Oman Shipping Company reports $180m profit in 2015

By Finance

Oman Shipping Company (OSC) was able to make a $180 million profit in 2015, indicating that this profit will be used to develop and expand the company’s business during the coming period.

Tariq bin Mohammed Al Junaidi, chief executive officer of OSC said in an interview with Oman News Agency (ONA) that achieving significant profit came as a result of the good performance of the operations of the company’s business in general, and as a result of an improvement in the rental market of giant oil tankers (as a result of the decline in world oil prices ) resulting from the increase in oil supply in global markets.

Al Junaidi also noted that OSC has begun to make profit since the first year of its establishment and did not suffer from any losses, only in two years, as a result of circumstances beyond the company’s abilities. He noted that the company invests 20-30 per cent to buy any tanker and the remaining sum would be financed by borrowing from local and international banks.

Oman Shipping Company reports $180m profit in 2015

LNG Tanker LNG Barka - Image: Geraldo Pietragala

He explained that OSC now owns 47 tankers and five tankers will join its fleet by the end of this year. The company has succeeded in strengthening its position in the maritime transport markets over the past few years.

It very recently signed an agreement with Shell International to provide it with 10 ships to transport oil derivatives in 2015 and 2016. OSC provides them with five ships so far and the other ships will be provided at the end of the year, he said.

Shell rents these ships for up to 10 years in order to operate in the global market.

Al Junaidi said that the company runs and provides the technical support operations for 33 tankers by one of its subsidiaries, the Oman Ship Management Company, while the rest of the tankers are operated by third parties.

He also noted that 60 per cent of the company’s tankers are under long-term contracts ranging from 15 to 20 years with large international companies, and reputable local companies, such as Oman LNG and Oman Oil Refineries and Petroleum Industries (Orpic) Oman Trading International (OTI), Salalah Methanol Company, Oman Vale Company, and Sohar Aluminium, while the rest of the company’s tankers are rented out on a daily basis via the spot market.

Al Junaidi said that OSC owns most of the ships, and sometimes hire some of the other vessels and then re-lease to customers.
The company owns 39 tankers and eight are chartered and re-leased tankers by contracts extended from one year to two years, depending on the project or the purpose for which they are used.

He also stressed that the shipping market is featured by great transparency and reacts quickly to the forces of supply and demand.

He said for example, OSC bought a ship for $31 million in 2013 while its price in 2008 was more than US $50 million. The daily rent for one of the company’s ships is in the range of $18,000 in 2013. The average rent of that ship in 2015 rose to $55,000.

SALALAH LNG - IMO 9300817

LNG Tanker Salalah LNG - Image: Manuel Hernández Lafuente

The CEO of OSC denied in his statement the rumours being promoted that some of the company’s tankers are not operating and are anchoring in one of the ports of the Sultanate, stressing that the company buys or leases the ships, based on the needs of the company’s commercial customers and the economics of any project, whether it calls investment in the construction of new ships, the purchase of newly manufactured ships, lease or re-lease, both short-term contracts or long-term contracts, according to the nature of each project.

He explained that any OSC tanker anchoring in the ports of the Sultanate is leased to local or international companies, which decide their routes, sending some ships to some of the ports of the Sultanate for several reasons, including loading or unloading cargo, filling, supplying, replacing the ship’s crew and other reasons, which are interpreted in ways that are incorrect or the interpretation of some of the gossip and rumors that never contribute to the good service of the public interest.

Al-Junaidi said that OSC was founded in 2003 and started in the liquefied natural gas sector from Qalhat by its tankers to the beneficiaries. OSC then turned to different transport sectors supported by the Government of the Sultanate by introducing the company as a national carrier to the national projects set up in the Sultanate, such as providing four supertankers to transport iron ore from Brazil to Sohar for Oman Vale company which founded iron smelter to form pellets that fall within the traditional iron industry.

Oman Oil Company and its subsidiaries, which owns 20 per cent of OSC looks at the company in a complementary manner, where the company has provided solutions to the transportation of oil products and their derivatives for their products from Orpic across the coast of Oman to a certain point of the Sultanate or in some cases outside the Sultanate, the transfer of methanol from Salalah Methanol Company, the transfer of the raw aluminium from Australia to Sohar Aluminium Company, and the transfer of oil products , traded by OHI worldwide. He stressed that these actions by the company through its tankers contributed to the increase in revenues and profits of the company. It also contributed to provide many jobs for qualified Omani youth, as OSC employs currently 230 employees, 85 per cent of them are Omanis.

He said the company attaches great importance to the rehabilitation and training of young Omanis. The company annually provides scholarships for Omanis to qualify them to work on boards of the company’s vessels.

The company sends annually 20-30 young Omanis annually abroad to study navigation and marine engineering, pointing out that the company has also dispatched students to study in the International Maritime College Oman (IMCO) in Sohar. The college also signed an agreement with OSC to train its students on board the company’s ships.

With regard to the programme of corporate social responsibility, he said that OSC is training a large number of graduates of IMCO, where OSC pays the expenses of their field training, which could last a whole year, after which the student gets the Certificate of Competency, as part of a college diploma program; to assist the college in the formation of an elite college talented qualified Omani navigators and engineers who are preparing to enter the field of maritime employment.

The company also was one of the most prominent supporters of Oman Youth Sailing Programme, in cooperation with Oman Sail for a common goal, namely the development of sailing in Oman as part of the heritage of the Sultanate’s maritime past.

He added that the company has signed a memorandum of understanding with the Ministry of Agriculture and Fisheries to provide marine safety equipment and awareness lectures for many Omani fishermen in different governorates of the Sultanate.

On the educational side, the company is cooperating with the Ministry of Education and Outward Bound Oman (Challenge) for the implementation of training courses in areas with difficult terrains to qualify students to deal with situations and crises that might confront during the life cycle through programs and courses of Outward Bound Oman (Challenge), which are in the mountains and deserts of Oman.

About the company’s support for small and medium-sized enterprises and investment in the Sultanate in order to raise the In-Country Value (ICV), he said that OSC supports these institutions indirectly. It provides in cooperation with the Oman Dry Dock the repair and maintenance services for a number of ships in the dry dock in A’Duqm, which makes it imperative to the Dry Dock Company to cooperate with small and medium enterprises engaged in providing support services for the dry dock and other various aspects of support.

Regarding OSC future plans, Al Junaidi said the company’s efforts to secure the transport of oil products from oil planned refinery set up in A’Duqm . The company also seeks in the near future to provide the ground for the transfer of minerals and the material produced by the Omani quarries in Sohar or Salalah via the company’s tankers.

The CEO of OSC said that the company began earlier this year set up a shipping line through one of its container vessel, connecting all the ports of the Sultanate starting from the port of Salalah, through the port of Jebel Ali with a journey every two weeks.

Source: Oman News Agency