January 11, 2005

Kvaerner Philly starts work on first products tanker

Kvaerner Philadelphia has started construction of its first products tanker. It has signed a $27 million deal with South Korea's Hyundai Mipo Dockyard to buy designs for building 12 product carriers alongside with related technology and materials.

But in a statement to the Oslo stock exchange yesterday, parent company Kvaerner ASA, denied stories that it will go to the market for extra money to fund the yard's tanker building.

"Kvaerner is not planning any initiative to aid the Kvaerner Philadelphia Shipyard, as the Norwegian newspaper Dagens Naeringsliv" reported, says the statement.. "Such aid is not required. Operations at the yard have developed positively in the past year, and increasing interest is being registered from potential customers in the U.S. shipping sector.".

Kvaerner Philadelphia has built and delivered two containerships and has a further two under construction, notes the statement. "The first two ships have been operating for six and 18 months, and feedback from the customer has been very positive. The vessels are faster and more economic to operate than other containerships in the U.S. market."

Kvaerner says it has taken initiatives that could result in contracts for a series of 10 new Jones Act product tankers to trade between U.S. ports.

"Forty two ships are currently present in this market," notes the statement. "Only half of these meet the requirements of the Oil Pollution Act, and the others must therefore be phased out. Only U.S. shipyards may build new ships to replace the old ones."

The yard is now in the process of starting the construction of its fifth ship, a product stanker. If the series of 10 products tankers materializes, work will be secured at the yard until 2010.

Independently, potential customers have shown interest in the two containerships which Kvaerner Philadelphia is constructing for delivery in 2005 and 2006.

Hyundai Mipo Dockyard announced its deal to supply technology to the yard last Friday. The yard is a division of Hyundai Heavy Industries and claims a 30 percent share of the world market for medium size product tankers. According to Korean press reports, the design selected by Kvaerner Philadelphia is a 46,000 dwt unit.

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