Saudi Aramco Rumored to be Buying VLCCs

Saudi Aramco

Published Apr 21, 2015 4:44 AM by The Maritime Executive

Board members of Saudi Aramco visited the headquarters of South Korea's Hyundai Heavy Industries Co Ltd on Tuesday, as the shipping arm of Saudi Arabia's state oil firm looks to buy up to 10 tankers, four industry sources said.

Saudi Arabia has been supplying more crude to Asian markets and Saudi Aramco's shipping arm has tendered to build five very large crude carriers (VLCCs) plus up to five optional vessels for 2017 delivery, said one of the sources.

All of the vessels the National Shipping Company of Saudi Arabia (Bahri) is seeking are 320,000 deadweight tons.

The deal could be worth about $1 billion, based on data from Clarkson, the British shipbroking house, which puts the price of the tankers of this size at $96.5 million.

Hyundai Heavy, the world's biggest shipbuilder, is favorite to secure the deal, said three sources, who declined to be identified due to the sensitivity of the issue.

A spokesman for STX Offshore & Shipbuilding Co Ltd confirmed it had competed in the final round of bidding, but declined to elaborate.

Saudi Aramco said it could not immediately comment, while Bahri was not immediately available for comment.

Saudi Aramco board members are in South Korea this week for a board meeting of the state oil firm.

Saudi Arabia's Oil Minister Ali al-Naimi, Saudi Aramco's chief Khalid Al-Falih and other board members went to the city of Ulsan, about 300 km (185 miles) southeast of the South Korean capital Seoul to visit Hyundai Heavy's headquarters.

Ulsan is also the site of a refining complex operated by S-Oil Corp, whose major shareholder is Saudi Aramco.

Hyundai Heavy and S-Oil spokesmen declined to comment on the trip or the deal.

Bahri became the sole provider of VLCC crude oil shipping services to Aramco after it purchased the marine unit of the oil giant in a deal completed last year.

Earlier this month, Bahri reached an agreement with S-Oil to ship crude oil from the third quarter of this year. Under the 10-year contract, Bahri will ship the oil on VLCCs from the Arabian Gulf and Red Sea to the port of Onsan in Ulsan.

Aramco increased its holding in S-Oil in January to 63.41 percent from 34.99 percent.

Copyright Reuters 2015.