# ‘Best time since the Vikings’



## non descript (Nov 18, 2005)

*‘Best time since the Vikings’, says John Fredriksen*

_Copyright The Financial Times Limited 2008
By Robert Wright, Transport Correspondent 
Published: June 1 2008 20:23_ 

"John Fredriksen leans back and lets a smile flit across his face as he is asked if, at the age of 64, he has considered retiring. 
Charter rates for dry bulk ships – of which he is a major owner – have just hit all-time records. Some of his oil tankers are currently making $100,000 a day clear profit and his oil rigs are being leased out for $600,000 a day or more.
“You cannot retire in a market like we experience today,” he says, in the sing-song accent of his native Norway. “This is the best time since the Vikings.”
The comment is typical of Mr Fredriksen, one of the chief beneficiaries of a shipping boom that has now lasted five years. An enthusiast for shipping, oil and equity markets of all kinds, he has been a particularly keen player of the spot market, where ships are chartered out on a voyage-by-voyage basis and rates fluctuate wildly. 
He regularly buys and sells ships and companies. He has proved possibly the most successful bulk shipping entrepreneur of all time, holding stakes of between 29 and 80 per cent in a group of 10 quoted companies, with a total market capitalisation of about $22bn. 
Estimates put his personal fortune at up to $11bn, leading to the inevitable comparison with Aristotle Onassis, the 20th century’s most famous shipping entrepreneur. However, while Onassis’s ships were held privately, Mr Fredriksen has spent the past decade founding, buying and investing in public companies. 
Including reinvested dividends, he says €1,000 invested in the July 1997 flotation of Frontline, his first listed company, would now be worth €23,180.
Even Mr Fredriksen has been bewildered by the strength of the current boom. More than five years ago, he reduced his exposure to shipping after downturns in 1998 and 2002 persuaded him the recovery would be short-lived.
“We decided to take some money off the table because we had been down two times,” Mr Fredriksen says. 
“Of course, what we should have done is get in more tankers and bulkers and go on the spot market.”
Mr Fredriksen started as a shipbroker in Oslo, where his father had been a shipyard welder. He bought his first ship – “a small dry cargo vessel, 1,400 tonnes” – in 1973. Then, while working as a trader in Singapore, in partnership with another Norwegian shipowner, he started regularly buying and selling vessels on his own account.
“I got the appetite for being a principal,” he says. “I didn’t become a real owner before late 1979, the early 1980s. Then I really started to buy heavily.”
During a market downturn in the 1980s, he was only able to find work for his tankers in the Gulf, during the 1980-88 Iran-Iraq war. 
He has been accused of profiting from being the “Ayatollahs’ lifeline” but says the only alternative would have been to lay up or scrap the ships.
“The times were extremely bad for all these years,” Mr Fredriksen says. 
“We didn’t make any money but we managed to keep the ships in the market.”
A new low came in 1986, when Norwegian authorities jailed him for four months while investigating allegations that his vessels’ masters had diverted crude oil from holds to use as fuel.
Mr Fredriksen was ignorant of any diversion, he insists, but agreed to a fine to end the “horror story”.
“I settled with them because the case was killing me,” he says.
He finally considered quitting the tanker market altogether in 1996 after the Sea Empress, one of his tankers, spilt 70,000 tonnes of oil into the sea off Wales.
“My hair turned white,” says Mr Fredriksen. “I started smoking again.”
But instead of quitting, he started to buy undervalued quoted tanker operators to get round the problems of raising bank finance in then-difficult market conditions. He merged several with Frontline, his first acquisition.
Frontline, in which Mr Fredriksen holds 35 per cent, now owns 80 ships, either existing or under construction. Golar LNG, in which he holds 47 per cent, is the world’s largest owner of liquefied natural gas carriers. 
Golden Ocean, in which he holds 40 per cent, owns 33 dry bulk carriers and operates several under charter from other owners. 
Demand for the oil exploration rigs of Seadrill, in which he owns 34 per cent, is such that the company, floated with a $200m market capitalisation in 2005, is now worth more than $10bn.
Tor Olav Trøim, Mr Fredriksen’s closest aide, says that the companies’ success stems from a willingness to let all shareholders share the returns. Other shipping companies, he says, are run more in the interests of their founders.
“John has been good at saying, ‘If I’m going to be public, I’m going to share with others; if I’m going to make money, everybody should’,” he says.
Yet Mr Fredriksen’s real achievement may have been to adapt his style. Many of the public companies’ vessels are on long-term charters, increasing the predictability of earnings but reducing super-profits in spot market spikes. 
He sounds wistful about the lost opportunity to play the market.
“If I had been private – probably on the tanker side – I would have had everything on the spot market,” Mr Fredriksen says. 
“It’s what we used to do. But we’ve been trying to protect the downside for the shareholders.”

Copyright The Financial Times Limited 2008


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## Frank P (Mar 13, 2005)

An interesting story Mark,
I liked the piece about taking the cargo "A new low came in 1986, when Norwegian authorities jailed him for four months while investigating allegations that his vessels’ masters had diverted crude oil from holds to use as fuel".

I had a similar situation when I was onboard the gas tanker M/T Mary Else Tholstrup, the galley stoves/ovens were all fired by gas and on the boatdeck we had 3 or 4 large gas bottles and we had to regularly take them down to the pump room on the main deck to be filled with gas from the cargo tanks, as far I know the company never got prosecuted for taking the cargo.

Cheers Frank(Thumb)


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## Dave Wilson (Feb 6, 2008)

Having worked for John Fredriksen and other Norwegians I would say they are the worlds greatest gamblers. Not the greatest on operational expertise but not short of 'chutspa'. Hilmar Reksten comes to mind.


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## trotterdotpom (Apr 29, 2005)

Curious to know what straight crude oil would do to a ship's engine.

John T.


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## Dave Wilson (Feb 6, 2008)

trotterdotpom said:


> Curious to know what straight crude oil would do to a ship's engine.
> 
> John T.


What type?


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## stein (Nov 4, 2006)

Dave Wilson: "Having worked for John Fredriksen and other Norwegians I would say they are the worlds greatest gamblers. Not the greatest on operational expertise but not short of 'chutspa'. Hilmar Reksten comes to mind."
Well, let's see, maybe that's the way this gambler will go as well. Regards, Stein


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## Peter Wearing (Aug 31, 2005)

Well, he should be able to ensure the ships crews are paid a decent wage !


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## trotterdotpom (Apr 29, 2005)

Dave Wilson said:


> What type?


In post No1 it states: "A new low came in 1986, when Norwegian authorities jailed him for four months while investigating allegations that his vessels’ masters had diverted crude oil from holds to use as fuel."

To my unmechanical mind, it just seems odd that an engine would run with sludge straight from the oil well.

John T.


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## tunatownshipwreck (Nov 9, 2005)

trotterdotpom said:


> In post No1 it states: "A new low came in 1986, when Norwegian authorities jailed him for four months while investigating allegations that his vessels’ masters had diverted crude oil from holds to use as fuel."
> 
> To my unmechanical mind, it just seems odd that an engine would run with sludge straight from the oil well.
> 
> John T.


That seems odd to me, too.


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## Orbitaman (Oct 5, 2007)

tunatownshipwreck said:


> That seems odd to me, too.


There are a fair number of crude oils that could be put straight into a marine diesel engine and even more that could be burned in a boiler. For example, Upper Zakkum crude is like gasoil in its natural state and could be burned without problem.

The FSO, FPSO and FSU at the West African terminal where I was piloting for a while had all been adapted to burn Zafiro and Topacio crude in the various boilers and process plants on board.

As Dave points out, it really depends on the quality of the crude oil, bearing in mind that crude oils aren't all thick, black, c**p.


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## tunatownshipwreck (Nov 9, 2005)

Orbitaman said:


> There are a fair number of crude oils that could be put straight into a marine diesel engine and even more that could be burned in a boiler. For example, Upper Zakkum crude is like gasoil in its natural state and could be burned without problem.
> 
> The FSO, FPSO and FSU at the West African terminal where I was piloting for a while had all been adapted to burn Zafiro and Topacio crude in the various boilers and process plants on board.
> 
> As Dave points out, it really depends on the quality of the crude oil, bearing in mind that crude oils aren't all thick, black, c**p.


Interesting, thank you.


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## trotterdotpom (Apr 29, 2005)

Thanks from me too, Orbitman - you live and learn.

John T.


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