REPORT: KOTC is building a future-proof tanker fleet
As a subsidiary of the Kuwait Petroleum Corporation (KPC), the Kuwait Oil Tanker Company (KOTC) is committed to providing safe and efficient transportation for Kuwait’s leading export (petroleum), which is in line with KPC’s strategic vision. Recently KOTC completed a nine-vessel newbuilding programme, where they worked with different suppliers to implement new systems to operate a cleaner, safer, and more fuel-efficient fleet.
Ali A. Shehab, KOTC’s deputy CEO (Fleet Operations), says that unlike most ship-owners, whose approach to operations has been driven by new regulations and bunkering costs, the company goes much further and consciously travels the extra mile. “Rather than wait for new regulations or react to changes in bunker prices, we actively seek new ways to improve our overall performance,” he says. “As a state-owned entity, KOTC not only has an obligation to provide KPC with excellent and cost-effective transportation services, we also represent the State of Kuwait, which has very specific policies on how we behave as a company.”
In 2014, KOTC completed Phase III of its ambitious newbuilding programme, a nine ship order that included four VLCCs, four medium range (MR) product tankers, and one long-range Aframax petroleum product and crude oil tanker. The company is now moving ahead with Phase IV of its newbuild programme, which envisages delivery of up to eight new tankers during 2017 and 2018.
Jamil Al Ali, manager of Fleet Newbuilding Projects Group at KOTC said Phase IV envisaged “two VLGCs, and one more in addition, possibly four more MRs and maybe another aframax for around 2017-18 delivery.” While South Korean yards will be the focus of the orders, he said one of the major Japanese yards also might figure, due to the devaluation of the yen, which could allow Japanese ship builders to compete with the dominant Korean players.
In the Phase III expansion, South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME) was the shipping line’s shipyard of choice for the bulk of the orders.
“In Phase IV, we have already gone ahead with the two gas vessels. We expect one more to add to them, four MRs and maybe another aframax,” says Al Ali. “There is talk of other vessels in the future. Those are the ones expected to materialise in [the next three years].” Al Ali added in an interview with Seatrade that finance would be supplied by mother company, Kuwait Petroleum Company (KPC). The entire KOTC fleet is on time-charter to KPC, which in turn often sub-charters to the oil majors.
KOTC currently has 30 vessels in the fleet, including 12 VLCCs, LPG carriers and product tankers of various sizes. The company’s use of a variety of shipyards and equipment and systems suppliers is a major feature of the entire newbuild expansion program, says Al Ali.
“From engine manufacturers to bridge control, classification to marine coatings suppliers, we worked with different industry leaders. Most owners tend to stick to the same suppliers, but we believe a more diversified approach helps us achieve better results,” he explains.
Al Ali says that using multiple suppliers not only allows KOTC to test different systems, it also helps deepen the technical know-how of the shipping line. “KOTC is part of a larger, state-sponsored effort to recruit and train the next generation of Kuwaiti seafarers, and we gain more expertise by working with different suppliers,” he explains. “This strategy has also helped us build a strong international network – we have friends everywhere!”
KOTC takes the same approach to classification societies. “Different classification societies have different strengths and we have worked with many of the leading classes across our fleet. However, we have enjoyed a strong, long-term relationship with DNV GL for many years,” says Shehab. “Their unrivalled technical expertise, especially in fuel efficiency, noise and vibration, crew comfort and ship safety has been very useful. Their quick response to our requests is also commendable.”
Ralph Becker, regional business development manager in the Middle East & India at DNV GL, notes that KOTC’s approach to shipping shares much in common with DNV GL’s mission to help the industry become safer, smarter and greener. “All shipowners are looking for affordable ways to lower bunkering costs, comply with regulations and gain a competitive advantage,” he says. “But KOTC is an early adopter, and the work they do is not only effective, but also serves as a model for other shipping companies.”
Indeed, KOTC’s newbuildings include a number of innovations, amongst others the latest generation Tier II energy saving engines to reduce SOx, NOx and CO2 emissions and hull forms designed to optimise the water flow to the propeller, reducing hydrodynamic resistance during vessel transit. Furthermore, the four VLCCs and the Aframax are also equipped with volatile organic compounds (VOC) reduction systems (De-VOC) which work by controlling and maintaining the pressure in the cargo loading drop lines above ambient pressure, minimising the generation of VOCs, especially at the initial stages of cargo loading.
Shehab acknowledges that there are risks in being an early adopter, but says the results speak for themselves. “Measured against the voluntary targets set by the IMO’s Energy Efficiency Design Index (EEDI), our initial analysis shows that we have achieved around 12% below the benchmark for the VLCC and 20% below on our MR tankers,” he says. “What we learn from this newbuilding programme will optimise our decisions for the next phase of our fleet renewal.”
Last year, KOTC announced plans to add eight more vessels to its growing fleet – a mix of very large gas carriers (VLGCs), liquefied petroleum gas (LPG) and MR tankers – scheduled to be delivered in 2016 and 2017. “As always, we welcome new ideas to help us achieve a cleaner, more fuel efficient fleet,” says Shehab. “In fact, we are already in discussions with a number of suppliers who we believe will help us achieve our goals.”