Iran Tanker Company Signs Over 200 Charter Deals in 2 Years

EghtesadOnline: The National Iranian Tanker Company has signed over 200 leasing contracts for its vessels in two years since international economic curbs were lifted, the company's chief executive officer said.

News ID: ۷۸۱۲۹۸

14 January 2018

"After the easing of sanctions (in Jan. 2016) until the end of last month, foreign companies signed 215 time-charter and single-voyage deals for NITC tankers," Sirous Kianersi told Tasnim News Agency on Wednesday.

The agreements were signed with France's Total, Royal Dutch Shell, Spain's Cepsa, Vitol, Hanwha Total of South Korea, India's Essar, Turkish refiner Tupras, China's CNPC and Oilmar Shipping and Chartering, among others.

Total, which became the first major western company to reenter Iran's energy market after the lifting of sanctions, placed the first purchase order for Iranian crude in Feb. 2016 alongside Cepsa and Russia's Lukoil, Financial Tribune reported.

Leasing idle vessels is a source of revenue for the state oil shipping company that operates one of the world's largest tanker fleets. NITC has yet to disclose the value of its contracts.

"The most lucrative charter deals belong to Very Large Crude Carriers (VLCCs) with the capacity to haul up to 320,000 tons of products, followed by smaller types of carriers, including Suezmax (120,000-180,000 tons) and Aframax (75,000-120,000 tons)," the official noted.

NITC operates some 70 tankers and vessels of all sizes with a capacity of around 15 million deadweight tonnage, one of the world's largest fleet in terms of the number of ships and capacity. It also owns three liquefied natural gas carriers, but the number of such ships are planned to increase when major LNG projects take off.

Kianersi said Iran exports around 2.6 million barrels per day of crude oil and condensate, a type of ultra light crude, with NITC-owned vessels handling about 30% of shipments.

Most of Iran's crude consignments are destined for customers in East Asia, including China, Japan, South Korea, Malaysia and Singapore.

--- Freight Rates

The NITC chief anticipated an increase in freight costs next year upon the introduction of tighter environmental regulations for vessels.

To cut carbon emissions and other polluting discharges by ships, international tanker operators will be required to renovate their fleet with new equipment as part of efforts to raise their compliance with global shipping policies.

He said an environmental law coming into effect in 2018 pertains to stricter regulations for managing "water ballast" that is defined as water carried by ships that contains harmful aquatic organisms.

"This [environmental drive] will increase leasing costs significantly… While aging tankers that will cost too much to be equipped with new components will inevitably be scrapped," he said.

NITC is pursuing plans to reduce the average age of its fleet to below 10 years old.

Kianersi made no mention of NITC's program for its aging vessels but anticipated that a growing number of international tankers will be sent to the junkyard by 2019 in what would "reduce the global fleet of oil tankers and raise freight rates".