Cmb.Tech N.V. (CMBT) Q3 2021 Earnings Report, Transcript and Summary

Good day and welcome to the Euronav’s Third Quarter 2021 Earnings Conference Call. [Operator Instructions] 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 4 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 on our own 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 the particular statement, and the company undertakes no obligation to publicly update or revise any forward-looking statements. Actual results may differ materially from those forward-looking statements. Please take a moment to read our Safe Harbor statement on Page 2 of the slide presentation. I will now pass on to Chief Executive, Hugo De Stoop, 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 first run through the Q3 highlights and makes some comments about what we believe will be seen as a trust of this tanker cycle. Brian, or Head of Investor Relations, will then look at the current themes and catalyst in tanker market before I return to discuss more details of the strategy and outlook for the tanker sector. So, turning to Slide 4, 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+ stated their cuts, it didn't translate into enough barrels available for the independent lead, 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. Also, this started to be eroded as we exited Q3. We have continued to use the low freight rate environment to accelerate dry dockings and now completed 23 year-to-date whilst another four 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 lower level of freight rates, but this sustaining 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 exports 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 fleet age, order book ratio and incoming emissions regulations. It is encouraging as we move into 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 some of the 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 bonds 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 where 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 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 applied beyond the list that we highlight on Slide 5. Recycling, for instance, September alone saw four VLCCs Suezmax that were removed from the global fleet at 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 is a consensus of between 0.5 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 the 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. Hopefully, 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 IEA [ph] argue the 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 strictly 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 6, 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 means that we have yet to regain the pre-COVID levels of consumption. The other sectors were 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 has the largest platform available to invest in this 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 and 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 contractor revenue streams, which for 2021 will drive our cash breakeven rates to a very low at 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 anchored vessels, 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 $2.04 per share by dividends and buybacks. Platform will provide investors with a very strong exposure to the future development of the tanker market as we now shared a bit more detail on Slide 8. Slide 8 focuses on the free cashflow generation per share from Euronav and when we compare ourselves with our notable payers, it’s clear that returns will be very competitive for the upcycle metrics, particularly our $50,000 and $75,000 per day. Euronav on that basis will then provide the highest potential return from the platform that we've built over many years and which we looked at in a bit more detail earlier. That concludes a very quick run through our market view and Euronav’s positioning. I'll now pass it back to Hugo for a summary.

Thank you, Brian. Our traffic lights on Slide 11 [ph] shows a double upgrade of oil demand and oil supply. Demand has continued to grow albeit remaining below the pre-COVID levels of consumption. Production growth of crude continues steadily and now importantly, converting into increase in export. 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, while ton-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 a yard full of orders from other shipping sectors and incoming environmental regulations that 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’ll now pass it back to the operator to take your questions. Thank you very much.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Jon Chappell with Evercore ISI. Please go ahead.

Thank you. Good afternoon. Hugo and Brian.

Hi, Jon.

Hugo, 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 has lifted as well. So, when you think about your next 12 months, understanding your backdrop of being optimistic, but we don't have a 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 breakeven 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 the agenda. Now remember, that towards the end of the year, we will potentially lose four VLCCs, because they were on the 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 redeliver them just prior to their 15-year survey, which was by design. So, at the end of the day, the ships that we get at similar time then those who will be [indiscernible] compensate 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 opportunistic. So, you have to look at whatever you can do to create value for the 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 set into that. I will end by it by saying that in terms of time charter market, I mean, we are seeing indeed increased activity, but I believe that that's only the choice of the charters are looking at a market, which is on the rise. 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 have 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?

Yes, it's a fair point. Jonathan, as always, I think, there's probably outside of COVID maybe three risks. Firstly, I think the recovery, 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 fakery [ph]. And that's probably down to the productions, 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 a pretty elevated level of any highs, got some headlines about how high the price is and the difficulty that around we could always encounter. If you remember back few years ago, we used to have a slide showing where we thought the demand destruction kicked in and it’s at the start of these sorts of levels in the mid-80s. So yes, 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 not 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 ton miles will be a story for 2022. You're absolutely right on the fact that it is very patchy, but also there are some very strong, as you guys said, very strong fundamentals that we are trying to reach to from 2022, 2023 onwards. The encouraging thing is that we didn't have to think very hard to come up with those capitalists because we're seeing them every day over the last eight to ten weeks. But you are right to highlight it isn't – nothing 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 there are single voyage and round voyages being delivered at $20,000 a day plus, as a live number over the last few days. But the trajectory has continued since we are putting these numbers together.

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

Thanks Joh. Bye-bye.

Thanks.

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

Team Euronav how is it going?

Hey, very well Randy. How are you?

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 from market there. Wasn’t in the presentation this time, but any updated commentary on that situation and maybe the market impact of a new deal there?

Yes. 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 UNAI in terms of some of the other data sources. Yes, I think, the potential benefit would be both structural because we look at the data we've liked to seen, we've got around about 45 to 55 VLCCs we think in age [indiscernible] and they are 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 29 of November. And if that does lead out into a deal, we think there will be that structural benefit of that older tonnage leaving the fleet, which has not been engaged clearly in commercial trades, but will be a very positive sentiment because we're talking about 5% of the world fleet potentially leaving in a short period of time. But also operationally, I think, it's pretty consensus now there’s still 100,000 or 1 million barrels per day that's been if you like kept out of the commercial world. Those barrels should logically return to commercial players like ourselves and our competitors. And the Iranian fleets have nine months to come back into full operational mode from when President Obama lifted the sanctions in 2015, 2016. So, there's some good data points there. Nothing has really changed if anything the latest date we’ve seen is the Iranian to China trade has actually dropped off a little bit. And [indiscernible] making the point in recent presentations. We don't see this trade growing. It's just, in a world when we've had barrels deprived from us OPEC Plus when we've had a world in sort of delayed recovery from COVID, 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. Those structural in terms of the sentiment as older ship with 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 the game with President Biden also pushing for additional barrels to try and hold the oil price down. But there is some very strong tailwinds now potentially that could bring this back into play into 2022.

Sure. Yes, no, that makes sense. Thanks for the color on that. And I guess secondly Hugo a big investor has taken a pretty big position in Euronav, right. So, there has been some rumors about Euronav possibly being acquired. So first, any comments on that possibility? And now 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?

Yes, I knew this one would call in.

Come on fell elephant in the room. Go ahead.

No, I was going to say I was surprised with the first though pushed in. But that's probably because we had a one-on-one conversation with some of you prior to the call.

Yes.

So, I think that's you are absolutely right, this is an investment. So, John Fredriksen has used as a vehicle that he used to make investments, and it's not trying acquiring shares of Euronav like where we've seen them in the past with other companies. So, tanker shipping market is 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 [indiscernible] would be a great investment because he is super bullish on the tankers in general. So, I would say to all the investors on this call, if you have this kind of charismatic person and knowledge of person about the tanker market investing in Euronav a lot of people told us too. As far as consolidation is concerned, I think, that 15 years ago, 17 years ago, we set up this platform in order to try to have the consolidation of markets. 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 considered in priority all the small players. That's really the people that are sort of 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 priorities which consolidates smaller players. But if you look at what we have done in the past, it's more question of opportunities rather than really deciding who you acquire and at which point in time.

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

Thank you.

The question comes from Chris Tsung with Webber Research. please go ahead.

All right. Good afternoon. How are you doing?

Hey very well. Thanks. And you?

Great, thanks. I wanted to just ask a bit about Slide Number 6 and the IEA demand forecast is also a bit down in Q1 before recovering. So, I wanted to just get your view, do you think the tanker market recovery would follow this albeit at a slight lag? Or do you think you possibly come sooner over here?

Yes, well, go ahead, Brian.

Okay. Maybe Chris you are a bit muffled on that, but yes, we're just taking 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 one-off as you guys said earlier, with regard to some of the fuels switching, that's not going to be sustainable to look for more than that, this winter period. But of course, these are the official sort of agencies that are giving the demand numbers from the IAA, 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 will building blocks in particular, the world is going back to normal more transportation, which is about 55% of the end use of crude oil not being reflected in higher demand for jet fuel and therefore the refiners are 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, there is this some trajectory, because we have to remember that with 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’re still in a recovery phase and that should, as we get into the final stages of that with a marginal supply, as we're seeing with the tension in the markets reflected in high freight rates. That's the trajectory we can see all things being equal, both in increasing supply of barrels as OPEC+ continues to taper their production cuts, but also demand continue to come through. So just to show 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.

Alright. Thanks. Thanks, Brian. And just maybe one more from me. On the successful B30 biofield trial where Euronav will have to choose other vessels, or is it limited to just the one?

Well, and 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 is because we have access to a biofuel that is priced at very, very thin margin above VLSFOs 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 are 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 looking to de-carbonization, if they could be priced at similar price, then the choice is obvious. Now, every time we are shifting and always by the way the case when we shifted from HSFO or 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 on voyage. 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 fuel producer obviously and we share the results with them. But that's very much how we are thinking about it.

Got it. Thank you.

[Operator Instructions] The next question comes from Ben Nolan with Stifel. 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. It relates to the sort of the dividend policy and appreciating 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 relative incentive to may be do share 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 flow is 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 you are a foreigner. So, we don't believe we are disadvantaged compared to the others. It's just a question of filling the form and making sure that either you avoid paying upfront, 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 Belgium citizen, then obviously you have to pay with only tax, but that's same as you are a U.S. citizen, you have to pay with all the 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 there in Belgium, if you don't fill that form, then the company is detecting it automatically, but it's certainly not something that that you have to do if you wish or if you decide to fill in the form. The balance between share buybacks and dividends will indeed be driven by where the share 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 that 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 first measures taken by the MOD [ph] side, the CIA will take phase, and we are also hearing quite a lot of positive comments from our clients that they are more and more interested in chartering in the vessels that can consume as little as possible and therefore, it needs as little as possible. So, we also need to be careful or need to be minded about how we renewed the fleet and whether we should accelerate this fleet renewal or not. So as always, the there's a slide in the deck that we are using vouchers 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 leverages at the moment is 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 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.

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

It's about – yes, Lieve?

Yes, I can help here. And you told that you had the planning, we are currently making the budget, so we are planning to have about dry bulk vessels scheduled in for 2022.

Perfect. Thank you. And by the way, similarly to what we have done this year if it turns out to be a fantastic year, you can delay because basically you have a window of six to eighteen 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 to see that number of vessel, but we will be very dynamic when we think about it.

Yes, your mouth to God's ears there Hugo, I hear it. So, thanks.

Yes.

The next question comes from Quirijn Mulder with ING. Please go ahead.

Yes, good afternoon. Can you hear me?

Yes, we can.

Okay, perfect. My question is about scrapping. You have seen nice numbers in September, I think, four plus four. Can you update us on what you think is happening and I’m saying the last quarter of 2021, and maybe in the first month of 2022, given the fact that, for example, that there was always a delay between, let me say low price and scrapping.

Yes. So, you are hitting the nail on the head there Quiri. There are a couple of factors. I mean, 2020 was a fantastic year in terms of earnings. I’ve asked people to directly go from a booming year to a very bad year where they believe that they should stop their vessels very difficult. So, you always have a time delay or a time lag between a good year and the decision to scrap for this. That's the first one. 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 $1 million or $2million or $3 million, over the scrap price for those vintages and then trading the ships and what was very lucrative, but obviously legal certainly not available for a company such as Euronav, 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've done in the past. And secondly, and maybe more importantly, that there has been so much tonnage brought for that trade that now it is over supplies. So that trade has too minutes 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 presented either for scrapping or for sale, there was no bids which were beating the scrap price and therefore they went for scrap, which is a signal that the appetite for these ships, for these traders has vanished. The fleet that is currently doing, it will probably continue to do that until something happened in the country, but normal 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 from there to the amount of money that he can get from the scrap price, because scrap is very, very elevated at the moment would probably choose scrapping and that's why we believe that Q4 and Q1 and the rest of 2022 should be very interesting in terms of a number of units that will be eliminated from the worksheet.

Okay. And what was at this moment, let me say, the number of tankers, let me say, used for storage, because I think there are some – as long as they are used for storage there was nobody who is caring about [indiscernible] 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 unit at the moment and we are talking about the 15-year 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 can choose their ships to trade in any way. They need those ships as a buffer for their oil production before it is being exported to the elicit channel. So, as Brian commented earlier on, the minute we see sanctions being lifted or another policy being applied to Iran, or to most strictly being put on what they do with the oil, all of that should have a positive impact through our market. And it remains to be seen what it will be, and what impact it will have to feel 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 Q3 earning call. And we hope that the next one will be with hopefully improve market and better news as we commented early on. So, thank you very much. And I will talk to you next time.

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