Saudi Arabia to create biggest tanker fleet

Sunday 24/07/2016
Saudi Energy Minister Khalid al-Falih

RIYADH - Saudi Arabia will soon cre­ate the largest fleet of oil tankers in the world as part of its strategy to boost its crude oil exports, offi­cials said.

The venture by the Arab Petrole­um Investments Corporation (API­CORP) and the National Shipping Company of Saudi Arabia (Bahri) will involve $1.5 billion being al­located over three phases to buy 15 very large crude carriers (VLCCs).

According to a statement, API­CORP, with an 85% stake, will be the main investor and fund man­ager and Bahri will be the exclusive commercial and technical manag­er as well as being responsible for the remaining 15% investment.

Saudi Energy Minister Khalid al-Falih said: “The additional 15 VLCCs will be on top of the cur­rent and future fleet of Bahri that is more than 45 ships. This will make Bahri the world’s largest oil ship­ping company.”

The venture is set to benefit state-owned Saudi Aramco. Ac­cording to Falih, Aramco ships about 20% of its oil cargoes by sea and needs additional tankers to meet rising demand.

“Timing is essential,” Falih said. “Many countries are cautious in in­vestments amid the current reces­sion. Thus, when Saudi Arabia an­nounces such a huge investment this sends a clear message that the kingdom is moving forward in building its private sector compa­nies and infrastructure.”

Pointing to the significance of the deal to Saudi Arabia’s econom­ic reform drive, Bahri Chairman Abdulrahman al-Mofadhi said: “This fund will not only reduce Saudi Arabia’s dependence on ex­ternal crude carriers but also its earnings will be reinvested in the local economy.

“As with any other initiative, our growth strategy for this invest­ment firmly falls in line with Saudi Arabia’s plans for future develop­ment as laid out in the kingdom’s Vision 2030.”

Saudi Arabia is the biggest oil exporter in the world, producing more than 10 million barrels a day for the past several months. Ac­cording to the Organisation of the Petroleum Exporting Countries (OPEC), the price of crude oil has rebounded more than 70% from a 12-year low earlier this year.

APICORP, which is based in the Saudi Eastern province, is owned by OPEC, with Saudi Arabia, Ku­wait and the United Arab Emirates each having a 17% stake.

The firm announced last Novem­ber its intention of issuing $1 bil­lion in Islamic bonds in 2016, with the aim of financing energy pro­jects in the Middle East and North Africa. APICORP, known mostly for its petrochemical investment, hopes to diversify by including more projects related to renewable energy.