Oman beefing up its LNG shipping capability

May 14, 2003
Oman has entered into a contract with Mitsui OSK Lines of Japan aimed at developing the country's ocean transport industry, particularly its LNG shipping, while awarding a tender valued at $299.5 million to Japanese and South Korean shipyards for the design and construction of two new LNG carriers.

By Eric Watkins
OGJ Middle East Correspondent

NICOSIA, May 14 -- Oman has entered into a contract with Mitsui OSK Lines (MOL) of Japan aimed at developing the country's ocean transport industry, particularly its LNG shipping, while awarding a tender valued at $299.5 million to Japanese and South Korean shipyards for the design and construction of two new LNG carriers.

Industry sources told OGJ Online that Samsung Heavy Industries Co. Ltd. (SHI) of South Korea and a Japanese consortium of Mitsubishi Heavy Industries Ltd. (MHI) and Kawasaki Heavy Industries Ltd. (KHI) won contracts for the carriers on Monday at a meeting of Oman's Tender Board, chaired by Malik bin Suleiman Al Ma'amari, minister for transport and telecommunications.

The three companies emerged from a list of 10 firms initially prequalified for the contract (OGJ Online, Mar. 27, 2003). In April, the Omanis trimmed the list to five firms: Samsung, Hyundai Heavy Industries Co. Ltd., and Daewoo Shipbuilding & Marine Engineering Co. Ltd., all of South Korea; and the Japanese consortium of MHI and KHI.

Oman will acquire the two new LNG carriers outright while retaining the option of adding two more ships at a later stage. Delivery of the first vessel is set for December 2005, while the second carrier is due in third quarter 2006.

The vessels, costing just under $150 million apiece, will meet the transport needs of Oman's LNG Train III project currently under construction at Qalhat in the Wilayat of Sur, adjacent to the existing two-train facility of Oman LNG (OLNG).

The new train, expected to come on stream by yearend 2005, will add a further 3.8 million tonnes/year (mty) to the 6.6 mty from the two existing trains, boosting the plant's overall capacity to more than 10 mty of LNG.

Oman currently ships most of the output from Qalhat to customers in Japan and South Korea and has recently signed a memorandum of understanding with Spain's Union Fenosa for the supply of 1.65 mty of the new train's output (OGJ Online, Dec. 16, 2002).

MOL, which advised the Omani government on the tender for the LNG carriers, said on Wednesday it signed a comprehensive service support contract with Oman Shipping Co. and Oman Shipmanagement Co. aimed at developing the country's ocean shipping industry.

MOL Pres. Kunio Suzuki and Oman Minister of National Economy Ahmed Macki signed the contract at the MOL head office in Tokyo on May 14. MOL said the agreement will involve the firm in a "wide range" of ocean shipping industry development projects in Oman, as well as in the transport project with the LNG carriers Lakshmi and Muscat.

Last March, Oman, MOL, and Mitsui & Co. Ltd. signed an MOU for the acquisition of the Muscat, a 145,000 cu m Moss-type LNG carrier to be constructed by KHI, with delivery set for March 2004. Upon delivery by KHI, the new vessel will enter into a long-term time charter agreement with the Omani government.

The Muscat will be the second LNG carrier to be chartered by Oman, following the SS Lakshmi, in which the Oman government has an equity stake. Oman earlier acquired a 40% share in Greenfield Shipping Co., which owns the 135,000 cu m Lakshmi, which is now being used for spot deliveries of LNG produced at the existing plant at Qalhat.

Stakeholders in OLNG include Oman 51%, Royal Dutch/Shell Group 30%, TotalFinaElf SA 5.54%, Korea LNG 5%, Mitsubishi 2.77%, Mitsui 2.77%, Partex Oil & Gas (Holdings) Corp. 2%, and Itochu Corp. 0.92%.