Hess charters 3 VLCCs to store Bakken crude

Market: Crude oil
07/05/20

US independent Hess has chartered three very large crude carriers (VLCCs) to store 6mn bl of its Bakken crude as US land-based storage nears capacity, chief executive John Hess said today.

One of the tankers is the Zodiac Maritime-owned Blue Nova that the company fixed for nine to eleven months at $100,000/d, and another is the Andriaki-owned Leonidas that the company chartered for a year at $83,000/d, according to the Argus floating storage bookings database.

Hess said it expects to sell the 6mn bl of crude oil in the fourth quarter and has hedged the contango in the Brent forward curve for these volumes. The Blue Nova and Leonidas are empty and en route to the US Gulf coast, per vessel tracking data.

At least one other US crude oil producer has chartered VLCC tonnage to store its excess oil. Occidental booked the Sea Ruby VLCC for nine to twelve months at $90,000/d and the Maxim VLCC for one year at $85,000/d, according to the Argus data. Though the Hess- and Occidental-booked VLCCs are not storing US crude yet, some are. The Shell-chartered Eliza and Maran Corona, which loaded Mars crude at the Louisiana Offshore Oil Port (LOOP), have been idling laden in the US Gulf coast since their respective loading dates of 7 April and 23 April.

Hess said the three VLCCs will store its May, June, and July production.

Traders have fixed a total of at least 73 VLCCs, 47 Suezmaxes, and 26 Aframaxes since March on short-term time charters that would allow them to be used as storage, according to the Argus database.

By Nicholas Watt

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