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KOTC presses ahead with next phase of newbuild programme

KOTC presses ahead with next phase of newbuild programme
Kuwait Oil Tanker Company (KOTC) is moving ahead with its Phase IV newbuild programme, which envisages delivery of up to eight new tankers by 2017-18.

Jamil Al Ali, KOTC manager fleet newbuilding projects group, said Phase IV envisaged “two VLGCs, and one more in addition, possibly four more MRs and maybe another aframax for around 2017-18 delivery.”

While Korean yards will be the focus of the orders, he said one of the major Japanese yards also might figure, due to the devaluation of the yen, which could allow Japanese ship builders to compete with the dominant Korean players.

“In Phase IV, we have already gone ahead with the two gas vessels. We expect one more to add to them, four MRs and maybe another aframax. There is talk of other vessels in the future. Those are the ones expected to materialise in [the next three years].”

He said finance would be supplied by mother company, Kuwait Petroleum Company (KPC). The entire KOTC fleet is on time-charter to KPC, which in turn often sub-charters to the oil majors.

KOTC today has 30 vessels in the fleet, including 12 VLCCs, LPG carriers and product tankers of various sizes.

Sheikh Talal Al Khaled Al Sabah, KOTC ceo, said in the December 2014 issue of company monthly periodical ‘Nakilat,’ that Phase III deliveries were now complete. Sheikh Talal said the tender for the two VLGCs would be floated before the end of 2014.

KOTC's Phase III new building programme included four VLCCs, one aframax LR-2 and four MRs.

Al Ali said some of the MRs might be used for marketing, rather than strategic, needs.

He hinted that additional VLCC orders might emerge in future, due to likely increases in crude exports to China. A 10-year contract was recently signed with China for export from Kuwait of 300,000bpd. “The contract with China is hoped to go up to 500,000bpd,” he said.

The Energy Information Administration (EIA) says Kuwait was the world’s 10th largest oil producer with around 2.8mbpd in 2013. It said Kuwait exported 1.9mbpd in last year, 75% of it to Asia-Pacific.

"To secure more supply contracts with Asian consumers, Kuwait signed another 10-year contract to double the supply to China's Sinopec to 300,000bpd starting in 2015," the EIA said.

Al Ali would not comment on likely VLCC new builds associated with the contract. “I look after newbuilding. When the actual requirement translates into a firm order, we move. In the meantime, we follow the market and what's happening in the yards.”