REPORT OF THE BOARD OF DIRECTORS
Petrochemical Transportation Sector: In 1990, NSCSA in collaboration with Saudi Basic Industries Corporation (SABIC) founded the National Chemical Carriers Company (NCC) with a capital of SAR 200 million and ownership of 80% and 20% respectively. Later, addition- al funds were injected to support the expansion plans of the National Chemi- cal Carriers with a capital currently amounting to SAR 610 million. As of 31st December 2010, NCC owns (13) chemical tankers. On January 31, 2009 (3) tankers were leased to Odfjell, a Norwegian company, under a bare- boat capital lease arrangement. On June 15, 2009, NCC signed a 50% joint venture agreement with Odfjell to establish a company in Dubai, UAE in the name of NCC Odfjell Chemical Tankers JLT (NOCT). The joint venture started operating in January 2010 with (15) tankers with a capacity of approximately 660,000 tons. (3) NCC tankers were assigned to the joint venture and are op- erating under a pool arrangement with other Odfjell tankers. (6) tankers are chartered to the International Shipping and Transportation Company (ISTC) a subsidiary of SABIC and (1) tanker is chartered to Saudi International Petro- chemical Company (SIPCHEM). In line with the strategic plan of NCC to increase the capacity of its fleet to approximately 1.3 million static tons and the number of owned vessels to (29) carriers, NCC entered into a contract in 2006 with SLS Shipbuilding Co. of South Korea to build (10) new carriers and another contract during 2007 to build (6) additional petrochemical carriers. These were expected to be de- livered during the period 2010 to 2012. However, in May 2010 and September 2010, it was mutually agreed by both parties to cancel the contracts for (7) tankers under construction due to the delays by (SLS) to deliver the tankers as stipulated in the contract. As a result, NCC realized a gain on the cancella- tion of the new-buildings for SAR 15.1 million. Also on July 4, 2010, NCC signed a contract with Daewoo Shipbuilding and Marine Engineering Co. Ltd of South Korea to build a (1) specialized chemi- cal tanker of 75,000 DWT at a contract price of SAR 245 million. This vessel is expected to be delivered in 2013. Moreover, on 21 December, 2010 the BODs of NCC agreed to sign a contract with SLS Shipbuilding of South Korea to purchase (2) tankers. The Petrochemical transportation sector realized a total operating income of SAR 112.89 million in 2010, compared to SAR 151.81 million in 2009, which constitutes 25% of the total operating income of the company in 2010.
Growth of Chemical Carriers Fleet
Description
Number of Carriers
Capacity (Static Tons)
Fleet as of 31 December 2010
13
574,000
Carriers under construction and expected to be delivered during 2011-2013
12
645,000
Total
25
1,219,500
The National Shipping Company of Saudi Arabia Annual Report 2010
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