Number of medium-range products tankers being built at Hyundai Mipo Dockyard10
Expected fleet size by the end of 201654
Steady sailing in OmanSeptember 11, 2015
Acting CEO of Oman Shipping Company Tarik Mohamed Al Junaidi talks to TOGY about the dip in LNG carriers’ daily rates. Founded in 2003 by the Ministry of Finance and Oman Oil Company – which hold 80-percent and 20-percent shares, respectively – Oman Shipping Company has expanded its fleet and diversified into markets such as crude oil, chemicals, dry bulk and cargo, in addition to LNG and LPG.
Is Oman taking full advantage of its location with regards to shipping?
Oman is located next to major shipping lanes, but the country has not yet been able to maximise its logistics industry potential.
We need to simplify the operation of businesses in Oman. It is easier to establish a company in a business-friendly location such as Dubai. There are some policies and procedures in Oman that will have to be revisited.
The ease of doing business in the UAE makes it more comfortable for companies to invest and set up businesses there and operate in Oman through their offices in Dubai. Leaders need to co-operate more to become more business oriented. Policy makers have to align and agree on what would be most beneficial to the marine and logistics industry.
Has maritime security in the Gulf region improved in recent years?
Piracy issues have almost disappeared. Oman Shipping Company keeps guards onboard its vessels in addition to taking out mandatory insurance. The security risk is extremely low in the Gulf of Aden when compared to the situation three or four years ago. We are now at the stage of contemplating whether we need these measures to protect our operations.
However, security is a difficult subject and requires much consideration. Maritime crews feel more comfortable when they are escorted by armed personnel. With the technology that is available in 2015, you would expect insecurity in the maritime industry to gradually disappear.
How would Oman Shipping Company benefit from becoming privatised?
It does not matter whether it is the Omani government or private investors that are the main shareholders of the company.
The ownership structure of the company is not important, as long as the stakeholders have a strategy in place that will facilitate growth in the business. Oman Shipping Company was heavily dependent on the Omani government when it was first established.
However, even though it remains a nationalised entity, the company is shifting away from governmental control by striking agreements with oil giants such as Shell.
Oman Shipping Company and Shell have a working relationship through a long-term tanker-charter programme called Project Silver. For this reason, the company has ordered 10 medium-range product tankers to provide hydrocarbons shipping services for Shell.
How much has Oman’s LNG market dipped?
The domestic LNG market is largely targeting East Asia. However, Oman also has an agreement to supply LNG to Spanish utilities provider Unión Fenosa. Thus, two LNG vessels are assigned primarily for the Spanish market.
The world is a small place. The 2011 tsunami in Japan affected LNG vessel prices dramatically as demand went up. The LNG industry has grown significantly as a result of the natural disaster in Japan. LNG vessel charter rates skyrocketed to close to $160,000 per day.
This prompted many shipping companies to invest in LNG vessels. However, those companies failed to calculate what the LNG market would look like over the following four years. Because of the excitement during the time when LNG charter rates were high, many LNG vessels were ordered by logistics companies purely on a speculative basis.
In 2015, there are so many LNG vessels in the market without much business and low demand. We expect this business to pick up again in 2017 and 2018 when new projects are set to begin. It will be uncomfortable for an LNG business not to have a fixed charter. Out of our six LNG vessels, Adam LNG is the only ship that does not have a long-term charter.
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