TCE was $1,142.2 mill, compared with $1,240.1 mill in 2015 and EBITDA was $706.5 mill against $780.1 mill in 2015.
The decline was due to a tanker spot market drop of more than 40% and timecharter market drop by up to 25%, SCF said.
Sergey Frank, SCF President and CEO, said: “Sovcomflot has delivered a solid set of results for 2016, despite market volatility in a year that has severely tested our industry. As growth in oil refinery throughput and up-front demand ran ahead of end-consumption underpinning tanker rates in 2015, so 2016 witnessed a material softening in demand that impacted negatively spot tanker freight rates, albeit with some respite in the final quarter.
“Sovcomflot strengthened its position as the World’s largest harsh environment tanker operator through the opportune acquisition of nine well-maintained tankers that became available as part of the PRISCO bankruptcy proceedings. Further, we built upon our leadership position in IBSVs with the acquisition two existing vessels and launched a new IBSV all committed to the Sakhalin II project. In a year when we celebrated our 10th anniversary as an independent owner and operator of gas carriers, we launched the first of a new class of pioneering Arctic LNG carriers, in which our technical experts have played a vital developmental role.
“Our overall performance owes much to having a diversified fleet, where our conventional tanker operations are balanced by our strategic focus on higher value added market sectors, such as offshore development services and gas transportation.
“Serving the transportation needs of large scale industrial projects, such as Sakhalin 1 and 2, Novy Port, Varandey, and Prirazlomnoye, provides consistent earnings visibility to underpin tanker market volatility and ensures continuous employment for a significant proportion of our fleet. Reflecting this, we ended the year with substantial future contracted revenues of $8.1 bill,” he said.
Evgeniy Ambrosov, SCF’s senior executive vice president and COO, commented: “In 2016, we successfully introduced three advanced design Arctic shuttle tankers to serve the Novy Port project. These vessels were developed specifically to address the navigational year-round demands of the Ob River Estuary. Their introduction serves to demonstrate our desire to work closely with charterers to resolve complex maritime challenges for our mutual benefit. Later in the year one of these three vessels, ‘Shturman Albanov’, was awarded the world’s first Polar Ship Certificate.
“With our commitment to operating in some of the world’s harshest environments, in January we were particularly pleased to see the launch of ‘Christophe de Margerie’, the world’s first icebreaking LNG carrier. Together with other developments during 2016, it has strengthened Sovcomflot’s reputation as an owner and operator of some of the most advanced vessels afloat,” he said.
Igor Tonkovidov, executive vice president and CTO, said: “In 2016, we took the important step of consolidating all our technical fleet management activities under a single governance structure and overarching brand – SCF Management Services. This successful reorganisation draws upon the significant technical skills and heritage of our legacy technical management operations, whilst providing improved organisational effectiveness and efficiency associated with a larger unified operation. The new structure also allows us to better respond to the increasing complexity of international regulation’s impact on maritime operations.
“SCF Group continues to invest significant resources into in-house training of its crews and to enhance the proficiency of the support teams ashore. The structured development of this specialised expertise and skill base is a source of competitive advantage for Sovcomflot. It was no surprise, therefore, that in 2016 insight from the Group’s technical experts was sought for and provided to a wide range of international maritime initiatives, from developing pioneering new classes of ships (eg for Yamal LNG), to formulating the IMO’s Polar Code and developing policies through the Arctic Council. Underpinning our work, however, is our philosophy that whatever the operational context, safety comes first.
“SCF Group actively facilitates the use of LNG fuels in the marine transportation of commodities, which will pave the way for a cleaner and more environmentally friendly shipping industry profile. This is very much in line with company’s environmental policy, especially in ecologically sensitive areas and matches well the aspirations of oil majors and the IMO’s Marine Environment Protection Committee (MEPC) in their drive for cleaner fuels,” he said.
Nikolay Kolesnikov, executive vice president and CFO, commented: “Last year, the Group was successful in raising an additional $1.26 bill in debt capital. This has enabled the Group’s debt repayment profile to be significantly improved, and has covered our capital expenditure requirements. The deals include $512 mill of long-term bank loans from Russian and international banks raised for purposes of funding the fleet renewal programme and for the refinancing of maturing debt.
“Additionally last summer, SCF Group returned to the international debt capital markets with a new $750 mill seven year Eurobond offering to finance a simultaneous tender offer for the Group’s outstanding Eurobonds, due in 2017. The new bond offering generated strong demand from investors and enabled very competitive pricing, with a coupon of 5.375%, which matched the coupon on the Group’s debut 2010 Eurobond issue, whereas the tender offer achieved one of the highest ever tender participation rates for borrowers from Russia of 83%,” he said.
In addition, SCF has recently ordered four Ice Class 1A LNG-powered Aframaxes at Hyundai Samho, plus options.
The order for the four Aframaxes is worth over $200 mill in total, Hyundai said.
They will be the world’s first to run on LNG and have been jointly designed by Sovcomflot and Shell. The ships will have their fuel supplied by Shell and will lift Russian crude oil.
The first ship is expected to be delivered to Sovcomflot in the third quarter of 2018, with the last in the first quarter of the following year.