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Tue 14 Aug 2007 05:59 PM

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Gulf Navigation receives $100m crude carrier

300,000 deadweight tonne Gulf Sheba delivered to Dubai-based shipping company.

Gulf Navigation, the Dubai-based shipping and marine services company, has announced the purchase and delivery of Gulf Sheba, a 300,000 deadweight tonne (dwt) very large crude carrier (VLCC).

The US$110 million addition to the Gulf Navigation fleet was handed over to Taiwanese firm TMT soon after delivery, on a three-year time charter at the rate of $52,000 per day.

The deal is expected to generate total revenues of about $56,900,000 for the company. If this deal is seen through, more than half the cost of the vessel will be recovered from this contract alone.

Many leading shipyards around the world are building at full capacity and long waiting lists for certain vessels have driven the value of newbuildings to unprecedented levels. Most ships delivered in the current market can be immediately sold for a 20-30% profit margin on the day of delivery.

"Apart from the revenue that accrues from the vessel, its value also keeps appreciating. It is presently valued at between $145 million and $150 million," said Engineer Abdullah Al Shuraim, chairman, Gulf Navigation.

The vessel, built at and delivered by NACKS Shipyard in China, was fully financed by DnB NOR, one of the world's pre-eminent ship finance and banking institutions. The total amount of financing was equivalent to 77% of purchase price.

"We are happy to have financed the purchase of Gulf Sheba, which will contribute substantially to the region's crude oil transport facilities. This mammoth supertanker is sure to generate impressive revenue for Gulf Navigation Holding," says Peter Knudchen, general manager of DnB NOR.

The term supertanker usually refers to the world's largest ships, those above 200,000 dwt displacement and capable of transporting two to three million barrels of oil. By way of comparison, the oil consumption of Spain and the UK combined is about 3.2 million barrels of oil a day.

The delivery comes shortly before the first anniversary of the company's listing on the Dubai Financial Market. Gulf Navigation Holding's IPO last year drew an enthusiastic investor response. The IPO closed in August 2006 and resulted in 3.5 times oversubscription, collecting AED 3.1 billion.

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