For sale: Oil Tanker asking $17M | Hacker News Reader

For sale: Oil Tanker asking $17M

horizonship.com

37 pointscaublestone28 comments

This bad boy holds about negative $-43,492,267 dollars worth oil.

  160,000 metric ton capacity
  times 2204 pounds per ton
  352,640,000 pound capacity
  300 pounds of oil per barrel
  1,175,467 barrels
  at -$37.00
  = profit

With the negative price someone will pay you to store it.

You forgot

    after filling, tow it out to sea and scuttle it
    = profit

You can bet some not so seaworthy tankers are being put to use again...

Rather the opposite. There is NO demand for oil right now. All the storage facilities are full.

I think the parent was suggesting that they would be used for storage.

Let's just hope the front doesn't fall off.

(the skit this is from, was specifically about an oil tanker. In case you've never seen it: https://www.youtube.com/watch?v=3m5qxZm_JqM)

I know a few people that have ~$400K USD leisure boats, and they really are not that large. ...and this is in Iowa, USA, mind you.

My point is...you get alot of boat for $17 Million USD.

...and if you'll accept it fully loaded, the price is $15M.

Act now and we'll throw in a Carnival Cruise ship for FREE! Call now!

...Seafarers, this is your moment!

> a Carnival Cruise ship

...filled with passengers, too!

(Permission to dock not included.)

The problem is that the ship is in Africa. If it were docked in the US and in working condition, it would already be used for storing oil. No, you won't be able to buy this boat and get it here on time to fill it up with negative priced crude oil.

> If it were docked in the US

Are low Oil prices only in the US? I would assume it would be a worldwide thing.

They are low elsewhere but not -$40 per barrel low.

Most would agree that oil prices are "low" everywhere, but there is currently a substantial gap between near-term contract prices for WTI (US) and Brent.

Aside from some differences in the specifications of the crude itself, the core difference between these contracts and the key driver for the massive price drop is the delivery location.

Brent contracts are the global benchmark, and delivery can take place in a variety of locations. WTI means West Texas Intermediate, and the delivery location for futures is in Cushing, Oklahoma:

"Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations..."[1]

Prices therefore reflect the demand and storage capacity/cost there, as well as the cost of sending it somewhere else.

The contract that had the massive drop into negative value was WTI for delivery in May. The owners of those contracts when trading terminates are responsible for taking delivery of that oil in the specified location at the agreed price in May. The negative price reflects the fact that noone wants that oil in that location at that time, even for free. At the low point, buyers were demanding >$35/barrel to take it.

For reference June WTI contracts are currently still $21.43.

[1] https://www.cmegroup.com/trading/energy/crude-oil/light-swee...

the USA has a very restrictive (and personally I think correctly so) maritime policy: You cannot just sail any boat there, nor can you buy goods, load or trade between ports in the USA without meeting labour and safety issues.

So yes...but.. no.

What do you mean? I assume you’re referring to the Jones Act https://en.m.wikipedia.org/wiki/Merchant_Marine_Act_of_1920

Why wouldn’t someone be able to sail this tanker to a US port, fill it with crude, then offload it at a non-US port? Or even re-flag it as US and trade between ports directly

Marine insurance. Minimum crewing standards. Tech compliance. Hull rating. Anti pollution equipment. CO tank purge. Bilge filters. Hull age.

do these sorts of vessels not come up for sale very often? Not sure what's so notable about this particular listing.

The current oil crisis and the lack of storage makes storage space really expensive.

Which means that somebody is hoping some naive investor will pay them to take a junker off their hands.

17M is . . . not much? What's the scrap value of this thing? It's gotta be mostly steel. 159,000 tons empty. After some bad math, never mind. Let's go with https://www.ajot.com/premium/ajot-shipbreaking-breaking-badl..., which cays south asian yards are offering 495/ton. That's 78.7 M. Which is a lot higher than 17M. Of course there's environmental and labor and by the time you actually break the thing apart and sell the steel, steel prices may be even lower than they are now. But, it still seems like a good deal no?

EDIT: so that article is dated April 23 2018 and says it goes down to 290/ton, still a profit at that price, but steel is probably a lot lower today. Anyone have better numbers? We could do a group buy and decide whether to scrap or turn it into a party deck (post-COVID parties only).

I can contribute like 10 bucks

You misunderstood the deadweight tonnage. There is nowhere near that much steel in the ship. Look at the light displacement number instead. Scrap value is a fraction of the asking price.

There are at least 150 listings for crude oil tankers at this site:

https://horizonship.com/ship-category/tankers-for-sale/crude...

What's notable about the selected ship?

Yeah, I don't get it. There are several more expensive and several less expensive than the ship in question: https://horizonship.com/ship-category/tankers-for-sale/crude...

previously discussed: https://www.reddit.com/r/wallstreetbets/comments/g4yqr4/only...

How many barrels of oil does it store?

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