Iran Aims For International Shipping Comeback With $2.4 Billion in New Ship Deals

Islamic Republic of Iran Shipping Lines is looking to add a number of vessels to its fleet

In addition to the remarkable recovery of its oil production sector following the lifting of international sanctions earlier this year, Iran is gearing up for a comeback in global shipping by systematically replacing its aging fleet.

People involved in the talks told The Wall Street Journal that the Islamic Republic of Iran Shipping Lines (IRISL) and Iranian Offshore Oil Co. have reached a preliminary agreement with Hyundai Mipo Dockyard of South Korea for orders valued at about $2.4 billion, even though financing hasn't yet been secured.

The orders are said to include as many as 10 petroleum-product tankers (which each cost about $30 million) and at least six handysize bulk carriers (which each cost about $20 million to build); IRISL, which operates about 115 oceangoing vessels with a total capacity of 3.3 million deadweight tons, is also reportedly discussing with Hyundai Heavy Industries Group an order for six 14,500-container ships.

But that's just part of the Islamic Republic's bid to impact the international market: the Wall Street Journal's sources say Iranian Offshore Oil Co., is in advanced talks for firm orders of at least five jack-up rigs with Daewoo Shipbuilding & Marine Engineering Co., each worth about $205 million.

One source remarked, "Rig orders are rare these days as oil prices are low and offshore drilling is expensive, so there will be a race among major yards for the order"; a race is also on for Hyundai's containerships, with Dalian Shipbuilding Industry Co. of China interested in the six-vessel order as well.

Another source said, "The yards are making slots available to the Iranians starting in 2018 and 2019; the Iranians are trying to make the 20 percent down payments through oil state-to-state deals to finalize the orders."

Other options for down payments are being discussed, and the parties involved with the proposed deals expect the orders to be completed by the end of this summer.

Earlier this week it was reported that Iran is making up for lost trade with at least 26 foreign tankers (each with a 25 million barrel capacity) having either loaded crude or fuel oil in the last two weeks, or about load at the Islamic Republic's Kharg Island and Bandar Mahshahr terminals.