The economic expert Ziad Al-Hashimi raised questions today, Wednesday, regarding Iraq's move to purchase new oil tankers to strengthen its maritime fleet, warning against making the decision without a comprehensive feasibility study of the nature of the maritime transport market and the expected demand for Iraqi ships.
Al-Hashimi compared this direction to the Greek experience, where ship-owning companies build oil tankers, container ships, and bulk cargo vessels, then operate part of them or lease them to other companies under long-term contracts or on a trip basis, considering that Iraq's entry into this market requires first identifying the appropriate business model, potential customers, the scale of investment, and the necessary marketing capabilities to compete.
Al-Hashimi stated in a post on Facebook, which "Video News Agency" reviewed, that Iraq owning new tankers does not necessarily guarantee their operation or yield returns, given that oil transport is linked to buyers' decisions and the existing competition in the global shipping market, urging the Ministry of Oil to conduct a strategic assessment before proceeding with the ship purchase.
He added that "Greek companies are signing contracts to build more than 1,000 new ships to add to the Greek fleet spread around the world. What about Iraq?".
He confirmed that "these ships will be a mix of oil tankers, container ships, and bulk cargo vessels to be operated in the transport market after delivery, where Greek ships represent a third of the vessels operating in the global maritime transport fleet".
He continued: "The business model of Greek ship-owning companies relies on building ships and operating some while leasing others to maritime companies under long-term contracts or on a trip basis. This model is currently dominant in the maritime transport market, meaning there are (owning) companies and other (operating) companies, so a significant percentage of the fleets we see today are (chartered) ships, not fully owned by maritime companies. Instead of investing several billion to purchase ships, companies prefer to lease them to reduce operational costs and focus on marketing, operation, and management aspects."
He added that "Greek companies are considered among the established companies with a large customer base worldwide and do not decide to purchase ships without having ready orders for lease or operation after an in-depth study of market demand, making investment in building new ships economically viable for those companies."
He pointed out that on the other hand, the Iraqi Minister of Oil stated his ministry's move to (purchase) new oil tankers to enhance the Iraqi oil tanker fleet, despite not having a guaranteed share in the oil transport market, nor being able to impose the sale of Iraqi oil transported to buyers, as the transport option is linked to the buyer's decision and desire, not the seller's. Furthermore, this minister or his ministry does not, under normal circumstances, possess global marketing capabilities that can compete with Greek maritime giants or others who control the market and can offer competitive transport prices that may deprive the new Iraqi fleet of gaining an appropriate share of the market.
He confirmed that "the establishment, operation, and management of oil ship fleets should not be a hasty decision, but rather a complex process that takes many years of arduous work and requires a complete market study, identifying the appropriate business model for Iraq, who the customers are, the required investment size, what human and marketing capabilities Iraq lacks, and how these gaps can be filled."
Al-Hashimi indicated that "once these requirements and others are met, the Ministry of Oil can accurately determine whether it is more suitable to build new ships or lease them or to abandon investment in transport and focus on other aspects of the energy chain, which could generate better returns than the transport process."
He noted that another problem is that some believe that not transporting Iraqi oil causes significant losses to the Iraqi treasury, which is merely a reaction and opinion that evaluates a transport process occurring in an emergency situation that will not last indefinitely; after stability returns to the markets, ships will pile up again looking for shipments to transport, transport prices will drop sharply, and a price war among carriers will begin. Those without a large and verified market share and the ability to present competitive transport prices will be among the biggest losers. At that point, the Ministry of Oil, if it proceeded with purchasing new ships, might either offer to transport oil at low prices just to cover high operational costs or look for tenants for its ships or stop those ships and wait for the market conditions to improve. All these options are not suitable at all, confirming that ship purchases should not have been a hasty reaction, but should have undergone a long evaluation and study path before making such a strategic decision.
Al-Hashimi concludes his post by advising anyone promoting and pressuring the issue of Iraq purchasing oil tankers to "instead advise the Ministry of Oil to complete a thorough study of this project so that it can accurately determine the most appropriate strategic option for Iraq amidst the accelerating changes and intense competition in the energy transport market in the medium and long term."