Straits Tankers Pool expands to LR2s

Apr 21 2017

Straits Tankers LR Pool, jointly operated by Hafnia Management and MOL, is about to welcome two LR2s to add to the 47 LR1s already commercially managed.

The 2005-built MOL-controlled LR2 ‘Phoenix Dream’ is to join the pool following a drydocking and she will be joined by a sister vessel.

Hafnia Management’s Anders Engholm confirmed the move into the larger product tanker segment. He said that Straits Tankers would welcome more LR2s and Hafnia would welcome more MRs into its pools.

At present, Hafnia commercially operates three pools - Handysize Pool (23 vessels), MR Pool (33 tankers) and Straits Tankers with 47 LR1s, which are soon to be joined by the LR2s.

This will give Hafnia and its partners commercial control over 105 CPP tankers putting it into third place behind the Scorpio and Handytankers pools.

***Moore Stephens has warned shipowners and operators to check the financial, tax and jurisdictional implications carefully before participating in shipping pool arrangements.

Shipping partner, Michael Simms, said, “Shipping pools can be an attractive option, particularly in difficult markets and during periods of economic uncertainty. Interest in the concept is generally increasing, as a way to leverage money and maximise economies of scale. But while it might make good commercial sense for like-minded shipping interests to pool their resources to mutual advantage, traps may lie in wait for the unwary.”

Shipping pools can take a variety of forms, from incorporated entities or partnerships to joint-ventures and other forms of agreement. The jurisdiction in which the pool is established is of primary importance, since it will have fundamental tax and reporting implications.

Simms added, “Historically, tax-friendly offshore jurisdictions have been a natural fit for many shipping pools, but the recent increased focus on general tax transparency and on proper governance and reporting procedures may serve as a catalyst for change in this regard.

“The existing structure of shipping pools established in offshore jurisdictions is unlikely to change, but it would be reasonable to expect the members of any new pool arrangements to at least consider the option of establishing the pool in a more traditional jurisdiction.

“A move towards greater corporatisation of shipping pools, which may grant access to trade finance solutions, might be a viable option for many owners, provided the terms of entry and exit are acceptable,” he said.

Moore Stephens has advised on a number of pool agreements during the past 12 months, the company claimed. There are a range of tax issues to consider when setting up, amending or joining a pool. In the case of a new pool, it will be necessary to consider the tax position of each entity within the pool structure.

Other important considerations include the terms of the pool agreement itself, the status of the pool under competition law, the effectiveness of the marketing strategy and the way pool accounts are prepared and submitted.

Simms concluded, “Shipping pools have clear advantages for some. But it is a challenging market, and one subject to increasingly stringent evaluation. It would be a mistake to just dive in without careful consideration.”

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