Court To Decide Fate of Product Tanker Fleet

A dispute has erupted in New York courts over control of a fleet of petroleum product tankers, currently working for oil major Shell.

Both the owner of the ships, First International, and an investment fund, which lent most of the $257 million to build the fleet, have asked the court to decide which of them controls the future employment of the six tankers.

The tankers have worked for Shell since new on a seven year contract, at a rate described by brokers as "rather generous", but last year, as widely anticipated, Shell exercised its right to pull out from the deal.

First International, a chain of eight interlinked tanker-owning companies controlled by Norwegian tanker-mogul Tom Steckmest, was left looking for fresh employment.

Steckmest negotiated a fresh charter with Shell at a lower rate, but it is a deal that the investment trust bond-holders have refused to accept.

"They (the bond-holders) have not consented, and will not consent, to the acceptance of the Shell bids..." reads a document filed by the bond-holders at the Southern District Court of New York. "Payments to be made thereunder do not provide sufficient funds..."

Steckmest's First International has asked the same court to force the bond-holders to accept the deal, and to prevent them from "interfering in any way with the shipowner's performance."

Sources close to the bond-holders, who provided over 90 percent of the $257 million to build the fleet, said that if they managed to kick out the Shell deal proposed by Steckmest, they would try to sell the tankers to New York-listed Stelmar.

The deal with Stelmar, which is owned by Easyjet chief Stelios Haji-Ioannou, was originally lined up last summer, when it first became apparent that Shell was pulling out.