TOKYO -- Nippon Yusen intends to expand its shuttle tanker fleet by acquiring vessels from a Danish competitor, positioning the Japanese shipping giant to meet growing demand from the deep-sea drilling industry.
Knutsen NYK Offshore Tankers, a Norwegian member of the Nippon Yusen group, is in negotiations with J. Lauritzen to take over the major Danish shipping company's shuttle tanker business and three-vessel fleet in a deal likely to cost at least 20 billion yen ($193 million).
Shuttle tankers, which transport crude oil from offshore installations too far from land to be reached by pipeline, are growing in importance as more of the world's oil comes from deep-sea fields. About 70 such vessels are in operation worldwide.
Nippon Yusen, which entered the business in 2010, rakes in sales of around 30 billion yen from operating its 23 shuttle tankers. In addition to the ships from J. Lauritzen, the company will expand its fleet by building around five new vessels over the next one to two years. This would bring the total to more than 30 -- about the size of Canadian firm Teekay's fleet, the world's largest.
Oil companies continue to develop deep-sea operations in waters off such locations as western Africa and Brazil. They have also begun projects in the North Sea and Southeast Asia. By some estimates, deep-sea oil will in 2025 account for about 10% of global crude output. Nippon Yusen seeks more contracts with such deep-sea drillers as Brazil's state-run Petrobras.
Shuttle tankers' sophisticated positioning technology and systems enable safe loading of oil from offshore installations even under adverse weather conditions. At around 10-15 billion yen, the vessels cost more to build than conventional tankers.
Two of the three J. Lauritzen tankers are under long-term contract with Petrobras. By purchasing the entire business, Nippon Yusen will apparently be able to expand its fleet more cheaply than it could through just building new vessels.