Iran expands VLCC fleet

Iran's state shipping company will take delivery of three new oil supertankers in the first-quarter of 2009, boosting its fleet by about 12 %, a senior company official said. Iran is the world's fourth-largest oil exporter, and operates 25 supertankers which can each hold 2 mm barrels.
The new tankers are part of the National Iranian Tanker Company's (NITC) nearly $ 2 bn plan to boost its very large crude carrier fleet to 38 supertankers to meet growing demand for oil shipping, its commercial director Seyed Habibollahi said.

"We ordered about 10 VLCCs last year [2007], and we will take delivery of these between 2010 and 2011, this is part of our effort to become a global shipping company," Seyed Habibollahi told.
NITC would also be taking delivery early 2009 of one new Suezmax oil tanker capable of holding up to 1 mm barrels, he said. South Korean shipyards built all the vessels due to arrive in early 2009, Seyed Habibollahi said.

Despite sanctions from the West and US pressure on financial institutions to stay away from Iran, Tehran secured financing for its fleet expansion from several European and Asian banks. BNP Paribas of France acted as lead financier.
Iran sits on 11 % of the world's oil reserves, and has the world's second-largest gas reserves. It pumps about 4 mm bpd to world markets, with roughly 60 % bound for Asia and the remaining headed to Europe.

Seyed Habibollahi said the recent support for supertanker freight rates were partly due to demand for floating storage facilities in the US Gulf Coast, and the North Sea.
"Yes if the freight rates stay at this level we will be happy, not lower," he said.

Oil majors and independent trading houses are storing at least 24 mm barrels of crude on oil tankers around the world, a survey showed. The rush to book oil tankers for floating storage has helped to push up crude freight rates on major export routes. The shipping firm is still considering a plan to order up to 30 new liquefied natural gas carriers (LNG), Seyed Habibollahi said.
"We are not making any orders yet," he said. NITC has said it wanted to build an LNG fleet to match Iran's ambitious LNG export plans. But the US has sought to deter investment by international energy firms capable of building LNG export plants.

Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals. In a last case, Iran signed gas deals worth $ 14 bn with Malaysia's SKS Group in early December, including a contract to build an LNG plant.
Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.

Iran has also said it is going ahead with its own plant, Iran LNG, and will bring the first phase on line by the end of 2010.Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to sign up to an increasing number of energy projects and earn billions of dollars, many western firms are increasingly showing interest to invest or expand work in Iran.
Some European countries have also recently voiced interest in investment in Iran's energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.

The National Iranian Gas Export Company and Switzerland's Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 bn cm of gas per year.
The biggest recent deal, worth EUR 100 mm ($ 147 mm, £ 80 mm), was signed by Steiner Prematechnik Gastec, the German engineering company, in 2008 to build equipment for three gas conversion plants in Iran.