Iran Shipping in newbuilding spree

Iran Shipping Lines (IRISL) ordered US$450 million of vessels from domestic yards in the country’s biggest shipbuilding order. As the Middle East’s biggest non-oil shipping company, IRISL ordered as many as ten 53,000DWT dry-bulk carriers at a total cost of $270 million. The Tehran based company, also agreed to buy six 75,000DWT ships valued at $180 million. These prices are below those quoted by Far Eastern yards.

The cost of building a 75,000 tonne Panamax bulk carrier averages $37 million, according to Clarkson while the average cost of building a 53,000 tonne Handymax vessel is $30 million. The Iran-built ships will be completed between July 2007 and October 2008.

IRISL and its oil tanker counterpart National Iranian Tanker Co typically buy vessels from shipyards in South Korea and China. Full order books and rising prices at Asian shipbuilders make Iranian yards a cheaper and quicker option.

“Our preference is to make ships in Iran,” A.M. Elahimia, managing director of IRISL Asia Pte in Singapore, said yesterday. “We will continue as long as they are competitive in timing and pricing.” He declined to confirm the commercial terms of the contracts.

Sadra Shipyard won the order for the 53,000DWT vessels while Iran Shipbuilding & Offshore Industries Complex Co (ISOICO) was commissioned to build the six larger bulkers. The Iranian government offers financial support to shipyards through subsidized loans as it tries to increase employment amid population growth of more than 1% a year.

ISOICO plans to break into the market for LNG carriers as Iran develops its gas reserves, the world’s second largest, for export. Last week, the shipyard signed a preliminary agreement to build an LNG carrier for the Belgium shipping company Exmar. The yard also plans to build oil tankers, president Mustafa Karbalaei said in interview in Dubai last week. The Bandar Abbas-based shipbuilder already has an order to build five 30,000DWT container ships for IRISL.