Standard Chartered sees US$5.5 billion ship loan growth on oil spend

Standard Chartered Plc (STAN), the British bank that earns most of its profit from Asia, expects to increase its $5.5 billion of loans to the shipping industry as demand for vessels recovers and oil-industry investments rise.

The London-based bank’s lending to ship companies jumped more than 30 percent last year and it expects another “very active year” in 2014, Nigel Anton, head of shipping finance at the lender, said in e-mailed comments yesterday.

“Dry bulk and tankers have certainly seen some recovery and we’ve seen exploration and production continue to grow globally,” he said.

New ship orders at Hyundai Heavy Industries, the world’s biggest shipyard, more than doubled from a year ago to $3.2 billion in March, according to data compiled by Bloomberg.

Saudi Arabia, the world’s biggest oil exporter, will spend $173 billion on energy projects through 2018, according to industry estimates, while Abu Dhabi has budgeted $10 billion to produce sour gas from its Shah field with Occidental Petroleum Corp. (OXY)

Global bank lending to the shipping industry collapsed to $38 billion in 2010 from a high of $94 billion in 2007 amid slowing trade and overcapacity, Standard Chartered said, citing data from Marine Money. Lending recovered to $56 billion in 2013 with private equity contributing to some funding, it said.

Loans to the so-called “traditional” segment such as tankers, dry bulk and container ships account for 50 percent of Standard Chartered’s loans, while the remainder is for offshore vessels serving the oil and gas industry such as drill ships and platform supply vessels, Anton said.

Significant demand will be driven by the oil and gas industry in the Middle East as national oil companies in these countries expand, he said.

Qatar Shipping, a unit of Qatar Navigation, obtained a $425 million, 12-year ship-financing facility in January from banks including Standard Chartered. Qatar Gas Transport Co., the operator of liquefied natural gas vessels, in July obtained $662.4 million in refinancing from Qatar Islamic Bank and Barwa Bank for its joint venture to expand its LNG fleet.

“The oil and gas sector is by far the most active sector in the Middle East, ” Anton said. “That’s the sector where we see our clients investing, driven by the stable and high oil price.”

WTI for June delivery was at $99.35 a barrel Tuesday in electronic trading on the New York Mercantile Exchange, down 13 cents, at 1:46 p.m. Singapore time.