Bahri Annual Report-2016



Bahri Annual Report

2016 Business Units Performance & Achievements

Bahri Annual Report

2016 Business Units Performance & Achievements

Bahri Oil, is a leading owner and operator of one of the largest VLCC fleets in the world. With 36 VLCC’s currently on water, Bahri Oil’s fleet is expected to grow by more than 40% over the next 2 years. As part of its fleet expansion strategy, Bahri acquired 5 VLCCs during 2016 and has an additional 10 VLCC’s on order, which will be delivered over during 2017 and 2018. In its continuing effort to optimize its commercial operations, expand its asset base and maximize its profit margins, Bahri Oil signed a memorandum of agreement with the Arab Petroleum Investments Corporation (APICROP). This agreement stipulated the setup of an investment fund, with a total value of $1.5 billion (SAR 5.6 billion), to acquire up to 15 VLCC’s. Bahri will commercially and technicallymanage the funds’ fleet monetization, through the Asset Management Company (AMC). This business venture will provide Bahri with controlled tonnage, at guaranteed discount, thus replacing spot in and it adds a new revenue stream through a third- party ship management service fees. Bahri Oil’s commercial acumen, coupled with its fleet size and ship management quality helped it to successfully establish a long-term strategic partnershipwith some of the largest oil companies and refineries across the globe. In addition, it diversified its trade routes, increased its global reach and penetrated new markets, thus providing its partners and global customers with efficient transport services and became a reliable supplier for their energy needs. Central to Bahri Oil’s 2016 performance, was its fleet deployment diversification strategy and an energetic pursuit of its growth plans, which were based on expanding its fleet size and customer base. This is due to Bahri above market performance, during which it outpaced the industry’s operational

and financial indicators. Thus, Bahri Oil outperformed the market by maintaining high quality, reliable tonnage and above market asset utilization standards. During 2016, Bahri Oil transported 881 million barrels equating to 2.5 million barrels per day, through 440 VLCC voyages worldwide. In comparison, during 2015, Bahri Oil carried out 402 VLCC voyages worldwide; this 9% increase is a result of Bahri Oil’s fleet deployment diversification strategy. Furthermore, the number of voyages on the AG/East route more than doubled from 18 in 2015 to 41 in 2016. This increase resulted in a 10-percentage point increase from 13% (2015) to 23% (2016), for all of Bahri’s East and West voyages performed from the Arabian Gulf over the past year. In addition, Bahri Oil’s penetration of the West African market increased, from 3 VLCC voyages in 2015 to 13 during 2016. To further enhance its market presence, Bahri Oil penetrated the Uruguay market, performing its first Uruguay/China voyage during 2016, a route which will potentially expand in the near future. These initiatives resulted in Bahri achieving a distinctly higher fleet utilization, measured by the time the vessel is laden, which resulted in being one of the best performers in the VLCC market. On the other hand, the Arabian Gulf to Okinawa route registered a slight drop in the number of voyages, going down from 6 in 2015 to 4 in 2016. There was also an 18% drop in the number of voyages on the Sidi Kerir, Rotterdam route, going down from 38 in 2015 to 31 in 2016. Although the Arabian Gulf Ain Sukhna route registered a 38% drop, it was offset by the 23% increase in VLCC voyages on the Yanbu to Ain Sukhna route. As a testimony to its superior services and capabilities and as part of Bahri Oil’s long-term commitment to improving its operational performance, an agreement was

the deployment of its ambitious, innovation-based ‘Big Data’. Central to this strategy is the alignment of the people, corporate structure and culture that will be combined with Bahri’s maritime operational prowess. In turn, this led Bahri to achieve its 2016 above market performance and has set the stage for Bahri’s future transformation.

Bahri’s deliberative approach to driving and changing the dynamics and expectation management of the shipping industry, resulted in its above market operational and financial performance. To achieve this, Bahri developed a comprehensive strategy map, with the aim of defining its business intent and approach, which will lead to the transformation of its business purpose, through

Bahri Oil

Performance and Achievements of Strategic Business Units during 2016

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