74 Kenneth Hvid, Teekay
Kenneth Hvid presides over a corporation with assets that ship 3% of seaborne oil trade and 8% of seaborne LNG. His company has decided against using scrubber technology for its fleet of aframax vessels
The president and chief executive is bullish for 2020 after his company’s brush with geopolitics in 2019
AT the age of 50, the career of Teekay Corporation president and chief executive Kenneth Hvid is peaking, along with the tanker and liquefied natural gas markets that determine the financial fortune of the company he manages.
The corporation’s tanker and liquefied gas shipping divisions (Teekay Tankers and Teekay LNG Partners) spans 150 ships and one regasification project in Bahrain.
It is forecasting earnings to grow in 2020 to just under $1.2bn, double levels seen in 2017.
“We’re quite bullish on 2020 and 2021,” Mr Hvid told Lloyd’s List about the tanker sector in a November 2019 interview.
Teekay views demand increasing, while supply of newbuilding tanker deliveries finally diminishes. The company is less enthusiastic about the LNG sector, where an LNG carrier glut is likely after 2020.
Mr Hvid joined Teekay 19 years ago and presides over a corporation with assets that ship 3% of seaborne oil trade (currently measured in total at about 50m bpd) and 8% of seaborne LNG (global LNG imports totalled nearly 314m tonnes in 2018).
He joined the board in June and is credited with diversification to LNG back in 2003 and its subsequent exit from offshore. Teekay LNG Partners now operates a fleet of 79 ships, the third-largest after Japan’s MOL and NYK.
Teekay’s aframaxes form the majority of the 68-vessel fleet of mid-sized tankers. The company has a 30% share in a lightering business off the US Gulf, where aframaxes are used to shuttle crude on to and off the very large crude carriers too large to call at ports.
It has been one of the fastest-growing crude export regions, with that position likely mitigating losses after the US sanctions disrupted Venezuelan crude flows earlier this year — an area in which Teekay had some exposure.
However, that was not Teekay’s only brush with geopolitics in 2019.
In September, Mr Hvid found Teekay’s LNG joint venture with a unit of China’s Cosco at Yamal, in Russia’s Arctic, needed restructuring to avoid further unilateral US sanctions.
Ultimately, Mr Hvid is a gas man, not an oil man. Teekay has not deployed scrubbers on its tanker fleet in order to meet lower-sulphur bunker requirements in 2020. The fleet composition, size and diverse port calls was only one reason, he explains.
“We think we will do a better job taking a position in the [tanker] market as opposed to taking a position on the spread [the difference in price between the cheaper, high-sulphur fuel used for scrubbers, and the compliant, lower-sulphur bunkers],” Mr Hvid says.
He champions Teekay, an early mover in global shipping when it comes to decarbonisation, saying the company was among the first to make technological changes to using cleaner fuels.
The latest LNG carriers delivered this year are carry 20% more and consume 40% less fuel than Teekay’s first, earlier generation ships from 2003. LNG is the transition fuel for the short to medium term, says Mr Hvid.
This is the second company for which the long-time Vancouver resident has worked. Mr Hvid started out at in the late-1980s with AP Moller and the Maersk group in Copenhagen.
“Shipping was very much a more global industry than many others,” he recalled to Lloyd’s List.
“As a young person, I wanted to go out and see the world and become part of global trade.”