Gulf Navigation gets $70m refund

Refunds come from a South Korean shipyard after the cancellation of orders for two vessels

Gulf Navigation Holding has received US$70 million (Dh257m) in refunds from a South Korean shipyard after cancelling orders for two vessels, the Dubai-based owner of oil tankers said. Gulf Mizhar Shipping, a subsidiary of Gulf Navigation, received a refund of more than $35m from SLS Shipbuilding of Tongyeong. The cancelled contract was for a 44,000 dead weight tonne (dwt) product-chemical tanker. "The contract was terminated due to excessive delays," Gulf Navigation said this week. Gulf Mishref Shipping, another unit of Gulf Navigation, received a $35m refund from SLS for a separate tanker contract that was also cancelled because of delays, it said.

Gulf Navigation is the only maritime and shipping company listed on the Dubai Financial Market. It operates 15 tankers for a total carrying capacity of about 1.3 million dwt. "Having received its full payment with interest for both vessels, the company is in a strong position to execute new purchases at current market rates significantly lower than before," it said. "The refund of the interest-bearing instalments will have a positive effect on the company's result, and increase its cash reserves to help with future acquisitions."

In January, Gulf Navigation said profit last year declined by 82 per cent to Dh26.6m from 2008. But the company said the results were positive considering the heavy shocks the shipping industry suffered because of the economic downturn. The company carried 4.5 million tonnes of cargo last year: 1.9 million tonnes of crude oil; 1 million tonnes of petrochemicals; and 1.6 million tonnes of dry cargo. Last November, Gulf Navigation put some of its vessels on the spot market after a charterer broke a long-term contract, leading the shipper to file a legal claim for $52m in damages.