Gulf Navigation holding has entered two of its petrochemical tankers into the dry dock for the mandatory five-year maintenance. This includes major upgrades to the two carriers in order to enhance the company’s competitiveness in the global markets. This is done by adopting plans and programs to fully comply with international environmental laws related to reducing greenhouse gas emissions, climate change and the targets for 2020, 2025 and 2030. The company is planning to upgrade its ships with state-of-art technologies in order to reduce operational expenses, says a report published on the Gulf Nav website.
- This upgradation will reduce the expenses by over 5% and enable the fleet to compete globally by entering EU and US markets.
- This also helps the Group’s short and long-term plans to reduce the environmental footprint of its maritime fleet and trans-sea operations.
- The upgrade will equip the two vessels with state-of-the-art technologies that will reduce operational expenses.
As a result of these expenses and the loss of the two ships’ rental revenues during the maintenance period, the company’s financial results in the second quarter have shown these losses.
Reactions from the Managing Director
Commenting on the results, H.E. Khamis Juma Buamim, Board Member, Managing Director and Group CEO of Gulf Navigation Holding said, “Another important investment expense, for which we have allocated a substantial amount of the company’s revenues in this quarter, is the quality upgrade of our ships while they went through the mandatory five-year maintenance. We have installed gas exhaust pumps to reduce sulphur emissions and added advanced equipment to treat ballast water to prevent biological pollution. This will help our vessels comply with IMO’s standards and give us an advantage to get new contracts in established markets such as the European Union and North America. Many companies are expected to withdraw from these markets because they will not afford the expenses to comply with the new technical specifications. We have also installed new advanced engine fans that reduce fuel consumption by 5%. Taking this step now helps us avoid having to use higher-priced, less-available low-sulphur fuels and thus risking higher operating costs and the possibility of our vessels to stop and not generate revenues while waiting for fuel.”
It is a common practice in the maritime shipping sector that ships go through a mandatory comprehensive maintenance every five years. Ships stop in the dry dock for a minimum of two months without making any revenues. Gulf Navigation has utilised the stoppage period to upgrade its fleet and enhance the capabilities of its vessels with new features that increase operational efficiency by reducing fuel consumption over the next five years. This will also help the vessels meet the new environmental standards for gas emissions and ballast water treatment, ensuring their competitiveness and preference to operate in established markets such as the European Union and North America. Thereby achieving significantly higher returns than before, as well as increasing the operational lifespan of ships and raising their return on investment.
Upgrade After In-depth Study
Gulf Navigation’s technical team of experts adopted these major upgrades and changes for the company’s fleet after an in-depth study of the global petrochemicals and petroleum products shipping industry, in light of the new requirements and standards imposed by the International Maritime Organization, the European Union, and the United States. The new measures will force many companies to exit the market because of their inability to keep up with them. It is also expected that low-sulphur fuels will be more expensive and less available.
Advantageous Timing
Buamim explained that choosing this particular time for the upgrade has two advantages for the company; the first is increasing the return on investment allocated to owning the vessels by increasing their operating lifespan through the comprehensive maintenance. The second benefit is to get long-term contracts from leading producers of petrochemical derivatives, which will look for environmentally-friendly ships that will not be banned from entering the markets that are bound by the new standards.
Reducing the fuel consumption of Gulf Navigation’s vessels adds a competitive advantage that allows it to achieve higher profits and offer better prices than its competitors who will pay more for low-sulphur fuel. More importantly, Gulf Navigation will be ready to commit to reducing greenhouse gas emissions and contribute to achieving the UAE’s goals in this regard for 2020, 2025 and 2030.
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Source: Gulf Navigation Holding
