Singapore's NOL wins US$220m oil transport contract 

www.channelnewsasia.com First created : 03 March 2003 1239 hrs (SST) 0439 hrs (GMT) Last modified : 03 March 2003 1835 hrs (SST) 1035 hrs (GMT)

Neptune Orient Lines, the world's seventh largest container shipping group, said its unit, American Eagles Tankers had won a US$220 million (S$382m) long-term contract to transport fuel from Venezuela to Asia.

In a statement, NOL Chairman, Cheng Wai Keung said AET won the tender to transport fuel for BITOR, a subsidiary of the Venezuelan state oil firm Petroleos de Venezuela.Advertisement The fuel will be delivered to Singapore power company Power Seraya which is switching to cleaner and cheaper Venezuelan oil to fuel its power station.

The contract is for seven years with an option for a three-year extension, and starts in the second half of 2004.

AET will expand its fleet of very large crude carriers (VLCCs) by three to five to cope with the additional capacity demands.

NOL has negotiated with Far Eastern shipyards last year to build the three additional VLCCs.

The vessels will be delivered from the end of next year to the beginning of 2005.

Industry analysts said the contract could put NOL in a stronger bargaining position to sell its profitable tanker unit and reduce debt.

Loss-making NOL, which is cutting costs in a bid to revive its core container shipping business, has said it is considering selling its only profitable division.

Analysts say the sale of American Eagle Tankers could fetch as much as US$1 billion, which would help bring down the shipping group's gearing to below three times from the current five times.

Last week, the Singapore shipping group said its 2002 net loss widened to S$574 million.

PowerSeraya told Channel NewsAsia that the Venezuelan oil is cheaper than high sulphur fuel oil, even after taking into account the cost of transporting it half way round the world.

The energy firm estimates that it'll be buying up to 1.8 million tons per year of the Venezuelan oil.