Malaysia's Scomi Marine to jointly operate product tankers

Scomi Marine Bhd plans to jointly operate five clean product tankers with its Vietnamese partner over the next three-years as part of the company's strategy to increase the revenue contribution of its offshore support services arm.

Scomi Marine has a 20% stake in Southern Petroleum Transportation Joint Stock Co (PV Trans Petro), the prospective main clean petrol product transporter for PetroVietnam's proposed refineries, Scomi Group Bhd group chief executive officer Shah Hakim Zain said.

He said Scomi Marine was in various stages of discussions to acquire the tankers towards finalising its bid for the joint transportation operation but would not indicate the price of the vessels.

PetroVietnam is building three refineries, with the first at Dung Quat, Central Vietnam expected to be completed by 2009. PV Trans is contracted to deliver 60% of the refinery's capacity for use in the domestic market.

The company also intends to increase the revenue contribution from its offshore support services arm from the current 15%, said Shah Hakim. "Coal transportation revenue contribution is at 85% and the company is hoping to change the ratio to 50:50 eventually and achieve this in five years' time."

For the financial year ended December 31, 2007 (FY07), Scomi Marine's net profit declined 32% to RM54.3 million due mainly to the rise in docking and bunkering costs of 62% and 34%, respectively. The company's earnings were also affected by the weakening US dollar, leading to translation losses of RM3.3 million for FY07.

As such, the company would continue to carry out its cost-cutting measures to mitigate rising costs. "In terms of cost increases, we are facing huge challenges as fuel, which is the bulk of our cost, has gone up by 100%.

"Hence, the need to focus on cost-cutting measures and cost efficiencies," Shah Hakim told reporters after the company's AGM here yesterday.

Shah Hakim also said the company would continue with its fleet renewal programme, with the delivery of seven anchor handling tug and supply (AHTS) vessels, in spite of the rising costs.

"We are taking delivery of three vessels, with another two by end of the year. The aim is to invest in two to four AHTS vessels a year, of which also ultimately depends on customer's demand and vessel availability," he said, adding the company would take delivery of one AHTS capable of deepwater operations each in 2009 and 2010.

It would also be taking delivery of a RM63 million accommodation barge in early 2009, Shah Hakim said. Its AHTS vessels that are expected to be delivered this year had secured charter deals worth US$182 million (RM591. 5 million) over the next four-years with an option to extend for another year.