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Investor FAQ Home > INVESTOR RELATION > Investor FAQ

FREQUENTLY ASKED QUESTIONS

 

  1. What is your particular line of business?  

We are involved in liquid bulk cargo transportation in which we have chemical, oil and gas tankers as well as FPSO to service our clients. We are the third world largest chemical tanker operator in the world with young, modern and sophisticated stainless steel tankers. 

 

The type of cargoes carried by the Company's fleet includes:

    • Crude oil and petroleum products;  
    • Lubricating Oil (Base Oil and additives);  
    • Liquid Chemical (Organic and Non-Organic);  
    • Liquified Gas (LPG, Propylene, Propane, and other pressurized gas);
    • Vegetable Oil and Animal Fats.   

The company offers a range of maritime transportation and related services.

 

  1. What is your operational area?  

Our Company divides the operation of its fleet into 4 geographical zones for its chemical tankers, one zone for its oil tankers, and one zone for its gas tankers. In the chemical tanker segment, Section 1 includes the area within Southeast Asia between ports in Indonesia, Thailand, Malaysia and Singapore. Section 2 includes the area from Southeast Asia to North Asia and within North Asia, as well as the backhaul from North Asia, with the primary destination ports located in China, Korea, Taiwan and Japan.

 

Section 3 includes area from Southeast Asia Westwood, to India, the Middle East and Europe as well as trade within these areas and backhaul from these areas. The primary destination ports for Section 3 are located in India, Iran, Saudi Arabia, Kuwait, Qatar, Egypt, Italy, Spain, the Netherlands and England. Section 4 covers trade between North and South America, from America to Europe through the Atlantic Ocean and from America to Asia through the Pacific Ocean.

 

The Company deploys its vessels throughout its area of operations on the basis of market conditions and customer requirements. The Company attempts to anticipate where the greatest demand for transportation services will be, while at the same time maintaining a broadly diversified position by spreading its vessels across a range of different geographic areas.

 

  1. Please segregate your contracts based on your revenue mix (i.e. chemical, oil and gas) and the length of the contracts.  

As of May 2008, our chemical tanker business is the biggest contributor of our revenue with 70% contribution of the total revenue while oil is about 25% and gas is 5%.

 

Chemical tanker businesses are basically covered with Contract of Affreightment (COA) due to its nature of volume based cargo which is around 50% while the rest is spot charters. The length of the COA contracts varies from 1 to 10 years period.

 

Oil tanker businesses are basically arranged on a time charter basis per day in which 50% of our businesses are covered on time charter and the rest are on spot charters. The length of the time charter ranges from 1 to 3 year period.

 

Gas businesses are also managed via a time charter contracts which comprise of 75% time charters and 25% on spot charters. The length of the charters is also between 1 to 3 years.

 

Please note that our contract arrangement will from time to time change between the spot and the contracts in line with our expectation of the charter rates. If we expect that the charter rates for certain sector has achieved peak rates, we will arrange for time charter or COA (Contract of Affreightment) contracts instead of spot charters and vice versa, if we foresee that the rate will be picking up, then we would reduce the contract portion and rely more on the spot contracts.

 

However, at any point in time, we will always maintain at least 50% of our revenue from contracts to reduce our risks and achieve consistent cash flow growth.

 

  1. Please explain your client base.  

The Company has established long term relationships with the majority of its customers, who include the major international oil and chemical companies such as Pertamina, Celanese Corporation, Exxon Mobil Corporation, Shell, BASF, SABIC and Dow Chemical.

 

Our client base is very diverse and we do not have a single customer that account for more than 10% of our revenue, so we do not have concentration of customer base and therefore this will significantly reduce our risks. The biggest customer we have so far is still Pertamina which revenue account for only about  7 - 8 % of our total revenue. The next is Exxon Mobil which accounts for about  5 - 6 % and the rest such as Shell, BASF, Dow, Celanese, Sabic, and others account for less than 5%. 

 

 

  1. What is the size of your fleet at the moment?  

As of 22 May 2008, we have 82 tankers with 1.97 million DWT and average age of vessel of around 9.2 years.

 

Out of the 82 tankers we have, 57 vessels of them are chemical tankers with capacity of 900,596 DWT, 15 vessels are oil tankers with total capacity of 966,000 DWT and 8 gas tankers with total capacity of 345,000 CBM and 1 FPSO with production capacity of 15,000 bpd.

 

  1. How many of your vessels are currently under construction?  

As of 22 May 2008, we have 23 vessels under construction. For detail, please check on our fleet data in the Business Information section.  

 

  1. How do you see the competition in the area that you are operating on and who are your competitors?  

The Company caters primarily to the liquid cargo segment in the shipping industry. The Company's tankers are utilized for both domestic and foreign trade. Competition in this segment of the industry can be extremely intense. Different operators compete on the basis of the availability of vessels in a particular region or for a particular route and price and on the basis of their proven reliability and reputation in the industry.

 

Within the domestic segment, the number of operators in the field offering shipping services within Indonesia is considerably fewer than in the international arena. In terms of transportation services within the Indonesian waters, the Company's competitors are PT Samudera Indonesia Tbk and PT Humpuss Intermoda Transportasi Tbk.

 

In terms of transportation services in international arena, the Company has a number of different competitors, primarily shipping groups based in Greece and elsewhere in Europe.

 

In the area of the transportation of oil, the Company's competitors are Ocean Tankers, Dynacom, Tanker Pacific, and Teekay Shipping. In the area of transportation of liquid chemicals, the Company's competitors are Iino Kaiun Kaisha, Odfjell ASA, Stolt Nielsen Group, JO Tankers A/S, Koyo Kaiun Co Ltd, Tokyo Marine Co Ltd and Woolim Shipping. In the area of transportation of gas, the Company's current major competitors are Unigas Khosan, Petredec and Stealth Gas.

 

  1. Your vessels are quite young. What is the competitive advantage of your vessels compare to older vessels.  

Well, if we are comparing between our fleet of average 9 years with those with average 10 or 12 years, there will not be much significant difference. However if you compare the age of our vessels with that the fleet of  5 - 10 years older than ours, then in relative terms we will have several advantages such as:

 

1.  From customer service point of view, some customers do not want to deal with old vessels for several reasons such as security, risk of contamination, risk of break down and therefore late delivery etc.

2.  Some oil majors due to their stringent quality standard will prefer younger vessels merely to ensure higher standard is achieved.

3.  From operational point of view, younger vessels means lower maintenance costs, repair costs, insurance costs and other related costs;

4.  Lower down time period so higher utilization rate for the fleet.

 

  1. There is a trend of more and more difficult regulation coming out for shipping industry which will have the ship owners extra compliance issue to deal with and more difficult to operate.  

Actually, more difficult regulation for shipping industry is good for Ship Owners because:

 

a.            It underscore the strengths of ship owners with quality fleets & operations and to further improves its ability to serve clients in a better way with higher safety, quality, health and environmental standards;

 

b.            It also serves as a barrier to entry for new comers in the industry as well as making it more difficult for the existing competitors to enter the market. This applies to our position against our competitors in relation with our track record with the oil majors. Most oil majors require certain standards that cannot be fulfilled by other ship owners.  

 

 

  1. What is current shareholding structure?  

As of 19 May 2008, the shareholding structure of our Company is as follows:

 

PT Tunggaladhi Baskara                  55.14%

Public (Indonesia)                               27.61%

Public (Spore)                                      8.06%

Treasury Shares                                  8.99%

Director                                                 0.20%

 

  1. What is your current composition of Board of Directors and their relative experience in the shipping industry?  

Our current Board of Commissioners is as follows: 

Name

Designation

Years of Experience in Shipping Industry

Hadi Surya

President Commissioner

33 years

Harijadi Soedarjo

Commissioner

22 years

Alan Darmawan

Independent Commissioner

 

Jaka Prasetya

Independent Commissioner

 

 

Our current Board of Directors is as follows: 

Name

Designation

Years of Experience in Shipping Industry

Widihardja Tanudjaja

President Director

29 years

Henrianto Kuswendi

Director

22 years

Siana Anggraeni Surya

Director

13 years

Michael Murni Gunawan

Director

9 years

Wong Kevin

Director

12 years

We have high quality and committed management with cumulative experience of almost 135 years in the shipping industry, a significant portion of which has been spent with the Company.
 

 

  1. What are the real benefits of Cabotage law to be implemented in Indonesia to your Company?  

For cabotage, the impact is very large because we are talking about the demand across Indonesia archipelago. Indonesia has 230 million in population, consisting of 18,620 islands in high tide water, which is 70% is seas and 30% is land and 8 million km length of coastal line.

 

It is rather difficult to get firm numbers of the total impact of cabotage regulation to the shipping industry because the data on the demand of the tanker is not so easy to get but as a gauge and to get the idea of the market, lets take the demand from Pertamina (state owned oil company) being the biggest user of tankers. They themselves offer big potential additional for the business. At any point in time they charter in around 110 ships and they spend about USD400 million or so a year.

 

But the thing is though, this cabotage law has been announced and started off essentially since late 2005 and so far there hasn't been any much impact to our business as yet primarily because we have been operating so much in international waters and another thing also is that most of the vessels with Pertamina are under long term charters therefore during the life of the charters they can not break the charter.

 

However, during these periods from 2008 - 2010 there will be quite a number of Pertamina tankers that come off charters and certainly these offers a good opportunities big and small tankers. But we are not interested in the small tankers, so the market we are aiming at is the larger tankers. Among the bigger tankers that will come off charters which is around 30 ships there is a potential benefit from 2008 - 2010, they present a total potential USD240 million revenue for Indonesian flags shipping companies.

 

To operate Indonesian flagged ships is not so easy because one of the main conditions to sail Indonesian flagged ships you need to have Indonesian crews on board of the ships and if you are operating an IMO-classed ships you would have an additional problem which is to get Indonesian crews with certain standards. There are not so many Indonesian crews in the market available to operate tankers and another additional difficulty is that from crew perspective it is more difficult to operate a tanker as compared to containers or dry vessels.

 

On another order of magnitude of difficulties is that as Indonesia is also deregulating its oil industry more and more of the oil majors are involved and that means that more and more ships have to satisfy the oil major standards and requirements and we believe that at least currently most Indonesian tanker players will need to play catch up to those standards while our company has been operating within their standards for a long time because we have been dealing with them for a long time. This further strengthens our market positioning and offers a bigger chance for us to get the contracts from Pertamina.

 

This is going to be interesting for the months to come especially recently the government seems to take a somewhat firmer stance on the implementation of the law.

 

So overall we see a lot of benefit for us from the implementation of cabotage law but then again this is going to happen only for another 1 to 3 years ahead.

 

(c) 2007 PT Berlian Laju Tanker Tbk. All Rights Reserved.