Oman Shipping starts $4 billion fleet expansion

Eric Watkins
Senior Correspondent

LOS ANGELES, Mar. 27 -- Oman's state-owned Oman Shipping Co. (OSC) plans to spend $4 billion in the next 3-4 years to expand its fleet as part of the country's latest effort to upgrade its oil industry.

OSC Chief Financial Officer Kuldeep Mathur said the expansion will facilitate exports of the country's crude and products in response to expected future demand.

The expansion planned by OSC, whose stakeholders are the Ministry of Finance and Oman Oil Co., is part of the sultanate's broader vision to upgrade shipping and chartering and enable it to depend less on leased vessels.

Oman, like other Persian Gulf states, also is trying to diversify its economy away from oil, which generates almost half its gross domestic product, because production is declining. An expanded fleet can transport Omani hydrocarbons or can be chartered out.

Part of OSCs multibillion dollar expansion includes a recent order to build 10 very large crude carriers, five with South Korea's Hyundai Heavy Industries Co. and five with Daewoo Shipbuilding & Marine Engineering Co.

OSC also is in discussions with the National Iranian Tanker Co. to secure a long-term charter contract for at least five of the supertankers.

International pressure and the implementation of broad-based sanctions on Iran, led by the US, have made it difficult for the Islamic Republic to access funding from financial institutions for the construction of VLCCs.

"Yes, we are discussing the option with [Iran], along with others, but we are not decided yet," Mathur said.

Last May, Japan's Mitsui OSK Lines Ltd. and OSC formed a 50-50 joint venture to build a 110,000 ton capacity products tanker that primarily will carry gasoline, diesel fuel, and jet fuel to China, Europe, and the US.

Sasebo Heavy Industries Co. will build the carrier at a cost of about ¥8 billion, and the Japanese firm also will begin operating it as early as 2009.

The agreement marks the fifth ship that Mitsui OSK and OSC will jointly own for hauling crude and petroleum products produced in Oman.

In June 2006 the two firms launched two companies (one for an LR2-type product tanker, another for an LPG carrier), while in June 2005 they started two others, one for a VLCC and another for an LR1-type product tanker.

Contact Eric Watkins at hippalus@yahoo.com.

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