Shipping News – February 8, 2017 – Platts

Venezuela tanker delays costly
Some owners charging upfront because of long waits at ports

FEATURE Houston—Tanker owners have
started pushing for “undisputed demurrage”
clauses into charter party agreements for ships
traveling to Venezuela because of long delays
for port calls, some exceeding 30 days,
knowledgeable industry sources said.
The undisputed demurrage is usually paid
on the account every seven to ten days once
the lay time is exceeded by the ship, rather than
the normal practice of processing demurrage
claims 90 days after discharge.
Demurrage is a charge payable to the owner
of a chartered ship with regard of failure to load
or discharge the ship within the time agreed in
the charter party or contract. Charter parties
usually allow 72 hours for Panamax, 84 hours for
Suezmax, and 96 hours for VLCCs each total for
loading and discharging cargo from the vessel.
The demurrage process determines which
parties or actions are responsible for ships
exceeding their lay time, the period the vessel
spends at berth, and the process is initiated
after the ship sails. In contrast, the
undisputed demurrage process requires
charterers to pay daily accrued demurrage
charges every seven to ten days, while the
ship awaits its cargo operations.
Dirty tanker demurrage rates currently
amount to $20,000/d for an Aframax loading in
Venezuela, the same as the day rate in the US or
elsewhere in the Caribbean. Suezmax demurrage
rates are $22,500/d, and VLCC demurrage rates
are $50,000/d, according to Phil Prapopulos a
ship broker Tankship International.
Clean demurrage rates in the Caribbean
are around $16,500-$18,500/d, with no
escalation noted for Venezuelan ports,
Tankship added. Undisputed demurrage is
charged at the same rate.
“It all depends where the final destination is,
for instance is the vessel to discharge in an ECA
area and what conditions the market is showing
at that particular time,” Prapopulos explained.
“Extensive delays are essentially like storage
in the mind of owners and treated as such. By
charging undisputed demurrage you are
protecting against storage as it tends to force
the charterer to get the ship free as soon as
possible and prevent issues such as hull fowling
in the warm Caribbean waters, which can impair
the economics of the vessel going forward.” Hull
fowling is considered a claimable issue.
Yet the undisputed demurrage clause
appears to mainly pertain to vessels
discharging at Venezuelan ports.
“That [undisputed demurrage] could be the
case for Panamaxes going to discharge cargo
into Venezuela where there are lengthy stays,”
a dirty shipowner said.
Clean shipowners suggested that the
special demurrage clause was included in some
charter parties for clean vessels discharging
product, including distillate fuel and naphtha, at
Venezuelan ports.
“In Venezuela, you have a nominated port
and berth and so there is no issue with the
vessel being used for storage, but you are
risking a financial hold and we try to protect
ourselves from being used as a bank by
including an undisputed demurrage clause in
the charter party,” a shipowner explained. “We
have been successful with some charterers.”
‘Extensive delays are essentially like
storage in the mind of owners and
treated as such’ — Phil Prapopulos
of Tankship International
Some traders, however, are reluctant to
agree to such clauses, arguing that it puts them
in a financial bind, as they are not paid prior to
the cargo’s transfer, an owner said.
Tanker delays not new
As economic and political strain continue
to dominate the landscape in Venezuela, with
reports of PDVSA’s financial nonperformance
and delays for tanker loading
and discharge operations appearing
regularly, opinions from shipping industry
sources remain a mixed bag, with some
voicing concerns and others contending that
it has been business as usual.
“This is common and not new — Venezuela
is prone to delays and ships prone to being on
financial hold,” a shipbroker said Monday.
“Owners are aware of the delays and know
what they are getting into when they have
orders for Venezuela.”
“They have a problem paying,” a market
source said when asked if any vessels he dealt
with were facing problems in the country.
The last year and a half the situation was
much worse, especially wait times, according
to an industry insider.
“Our clear impression is it is a financial
hold,” he said.
PDVSA did not immediately respond to a
request for comment on the situation.
According to cFlow, Platts trade-flow
software, the following ships have been
anchored offshore Venezuela for an
extended period: The Aframax tanker CV
Stealth has been stationary at Puerto la Cruz
since September. Offshore Aruba, the
Aframax ADS Oslo and the Panamax SCF
Pacific have been anchored since January
28 and January 29, respectively.
Offshore Amuay Bay, cFlow showed the
Medium Range tanker BLS Ruwais anchored
just outside the Paraguana refining center,
since January 8.
Further, the 40,000 DWT products tanker
NS Pride was shown as sitting off of Punta
Cardon since January 24, before it was moved
to be anchored outside of Amuay Bay on
Wednesday, while the Aframax Europride
appears anchored laden at Amuay Bay since
January 16.
According to an official Amuay terminal
document, both tankers are waiting for hull
cleaning and a third, the Panamax ICE Energy,
is 40% advanced with hull cleaning. cFlow
shows the tanker anchored at Amuay Bay since
January 17.
At the terminal of Curacao five tankers
have been reported stopped, but could not be
identified on cFlow.
Unavoidable export hub
Despite the financial strife, some market
participants argue that shipping out of Venezuela
is an inescapable cost of the business.
“It is hard to avoid basically the biggest
export region in the Americas,” a broker said. “I
think it just builds until people say ‘enough’ …
people do start to resist going there.”
Perhaps most of all, shipowners are afraid
of the potential impact to cash flows, another
source said.
“Others don’t want the cash flow risk,” he
said. “Same with [time charters], though more
have been avoiding time charters with PDVSA.”
A major draw of doing business for
shippers, however, besides the consistent
product outflow, is the possibility of achieving a
reward in the form of higher demurrage.
“Very sad situation in Venezuela,” the
source said. “[Though] I haven’t seen too
much to suggest a change in calculus from
owners from recent months, some owners
are happy to go and expect they will
eventually get paid — or arrest the cargo.” —
Alan Tomczak,Alex Ifkovits. Barbara Troner,
with Mery Mogollon in Caracas