Growing ambitions: State-owned maritime transportation flagship explores LNG shipping opportunities in Iran and West Asia
Conrad Prabhu –
Dec 19: Oman Shipping Company (OSC), a subsidiary of the wholly state-owned Oman Global Logistics Group (OLG), says it has urged the government to endorse its role as the principal maritime transportation arm for the handling of the nation’s import and export cargoes.
The move is in line with the shipping firm’s broader vision to align its business and growth strategies with the government’s efforts to spur the development of a logistics-centric economy in the Sultanate. OGL, which now groups all of Oman’s public sector maritime, aviation, transportation and logistics related entities, has been tasked by the government to achieve this vision as articulated in the ‘Sultanate of Oman Logistics Strategy 2040’.
Oman Shipping’s vision for 2017 and beyond is outlined in the latest edition of ‘Compass’, the official newsletter of OLG. “OSC has urged the government to consider its organisation as the main shipping arm for Omani Exim cargo,” a report in the newsletter said, underscoring OSC’s ambitions to position itself as the Sultanate’s premier maritime freight transportation services provider.
Describing itself as a “forward-looking” company, OSC says it is also exploring opportunities in LNG shipping in the West Asia Gulf region, including Iran. “This is an exciting time for development not only for OSC, but for the Sultanate,” it said. “The future of seaborne shipping in the region is one filled with great opportunity and expectancy,” it noted.
Significantly, OSC has also set its sights on opportunities in oil and gas transportation, which represents the mainstay of its business. Fuelling these opportunities, it says, are growing investments in new refining and storage capacities in the region, centring on crude oil and petroleum products.
Recent investments in the expansion of its already formidable shipping fleet have been geared towards targeting this promising market, according to the company. Notable was an order for nine Very Large Crude Carriers (VLCCs), each of about 318,000 deadweight tonnes (DWT) and constructed at leading South Korean shipyards Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding and Marine Engineering (DSME). Further, to bolster its chartering business, OSC has invested in a fleet of 10 new mid-range Product Tankers each of about 50,000 DWT, built at South Korea’s Hyundai Mipo Dockyard. Conceived as part of the company’s ‘Project Silver’ initiative, all 10 vessels have been chartered to Shell International for a period of 7 — 10 years. The deal gives OSC “assured business with an international leader in the oil industry, and an opportunity to enhance both quality and its competitive edge through compliance with Shell’s existing standards,” it said.
Another recent investment by OSC pertains to the construction of a state-of-the-art LNG carrier, named Adam LNG. The 163,000 cubic metre capacity vessel has been built at Hyundai Heavy Industries.
With many of its long-term LNG shipping contracts due to expire shortly, Oman Shipping says it is looking to renew its arrangements with exporters of Omani LNG, as well as add further volumes from Oman LNG’s output.
However, a significant challenge it foresees going forward is the escalating wage bill it incurs in the operation of its sizeable fleet. Crewing costs account for a hefty 60 per cent of total operating costs — a challenge the company says must be taken into consideration if it has to remain competitive in the international market.