The flow of much of the world’s oil is controlled from a small suite of offices perched over a Tiffany & Co. store in the Chelsea section of London. That’s where John Fredriksen, a Norwegian shipping magnate worth $13.2 billion, manages the world’s largest fleet of supertankers, the most valuable deep-water drilling company and an armada of about 128 vessels that carry minerals, grains and liquefied gases.
Every morning, he plows through a stack of reports on the operations of his maritime empire. Whenever he makes a bet-the-company move, which he does every few years, Fredriksen sets the data aside. “I still work on a gut feeling,” he says in a conference room adorned with a painting of a supertanker named Kathrine, after one of his two daughters.
(Henry Bourne/Bloomberg Markets) - John Fredriksen, 68, chief executive of Bermuda-based Frontline, is the most influential oil-tanker owner since the days when Greek tycoon Aristotle Onassis ruled the sea lanes.
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As he navigates the worst shipping market since the 1970s, Fredriksen’s instincts are telling him to buy. He’s investing $7 billion in 18 rigs to pump oil from beneath the ocean floor and $4 billion in four dozen new vessels to transport liquefied natural gas, gasoline, propane and other fuels. Although Fredriksen loves tankers, he’s trying to increase his dominance over the global trade of liquid energy in most of its forms.
Fredriksen, 68, is making the biggest wager in a swashbuckling career that has brought billions of dollars in windfalls as well as bitter setbacks — such as the four months he spent in jail charged with fraud. A stout man with the weathered face of a mariner, Fredriksen is fond of joking that 42 of the 50 years he has worked in the tanker trade have been awful.
Whether he’s holding court with Norwegian money managers at the ritzy Theater Cafe in Oslo or downing beers with shipowners at industry confabs in Athens, the chatty billionaire loves being the big dog in tankers. Although he quit school at age 16, Fredriksen lives in a refurbished 18th-century rectory with two acres of gardens in Chelsea that’s worth $172 million.
He bases his latest investments on the plunging prices of vessels rather than on economic- and petroleum-growth forecasts, which he says are too uncertain to be useful. At $535 million, the cost of a deep-water rig in Singapore yards is down 31 percent from its 2008 peak, and Chinese and South Korean shipbuilders are accepting supertanker orders for about $80 million, half of what they cost at their high in 2007.
“Basically, I’m a trader,” Fredriksen says. “I think as we are sitting here, we are very close to the bottom of the market, and I like to be a buyer at the bottom. This is the game.”
He is taking a huge risk: If he floods the markets with too many vessels, they could further drive down the charter rate that oil producers, traders and refiners pay owners like him to pump and carry their precious juice. The rates for crude carriers are hovering at 10-year lows following a spate of overbuilding before the 2008 financial crash. It doesn’t help that the euro zone’s economy, which contracted 0.2 percent in the second quarter, is sliding toward recession and that growth in the U.S. remains anemic.