Tanker owner Scorpio Ship Management has held on to its coveted panamax-tanker business with Venezuelan oil company PDVSA.

The Monte Carlo-based company has bagged one of the few fixed-rate contracts of affreightment (COAs) available in today's robust tanker market.

The deal is for the shipment of up to one million tonnes of orimulsion, a heavy tar fuel, from Venezuela to Coleson Cove in Canada for use by local power company NB Power.

Scorpio won the business in the face of competition from other panamax operators, including the likes of Heidenreich Marine (Heidmar).

Scorpio has inked the contract until 2010, extending its grip on a trade that has lasted for more than 10 years.

All bodes well assuming there are no hiccups along the way in the supply of orimulsion.

The sector was hanging by tenterhooks a couple of years ago, when PDVSA threatened to stop producing the bitumen-based fuel, saying it was no longer profitable.

That provided grounds for a $1.7bn lawsuit against PDVSA in 2004 by the Canadian company and led to many meetings aimed at renegotiating the business.

Market sources say the new deal involving Scorpio is likely to reflect much better terms in the shipowner's favour than in previous contracts, reflecting the stronger tanker market.

In 2000, PDVSA was said to be paying only around $11.5 per tonne for the business.

While price is likely to have been the overriding factor in the new deal, Scorpio was likely chosen because its modern, ice-class 1C ships fit the environmental requirements of the Canadian importer.

Scorpio signed its previous orimulsion contracts with Bitumenes Orinoco (Bitor), an arm of PDVSA that was liquidated in 2003.

PDVSA now runs its orimulsion business under its own name.

Since that time, Scorpio has established the Jacob-Scorpio Tanker (JST) pool, which operates a fleet of more than a dozen panamaxes, together with Jacob Tankschiffahrt and Ahrenkiel of Germany. However, the PDVSA contract is for Scorpio's account, not the pool's.

Scorpio could not be contacted for comment before press time.

Meanwhile, orimulsion imports to Italy have ceased because of supply concerns but VLCC shipments are still made to Asia, with China and South Korea the big buyers.