Kuwaiti oil tankers and the Korean Daewoo Company

March 7, 2010

KPC adopting a productivity strategy for the period extending till 2030 aims at increasing production capacities in Kuwait to reach 4 million barrels a day. This requires the acquisition of modern and sophisticated tankers qualifying Kuwait to go ahead with its planned expansions.
In the recent period, there were reports that the Kuwaiti Oil Tankers Company has conducted a preliminary agreement with the Korean Daewoo Company regarding the construction of four new crude oil tankers. The contract signed with Daewoo stipulates the construction of four tankers at a total cost up to $ 700 million; each with a capacity of 318 thousand tons.
It is likely that both parties have reached an agreement to deliver the first tanker in September 2010 while delivering the remaining carriers respectively.

Daewoo is studying a request submitted by the Tanker Company to reduce the price of the tankers to be built by the Korean Daewoo Company by 10% of the original cost agreed earlier due to the global demand withdrawal for tankers industry by nearly 40% over the last year 2009 given the financial crisis and oil prices decline.
It is expected that Daewoo during the coming period will agree to reduce the cost of tankers’ construction in preparation for their inception operations. Daewoo will certainly compensate the losses resulting from reducing the tankers’ price of construction benefiting from the global decline in iron and other raw materials’ prices which constitute the largest and most important element in building the tankers, which, in turn, will reduce the total cost of building new tankers at satisfactory rates.

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