As part of its commitment to becoming the first-choice provider in the oil transportation industry, Tsakos Energy Navigation (TEN) continues building up a state-of-the-art tanker fleet.

As the head of TEN, Nik Tsakos has focused on creating an industrial shipping company that produces the results investors are looking for and the modern, high-quality ships that charterers demand.

Including the tanker Decathlon, TEN currently operates a fleet of 28 vessels. The fleet comprises 2,981,252 dwt and has an average age of 6.8 years, compared to the average for the world's tanker tonnage of 12.8 years. TEN is scheduled to take delivery of a further 11 newbuildings over the next three years. The resulting fleet of 39 vessels with 4,147,052 dwt will include 27 newbuildings (1997-2007) with 3,148,113 dwt.

TEN has made significant strides into the global oil transportation industry since its start up in 1993. Unlike most companies undergoing a period of rapid expansion, TEN has been able to cultivate a personal approach to its customers. This strategy is opening new doors and further increasing the market potential for the company and its investors.

"Consistency has been the name of the game for the company during a highly successful first decade. One of our original goals in creating the new tanker entity was to achieve consistent results for investors from a high quality operation that would provide customers with a reliable service, and this we have achieved," says TEN president and CEO Nik Tsakos.

TEN has achieved remarkable overall stability in revenue from its vessels, allowing for the steady increase coming from the steady expansion of the fleet. An emphasis on medium to long-term charters at fixed rates has helped it to outshine most of its competitors.

As a publicly listed company, TEN has a strong desire to continually improve its operational and financial performance. Explains Tsakos, "Our ability to provide quality service and tonnage to our growing universe of clients and our competitive cost structure are the foundation upon which we are building increasing value for our shareholders."

Organic growth
Business is going well for TEN. The Athens-based company initiated its aggressive newbuilding programme in 1997, and this has continually provided strong organic growth. This momentum continued during 2003 when the company added six newbuildings, comprised of two Aframaxes and four Panamaxes. To date, the programme has added 16 vessels to the fleet. Tsakos comments, "Our newbuildings scheduled for delivery from 2004 through 2007 total 11 vessels, with three additional vessels on option. Three of the future vessels are conventional designs, and eight are ice-classed, as are two of the three options."

Adds Tsakos, "The newbuilding programme has given us the ability to design our fleet to meet the evolving needs of our clients and to benefit from the economies of sister-ship operations. The most recent newbuilding orders have concentrated on ice-classed vessels for delivery beginning in 2005, reflecting TEN's view that petroleum transportation needs from ice-bound ports in Russia, Canada and Alaska will grow significantly in this time frame."

Tanker prospects
Tsakos and his advisors believe that worldwide consumption of oil products will increase by over 1.8 per cent in 2004, spurred on by the economic recovery in the US and, to a lesser extent, in Japan and Europe. The expected increasing demand in China and India will also factor heavily into worldwide consumption and demand. The forecast rate of growth would be among the highest for several years. Oil demand has been further supported by the need to rebuild inventories after an unusually cold winter in much of the northern hemisphere. Further, Tsakos believes the demand side of the equation is well supported by prospects for continued growth in the US, Japan and possibly Europe. Likewise, the dynamics at work in India, China and the Pacific Rim bode well for transportation requirements for petroleum and its products in the coming months and years.

"The supply side should experience modest growth in overall tanker capacity over the next several years. Limits on shipyard capacity and regulatory encouragement for early retirement of tonnage, supported by unusually high scrap values, are reasons for optimism about tanker industry prospects," says Tsakos and adds, "Growing charterer selectivity that has, and will, promote solid demand for well managed, modern tonnage, further supports these fundamentals. TEN has been encouraged by the level of charter rates in the fourth quarter of 2003 and thus far in 2004. It is reasonable to expect that the usual seasonal decline in the spring, summer and autumn could have less impact than normal in 2004."

Spot market
TEN benefited from the strong spot market for Suezmaxes and Aframaxes enjoyed during most of 2003, and the timing of its fleet additions has been most fortunate. The further fleet expansion, commencing in June this year, should also prove accretive.

"TEN expects future cost pressures from industry-wide increases in insurance rates, a soft dollar, and higher finance costs; nevertheless, firmer charter rates, benefits of increasing scale, and effective cost containment should provide the basis for continued growth in business," concludes Tsakos.