Oman Shipping Company (OSC), the nation’s principal marine transportation services provider, is keenly eyeing opportunities associated with multibillion dollar investments in a mega refinery and proposed petrochemicals cluster planned in Duqm Special Economic Zone (SEZ).
Duqm, positioned as the new national growth pole, has the potential to drive new business growth for the state-owned shipping line — part of ASYAD Group, the holding company of government shareholdings in various port, free zone, transport, logistics and related enterprises in the Sultanate. Coupled with opportunities linked to ballooning bulk commodity exports, chiefly aggregates and minerals, as well as the energy and petrochemicals sectors, prospects for an uptick in OSC’s business activities are brightening going into 2018, OSC’s chief executive officer, Tariq al Junaidi (pictured) said.
“We are carefully weighing opportunities for investment and growth not only within our existing lines of business, but beyond as well,” said Al Junaidi. “More importantly, OSC is looking to work closely with ASYAD Group to ensure that our growth objectives are in sync with ASYAD’s overall strategy for enhancing the value proposition of Oman as a logistics hub.”
The upbeat comments reflect a new mood in the company as it seeks to emerge from a protracted global downturn that has weighed down the shipping industry worldwide. Thanks to a combination of prudent business and investment decisions, OSC has emerged largely unscathed from the slump, according to the CEO.
“Around 70 per cent of our business is secured under long-term agreements, while the remaining 30 per cent is in the spot market —measures that have helped alleviate any significant impacts on our business,” said Al Junaidi.
“Also in response to the slump, commercial management of our VLCCs handled by a third party, was brought in-house. We now have a department looking at the trading of these vessels. Thus, in terms of utilisation, these vessels are performing quite well because we managed to get a very good Contract of Affreightment (COA) with Shell. Under this arrangement, Shell is utilising about 70 per cent of the capacity of our vessels.”
Buoyed by the brightening market outlook, OSC has its sights on opportunities centred primarily in and around Duqm where a number of big-ticket energy, petroleum and mineral related investments are on the cards. They include the $7 billion Duqm Refinery which, in the second phase of its development, also envisions investments in a petrochemical complex featuring around 10 different downstream ventures. “We would definitely like to meet the shipping requirements of the refinery and petrochemicals complex, but would need to build our fleet in order to do so,” said the CEO. “We do have 10 MR tankers in our fleet, but these are deployed on long-term charter for the next seven years. Even if we don’t actually own vessels to support Duqm’s shipping needs, we can consider bareboat charters of vessels as a short-term option. Our ultimate objective is to have a suitable arrangement with Duqm Refinery that would business sense for both sides.”
Also prospective is the burgeoning bulk sector fuelled by a strong uptick in mineral exports chiefly from Duqm and Salalah, according to the CEO. “We see growth in mineral shipments, but unfortunately not as part of a consolidated chain of exports that would allow for a shipping line like OSC to step in. Hopefully, the Public Authority for Mining (PAM) will step in and organise these exports into a seamless supply chain from the quarry to the port, with onward shipments handled by OSC. This approach will be particularly promising when the Mineral Line, linking the quarries with the Port of Duqm, is eventually built.”
Additionally, OSC envisions potential to develop its fledgling container shipping business. The goal, says Al Junaidi, is to enhance connectivity between Omani ports and maritime gateways in the wider region through the expansion of OSC’s feeder network. At present, OSC’s wholly owned Oman Container Line operates a container feeder service connecting Jebel Ali (Dubai) with Sohar Port, while another line links Sohar, Duqm and Salalah with the UAE.
Also in the company’s sights are potential business opportunities linked to mega investments in, among other developments, a crude storage park at Raz Markaz near Duqm. Oman Tank Terminal Company (OTTCO), a wholly owned subsidiary of Oman Oil Company, is building one of the world’s largest storage depots that will not only provide feedstock for Duqm Refinery, but also serve as a second export terminal for Omani crude. Equally promising are opportunities being created by the development of an LPG extraction plant and an ammonia project in Salalah Free Zone, the CEO added.