INTERVIEW: Jawar Al Khaleej chairman Baydaq Al Jazaeri
After the oil & gas sector, the offshore services sector of the marine industry is arguably the most important in the Middle East, because it is the neck that turns the head. Without it, the VLCC giants that transport the region’s oil, and the rigs that drill it, would be bereft of supplies or the ability to dock for loading. In the Iraqi oil sector, there is no offshore marine services company more significant than Jawar Al Khaleej Shipping.
JAK operates the fleet of tugs and support vessels that enable the running of the Al Ba?ra Oil Terminal (ABOT) and Khor Al Amaya Oil Terminal (KAAOT). These terminals account for more than 90% of Iraq’s crude oil exports, which accounts for the vast majority of the Iraqi government’s foreign revenue, which is essential to the stability and long-term feasibility of the entire nation.
In this small bottleneck between Iran and Kuwait then, the future of an entire nation rests on the ability of Jawar Al Khaleej’s fleet of offshore support vessels to keep the terminals operable in all weather conditions. It is a responsibility the company does not take lightly. In fact JAK had just taken delivery of a new Damen-built ASD 3213, one of the largest azimuth stern drive tug in its class available on the market when Maritime & Ports Middle East sat down with the chairman, Baydaq Al Jazaeri.
“We will continue to invest in high quality assets for marine or other equipment that are strategically important to execute our mission,” says Al Jazaeri. “One of such assets may be a third 8000hp tug, to join the ASD Jawar Basra of which we recently took delivery.”
According to Al Jazaeri, the addition of such vessels to their fleet at the Basra terminals is essential because of the high winds that frequent the area, and force their smaller harbour tugs to return to port. “This created a 16-hour window in which loading of crude was interrupted, which is unacceptable,” says Al Jazaeri. “The Jawar Basra can stay on station and is purpose-built for manoeuvring VLCCs.” The investment by JAK, the first of many in its operations at Basra, was also made in preparation for expected growth in Iraq’s oil exports.
“Currently Iraq exports around 3.1-million barrels per day through the south export facilities. The goal is to significantly increase this to 6-8mbpd within the next decade,” Stefan Malfiet, business development director at Al Jazaeri Group of Companies, the parent company of JAK. “To achieve this, Iraq and the South Oil Company have compiled a significant expansion plan which is to be rolled out in the coming years. JAK will aim to be a part of this growth and has already established strategic partnerships with other international partners to bid for such projects.”
Such projects include the clearing of debris from the Shatt al Arab River and the installation of more Single Point Moorings for the greater number of VLCCs that will dock at the ABOT and KAAOT terminals. “Where needed, JAK also has the intention to continue to grow and diversify its current fleet and service capabilities, both onshore and offshore,” Malfiet adds.
This is something that JAK did several years ago in providing its marine spread for the project to clear hundreds of pieces of debris from around the two terminals after the war. “This was a major project that we undertook in a joint venture with Svitzer Salvage,” explains Malfiet. “After three decades of conflict, there were many hundreds of pieces of debris and we were required to clear everything large than 1-cubic metre from the sea floor.” Nine months later, having completed the project on time and within budget, JAK and Svitzer had removed more than 500 pieces of wreckage and unexploded ordinance from the seabed.
“Another major project was the installation and maintenance of the Single Point Mooring buoys offshore Iraq,” Al Jazeeri adds. “Jawar al Khaleej was a subcontractor to Leighton Offshore supplying marine spread, qualified onshore and offshore personnel, equipment, offshore and onshore logistics support.”
While JAK has been a strategic partner of South Oil Company since 2006, the offshore services provider has long-standing links to Iraq. “Jawar Al Khaleej and the parent company Al Jazeeri Group is a family business that has been operating and doing business in Iraq for more than forty years,” says Al Jazeeri.
The chairman adds that while Iraq is a major focus at present, the company is also looking at expanding its activities elsewhere in the region. “We’re currently in talks with several major companies across the GCC region for wreck removal and offshore installation projects,” he says. “We’re looking to expand our wreck and debris removal operations using the Norma 1.”
Norma 1 is a wreck removal floating crane with a carrying capacity of 440-tons and was acquired for the Svitzer Salvage joint venture. She is a highly specialised vessel compared to others in her class in the Middle East market, says Al Jazeeri. “She is self-propelled and has a bow thruster, which gives her a great advantage. She can accommodate 25 persons, but there is sufficient deck space to increase this to 100 people using modular accommodation.”
Riviera 1 is JAK’s jack-up accommodation platform, which provides added accommodation for even larger projects. In essence then, JAK has positioned itself to take full advantage of the expansion plans being discussed for the ABOT and KAOOT terminals. “We have the vessels on site for any future projects,” Malfiet confirms, adding that JAK’s major activities will be in fulfilling the needs that arise when a company like South Oil considers expanding the terminals.
The most immediate need when initiating any major project is accommodation for the various sub-contracts involved and Riviera 1 is able to accommodate 200 people. The other requirement is a means of getting them from the platform to the terminals, or whether the work is to take place, which is where JAK’s fleet of workboats and support ships will be deployed. If pipe laying is required, its tugs will be able to support the activities of the pipe laying vessel. At the time of writing JAK were planning to deploy a second accommodation unit to the area.
“We will supply two accommodation units next to the existing fleet,” says Al Jazeeri. “As the current accommodation units on ABOT and KAAOT need to be refurbished. These will both be operational in the field by September this year.”
Maritime & Ports Middle East wondered, however, if the recent drop in the oil price had in fact dampened expansion enthusiasm among the oil majors. “You have to distinguish between the way a national oil company takes decision and the way an international one does,” says Al Jazeeri. “An international oil company has a cyclical way of making investments, they invest when the oil price is high and then cut everything when it plummets, so investment comes and goes in waves.”
“For national oil companies, and specifically in Iraq, revenues from oil are used as a financing tool for the country, so if the oil price drops a part of their financing is gone. The investment, therefore, remains relatively stable, as they will need to pump more oil to keep the money coming in,” says Al Jazeeri, adding that only the most expensive projects had been put on temporary hold.
The only way Iraq can finance its needs as a country in the short to medium term, given the low oil price, is to produce more oil and export more oil and so Al Jazeeri says that JAK “has not been negatively affected” by the drop in the price of oil.
Security is of course a major concern for all companies operating in Iraq, but as Jawar Al Khaleef’s activities are primarily offshore, and because of the high-security nature of the ABOT and KAAOT terminals, they haven’t seen any negative impact from the unrest stirred up by ISIS. “The unrest is more to the north and to date has not really affected Basra,” says Al Jazeeri.
“In the past the offshore terminals have been a potential target for attacks, but because of the country’s dependency on these terminals (99% of the GDP comes from oil and of that 80% is derived from exports through these terminals) their significance cannot be overstated,” he adds. “It is a very well protected area, by the Iraqi Navy.”
In fact, Al Jazeeri feels that the security situation could give JAK an indirect advantage. “Foreign companies coming into Iraq who are unfamiliar with the environment, will be looking for a local partner that has been there for a long time, not just a few years,” he says. “Our links to Iraq are extremely deep, - so it does provide opportunities because we have the local market knowledge and given the plans of Iraq to increase its exports, more companies will need to come in to execute that work.”