Operator: Thank you. And now, we’re going to take our next question. And our next question comes from the line of Omar Nokta from Jefferies.
Omar Nokta: Lars, I have a couple of questions. Just as a follow-up, I think, to Jon’s questions at the beginning and your comments maybe first just on the order book and your thoughts about the — your disinterest, I guess, in ordering VLCCs given the time frame and the cost. Is that commentary just based on VLCCs, or does that also hold for the Suezmaxes and LR2s?
Lars Barstad: I think kind for the VLCCs, that’s more us because we’re quite content on the Suezmax size we carry. And we also have very modern Suezmax fleet, predominantly very modern Suezmax fleet. So for us, it’s been looking into the VLCC space. And I think also, we’ve communicated quite clearly that we believe that VLCCs over time, basically due to the benefit of the size kind of offers our investors more bang for the buck. But I think you could say it’s the same for the Suezmaxes as well. The challenge we have actually in this market, if you look further into the shipyard industry is that one thing is that owners are not really interested in ordering them, but yards are not really interested in taking the orders either.
As long as there are higher margin kind of ships to build, they will prefer that. So, it’s kind of a little bit twofold. I also have to look at the overall yard capacity in the world and it’s probably anybody’s guess that it’s somewhere between 150 and 200 shipyards in the world servicing kind of commercial segments that we care about. And you have, I think, currently more than 100 yards building dry bulk vessels; we have more than 80 yards building container vessels. We have 13 yards, I believe, that currently have tanker in the order book. So it’s quite peculiar. And also, you have — the other thing is that if you take off those 13 yards that build a tanker, there’s actually very few that can build the VLCC. So, it’s a structural kind of issue we have at hand here as long as the Koreans are completely absent from the VLCC building side.
Omar Nokta: Thanks, Lars. That’s interesting. Something has to give at some point. Maybe just one follow-up and also kind of what Jon was talking about and maybe the inverse of the question of what could go wrong. Maybe what could go right in terms of this market over the next few months? Clearly, you laid it out in your opening remarks. But just in general, we’ve seen, as you mentioned, the refining margins have gone up. We’ve seen LR2s push higher. And so, when we think about both crude and products here over the next few months, should we think that LR2s will outperform for now? And then, what are you looking for in terms of laying the groundwork for crude tankers to start to get a bounce?
Lars Barstad: Well, I think, at the end of the day, we need — if we get oil demand anywhere near where EIA or IEA or OPEC or whoever you ask put that, that we go and consume 103, 103.5 million barrels per day in December, I think that’s basically all we need. If that trajectory is true, I think we’re going to kind of gradually come out of here. And also Russia is obviously a big factor in addition to China. It’s quite likely that with that demand projection, oil prices will behave fairly okay. Then I think there will be initiatives from to start to get hold of assets that can actually transport their product products. And that will kind of be the reverse of what we’ve seen just now where a lot of Russian — or former Russian trading vessels have started to compete with us in the Suezmax and Aframax markets.
They’re basically going to go back. I saw some — one headline from a broker that this fall, if that plays out, it’s going to be very good for S&P brokers that deal with the kind of tonnage going in that direction to put it that way. And this is obviously going to be the older tonnage in both the Suezmax and Aframax fleet. So — and then there is also an alternative story starting to develop on all the kind of headwinds coming out of China, because you can speculate what will they actually do now. Will they allow the country to run at half steam until kind of they get to some sort of natural recovery, or will they actually start to stimulate in order to carry kind of their economy over this gap? And if they do so, I think we will get the same result.
We will have the 2 million barrels extra of demand and we will have a healthy — kind of continued healthy import into China. So I think it’s fairly easy to paint a bullish picture here. But, I think it’s more important to try and look for the cracks because it’s almost too good to be true.
Omar Nokta: Yes. It certainly looks like the script is written and we just have to follow through on it. Great. Okay. Thanks, Lars. I’ll pass it over.
Lars Barstad: Thank you.
Operator: Thank you. Now we’re going to take our next question. And the question comes from the line of Chris Tsung from Webber Research.
Chris Tsung: I just have a quick question on your fleet. What are your plans for the 2010 built VLCCs without scrubbers? Would you look to install scrubbers, or could those vessels be sold, and what would the timing be for those decisions?
Lars Barstad: Well, that’s a fairly specific question. I think it’s very likely that they will have scrubbers in accordance with the drydocking schedule. But we don’t have any — apart from that — it’s funny how some ships are lucky ships, so they actually make money, literally around every corner. And these have been very, very good operators. So, for now, they’re in our fleet and going to remain there.
Chris Tsung: Okay. Fair enough. One for you, Inger. Sorry, I missed the part earlier where you provided drydocking guidance. Can you repeat how many vessels do you plan on drydocking for the rest of the year?
Inger Klemp: For the next year?
Chris Tsung: For the rest of the year.
Inger Klemp: For the rest of the year. For this fiscal year, we plan to drydock 8 Suezmaxes, 4 in the third quarter and 4 in the fourth quarter.
Chris Tsung: Okay. That’s it for me. I’ll turn it over. Thank you guys.
Inger Klemp: Thank you.
Operator: [Operator Instructions] And the next question comes from the line of [Lo McGibben from Frank Winnie].
Unidentified Analyst: Hi. Two questions. The first is, when you went from 25 to 20 years on your depreciation, how much did that reduce the earnings per share?
Inger Klemp: It was about — for year, it totals about $60 million. So that means, yes, means — yes, that means divided by 222 million shares — yes, just a moment.
Operator: Excuse me. Do you have any further questions?
Unidentified Analyst: Yes. The second question, this deals with…
Inger Klemp: [$0.36]. That’s your answer.
Unidentified Analyst: Okay. Thank you. It’s a conservative mood, and I applaud you for taking that. The premium on the modern vessels, I was wondering if you could discuss that. And in particular, the IMO guideline, the regulatory side that you’ve mentioned, when does the next major change kick in? And I was curious what makes up the premium that Frontline gets such a benefit on because it has the world’s youngest fleet?
