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Page added on July 19, 2016
Saudi Arabia Seeks to Create Biggest Tanker Fleet
A venture between Arab Petroleum Investment Corp., known as Apicorp, and National Shipping Co. of Saudi Arabia will create the world’s largest fleet of oil tankers and support the kingdom’s plan to boost crude exports, Saudi Energy Minister Khalid Al-Falih said.
Apicorp, a multilateral energy-finance lender, and the Saudi shipping company, known as Bahri, formed a $1.5 billion investment fund to add 15 very large crude carriers, or VLCCs, to the shipper’s planned fleet of 46 such vessels. The deal announced late Sunday will support Saudi Arabia’s efforts to ensure a secure supply of oil to its customers worldwide, Al-Falih said.
“The additional 15 VLCCs will be on top of the current and future fleet of Bahri that is over 45, and this will make Bahri the world’s largest oil shipping company,” he told reporters in Riyadh.
Saudi Arabia is the world’s biggest oil exporter and is producing at close to a record, the Organization of Petroleum Exporting Countries said in its monthly report published July 12. Oil prices have rebounded more than 70 percent from the 12-year low earlier this year as a Saudi Arabian-led OPEC strategy to pressure rivals, including some U.S. shale drillers, with lower prices slowly eliminates a global supply glut.
State-run Saudi Arabian Oil Co., known as Saudi Aramco, ships about 20 percent of all oil cargoes at sea globally, and it needs more tankers to meet rising demand for its crude, Al-Falih said. The biggest owner of very large and ultra large crude carriers, the industry’s biggest ships, is China Merchants Group, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. China Merchants has 53 vessels including those on order.
Bahri, which merged its fleet with that of Saudi Aramco, owns 36 very large crude carriers and plans to add 10 more in the next two years, its chairman, Abdulrahman Mohammed Al Mofadhi, said.
Apicorp will be the main investor and manager of the $1.5 billion Apicorp Bahri Oil Shipping Fund, with an 85 percent stake, while Bahri will own the remainder and serve as the 10-year fund’s commercial and technical manager, the partners said in a statement. The additional 15 VLCCs will be financed with a mix of debt and equity, Apicorp said in the statement.
The fund should generate returns of more than 10 percent, Raed al-Rayes, Apicorp’s deputy chief executive officer and general manager, said in an July 17 interview. Apicorp may invite other institutional investors, such as regional pension funds, to invest in the oil-shipping fund, he said.
Apicorp, based in Dammam, Saudi Arabia, is owned by the Organization of Arab Petroleum Exporting Countries, with Saudi Arabia, Kuwait and the United Arab Emirates each holding 17 percent, according to its website.
16 Comments on "Saudi Arabia Seeks to Create Biggest Tanker Fleet"
geopressure on Tue, 19th Jul 2016 9:40 am
do you really think they are buying tankers to increase exports???
Just like Iran is buying up tankers to STORE oil & decrease exports… so too is Saudi..
—
You don’t need to buy tankers to increase exports, by the way…
geopressure on Tue, 19th Jul 2016 9:44 am
whoever posted this article needs to learn how to sift through media & tell what is true & what is BS…
Newfie on Tue, 19th Jul 2016 8:05 pm
Only a few months ago the Saudis announced they would phase out oil from their economy by 2020 and become an economic powerhouse without any oil exports whatsoever. ROTFLMAO.
Northwest Resident on Tue, 19th Jul 2016 8:13 pm
The tankers aren’t to increase exports. That’s just the cover excuse. They are to store as much oil as possible in preparation of hard times to come. Maybe?
Anonymous on Tue, 19th Jul 2016 8:32 pm
NWR, why would the ‘sauds’ need to buy expensive, rust-prone tankers to store the oil when its already ‘stored’, (for free no less), under their feet. If that was their ‘plan’, they could accomplish the exact same thing by simply pumping less oil and let nature ‘store’ it for them till needed, lol.
Davy on Tue, 19th Jul 2016 8:54 pm
http://www.zerohedge.com/news/2016-07-19/peak-oil-paradox-revisited
antaris on Tue, 19th Jul 2016 9:11 pm
No shortage of dummies to invest in funds. You just need to give them something to get 10% return. Smoke and mirrors. Same old shit. Lots of graft and corruption building large ships with China.
Rick Bronson on Tue, 19th Jul 2016 9:52 pm
First they started buying refineries in USA, China, Japan.
Now they are expanding their tanker fleet.
Their next step might be to buy a retail gas station network.
And they they will directly bring the Oil produced in Saudi Arabia thru those ships to those refineries and sell it in their gas stations bypassing all the middle men.
And consumers may flock to such stations if the gas is few pennies cheaper.
And all the money will go directly to Riyadh and from there to the terrorists.
geopressure on Wed, 20th Jul 2016 4:41 am
nwr – you don’t understand how the world works
rick – they already own retail gas stations… 1,000’s of them
geopressure on Wed, 20th Jul 2016 4:46 am
WTI options expire today… none of you even know what that means…
OPEC is cutting exports… thats a fact, it’s already happened…
but the price of oil will stay where it is or go down….
shortonoil on Wed, 20th Jul 2016 6:15 am
“OPEC is cutting exports… thats a fact, it’s already happened… “
Are they cutting exports, or have their 70 year old fields been pushed as far as they can go? Breakthrough is probably not very far away. It would be most revealing to see some numbers on their water cut. With the permeability as high as it is, with many of these fields, when they go they will go with a bang.
geopressure on Wed, 20th Jul 2016 6:37 am
shortonoil – wake up…
shortonoil on Wed, 20th Jul 2016 6:53 am
” The tankers aren’t to increase exports. That’s just the cover excuse. They are to store as much oil as possible in preparation of hard times to come. Maybe? “
The problem with these very high permeability fields is that they can’t cut the pressure very much, or they start losing oil. The water sweep starts running under the oil column, and the oil gets trapped above the water with no way to retrieve it.
It sounds to me like they are planning on a long siege of low prices, and falling demand. They are basically stuck in the position of pump it, or lose it. Above ground storage just might be too much of a temptation for their jihadists friends. Building additional above ground storage is also an admission that they have a lot of oil that they can’t sell. The would be very bad PR for the Most Royal House of Saudi.
The end game will be very interesting from an intellectual point of view. From a personal point one; not so much!
Davy on Wed, 20th Jul 2016 9:25 am
More of the “gas helps climate change” fallacy.
“The Future of Big Oil? At Shell, It’s Not Oil”
http://www.bloomberg.com/news/articles/2016-07-20/the-future-of-big-oil-at-shell-it-s-not-oil
“The energy giant is shifting to gas as the industry adapts to climate change.”
PracticalMaina on Wed, 20th Jul 2016 10:07 am
Davy IMHO, it is the only fuel that will be able to compete with renewables in the future. The DOE and Tesla are both talking like battery technology is still in its infancy and about to take off. I hear China has buses that are powered by capacitors, stop at a bus stop for 30 seconds, charge em up and make it to the next stop, no heavy batteries needed. This could easily be applied to other transportation technologies, such as trains ect. Better regenerative capabilities with ultra-capacitors compared to lithium, higher efficiency storage and much higher speeds, way better longevity. I know you guys don’t have quite the high hopes for renewables I do, but I think we will finally figure out our priorities, after we clean another 50% of species off this planet and things are really scary.
rockman on Wed, 20th Jul 2016 11:45 am
Anon – Exactly. Amazes me that folks try to complicate the simple. Right now other shipping firms make a profit hauling oil from the KSA to the buyers. Buyers that pay the freight. Of course the profitability depends on the utilization rate of their tankers. Does anyone honestly think the KSA will let their tankers sit idle? They buyers don’t care who they pay to hail their oil as long as it’s at market rate. All the KSA has to do is charge the same as the other shippers and they’ve established a new LONG TERM profit center.
Can’t come up with the “typical” charge per bbl hauling oil out of the Persian Gulf. But currently the KSA is shipping 2.7 BILLION BBLS PER YEAR. Don’t know if $5/bbl is a reasonable guess but that would be a gross cash flow of almost $14 BILLION PER YEAR. And that would be hauling just the KSA exports.