What are the challenges and opportunities of maritime transport in Oman?
The shipping industry is cyclical in nature and capital intensive, which makes investors naturally cautious. Many are wary of making long-term commitments, and this aspect is one of the difficulties that we encounter. Oman Shipping Company (OSC) has followed the strategy of being a long-term investor by building new vessels for time charter to renowned companies in Oman, such as Oman LNG, Sohar Aluminum, and Vale Oman, among others. OSC seeks to expand through realizing long-term contracts with various commodity producers in Oman, but this is no mean feat, as they prefer instead to carry goods on spot and gauge market reaction. I believe that the shipping market has now troughed, and that prices will rise from here on in. Numerous entities in Oman are keen to export aggregates, as well as limestone and gypsum. In 2013, the prices for newly-built vessels hit a historic low, since then we have seen prices rising; ours is a cyclical market of buying low and attempting to sell high. In my view commodity producers should work closely with shipping companies, and as far as Oman Shipping Company is concerned, we are here to support Omani producers in any way that we can, not only by providing ships, but also shipping solutions.
Oman Shipping Company began dealing with liquefied natural gas (LNG). What is the importance of this segment for your company today?
OSC currently operates five LNG vessels, with a further vessel to be delivered by 4Q2014, which contribute 14% to OSC's fleet size. Our current fleet of LNG vessels have been contributing steady income to our company. They are based on 20-year contracts, which will remain in place regardless of market fluctuations. Sometimes ship owners say that the market is buoyant and charge high, but if they adopt a long-term perspective it becomes clear that our strategy actually represents a good deal in the long term.
What is your competitive advantage over other shipping companies?
Our local knowledge and established connections are our chief competitive advantages. We know the decision makers, and how to work efficiently, managing our vessels in house, which adds value to customers. Being a state-owned company, we have good relations with influential sector figures, as well as with our customers.
Is the market becoming more competitive?
Shipping is a competitive market, especially when you have access to financial resources to purchase vessels. I could buy a vessel, for example, and contract it to a third party to operate, and then contract it to other parties to commercially and technically manage. We undertake the commercial and technical management, and advise our customers on what they can do to generate higher returns, also proposing cost reduction methods that bring good returns.
Can you elaborate on the importance of the Duqm project and how it will affect your business?
In Duqm there are plans for various downstream plants, although we do not know the volume set to be imported. Perhaps there will be potential in terms of crude movements, using our vessels to import it into this area. Meanwhile, exports really depend on the master plan; if the plan is to refine products for export, there is huge potential for OSC.
What is your outlook for 2015?
I foresee positive developments for the shipping industry in 2015, and thus far there have been few new orders placed for vessels, due to prevailing unfavorable charter rates. In 2015, we hope that charter rates will catch up, and that the supply of vessels will match demand. By 2016, with shipbuilding prices having been low for a period, I predict a potential oversupply of vessels compared to demand, which would again destabilize the market.