MANAGEMENT REPORT FOR 2007
The Year 2007
was a landmark in the history of Q Ship in more than one respect. Q Ship earned
a record profit of QR. 621.366 million an increase of about 35.5% despite a
fall in the freight markets in 2007 as compared to 2006. This was achieved
through innovative strategies of selling two ships at peak prices, time
chartering out the fleet at very attractive rates for a longer period of time
and a tight control on cost despite a weakening dollar and a high inflation
rate. At an operating level the company's fleet was operated efficiently
without any major hitch and met with all Oil majors’ requirements. Qatar
Engineering & Construction Company (Qcon), a wholly owned subsidiary, which
was incurring losses even before its acquisition by Q Ship in 2004, earned a
profit for the first time in 2007. The highlights of the year are given in the
subsequent paragraphs.
Operations
During
the year, Q Ship owned and operated a deep-sea fleet comprising 7 vessels with
an aggregated tonnage of 427,622 Dwt. Q Ship vessels traded worldwide and
called at terminals operated by most of the Oil majors and leading
international charterers. The fleet of seven vessels excluded two vessels sold
in January and February 2007. Q Ship continues to own one of the youngest
fleets in the world with an average age of about three years.
Year 2007 was another excellent year for
shipping operations. Q Ship operated its clean product handymax tankers, the
Jinan and Dukhan, on the spot market at very high rates till the middle of the
year to take advantage of the high freight levels and thereafter these vessels
entered into time charters for a period of three years each. This was timed
well as the spot markets thereafter witnessed a significant downturn. The two
gas tankers continued on their time charter, with the Almarona on a long term
time charter to QAFCO. The Almajedah completed a two years charter in January 2008 and immediately commenced a
time charter with another international operator at an attractive rate. All the
three aframax tankers continued in a blend of short and long terms charters
ranging from two to five years and thus Q Ship continued to benefit from a high
fixed rates.
This strategy enabled Q Ship
to generate excellent profits during the year, while at the same time, through
careful monitoring of the markets, ensuring that the fleet was also well
covered with long term employment. Given that asset values reached record
levels, in a strategic move to harvest high assets values at their peak, Q Ship
sold the aframax tanker RUWAIS on 04th January 2007 and the product
tanker ALNOMAN in February 2007, which generated excellent profits for the
Company.
OPERATIONS
The
table below gives the voyages performed by vessels fully owned by Q Ship during
the year 2007. Q Ship owned vessels performed a total of 108 voyages and
transported about 4 million metric tonnes of cargo.
TABLE - I
|
NAME OF VESSEL |
TYPE OF VESSEL |
DWT (MT) |
VOYAGES |
TOTAL CARGO CARRIED (MT) |
|
ALNOMAN (upto 08.02.2007) |
Product/chemical tanker |
37,256 |
1 |
32,799.86 |
|
JINAN |
Product/chemical tanker |
37,285 |
19 |
592,062.83 |
|
DUKHAN |
Product/chemical tanker |
37,283 |
15 |
461,951.29 |
|
RUWAIS (upto 04.01.07) |
Crude Oil/DPP carrier |
106,054 |
- |
- |
|
UMLMA |
Crude Oil/DPP carrier |
106,054 |
15 |
1,155,009.48 |
|
MESAIEED |
Crude/ Clean
and Dirty Products |
106,054 |
11 |
812,828.12 |
|
KHAWR ALADID |
Crude / Clean and Dirty Products |
106,054 |
7 |
545,554.71 |
|
ALMARONA |
LPG carrier |
17,446 |
24 |
319,608.15 |
|
ALMAJEDAH |
LPG carrier |
17,446 |
16 |
242,853.73 |
|
|
Total |
570,932 |
108 |
4,162,668.17 |
The
technical performance of the fleet continued to be excellent, with no
significant down time during the year. Scheduled dry dockings were carried out
for the vessels ALMARONA, ALMAJEDAH and JINAN in an optimum manner. In addition
to the United States Coast Guard acceptance, all the vessels have had vetting
inspections successfully done by most of the Oil majors and carried cargoes for
most of them. The vessels have passed all port state control inspections
without detentions. In addition, the Q Ship offices were successfully vetted by
a leading Oil major company prior to one of our vessels being taken on time
charter by them.
As
in previous years, there was absolutely no pollution incident of any nature
involving the Q Ship fleet and while we are proud of this achievement we
continue to remain ever vigilant. The Q Ship ocean going fleet continued to
have no claims affecting the
In June 2005, Q Ship had contracted for
the building of four 82,200 Cubic metres Very Large Gas Carriers (VLGCs) with
Hyundai Shipyard for delivery in the years 2008-2009. The process of setting up
of a 50:50 joint venture company between Nakilat and Q Ship to own and operate
these four vessels is under progress. The Q Ship team has been supervising the
construction of these vessels and, as per indications available, these vessels
are likely to be delivered as per their contractual delivery dates.
OFFSHORE SUPPORT SERVICES
The
company continued to successfully execute the Qatar Petroleum (QP) contract of
providing Harbour Towage, Pilot Boat services and Crew at Mesaieed port with
four fully owned Tugs and two Pilot boats. Under another long-term contract
with QP at Halul Island Terminal, we continue to operate successfully a fully
owned tug “Wassit”, which is deployed as a tanker berthing
assistance tug. In order to cope with a
request from Qatar Petroleum to meet the ever growing vessel movements at the
port of Mesaieed, Q Ship chartered in two tugs and a Pilot boat and deployed
them under a variation to the existing QP contract. Q Ship also received their
Pilot Boat “Shaqra”, which had been ordered by Q Ship from the
Damen Shipyard in the Netherlands and this boat entered into QP service in
March 2007.
SAFETY & QUALITY
During the year Q Ship has
maintained its commitment towards improving the safety culture in the
organization. As a result it achieved continual improvement in it’s
Quality, Safety, Health & Environment objectives. Q Ship also renewed
it’s Certification for Quality Management (ISO9001:2000), Environment
Management (ISO14001:2004) and Occupational Health & Safety Management
(OSHAS18001:2007) after successful completion of an Audit at the end of 2007.
JOINTLY OWNED
ACTIVITIES
Q Ship has investments in various types
of joint ventures involving both shipping as well as non shipping activities.
I. LNG Shipping
Details of Q Ship's participation in LNG
shipping are highlighted in table II below:
TABLE - II
|
No |
Name of the Joint Venture Company |
Q Ship’s share |
Charterer |
Vessel Name |
|
1 |
India LNG Transport Co. (No.1) Ltd. |
15% |
Petronet, India. |
Disha |
|
2 |
Camartina Shipping Inc. |
29.4% |
RasGas II |
Fuwairit |
|
3 |
K/S Membrane I |
25% |
RasGas II |
Maersk RasLaffan |
|
4 |
Qatar LNG Transport Ltd. |
20% |
QatarGas |
Dukhan |
|
5 |
India LNG Transport Co. (No.2) Ltd. |
15% |
Petronet, India |
Raahi |
|
6 |
Peninsula LNG Transport No. 1 Ltd. |
29.4% |
RasGas II |
Lusail |
|
7 |
Peninsula LNG Transport No. 2 Ltd. |
29.4% |
RasGas II |
Al Thakira |
|
8 |
Peninsula LNG Transport No. 3 Ltd. |
29.4% |
RasGas II |
Al Deebel |
|
9 |
K/S Membrane II |
25% |
RasGas II |
Maersk Qatar |
As on 31st Dec 2007, Q
Ship’s investment in the LNG ships was about QR. 459 million including
shareholders loan.
II. Qatar Gas Transport Company
(NAKILAT)
Q Ship has invested a total of QR.844
million in Nakilat representing 15% of the share capital of this company, which
was formed as an integral part of the LNG supply chain for the State of Qatar.
During the year under review Q Ship paid a sum of about QR. 422 million toward
its contribution to the share of capital of the Company.
III. LPG Transportation: Gulf LPG
Transport Company WLL (GLTC)
Q Ship has entered into an agreement
with Nakilat to set up a 50:50 Joint Venture company with an equity capital of
QR. 400 million, to be named Gulf LPG Transport Company WLL primarily for
owning and operating LPG Carriers. This JV will, interalia, through special
purpose companies own four Very Large Gas Carriers (VLGCs) which are presently
under construction at Hyundai Shipyard, South Korea and are scheduled to be
delivered in 2008-09.The process of setting up of the JV
Company is on and is expected to be completed in the year 2008.
IV. Crude Oil Shipping: QM Tanker LLC
QM Tanker LLC is a 50:50 joint venture
with Exxon Mobil. The JV owned two 1999 built Aframax crude oil tankers MT Ras
Laffan and MT Valiant. However during 2008 both these tankers were sold at
attractive prices. The JV Company is expected to be liquidated in due course.
V. Offshore Services: Halul Offshore
Services Company WLL (HOSC)
Q Ship has 50% ownership in HOSC which
owns and operates a fleet of vessels for offshore support services. During the
year 2007 this Company owned a fleet of 26 offshore vessels with 6 more new
builds expected to be delivered during 2008. In addition it also operated 13 in
chartered offshore vessels. The boom in the oil and gas industry coupled with
the increase in associated drilling activities has given a fillip to revenue
and consequently the profits of this company which increased substantially
during the year.
VI. Qatar Engineering and Construction
Company WLL (Qcon)
Qcon made a profit of QR. 52.76 million
on a Revenue of QR. 384.86 million after an interval of six years. This
Company, which was acquired by Q Ship in 2004, was incurring a loss since 2001.
All the three major divisions of the company namely Major projects, Maintenance
and Marine Fabrication Yard contributed to the profits of the Company with a
significant chunk of the profits coming from the Maintenance division. During
the year the company added QR. 1.1 billion to its order book which included a
contract award of US $ 212 million by Dolphin Energy for Low Common Sulphur
Condensate Storage & Export Facilities – Tank Farm expansion project.
VII. Chemical Transportation: QIM
Transport Inc (QIMT)
In QIMT, Q Ship has a 1/3rd
participation along with Mitsui & Co and Iino Kaiun Kaisha Ltd of Japan.
The JV was formed to jointly pursue chemical transportation business of mutual
interest.
VIII. Qatar Quarries and Building
Materials Company WLL (QQBMCO)
Q Ship is a 25% stake holder in Qatar
Quarries and Building Materials Company which was established in May 2004 with
an authorized capital of QR.120 million and it’s present paid up capital
stands at QR.60 million. QQBMCO’s main objective is to stabilize the
supply of Aggregates for construction activities in Qatar.
During 2007, QQBMCO earned a record
profit of QR.72.26 million which added QR.18.06 million to Q Ship’s
profit during 2007.
SHAREHOLDERS’
STATISTICS
At the end of 2007, there were 5236 shareholders. Individuals
held about 40% of the shares whereas Qatar Petroleum (QP) and Qatar Navigation
(QN) held about 18% and 15% respectively. The remaining 27% shares were held by
other companies and establishments.
The highest and lowest prices at which
the shares were traded during the year were about QR 75 and QR 52.10
respectively.
Market capitalization of the company was
QR 6.58 billion or US$ 1.81 billion as on 31.12.2007.
FINANCIAL RESULTS
The net profit of the company during 2007 stood at QR.621.36 million as
against QR.458.58 million in 2006, representing a rise of about 35.5%. The net
worth of the company as on 31st December, 2007 stood at QR.4.71
billion (US$.1.29 billion) as compared to QR.3.42 billion (US$.0.94 billion) as
on 31st December, 2006 representing a rise of about 37%.
K.K. Kothari
Chief Executive Officer