Egypt seeks economic opportunities in shipping

Egypt’s fleet of refuelling vessels has operated on rudimentary refuelling systems for 43 years with a capacity of no more than 35,000 tonnes of fuel a year.

Saturday 24/08/2019
A ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal near Ismailia port city. (Reuters)
Untapped potential. A ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal near Ismailia port city. (Reuters)

CAIRO - The Egyptian Ministry of Petroleum and Mineral Resources announced plans to maximise its logistics services for ships transiting its coasts and waterways.

Cairo said it would increase its fleet of service ships with about five new tankers to supply vessels with fuel and other logistical services. “The move is in line with the country’s strategy to become a regional energy hub in the Eastern Mediterranean region,” Egyptian Petroleum Minister Tarek el-Molla said.

He said the government seeks to add value to its fuel services sector, which coincides with the development of safety systems for logistics in line with local standards compatible with British systems.

The oil products tanker Misr 1 moored at the city of Port Said on August 13. The vessel operates a dual-supply system and has a fuel capacity of about 1,750 tonnes. Hussein Fathy, president of Misr Petroleum Company, a public company affiliated with the Petroleum Ministry and which owns the fuel supply vessels, announced that the other tankers would arrive in Egypt this year and next.

He said Egyptian fuel supply vessels use a single-supply system not compatible with supertankers, which prompted the company to upgrade its fleet. Egypt’s fleet of refuelling vessels has operated on rudimentary refuelling systems for 43 years with a capacity of no more than 35,000 tonnes of fuel a year.

Cairo’s limited technical capabilities in refuelling services, plus the high cost of operating older vessels, affected its ability to compete in refuelling transit ships, for which it was more economical to push on to the Jebel Ali region in the United Arab Emirates for refuelling.

Egypt adjusted its refuelling prices and increased the capacity of its refuelling ships about a year ago, quadrupling Egypt’s fuel supply capacity to 187,000 tonnes. The improvements enhanced Egypt’s competitiveness and encouraged the Petroleum Ministry to upgrade its refuelling tankers.

Cairo is betting on the project for the development of the Suez Canal axis, which is likely to open investment for the Egyptian economy through the localisation of re-export industries, such as shipbuilding and vehicle manufacturing.

Re-export operations would result in major activities in shipping and traffic through the canal, which is expected to increase demand for logistics services, whether fuel supply, maintenance or food supplies in addition to opening tourism opportunities for the vessels’ crews.

The only revenue from the Suez Canal comes from transit fees. The Suez Canal Authority announced a record $3.6 billion in revenues for the last fiscal year but that level was still considered weak, compared to Singapore’s experience in providing logistics services to ships and which generates about ten times as much revenue.

A total of 70,679 ships, transporting 4.3 billion tonnes of cargo, transited the Suez Canal in 2018. The canal last year recorded the highest number of vessel crossings in one single day, 81 vessels with 6.1 million tonnes of cargo.

To prepare for enhanced work in ship logistics, Rasheed Petroleum developed a Safety Volume for Logistics Services, which establishes minimum international standards and practices in equipment and operations.

It includes the development of standard operating and risk management procedures for high-risk activities, the definition and identification of major accident risks associated with logistics operations, various risk management systems involved in managing the risks and reducing them to ensure the safety of personnel and appropriate performance standards for logistical safety elements.

Adel al-Lamaie, chairman of the Transport Committee at the Egyptian Businessmen Association, said not developing maritime logistics systems has cost Egypt opportunities to capitalise on investment.

He said the government’s initiative was positive but that the government still needs to make available larger supply and maintenance vessels to attract the business of giant cargo vessels as they cross the Suez Canal.

Last April, Royal Caribbean’s Quantum-Ultra-class cruise ship Spectrum of the Seas, the largest passenger ship in the world, crossed the Suez Canal on its maiden voyage. The ship is 347.1 metres long, 41.4 metres wide and displaces 170,000 tonnes. It can accommodate more than 4,200 passengers and has a crew of 1,500. It paid about $1 million in transit fees.

The Megamax 24, one of the world’s largest container ships with a capacity of 23,000 containers, also crossed the canal.

Cairo is to begin receiving Israeli gas in September. It is to be liquefied and processed at the Edco Station on the Mediterranean coast before export to international markets. This is expected to increase ship traffic in the Mediterranean and open logistics investment opportunities for Cairo.

Egypt is also awaiting the arrival of Cypriot gas by 2024, Cypriot Energy Minister Yiorgos Lakkotrypis said during the recent Eastern Mediterranean Gas Forum in Cairo. This would require Cairo to keep pace with changes in commercial gas traffic, increasing services in the logistics activities for transit ships.

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