Annual Report 1999 (For year ended March 31,1999)

Business Review

 
Marine Transportation
Tanker and Energy Transportation Services

 

Operating revenues from our energy transportation services for the term
under review were down 1.9% from the previous year, to ¥35,745 million (US$297 million).
  
Tanker Services
Demand for crude oil tankers was brisk during the first half of the year, reflecting active cargo movement. In the second half, however, demand declined owing to the sluggishness of Japan's economy and production cuts by oil companies. Demand for oil product tankers was generally slack, reflecting a decline in demand for oil products. Under these circumstances, we did our best to secure profitable cargoes and maximize transportation efficiency. Our efforts, however, failed to maintain the same level performance of previous year in terms of our crude oil and product tankers.
    
New Double-hull VLCCs
Based on our tanker fleet enhancement program, we recently placed orders for two VLCCs.
       In August 1998, "K" Line placed an order with Kawasaki Heavy Industries, Ltd. for a double-hull VLCC to augment its VLCC fleet−the first in nine years. This ship will be more competitive than conventional VLCCs passing through the Straits, especially in terms of cargo intake, thanks to greater deadweight tonnage by several thousand metric tons. With 293,300-DWT, the ship reaches the Straits maximum draft limit of 20.50m, and with 269,300-DWT the typical draft limit of 19.20m for Japan-bound VLCCs.
       In April 1999, the Company placed an order with Imabari Shipbuilding Co., Ltd. for a second VLCC comparable to a typical 300,000mt DWT AG/WEST VLCC, like the first tanker.
    
Energy Transportation Services
Our 7-vessel coal carrier service fleet consists of two dedicated carriers operated on the basis of long-term cargo guarantees from power companies, three Corona Ace type carriers, exclusively operated for Japan's electric power companies, and two Panamax vessels on long-term charter.
       During the term, the Company increased shipments of steaming coal, which reached the 5-million-ton level for the first time. As for LNG transportation services, three newly-built vessels for Qatargas LNG Project joined the fleet during the term.
       All 17 LNG carriers co-owned including 4 ships under our management have been operated under long-term charters and contributed to safe and reliable LNG transportation and stable profit.
   
New LNG Carrier
Among three LNG carriers newly built during the term, the delivery S.S. Zekreet was somewhat significant in two aspects.
       First, she has become the fourth vessel under our management following S.S. Bishu Maru and S.S. Dewa Maru for Indonesian FOB trades and S.S. Al Rayyan for Qatargas.
       Second, the vessel is the first one built under Additional LNG Sales & Purchase Agreement concluded between Qatargas and 7 Japanese utility companies headed by Tohoku Electric Power Company, Inc.
       In starting the first year of its scheduled 23 years of service, S.S. Zekreet was celebrated by many top executives of LNG sellers, buyers and her shipbuilder as well as shipping companies on the occasions of her naming ceremony in Japan, her first loading in Ras Laffan, Qatar and her first discharge in Tohoku Electric's Niigata Terminal.