Tsakos Energy Navigation Sees Tightening Tanker Supply, Leans on Long-Term Charters at Lytham Event

Key Points

• Tsakos centers on long-term time charters to reduce cyclicality and serve major oil companies, a strategy it says underpins its consistent dividend track record.
• Management warns the global fleet is aging and near-term newbuild deliveries are limited, creating a tightening tanker market that should support higher vessel demand and values.
• Tsakos has a 20-ship newbuild program — including eight shuttle tankers, three VLCCs and four Panamaxes — driven by customer contracts, with some VLCC slots accelerated via South Korean yards to lock in long-term charters.

Tsakos Energy Navigation NYSE: TEN is positioned as a long-term partner to major oil companies and is increasingly optimistic about tanker market fundamentals, according to comments made during a fireside chat at a Lytham Partners event.

Robert Blum, managing partner at Lytham Partners, moderated the discussion with Mike Kimble, who heads investor relations at Tsakos. Kimble said the company transports “oil and oil products” and described Tsakos as “one of the largest seaborne energy transporters in the world,” adding that among dedicated tanker companies it is “clearly in the top 10” and, with recent orders, “probably the top five within the next couple of years.”

Company profile and customer focus

Kimble said Tsakos moved almost 600 million barrels last year—about “12.5 days of U.S. consumption”—and emphasized the company’s longevity in public markets, noting it listed in Oslo 32 years ago and on the New York Stock Exchange 23 years ago. He also highlighted its dividend history, calling it “quite uniquely” consistent for a shipping company: “We have always paid a dividend.”

Strategically, Kimble said Tsakos tailors its operations around the needs of “the international oil majors like Exxon, Shell, Chevron, Equinor,” describing them as the core customer base.

Business model: long-term time charters to reduce cyclicality

A central theme of the conversation was Tsakos’ focus on long-term time charters rather than heavy exposure to spot shipping markets. Kimble said, “Among all the publicly traded tanker companies, we’re the only ones who really focus on long-term time charters,” describing the model as a way to “take a lot of the cyclicality out of the business.”

Kimble framed the arrangement as analogous to industrial “base load” capacity: oil majors “don’t wanna be in the shipping business,” he said, and instead rely on a small group of tanker operators for long-term capacity tied to projects and ongoing needs. He added that the company’s decades-long operating horizon is supported by this approach, which he said helps explain Tsakos’ dividend track record and financial positioning.

Tanker market outlook: aging fleet and limited newbuild supply

Kimble said the tanker market is tightening due to a combination of an aging global fleet and a limited pipeline of new vessel deliveries. Citing a slide in the company’s investor presentation, he said there are roughly 5,500 tankers globally, with “20%…over 20 years old” and “almost 50%…over 15 years old.” He described tankers over 20 years old as effectively nearing end-of-life, adding, “A tanker over 20 years old is not long for this world.”

Because it takes about three years to build a ship, Kimble said owners have visibility into near-term supply. He estimated deliveries over the next three years at about 15% of the global market and argued that incoming supply is “not enough to replace ships that are going to be coming offline sometime in the next few years.” He said this dynamic underpins the company’s sizable order book versus public peers and added, “My boss has never seen this.”

Geopolitics, ton-miles, and risk insulation

On demand drivers, Kimble pointed to shifts in trade routes that increase “ton-miles,” including the rerouting of Russian crude from Europe to Asia following sanctions related to the war in Ukraine, and longer routes around Africa due to Red Sea security concerns. He also referenced the Strait of Hormuz, noting it accounts for “20% of world oil supply,” and said supply growth from deepwater production areas such as Brazil, Guyana, and West Africa has contributed to more Atlantic-to-Asia flows.

Kimble said Tsakos’ time-charter-heavy model helps insulate it from certain geopolitical and cost risks. He noted that if a vessel were delayed or immobilized, the charterer typically continues paying under time charter terms. He also said war insurance costs had risen “six, seven, eight times,” but under many of Tsakos’ time charters, “the time charter pays that.”

Regarding sanctions enforcement and the “shadow fleet,” Kimble said Tsakos avoids sanction-sensitive activity: “We don’t go anywhere near an issue that might violate sanctions.” He argued the shadow fleet had historically pressured spot rates but also boosted values for older tonnage by increasing secondary-market demand. Kimble said that after U.S. actions involving Venezuela and then Iran, the market saw scrappage “for the first time” in a while as some shadow fleet operators faced operating difficulties. He added that spot rates “went up” and that the timeline for shadow fleet exit appeared to accelerate.

Fleet strategy: customer-driven newbuilds and specialized growth

Kimble said fleet decisions are largely driven by customer needs: “We build the ships that our customers want.” He said that approach has resulted in one of the more diversified fleets among public tanker companies and has led Tsakos into specialized areas such as shuttle tankers.

He recounted that Exxon approached Tsakos more than a decade ago seeking a shuttle tanker for a deepwater project. While Tsakos had not previously operated shuttle tankers, it built the vessel, which Kimble said helped establish a foothold in a niche with only “five companies in the world” and has been “by far our most profitable line of business.”

Discussing the company’s current newbuild program, Kimble said Tsakos has 20 ships on order, including:

• Eight shuttle tankers
• Three VLCCs
• Four Panamax vessels

Kimble said most newbuilds are initiated by majors and are expected to have long-term contracts in place by delivery. He added that Tsakos was able to secure VLCC shipyard slots on an accelerated timeline—“more like one year and two years” rather than three—describing it as an opportunistic move supported by the company’s relationships with South Korean shipyards and balance sheet flexibility.

On charter duration, Kimble said some shuttle tanker contracts can reach 15 years, while the fleet average is “between two and three years,” allowing for repricing as contracts roll. While Tsakos is “not big at playing the spot market,” he said the company may maintain limited spot exposure during rollovers to ensure long-term rechartering reflects prevailing conditions, particularly amid volatile VLCC spot rate prints that he cautioned can resemble “Uber peak pricing.”

Kimble also discussed fleet renewal, saying ships approaching 15 years old “are on our radar screen” for sale and replacement, though decisions are “opportunistic” and “subjectively balancing a lot of things.” He cited selling a 10-year-old VLCC for $109 million ahead of a costly special survey as an example of capitalizing on market demand.

Looking ahead, Kimble said the company remains focused on risk-averse operations, avoiding putting vessels “in harm’s way,” and believes current conditions could support “a very profitable long cycle,” even acknowledging the risk that a significant drop in aggregate oil demand could reduce ton-miles.

About Tsakos Energy Navigation NYSE: TEN

Tsakos Energy Navigation Ltd. NYSE: TEN is an international shipping company specializing in the transportation of crude oil and refined petroleum products. Founded in 1993 by Nikolas P. Tsakos, the company has built a reputation for operating a modern, well-maintained fleet of double-hull tankers. Tsakos Energy Navigation is organized around both ownership and technical management of vessels, offering chartering, commercial operations and crew services under one umbrella.

The company’s fleet consists primarily of very large crude carriers (VLCCs), Suezmax and Aframax tankers, as well as medium-range (MR) and Handy product carriers.

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