CMB.TECH NV Ordinary Shares

Good day and welcome to the Euronav third quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Brian Gallagher, Head of Investor Relations. Please go ahead.

Thank you. Good morning and afternoon to everyone, and thanks for joining Euronav's Q3 2021 earnings call. Before I start, I would like to say a few words. The information discussed on this call is based on information as of today, Thursday, the 4th of November, 2021, and may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements reflect current views with respect to future events and financial performance. and may include statements concerning plans, objectives, goals, strategies, future events, performance, underlying assumptions, and other statements which are not statements of historical facts. All forward-looking statements attributable to the company or to persons acting on its behalf are expressly qualified in their entirety by reference to the risks, uncertainties, and other factors discussed in the company's filings with the SEC, which are available free of charge on the SEC's website at www.sec.gov. and our own company website at www.euronav.com. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of that particular statement, and the company undertakes no obligation to publicly update or revise any forward-looking statements. Actual results may differ materially from these forward-looking statements. Please take a moment to read our safe harbour statement on page 2 of the slide presentation. I'll now pass over to our Chief Executive, Hugo de Stoep, to start with the agenda slide. Hugo, over to you.

Thank you, Brian. Welcome to our call today, wherever you are. In terms of the agenda, I will firstly run through the Q3 highlights and make some comments about what we believe will be seen as the trough of this tanker cycle. Brian, our head of investor relations, will then look at the current themes and catalysts in the tanker market before I return to discuss in more detail our strategy and outlook for the tanker sector. So turning to slide four and the highlights page. There were more lowlights than highlights during Q3, which was arguably the most challenging freight market in the last 20 years. This was driven by two key factors. Lack of commercially available barrels. Even though OPEC Plus tapered their cuts, it didn't translate into enough barrels available for the independent fleet such as Euronav. Furthermore, the illicit trade around sanctioned Iranian barrels took away what would have been otherwise barrels required to be transported by the regulated fleet. The market also suffered from an oversupply of vessels, although this started to be eroded as we exited Q3. We have continued to use the low freight rate environment to accelerate dry dockings and will complete a 23 year to date, whilst another 4 will be done by year end. That's around 40% of our underlying fleet. However, the market has improved strongly since early September. The improvement in rates has come from a low level of freight rates, but this sustained improvement has sequentially improved each week over the past six to eight weeks. This has been driven by a number of factors and catalysts, such as a greater number of barrels available for export in both the Arabian Gulf and the Gulf of Mexico. An improved demand for oil, in particular fuel oil, as some additional demand came from customers able to switch between various fossil fuels and willing to do so because of the elevated gas prices. And finally, an increased recycling activity in all the tonnage. This gave a better balance between fleet supply and supply of available barrels for exports. In recent earning calls and presentations, we have consistently stressed the constructive factors for the tanker market in the medium term. Factors such as the fleet age, order book ratio, and incoming emissions regulations. It is encouraging as we move into a seasonally stronger trading period to see that the market is gaining traction and rates moving higher. All of this is good and goes in the right direction, but a return to profitability will require continued improvement on those oil demand side as the winter progresses. Turning to summer financial, our leverage stands at 48.7% and is supported at the end of September with 791 million of available liquidity. We were pleased to refinance our 200 million Nordic bond at an improved coupon in early September, allowing us to make sure we continue to have access to alternative source of capital such as the Nordic bond market. Our timing looks positive already as yields have risen steadily since. Despite the loss during the Q3, we will distribute a $0.03 dividend per share as per previous loss-making quarters. With that, I will pass over to our Head of Investor Relations, Brian Gallagher, to make or to walk you through some market highlights. Brian, over to you.

Thank you, Hugo. I'm now going to run through some of the catalysts we've been seeing over recent weeks and months that Hugo alluded to earlier. The encouraging element of this feature is the fact that this has not been an exhaustive list. Other factors are also at play beyond the list that we highlight on slide five. Recycling, for instance. September alone saw four VLCCs and four Suezmax that were removed from the global fleet. That's a 1% reduction in the fleet size alone and has been followed up in October with another three VLCC equivalents which have exited the fleet. The huge squeeze in fuel prices in things like natural gas during Q3 has also driven some switching both for economic and security of supply reasons. Estimates vary, but this winter there's a consensus of between half a million and a million barrels per day of additional crude demand coming from this fuel switching source. That one-off factor is a very strong benefit to our marketplace. Thirdly, it's been frustrating in recent months that production rises in global crude have not always translated into a like-for-like increase in export barrels but this feature has also started to change starting in late Q3. For instance we saw in September that 550,000 barrels a day alone were exported from the Persian Gulf and that's been followed up with nearly 700,000 barrels from the same region during October alone. Fourthly further recovery of oil demand is expected to continue beyond this winter seasonality as we see increases in areas like jet fuel continue their trajectory towards pre-COVID levels of consumption. Finally, and as a fifth point, at some point the EIA argue that inventory build will have to begin. They themselves forecast that stocks will start to rebuild starting in January, as global inventory in terms of oil and crude around the world is way below the five-year average to the end of 2019. Inventory builds historically have been very positive for tanker markets, and provide further encouragement to our view that the market has now reached the trough. Moving on to slide six, these short-term catalysts are supporting a more general improvement in both the crude demand picture and also the supply dynamics. Slide six combines the trajectory of the IEA forecast for oil demand over the coming five quarters with that of the proposed OPEC plus tapering projections. Unlike other industrial and shipping sectors, the late cycle nature of tanker shipping is means that we have yet to regain the pre-COVID levels of consumption that other sectors have enjoyed already. But this slide illustrates clearly that the anticipated progression in the market recovery in both supply of oil and the demand for oil should continue to drive tanker markets going forward. Euronav as the largest platform available to investors is ideally placed to benefit from this recovery, as slide 7 illustrates. This slide highlights the robust and yet diversified platform that we have built to navigate what we believe is the upcoming and next stage of the tanker cycle. Our large fleet has a core focus of 37 VLCCs, which are amongst the youngest amongst our competitive group at 6.7 years of age on average. We're supported by multiple contracted revenue streams, which for 2021 will drive our cash breakeven rates to a very low and highly competitive level. Our strong balance sheet has allowed us to simultaneously invest in the future, We're expanding our core fleet, for instance, by 15% with eight new ecovessels, which will start delivery in January of next year. And yet we retain a very conservative leverage ratio. Our fully integrated platform has been supportive of shareholders as well. We've returned over $1.2 billion of cash dividends since we listed in 2004. And alone in the past 21 months, we've returned $2.4 per share via dividends and buybacks. platform will provide investors with a very strong exposure to the future development of the tanker market, as we now show in a bit more detail on slide eight. Slide eight focuses on the free cash flow generation per share from Euronav, and when we compare ourselves with our notable peers, it's clear that returns would be very competitive for the upcycle metrics, particularly our $50,000 and $75,000 per day. Euronav would, on that basis, then provide the highest potential return from the platform that we've built over many years,

which we looked at in a bit more detail earlier that concludes a very quick run through our market view and uranus positioning i'll now pass it back to hugo for a summary thank you brian our traffic light slide on the on slide 11 shows a double upgrade of oil demand and oil supply demand has continued to grow albeit remaining below the pre-covered levels of consumption Production growth of crude continues steadily and now importantly converted into increase in exports. This is more than probably due to the fact that all inventories across the globe are now below the five-year average. Our other variables, well, tonn miles and vessel supplies are unchanged, but here too, there are some positive signals. For instance, Q3 was the lowest quarter for tanker orders in 25 years. With the yards full of orders from other shipping sectors and incoming environmental regulations, that came with no surprise. The medium term picture for vessel supply is particularly encouraging. As I said in my introductory remarks, we're not out of the woods yet, but given how low the freight rates were over the summer, we welcome the rebounding and hope to reach profitability levels in the not too distant future. We are of the view that Q3 will represent the trough of the cycle, and our platform is very well positioned to benefit over the coming quarters of improved tanker fundamentals and the short-term catalyst as they gain traction. That concludes our remarks. Thank you for your attention, and I now pass back to the operator to take your questions. Thank you very much.

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. In the interest of time, please also limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. And the first question comes from John Chappelle with Evercore ISI. Please go ahead.

Thank you. Good afternoon, Hugo and Brian.

Hi, John.

As the tone has shifted from maybe cautiousness to a consensus optimism that things can only get better from here, it seems like some arbitrage opportunities have opened, meaning the time charter market seems to be moving up while spot continues to kind of ebb and flow around pretty weak levels and also secondhand values. have lifted as well. So when you think about your strategy for the next 12 months, understanding your backdrop of being optimistic, but we don't have 100% line of sight, have you thought about creating or taking advantage of some of those ARBs by getting rid of some of the older ships as the new vintage come on next year and or putting some more ships on charter just to raise your break even at the beginning of the cycle?

Well, I mean, thank you very much for this very nice summary of where we are, because that's exactly where we are and where we feel we are. I think that fleet rejuvenation is always on the agenda. Now, remember that towards the end of the year, we will potentially lose four VLCCs because they were on sale and lease back with no purchase obligation at the end of the charter. They will reach 15 years. We will have the opportunity to re-deliver them just prior to the 15-year survey, which was by design. So at the end of the day, the ships that we get at similar times than those who will be compensated for it. So if we don't do anything else, we are almost one for one in terms of fleet rejuvenation. Now, in this market, you have to be optimistic, so you have to look at whatever you can do to create value for your shareholders all the time. That's hopefully what we do, and there is an opportunity to extract more value of the market, and as you said, to take advantage of an arbitrage. We will certainly do that. I will end by saying that in terms of time chart of the market, we are seeing indeed increased activity, but I believe that that's only because the charters are looking at a market which is on the rise, and they want to lock still what they believe is great value, and obviously, being on the opposite side, what we believe is probably too low compared to what we could expect.

Okay. That makes sense, Hugo. And then, Brian, one for you. The slide that lays out the short-term factors that are gaining traction, I mean, Listen, I'm in the same boat as you guys, but I've been continually disappointed in the pace of this recovery. COVID setbacks aside, what are some of the risks that can continue either to derail or delay the recovery that you've laid out here with all these other catalysts?

Yeah, it's a fair point, Jonathan, as always. I think there's probably, outside of COVID, maybe three risks. Firstly, I think the recovery itself. I think everyone's sort of frustration has been a bit patchy. So we see some really strong numbers the last three months now in terms of exports from the Arabian Gulf. But clearly that's not been followed by other parts of the OPEC plus tapering. And that's probably down to production is just not simply able to be raised in certain parts of the OPEC consortium, as it were. So I think that is probably one risk that we don't get this sort of uniform rise. I think a second risk is clearly going to be from OPEC Plus itself in terms of how it behaves and where it wants to see things develop. And I think the last risk is obviously one thing that we've all forgotten about is the oil price. We are reaching pretty elevated levels, seven-year highs, lots of headlines about how high the price is, and the difficulty that we could always encounter. If you remember back a few years ago, we used to have a slide showing where we thought demand destruction kicked in, and it's at the start at these sorts of levels in the mid-80s. So, yeah, if we continue to see a higher oil price, that could also sort of choke off some of that reasonably fragile demand recovery. So it's nothing guaranteed, as you say. But I think the point we wanted to make is that pushing against that, those caveats, is we do expect that the seasonality will be slightly driven out of our business as we get through the winter, simply on the basis of we've got that recovery. And we also believe, as we said in the last couple of calls, that we think tonne miles will be a story for 2022. You're absolutely right to focus on the fact that it is very patchy, but also there are some very strong, as Hugo said, very strong fundamentals that we're trying to bridge to from 22, 23 onwards. The encouraging thing is that we didn't have to think very hard to come up with those catalysts because we're seeing them every day over the last eight to 10 weeks. But you're right to highlight it. Nothing's guaranteed, and some of these are a bit patchy. But we'll continue to be very focused, and we'll continue to be very, very driven because We're seeing as a run rate today, you know, there are single voyage and round voyages, you know, being delivered at $20,000 a day plus as a live number over the last few days. But, you know, the trajectory has continued since we were putting these numbers together.

Okay. That's great. Thanks so much, Brian. Thank you, Hugo.

Thanks, Bill. Bye-bye.

Thanks. The next question comes from Randy Gideon with Jefferies. Please go ahead.

Howdy, team. You're on app. How's it going?

Hey, very well.

Good, good. All right, so I guess, Brian, I know you've historically included some commentary regarding the Iranian fleet and maybe potential impact of additional Iranian barrels coming to the market there. It wasn't in the presentation this time, but any updated commentary on that situation and maybe the market impact of a new deal there?

Yeah, I mean, we've obviously been very keen to keep that in people's sight lines. And we're taking some of the data from some very good sources, including UNAII, in terms of some of the data sources. Yeah, I think the potential benefit would be both structural, because we look at the data we've lately seen. We've got around about 45 to 55 VLCCs, we think, engaged in this trade. And they're all aged over 18 years of age. We've got a very high scrap price. We've obviously had the news overnight that the Iranians are going to engage with the Europeans on 29th of November. And if that does lead open to a deal, we think there'll be that structural benefit of that older tonnage leaving the fleet, which has not been engaged clearly in commercial trades, but will be very positive for sentiment because we're talking about 5% of the world fleet potentially leaving in a short space of time. But also operationally, I think it's pretty consensus now there's 700,000 to a million barrels per day that's been, if you like, kept out of the commercial world. Those barrels should logically return commercial players like ourselves and our competitors um and the iranian fleet took nine months to come back into full operational mode from the when uh president obama lifted the sanctions in 2015-16 so there's some good um data points there nothing has really changed if anything the latest data we've seen is the iranian uh to china trade has actually dropped off a little bit and he goes making the point in recent presentations um we don't see this trade growing it's just um you know in a world when we've had um barrels deprived from us from OPEC+, when we've had a world in sort of delayed recovery from COVID-related issues over the last 18 months, a million barrels a day potentially is a very big number in our world. So that's the benefit, both structural in terms of the sentiment as older ships leave the fleet, and operational benefit as those barrels return to the commercial fleet. So no real change in the numbers, Randy, but clearly it does seem, and again with President Biden also pushing for additional barrels to try and hold the oil price down. But there's some very strong tailwinds now potentially that could bring this back into play into 2022.

Sure. That makes sense. Thanks for the call on that. And I guess secondly, Hugo, a big investor has taken a pretty big position in Euronav, right? So there's been some rumors about Euronav possibly being acquired by So first, any comments on that possibility? And then on the other hand, have there been any maybe internal discussions about Euronav actually being an acquirer of a smaller player at this low point in the cycle?

Yeah, I knew this one would come in.

Well, come on, it's the elephant in the room.

Go ahead. No, I was going to say, I was surprised it wasn't the first question. But that's probably because we had a one-on-one conversation with some of you prior to the call. So I think that you are absolutely right. I mean, this is an investment. So John Ferguson has used a vehicle that he used to make investments. And it's not frontline acquiring shares of Euronav like we've seen them in the past with other companies. So, you know, tanker shipping market is a small market. We come across each other all the time. We talk a lot to each other. and there's nothing unusual there. What people need to understand is that for John, it's very difficult to add more to what he has into Frontline. And so we are very happy that he has chosen our platform to invest what ABD would be a great investment because he's super bullish on tankers in general. So I would say to all the investors on this call, if you have this kind of charismatic person and knowledgeable person about the tanker market investing, you know, a lot of people should follow through. As far as consolidation is concerned, I think that, you know, 15 years ago, 17 years ago, we set up this platform in order to try to help the consolidation of the market. And that strategy has not changed dramatically now. we were on a panel with Frontline the other night, and we both said that what needs to be consolidated in priority are the small players. That's really the people that are hurting the market simply because they don't have the capacity to gather the information that we do, being present in the market all the time. And that should be the priority. So, We think that the market will consolidate further. We would like to be a participant in that consolidation, and the priority is probably to consolidate smaller players. But, you know, if you look at what we have done in the past, it's more a question of opportunities rather than really deciding who you acquire and at which point in time.

Got it. No, that all makes sense. And, yeah, thanks for the additional call there.

Thank you.

The next question comes from Chris Sung with Weber Research. Please go ahead.

All right. Good afternoon. How are you doing? Very well. Thank you. And you? Good. Thanks. I wanted to just ask a bit about slide number six. And the IEA demand forecast looks like it's going to dip down a little bit in Q1 before recovering. So I wanted to just get your view. Do you think the tanker market recovery will follow this, albeit at a slight lag, or do you think it could possibly come sooner or later?

Obviously, I... Yeah, go ahead, Brian.

Okay. Maybe, Chris, you're a bit muffled on that, but yeah, we're just taking the data points, and the reason we're trying to sort of just with that slide in mind is that we want to just try and show that the catalyst we're seeing clearly is going to be a one-off, as you guys said earlier, with regard to some of the fuel switching. That's going to be sustainable for the for more than this winter period. But, of course, these are the official sort of agencies that are giving the demand numbers from the IEA, and they're expecting to see less seasonality as we go through to 2022, as we get that sort of demand recovery, because we're looking for the last final, if you like, building blocks, in particular the world going back to normal, more transportation, which is about 55% of the end use of crude oil, And that being reflected in, you know, high demand for jet fuel and therefore the refiners using more crude as a raw product. So, yes, what we're just trying to show is that there is this trajectory through the next four or five quarters, which if it's followed, obviously, with the caveat that COVID doesn't return, that there is this trajectory. Because we have to remember that the real underlying point we're trying to make is that the crude tanker market is very late cycle. We're not like other shipping sectors or other industrial sectors where they've already recovered to where they were in Q4 2019. We haven't got to that stage yet in terms of crude consumption. So that's the point we're trying to make, is that we are still in a recovery phase, and that should, as we get into the final stages of that, with the marginal supply, as we're seeing with the tension in the markets reflected in higher freight rates, that that's a trajectory we can see, all things being equal, both in both of Increasing supply of barrels, as OPEC Plus continues to taper, their production cuts, but also demand continues to come through. So just to show that that background of both supply and demand is very supportive, and it's underlined by some of the short-term catalysts that we've got.

All right. Thanks. Thanks, Brian. And just maybe one more from me. On the successful D30 biofuel trial, will Verneville have its use in other vessels, or is it limited to just the one?

Well, I can probably take that one. So we've done several trials and we continue to do so. The reason why we are able to do it is because we have access to biofuel that is priced at a very, very thin margin above the LSFO that you can find in the market. And that's because of specific subsidies available for European companies in the port of Rotterdam. Now, the reason why we're interested in testing those fuels is because we believe that they would be part of the fuel mix in the future. And as we are all looking to decarbonization, if they could be priced at a similar price, then the choice is obvious. Now, every time we are shifting, and that was, by the way, the case when we shifted from HSFO to LSFO, every time we're shifting from a fuel to a different fuel, we need to be very cautious and we need to test it gradually. over a short period of time initially, over a longer period of time, but maybe when we are near a port, maybe waiting to enter a port. And then finally, the final stage is to test them over the full duration of a voyage. And that's exactly what we're doing, and we're very happy to be at the forefront of those trials. And we do that in cooperation with the fuel producer, obviously, and we share the results with them. But that's very much it. how we are thinking about it.

All right. Thank you. Thank you.

As a reminder, if you have a question, please press star, then 1 to be joined to the queue. The next question comes from Ben Nolan with Stiefel. Please go ahead.

Hey, good morning, guys. So I wanted to start with something that, Brian, you and I have talked a little bit about, but It relates to sort of the dividend policy and appreciating that at the moment there's not a lot of free cash flow, but hopefully as you guys lay out, that will improve over the course of next year. You guys are at a little bit of a tax disadvantage on the dividends given the dual listing, but the share price is now a little bit higher, so maybe the the relative incentive to maybe do sheer repurchases versus dividends is not quite as obvious as it was. So just thinking about how do you address sort of what you would anticipate doing with your dividends once the cash flows a little bit higher as we move forward?

Well, thank you for that question because it's very important for people on the call to understand that indeed in Belgium we may be at a disadvantage, but there's a lot of mechanisms to avoid or to claim it back when we are a foreigner. So we don't believe we are at a disadvantage compared to the others. It's just a question of filling the form and making sure that either you avoid paying it up front or you claim it back, and then it's relatively straightforward. We have improved the page on the website to show you how you can do that, And so that should be very, very helpful. And obviously for the Belgian who are Belgian citizens, then obviously they have to pay withholding tax, but that's the same if you are a U.S. citizen, you have to pay withholding tax in the U.S., et cetera, et cetera. So I think it's more of an administration problem than anything else, and maybe the difference is that in Belgium, if you don't fill that form, then the company is deducting it automatically, but it's certainly not something that you have to do if you wish to or decide to fill in the form. The balance between share buyback and dividends will indeed be driven by where the share price sits compared to NAV. There will always be a sort of a balance between the two because we don't want to go full speed on only one of the two instruments to return capital to the shareholders. And I think what we have done in 2020 was very useful for us in terms of understanding what one sort of return does to the share price and what the other sort of return does to the share price, as well as reinvesting some of that capital into a renewed fleet. We are coming closer and closer to the time where the first measures taken by the IMO, the EXI, the CIA will take place. And we are also hearing quite a lot of positive comments from our clients that they are more and more interested in chartering in vessels that consume as little as possible and therefore emit as little as possible. So we also need to be mindful or need to be minded about how we renew the fleet and whether we should accelerate this fleet renewal or not. So as always, there's a slide in the deck in the deck that we use in road shows, which shows how we allocate capital in something that is very dynamic, where at the point of taking the decision, we are looking at everything possible, including debt reduction, but as you know, our leverage is at the moment relatively conservative, but including that if we were to exceed 50%, for instance, and it's at that point in time that we take the decision. So it's very difficult to make a a better policy than that because we are in the volatile market, we are in the cyclical market, and there is a lot of dynamic around the company itself.

Okay. That's very helpful, Hugo. And then for my follow-up, just hopefully pretty straightforward, you said that I think 27 vessels are being dry docked this year, 40% of the fleet, and some of that's brought forward. So for next year, you know, what's the bogey here? How much less would we assume that it should be?

Um, it's about, uh, yeah, leave it.

Yes, I can help here. Um, indeed. So the, we had a planning, we are currently making the budget. So we are planning to have about 16, uh, drives up for 2022.

Perfect. Thank you. And, and, and, and by the way, similarly to what we've done this year, uh, if it turns out to be a fantastic year, you can delay because basically you have a window of six to 18 months if you push to dry dock your vessels, especially the ones that are less than 15 years of age. So, again, this is our plan, our budget, foresee that number of vessels, but we will be very dynamic when we think about it.

Yeah, your mouth, the God's ear there, Hugo, I hear you. So, thanks. Yes.

The next question comes from Cordian Mulder with IMG. Please go ahead.

Good afternoon. Can you hear me?

Yes, we can.

Perfect. My question is about scrapping. You have seen nice numbers in September, I think 4 plus 4. Can you give an update on what you think is happening in the last quarter of 2021 and maybe in the first months of 2022? Given the fact that, for example, that there's always a delay between, let me say, low price and the scrapping.

Yeah, so you're hitting the nail on the head there, Kieran. There are a couple of factors. I mean, 2020 was a fantastic year in terms of earnings. to ask people to directly go from a booming year to a very bad year where they believe that they should scrap their vessels is very difficult. So you always have a time delay or a time lag between a good year and the decision to scrap a vessel. That's the first point. The second point is that obviously those decisions have been polluted by the fact that some people were willing to pay a premium for very old tonnage that they would use until their end of life in an illicit trade. And they were paying one or two or three million over the scrap price for those vintage and then trading the ships in what was very lucrative but obviously illegal or certainly not available for companies such as Euronet, which was to transport Iranian oil. We believe that, first of all, the U.S. is looking at it a little bit more closely than what they have done in the past. And secondly, and maybe more importantly, that there has been so much tonnage bought for that trade that now it is oversupplied. So that trade has too many ships compared to the number of barrels that are being transported from Iran mostly to China via Malaysia. So the last couple of ships that we have seen being presented for sale, either for scrapping or for sale, there was no bids which were, well, beating the scrap price, and therefore they went for scrap, which is a signal that the appetite for these ships for this trade has vanished. The fleet that is currently doing it will probably continue to do that until something happens in the country, but no more ships will be there. So everybody who now looks at what he can currently earn But more importantly, what he has to spend in order to pass a survey and be certified to operate in the market, compared to the amount of money that he can get from the scrap price, because scrap is very, very elevated at the moment, will probably choose scrapping. And that's why we believe that Q4 and Q1, or the rest of 22, should be very interesting in terms of a number of units that will be eliminated from the world fleet.

Okay, and what is at this moment, let me say, the number of tankers, let me say, used for storage? Because I think there's some, as long as they're used for storage, there's nobody who's caring about, let me say, the age of the vessel.

That's totally correct. And on top of that, they can get another type of certificate, which is a lot lighter. So you do not need to spend that amount of money. But there are very, very few tankers which are being used as storage units at the moment. We're talking about the 15 or 20-year average, so you always have a number of vessels. And in that number, you see a lot of the Iranian fleet itself because they cannot use their ships to trade in any way. They need those ships as a buffer for their oil production before it is being exported through the illicit channel. So as Brian commented earlier on, the minute we see sanctions being lifted or another policy being applied to Iran or to more scrutiny being put on what they do with the oil, all of that should have a positive impact to our markets. and it remains to be seen what turn it will be and what impact it will have, but we are very hopeful that something is likely to happen.

Thank you.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Hugo de Stoop for any closing remarks.

Well, thank you, everyone, for attending this Q&A. and we hope that the next one will be with hopefully improved market and better news as we commented earlier on. So thank you very much, and I'll talk to you next time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.