Iraq is rebuilding its state-owned crude oil tanker fleet with the aim of emulating the strategy of Saudi Arabia: sell its crude oil on a delivered basis and manage the shipping of crude oil to its customers.
The strategy is to mimic the actions of Bahri. Some five years ago, the state-owned National Shipping Company of Saudi Arabia and the then privately owned Vela International merged their fleets to create Bahri.
Bahri is now one of the largest operators of modern VLCCs, and the vast majority of Saudi Arabian crude oil is exported via Bahri tankers.
Under general manager Mr Hussein Allawi, the Iraq Oil Tanker Company (IOTC) will expand its fleet through secondhand purchases and contracting newbuildings. The current IOTC fleet consists of four 13,100 dwt small clean tankers, Alforat, Baghdad, Dijlah, and Shatt Al Arab. These have an average age of 11 years old. There are no tankers on order.
According to VesselsValue, IOTC has a 22.5% share in Iraqi shipping company, Al-Iraqia Shipping Services & Oil Trading, which is already active in the VLCC trades, having taken the Marinakis-owned VLCC Basra on charter in 2017.
In November 2017, Basra left Iraq laden with what is believed to be 2M barrels of Iraqi crude oil and arrived in the US Gulf in January 2018. The vessel appears to have spent a month in the US Gulf before heading to China.The remaining shares are held by Arab Maritime Petroleum Transport Company.
The latter is providing training for the crew and staff of IOTC.
For IOTC to achieve the same level of growth realised by Bahri would require a considerable investment. Currently, Bahri has a fleet of 46 VLCCs, valued at US$2Bn according to VesselsValue.
In some respects, the timing could not be better for IOTC, with VLCCs at current lows of US$82M. For a relatively reasonable investment, IOTC could equip itself with a modern fleet of 2020 sulphur cap-ready VLCCs, equipped with ballast water management systems.