MARINE FLEET MUST BE EXPANDED TO COPE WITH RISE IN DOWNSTREAM
▶ Companies such as Adnoc Logistics are planning to acquire more than 25 vessels over the next five years
Marine logistics companies in the Middle East will require up to $2.3 billion (Dh8.4bn) in investment to expand fleet capacity in order to transport increased production output in the region over the next five years, according to a senior oil industry executive.
“It is actually cheaper than it used to be a few years back. Now we’re looking as a starter, you have to think of roughly $1.5bn, $2.2bn to $2.3bn for the Mena region as a whole, because they need a lot of these vessels to transport the projected potential of the downstream and other products,” Khamis Juma Buamim, board member and group chief executive at Gulf Navigation told The National, speaking in his capacity as chairman of the Arab Association of Petroleum Professionals.
National oil companies in Saudi Arabia and the UAE have planned significant investments in petrochemicals over the next five years, with commitments reaching $123bn by 2023, according to the Arab Petroleum and Investment Corporation. Saudi Arabia is planning to build a massive $20bn oil-to-chemicals facility on its Red Sea coast by 2025, while the UAE is looking to double refining and triple chemicals facilities in the same time period.
The two countries are also undertaking overseas expansion in downstream, with state-owned Saudi Aramco and Abu Dhabi National Oil Company forming a joint venture to invest in a $44bn integrated refining and chemicals project on the west coast of India.
Mr Buamim observed that the increasing focus on building downstream capabilities eastward will create more
National oil companies in Saudi Arabia and the UAE have planned significant investments in petrochemicals in the coming years
opportunities for marine logistics companies, as well as open up possibilities to bundle transportation and offtake agreements.
“You’re finding now oil related entities in the region such as Saudi Arabia and the UAE storing in India, refining in India and distributing it in India [rather than] doing it elsewhere,” said Mr Buamim.
“What they’re doing is they’re amalgamating and collaborating more and even in certain cases they’re going for joint ventures or full integration. [In] the sea transportation sector because the market is growing, you have to have the opportunity to build and amalgamate,” he added.
Other companies engaged in the sector such as Adnoc Logistics, also expect increased demand on capacity and are eyeing fleet acquisitions on the back of Abu Dhabi’s ambitious plans to expand upstream and downstream.
In an interview with The
National, Adnoc Logistics & Services chief executive Abdulkareem Al Masabi said the company was looking to purchase two very large crude carriers to support upstream growth, with plans to add more the 25 vessels over the next five years.