modest fleet supply growth and strong cargo demand anticipated for 2015, which will push tonnage utilisation higher. Subsequently, this will translate into improvement in the charter rates for petroleum tankers, helping AET to further strengthen its performance for the year. With the tides changing for the better, plans for the future on fleet renewal could also take place to replace its aging vessels beyond 2015. p 61 MISC BERHAD - Annual Report 2014
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