Iraqi oil joint venture to benefit MMM in long term (12/03/05)

Malaysian Merchant Marine Bhd (MMM), Malaysia’s second largest shipping concern in terms of fleet size, is expected to benefit in the long term from its proposed joint venture in Iraq. MMM is believed to have already signed a memorandum of agreement with Iraqi Oil Tankers Co. (IOTC), said to be the first agreement ever signed by IOTC, which is controlled by the Iraqi Ministry of Oil.

“Under the agreement, MMM is to have a minimum of eight years of confirmed privilege to supply bunker fuel to Iraqi ports and oil terminals,” a source close to the deal said. MMM is also expected to get a substantial discount from the market for fuel.

An MOU was signed with Iraqi Oil Tankers

“The benchmark would be the fuel price in Dubai. If the price of bunker fuel in Dubai is RM200 per barrel, MMM will get the fuel at about RM180 or RM170 per barrel from the Iraqi government,” the source said, describing that this would mean rather substantial discounts.

MMM currently has 13 vessels in its fleet and plans to increase it to 16 by year-end. As for supplying bunker fuel, he said it would be between 50,000 and 60,000 tonnes initially, but could soon rise to 100,000 tonnes.The limit for MMM will be the capacity of the pipeline at the Iraqi ports.

Late last year, MMM told Bursa Malaysia it was in discussions to enter into a 50:50 joint venture with IOTC to provide bunker fuel and other shipping services to ports in Iraq. MMM will spearhead the operational and commercial activities of the joint-venture company. It will also set up ship repair facilities and marine supply centres in neighbouring Iraq.

The company will be headquartered in the Jebel Ali Free Zone in Dubai. The source said that MMM was in a perfect position to achieve greater heights, given that IOTC had once been the largest tanker company in the Gulf area.

“IOTC is now going to rebuild its tanker fleet and MMM will be its partner. Iraq has the second largest oil reserves in the world. Hence, the bunker business could just be a small step towards a bigger opportunity. “The agreement is intact, which means MMM is only waiting for the new Iraqi oil minister to endorse it, possibly by the end of March,” the source said.

Source: TheStar