Muscat-based Oman Shipping Co (OSC) plans to add up to 35 new ships to its fleet over the next five years.

In a major first for a Middle Eastern shipowner, chief executive Ibrahim Al Nadhairi says the vessels will be fitted with dual-fuel engines that use LNG or other alternative fuels, such as methanol or ammonia.

Al Nadhairi — a 15-year OSC veteran who previously headed up its in-house ship management division before being promoted to the top spot last December — told TradeWinds the vessels will be part of an aggressive five-year expansion plan.

These are only the ships OSC will directly own. But Al Nadhairi also revealed plans to charter in 50 vessels between now and 2025.

Charter plans

The fleet additions will be spread across various market segments in the dry, wet, gas and container sectors.

On its potential shopping list are suezmax and product tankers, panamax and ultramax bulkers, and smaller containerships with capacities of between 4,000 teu and 5,000 teu.

Some of the sectors will be new territory for OSC. According to its website, it has a fleet of 35 tankers, six LNG carriers, 11 bulkers, four VLOCs, eight midsize bulkers, a VLGC and five chartered-in containerships that are operated by its regional liner arm, Oman Container Line.

“OSC wants to play a greater role in the global shipping markets. In the future, we will be more focused on competing internationally, although some of the assets will be deployed on Omani projects. There are a lot of these coming in and we want to add value to the country,” Al Nadhairi explained.

The expansion plan was recently approved by the shareholders of OSC’s parent, the ASYAD Group — a state-owned organisation that brings together 16 government logistics and transport companies and joint ventures under one entity.

OSC is also expanding its chartering activities.

The company has commercial teams that handle the chartering of its VLCCs, most of which are deployed in the spot market, its LNG carriers and will expand its activities to include the product tanker sector.

Al Nadhairi said OSC has the capability to do this with its current talent pool.

Alternative fuels focus

The 2001-built LNG carrier Sohar LNG is the oldest ship in the Oman Shipping Co fleet. The average age of the company's fleet is just over nine years. Photo: Kumakichi/MarineTraffic

OSC's new additions will be newbuildings and secondhand acquisitions and some will be used to replace older ships.

Al Nadhairi said, the newbuildings would only be “green ships”.

“All will be fitted with dual-fuel engines using LNG or other alternative fuels like methanol, or even ammonia,” he said.

Fuel choices could depend on the project the ship is deployed on. OSC, for example, has two conventional methanol tankers on long-term contracts with Salalah Methanol. If it contributes more ships to this project, Al Nadhairi said using methanol as their fuel makes sense.

“Oman is looking seriously at clean energy and we want to help by taking the first step. We believe we can do it,” he said, describing the marine fuels market as going through "a very interesting time".

Efforts began last June when OSC tapped Standard Chartered to secure Oman's first sustainable refinancing in a deal involving two bulkers.

The bank provided $35m to cover OSC's Chinese-built ultramaxes, the 63,500-dwt Jabal Shams and Jabal Al-Misht (both built 2019).

The credit margin under the eight-year facility will be adjusted based on OSC’s progress against key targets in line with the United Nations' sustainable development goals.

The Jabal Shams is part of Oman's first sustainable refinancing. Photo: Rik van Marle/MarineTraffic

As new ships join the OSC fleet, tentative plans call for selling off five older, less-efficient vessels from different segments.

The company is in no rush to sell as the average age of its fleet stands at just over nine years.

The oldest ships are four VLCCs built in 2008 and 2009, six LNG carriers dating from between 2001 and 2008, and a product tanker also built in 2008.

“None are for sale right now, but we may sell a conventional LNG carrier coming off a long-term charter,” Al Nadhairi said.

“We will probably sell a VLCC afterwards, but only when the market recovers and second-hand values increase,” he added.