Oman Shipping Company aims at diversified fleet portfolio
MUSCAT -- Construction of Oman's first Very Large Crude Carrier (VLCC) and Product Carrier is due to commence at Japanese shipyards by late next year, according to officials of the state-owned Oman Shipping Company (OSC).
The acquisition of the new-building VLCC and Product Carrier is in line with OSC's vision of creating a truly world-class and well-diversified ocean-going shipping industry. OSC, which is 80 per cent owned by the Ministry of Finance and 20 per cent owned by Oman Oil Company (OOC), already has interests in seven LNG carriers, five of which are in various stages of design and construction at Korean and Japanese shipyards.
The VLCC and Product Carrier mark a significant diversification from OSC's initial focus on creating a core fleet of LNG carriers to serve the Sultanate's burgeoning LNG industry. In time, the company's fleet portfolio is expected to also include dry bulk carriers, chemical tankers and various types of carriers designed to primarily serve the petrochemical and industries projects under development in various parts of the Sultanate. The ultimate goal, say OSC officials, is to grow into a truly global shipping company.
OSC and the Japanese shipping giant Mitsui OSK Line (MOL) have agreed a joint venture arrangement to co-own the VLCC and Product Tanker in a 50-50 partnership. The VLCC, of 308,000 DWT-capacity, is due for delivery towards the end of 2008. It is expected to be placed on the spot market for delivery of crude oil, but can also be potentially deployed to Omani crude oil cargoes, say officials.
The 75,000 DWT-capacity Product Tanker will also enter service around end-2008. Upon delivery, OSC and MOL will establish a joint venture company that will take over the tanker on a time charter. It will be deployed into the so-called 'LR1' pool, which is a grouping of shipping companies that operates by agreeing common freight tariffs and sharing the income among themselves. MOL is presently the co-lead manager of the LRI pool. As OSC's strategic shipping partner, MOL will operate both the VLCC and Product Tanker.
MOL, one of the world's largest shipping companies, also has an equity interest in six of the seven LNG carriers that are co-owned by OSC. Both OSC and MOL have forged a strong partnership designed to help the Sultanate develop a viable maritime industry. Oman Ship Management Company SAOC (OSMC), which is a wholly owned subsidiary of OSC, has entered into service agreements with MOL whereby the Japanese shipping firm will provide technical know-how in the operation, maintenance and management of OSC's vessels.
Oman Ship Management Company was set up by OSC to manage and operate its rapidly growing fleet of ships. Oman Ship Management Company has signed Ship Management Agreements with the owning companies of Sohar LNG, Muscat LNG, Nizwa LNG, Ibri LNG, Salalah LNG and Ibra LNG to operate and manage these vessels. The company has also appointed a team of qualified staff to oversee the management of these ships. A team of technical personnel has been seconded from MOL to OSMC.
Technology transfer is a key objective of MOL's partnership with OSC. OSC has also set up a wholly owned subsidiary, Oman Charter Company SAOC, to oversee the company's charter business. The owning companies of Sohar LNG, Muscat LNG, Nizwa LNG, Ibri LNG, Salalah LNG and Ibra LNG have given their vessels on charter hire to Oman Charter Company, which in turn has the mandate to give them to third parties or end-users on charter hire.
Besides acquiring these six LNG vessels on charter hire, Oman Charter Company has also made inroads into the wider charter business. It has already taken an LNG tanker, named 'Excel', on time charter from Exmar. The vessel has been given to Oman LNG on a five-year time charter agreement.
By Conrad Prabhu
© Oman Daily Observer 2005
