Middle East tanker venture sets sights on fleet of VLCCs

A new Middle East tanker player with a strong appetite for building a fleet of VLCCs aims to take advantage of what it expects to be a period of market rebalancing.

Iraqi Oil Tankers Co (IOTC) has teamed up with Arab Maritime ­Petroleum Transport Co (AMPTC) to form Al-Iraqia Shipping Services & Oil Trading (AISSOT).

Ahmed Said, deputy chief executive of AISSOT, says the joint venture will use some of its shareholders’ existing ships but will also be active in acquiring tonnage.

“The JV’s mandate is broad, and over the next five years we anticipate to gradually acquire a significant fleet of ships for the transportation of petroleum products and crude oil from Iraq to end-users,” he said. “As AISSOT becomes established, we expect a large number of VLCCs to be acquired or chartered as well, specifically for the transportation of crude oil.”

Clarksons data shows that IOTC owns four small products and chemical tankers.

AMPTC controls 11 ships, including products, LPG and crude carriers, according to its website. The company was founded by members of the Organization of Arab Petroleum Exporting Countries, which includes Saudi Arabia, the United Arab Emirates and Kuwait.

After starting operations three months ago, AISSOT has 30 employees based in Dubai.

Reuters, citing a 20-year contract it has seen, has reported that IOTC owns a 22.5% stake in the joint venture and AMPTC 77.5%.

Middle East oil producers are ­becoming more commercially ­focused as a result of the slump in crude prices over the past three years. The formation of AISSOT, which will also provide bunkering services, comes hot on the heels of another joint venture between Iraq’s SOMO and Russia’s Litasco, focused on the global oil trade.

“The JV is based on the vision of the Iraq Ministry of Oil to strengthen the national companies in partnership with capable international companies that have the experience and track record to benefit the Iraq economy and expand its critical infrastructure,” Said explained.

The timing is rooted in declining time-charter rates and asset prices. “The market still has 18 to 30 months of rebalancing to take place,” he said. “We have started our operations during the right time in the cycle and can take advantage of the supporting prices in building up our fleet.”