* More tanker companies could go for 'slow steaming' - CEO
* Companies may reposition ships as fuel costs rise
* Says his ships not avoiding Japan
By Krishna N Das
BANGALORE, May 5 (Reuters) - Overseas Shipholding Group Inc
, the world's second-largest independent tanker company,
warned that rising crude oil prices
Ship operators may idle vessels, reposition them or just drive them slower to try to mitigate oil prices that have risen to 2-1/2-year highs - before Thursday's sharp drop. [ID:nL3E7G50LS]
The global tanker fleet is forecast to grow by 10 percent to 450 million deadweight tonnes this year, while demand is seen rising by only 2 percent.
"Oil prices staying high and choking off demand is a big negative," Overseas Shipholding's CEO Morten Arntzen told Reuters by telephone from London. "When Americans start cutting back on driving because of higher gasoline prices, that's a negative."
Arntzen said more tanker companies should opt for so-called "slow steaming" -- slowing down vessel speeds to save fuel. This would also require more ships to shift the same cargo, helping ease the ship glut.
"Slow steaming is here to stay and it will absorb some of the incremental tonnage that's coming in," said Arntzen, who was visiting the English capital for business meetings.
JAPAN, LIBYA, PIRATES
Rising fuel prices, tumbling freight rates , piracy and radiation fears from the Japanese earthquake in March could make this year one of the toughest in decades for the maritime industry, forcing some shippers out of business. [ID:nL3E7FB02U]
Spot rates for the benchmark Arabian Gulf-Far East voyage for Very Large Crude Carriers (VLCCs) -- among the biggest ocean-going transporters -- recently fell below the actual cost of fuel for the trip, raising the possibility that shippers may decide to taking vessels off the market.
"We have no intention to lose money on a voyage, it doesn't make sense. I think people will reposition ships," said Arntzen, who has been at the company's helm for seven years.
He said his ships were not avoiding Japan, where the March 11 quake and tsunami crippled a power plant and sparked the worst nuclear crisis in a quarter of a century.
"We are being very careful about which ports (in Japan) we go to. We don't do a lot of business there ... (we) move some LNG occasionally and some products," Arntzen said.
He also urged governments to curb the menace of Somali pirates in the Arabian Sea.
"We're taking all the measures, including substantial route deviation, to ensure our ships are safe," he said.
On Tuesday, New York City-based Overseas Shipholding posted a narrower-than-expected first-quarterly loss -- its eighth in a row -- as a jump in its U.S. business revenue offset the fall in the rates it charges. [ID:nL3E7G320G] (Reporting by Krishna N Das in Bangalore, Editing by Ian Geoghegan)