SAUDI ARABIA - The Saudi Logistics.

Saudi Aramco now has an integrated overseas system for the shipping, storage and supply of crude oils, refined petroleum products and gas liquids. In terms of tonnage, its shipping subsidiary Vela has the world's biggest fleet of tankers which carry or store crudes, oil products and gas liquids.

Saudi Aramco has extensive oil storage facilities both in the kingdom and overseas. Together with VLCCs and ULCCs chartered by Vela occasionally for floating stocks, its network can store large volumes of oil worldwide. This includes leased overland storage facilities in Europe, the US, the Caribbean and the Asian/Pacific basin. It also includes facilities purchased, or bought into, by Saudi Aramco, as well as facilities for oil products and gas liquids leased by one of its divisions which used to be known as Samarec.

In 1993 its wholly-owned subsidiary, Aramco Overseas, acquired a 34.35% stake at the Maatschap crude oil terminal and storage facilities in Rotterdam from Texaco. The facilities can store 17m barrels of crude oil. In the Mediterranean, Saudi Aramco leases crude oil storage facilities at Sidi Kerir, the terminal of the Sumed pipeline from the Gulf of Suez to the Mediterranean. Saudi Arabia is a major shareholder in Sumed, whose pipeline capacity has been expanded to 2.4m b/d. It facilities in the US through Motiva Enterprise, now a 50-50 venture between Saudi Aramco and Shell which is one of the biggest downstream entities in North America. It has storage facilities in South Korea, where it is a partner of Ssangyong Oil Refining Co. It has a 40% share in Petron, the main refining, distribution and storage company in the Philippines, which it acquired in early 1994. Similar facilities are to be acquired in China, where it is negotiating refining partnerships (see Part 4 in OMT No. 19).

Vela Marine Int'l, Saudi Aramco's shipping arm, carries about 50% of Saudi Arabia's oil exports. Its fleet includes 27 wholly-owned tankers with a capacity of almost 7m dwt, including ships for oil products. Its vessels have high safety standards. It also has tankers chartered on demand.

With the last of new tanker orders made since 1990 delivered in March 1995, Vela's oil fleet now consists of: four ULCCs, 19 VLCCs and four products carriers. Of these, 18 new VLCCs have a capacity of more than 4.3m dwt, able to carry up to 30m barrels of crude oil. There will be additional orders for ULCCs and VLCCs, as Vela's goal is to carry 70% of Saudi crude oil exports. Vela has on time charter several LPG tankers used for CIF deliveries of propane and butane.

Vela was set up in 1984 with four tankers acquired from Norbec. It bought four vessels in 1990, giving it four ULCCs and four VLCCs. It began an expansion programme in December 1990, when it started tendering for the construction of 18 VLCCs - nine with the capacity of 300,000 dwt each, and another nine of 280,000 dwt each. Orders for 15 of these were placed from February 1991, with shipyards in Japan, Denmark and South Korea involved. The first two of these tankers were delivered in 1993. Most of the others were delivered in 1994, with the rest during the first quarter of 1995.

From April 1997, Vela has managed all these ships from Dubai. Previously, six of its new VLCCs were managed by Acomarit of the UK under a contract signed in May 1993. Another six were managed by Northern Marine Management, also of the UK, under a similar contract signed in May 1993.

Saudi Aramco has justified Vela's investment on two grounds: (a) expansion is vital to its vertical integration overseas, which requires both a high degree of flexibility and central control at the same time - since Saudi Aramco is by far the biggest oil producing and exporting company in the world; and (b) the tanker market was expected to tighten in this decade.

The vessels have single hulls, ordered before the new 1992 International Maritime Organisation (IMO) requirement for sturdier double-hull construction. The IMO ruling states that all tanker orders from July 1993 must have double hulls or an equivalent IMO-approved design. (Under its 1990 Oil Pollution Act, the US requires double-hull vessels calling at its ports. Both the IMO and US laws apply to existing vessels, but have been phased in with deadlines extending into this decade. So Vela has some time to adjust to the new rules).

In mid-2000 Vela ordered four 300,000 dwt VLCCs, each with a capacity of 2m barrels, from Hyundai of South Korea. They are to be delivered in 2002 and 2003. They will replace four ageing VLCCs.

The National Shipping Company (NSCSA), owned 71% by private shareholders and 29% by the state, is the second biggest shipper of petrochemicals in the world. Its fleet includes 26 chemical tankers and general cargo ships. The chemical tankers have a total capacity of 381,000 dwt. It has five new double-hull VLCCs of 300,000 dwt each ordered on Jan. 1, 1994 from MHI of Japan, with each vessel able to carry 2.1m barrels of crude oil or oil products. They were delivered in 1996 and early 1997, and three of them were leased to Vela. It has also ordered two oil products carriers to be leased to Vela.

In mid-2000 NSCSA ordered four double-hull VLCCs each with a capacity of 2.2m barrels, in a $330m deal with Samsung of South Korea. One was to be delivered in October 2001. The others will be delivered in February, May and October 2002. They will bring its oil carrier capacity to more than 19m barrels. The first delivery has been time chartered by Vela. NSCSA now is negotiating with an Omani company for the time charter of the next two vessels. The fourth ship will serve the crude oil spot market.

NSCSA has branch offices on both sides of Suez and alliances with some of the world's major shippers. It has expanded links to Northern Europe and the Mediterranean, having made changes in its North American-Middle East links and introduced a direct line from Singapore to the Gulf.

National Chemical Carriers Co. (NCCC), owned 80% by NSCSA and 20% by SABIC, was set up in May 1990 to transport chemicals produced by SABIC's ventures (mostly JVs with foreign companies - see DT). It then purchased nine tankers totalling 280,000 dwt from Storli Group of Norway, which has since handled their operations. It had on charter two ships, the 41,148 dwt 'Al Farabi' and the 42,825 dwt 'Uqba Ibn Nafie', owned jointly by the Kuwait-based United Arab Shipping Co. In early 1991, NCCC ordered two 30,000 dwt ships worth $35m from Tomoe Shipping Co. of Singapore. In January 1992, it placed an order for three 37,000 dwt carriers at a total cost of $225m from Kvaerner of Norway. The last of these vessels was delivered in late 1996.

In late October 2001 NCCC was to sign an order worth about $267m for four new chemical carriers each with a capacity of 40,000-50,000 dwt. To be delivered over a period of 12 months, they will carry methanol, ethylene glycol, gasoline and other chemicals.

NCCC services cover 150 ports in the Gulf, the Mediterranean, Europe, North and South America, Asia and Australia, with Storli involved in their management. Its fleet at present consists of 14 vessels and NCCC says it is the world's second largest chemicals carrier.

Al Bakry Navigation Co., a private Saudi firm, has two 45,000 dwt chemical tankers delivered in 2000 by a South Korean shipyard. They are used by SABIC and Al Bakry's other regional customers. Al Bakry also has two 36-metre utility boats built in South Korea and delivered in 1999. They are being used by Saudi Aramco. Al Bakry Energy International has built its first mooring boat at the Jeddah Dry Dock and this is being used by Al Bakry Navigation. It has a licence to build marine craft.