(EnergyAsia, March 6 2013, Wednesday) — The Arab Petroleum Investments Corporation (APICORP) said its newly launched “landmark” US$150 million petroleum shipping fund has acquired five medium range (MR) petroleum product tankers to be leased out to the regional and international markets for five years.
APICORP, the Saudi Arabia-based multilateral development bank owned by the Organization of Arab Petroleum Exporting Countries (OAPEC), said it is jointly managing the fund with Tufton Oceanic, a leading global fund manager in the maritime and energy-related industries, to capitalise as well as leverage on growth opportunities in the oil product tanker charter market.
The fund will also help charterers meet their requirements for petroleum products transportation without burdening their balance sheets.
Describing it as Shariah-compliant, Ahmad Bin Hamad Al Nuaimi, APICORP’s CEO and general manager, said the fund is aimed at helping oil and gas companies “grow their business while also generating regular yield and returns for the equity investors.”
“The new fund supports APICORP’s strategic objectives of diversifying its business streams into new midstream sectors as well as tapping promising new growth avenues in the industry. We are exploring the development of similar new funds in shipping and other oil and gas sectors to take advantage of further such growth opportunities.
“Tufton Oceanic’s strong capabilities in managing funds and deep knowledge of the global shipping sector make it the ideal partner for this Fund. Our partnership with them brings the required technical expertise to the region in investing and managing investment funds focused on shipping assets.”
The two companies jointly coordinated in arranging the fund’s debt funding from Standard Chartered, SMBC, Riyad Bank and Natixis, with Standard Chartered acting as the agent bank and Natixis the documentation agent. Debt accounts for 70% of the fund with equity the remaining 30%
Tufton Oceanic is regulated by the Dubai Financial Services Authority (DFSA) in the region and has strong relationships with regional institutions built over 30 years.
Tufton Oceanic director Marcus Machin said:
“The positive outlook for demand growth in the global product tanker market creates the right conditions for the success of the fund. The growth of rapidly industrialising mega-economies like China and India is expected to drive volumes of seaborne petroleum products in the next few years. Combined with changes in trade patterns, this is expected to lift product carrier demand growth above general global economic activity in the coming years.
“We expect the product tanker market to witness a compound average demand growth of above 5% per annum over the next five years. At the same time, there has been a decline in the vessel order book as a result of constraints in the placement of new orders. Both these factors create the conditions for market growth in the coming years.
“The fund acquired the product tankers at highly competitive rates at what we believe was a low point in the shipping market cycle.”
Established in 1975, APICORP has invested, as an equity owner, in a total of 22 oil and gas joint venture projects worth in excess of US$16 billion. The bank, which is 10% owned by the Qatar government, has also participated in direct and syndicated energy finance transactions worth more than US$130 billion.