Emirates Ship Investment (Eships) plans to embark on a major investment programme to double its fleet in three years to more than 25 chemical, product and dry-bulk vessels as it gears up for a raft of new industrial projects in the Gulf.

The Abu Dhabi ship owner and operator hopes to capitalise on plans for
petrochemicals and basic metals plants as Gulf countries diversify
their economies away from oil and gas revenues.

These plans could
include more than US$40 billion (Dh146.91bn) of petrochemical projects
in Abu Dhabi alone. Abu Dhabi National Chemicals Company (Chemaweyaat)
will deliver an integrated complex to produce olefins, aromatics and
oxide and ammonia derivatives by 2015, while various state-owned firms
will manufacture and export plastics and other petrochemicals from the
Ruwais industrial cluster in Al Gharbia.

The fleet expansion, which
could be worth hundreds of millions of dollars, will occur by
purchasing and chartering ships, said Scott Jones, the chief executive
of Eships.

“We are expecting them to export large quantities in
long-haul voyages,” he said. “The size of our chemicals vessels will
not be economical, so we have to upsize our fleet.” Eships has 13
ships, ranging from 6,500-cubic-metre liquefied petroleum gas tankers
to 170,000-tonne Capesize vessels for transporting iron ore. Capesize
vessels are too large for the Suez Canal and must pass Cape Horn or the
Cape of Good Hope.

Shipping has been battered by the global downturn
and the new plans will come at a critical time for shippers, which have
seen chartering rates and asset values plummet since their peak in late
2008.

“The demand prospects in the region is great news for the
shipping industry,” said Raffi Vartanian, an analyst with Freight
Investor Solutions in Dubai. “For the region these are enormous
projects compared with what existed before.”

Eships is owned equally
by Mubadala Development and Invest AD, two investment arms of the
Government. The two Abu Dhabi shareholders last year bought out the
shares of the Muscat-based Oman and Emirates Investment Holding, which
decided to leave the shipping business. It follows the departure in
2005 of the founding partner, the Klaveness Group of Norway, a dry-bulk
specialist, when Eships expanded into the chemicals tanking business.

The
fleet acquisitions will be financed through a combination of equity and
debt, Mr Jones said, adding that asset values had dropped to attractive
rates with the global economic downturn. Eships will “optimise the
timing of our expansion by taking advantage of market and price
volatility”, he said.

The company enhanced its credentials as a primary shipping partner for local industry by signing two major contracts last year.

Eships,
through a joint venture with a German firm, won its second contract
with Emirates Steel Industries in Musaffah to deliver, starting in
2012, 2.5 million tonnes of iron ore per year to be used in steel
production.

It also won a contract to deliver 1 million tonnes of
alumina per year to Emirates Aluminium’s Taweelah plant, which began
production in December with plans to scale up quickly to become the
world’s largest aluminium smelter.

In 2008, the company posted a
loss, mainly from using financial instruments in an attempt to protect
itself against volatile interest rates.

But the company will
record a profit for last year, as its long-term charter contracts
buffered it against the industry’s volatility. “In the circumstances,
it is a healthy profit, but shipping had a bad year and most companies
have had a difficult time,” Mr Jones said.

One area the company
decided not to focus on, however, was crude tanking. Abu Dhabi National
Oil Company requires buyer countries to bear the costs of transporting
the crude, which often results in customers hiring shipping firms in
their home countries, Mr Jones said.

Source: The National

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