Iraq's national oil tanker company is set to slowly begin rebuilding its fleet, destroyed by decades of war and sanctions, as the country's oil sector crawls back to its feet, a senior company official said on Tuesday.
The Iraqi Oil Tankers Company (IOTC), a unit controlled by the country's Ministry of Oil, received a $20 million-loan from the government to purchase two medium-ranged (MR) tankers, the company's commercial director, Karim Jabar Hassan, told Reuters.
"As you know we are slowly trying to rebuild our fleet, and this year we are looking to get two MR tankers to help with bunker fuel supply at Iraqi ports," said Hassan in a telephone interview from the southern city of Basra.
IOTC was set up in 1972, and at one time had about 20 tankers, which included a total of 15 aframaxes and suezmax tankers and five smaller oil product carriers, Hassan said.
The company is looking to help supply about 60,000 tonnes of marine fuel monthly to various ports in Iraq, helping refuel ships that carry its vital oil exports to foreign refiners and import commodities such as wheat and edible oils.
"This is the first phase, after this we will look at expanding into transporting crude oil," Hassan said.
IOTC, which was ravaged by the Iran-Iraq War and the 1991 Gulf War, has struggled to recover and sees its rebuilding plans to take at least five years.
"The government told us to come up with three proposals, and we have got that now, so it is up to them to decide," said Hassan.
"In the short term we are looking to purchase... a total of 10 suezmaxes and aframaxes by (2010-2012)," Hassan said.
He said the expansion plans would have to be financed by government loans and joint-ventures with foreign investors.
IOTC is looking for partners and has fielded proposed joint-ventures with Malaysian Merchant Marine Bhd. (MMM), Norway's StenaBulk, and a US-based shipping outfit, to assist in its broader plans to transport crude oil. But the turmoil and violence in Iraq has made foreign firms wary and agreements difficult to clinch.
Malaysia's second-largest shipper MMM signed a memorandum of agreement (MOA) in 2004 with IOTC to set up a joint venture called Iraqi Malaysia Oil Tankers Company in Dubai, but last week a senior company official said the deal had stalled because of the volatile political situation in Iraq.
"Yes, we have a problem now that our government is still not stable, so we have to wait for some certainty and stability, we hope this can be sorted out soon," Hassan said
IOTC's discussions with StenaBulk and the US shipping company, Seabulk International Inc, a wholly owned unit of SEACOR Holdings Inc, remains at an early stage, he said.
Iraq is home to the world's third-largest oil reserves, but sabotage attacks, political instability, a lack of foreign investment and mismanagement have plagued the oil sector, the Opec-member's economic lifeline and key for post-war reconstruction.
The country hopes to raise oil exports to 1.8 million barrels per day (bpd), by the end of 2006, from 1.5 million bpd now as part of a plan to overhaul its crippled oil sector. Technocrat Thamir Ghadhban is being tipped to take over at the oil ministry, and is seen as the candidate best-placed to steer the ministry back to health.
But its daily oil output averaged 2.18 million barrels in March, below 2.58 million barrels before the March 2003 US- led invasion and below the oil ministry's target of 2.3 million, according to a report by the US special inspector general for Iraqi reconstruction released on Monday.
The oil sector is awaiting the oil investment law, which has to be approved by parliament, to organise foreign investment and draw international companies.
Already firms from the United States, China, and Russia are waiting for a permanent government to follow through on agreements signed under the interim administration, officials from Iraq had said.
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