Oman's state-owned logistics arm Asyad expects only a limited long-term impact from any potential lifting of international sanctions on Russia, citing an ageing global tanker fleet and steady oil demand that should keep the market balanced. Speaking to Argus on the sidelines of the Adipec conference in Abu Dhabi, group chief financial officer Muhsin Al Rustom said the company continues to navigate through geopolitical uncertainties through a diversified portfolio while pursuing a $2.3bn–2.7bn fleet expansion plan over the next five years.
If the Russia–Ukraine situation de-escalates and sanctioned vessels rejoin the fleet, how might that affect current fleet dynamics and shipowners' revenue?
I believe there are always both risks and opportunities when it comes to sanctions, whether it's Russia today or Iran. However, we can't look at sanctions in isolation from the broader dynamics of the aging global fleet.
For instance, in the oil tanker segment, the number of new vessel deliveries over recent years and those expected in the next three to five years, is less than half of the actual market demand. At the same time, more than two-thirds of the existing tanker fleet is between 15 and 20 years old. This ageing profile, combined with stricter IMO [International Maritime Organization] regulations on sustainability and carbon emissions, will likely accelerate fleet recycling and demolition. While the immediate lifting of sanctions could have some short-term market effects, in the longer term, demand for oil and tankers remains strong, and the limited supply of new vessels will continue to support the market balance.
How does the group navigate through challenges that come from geopolitics, economic uncertainty and inflationary pressures?
We are not new to these kinds of challenges. Even before pandemic, there were plenty of geopolitical risks that we had to navigate. The pandemic brought its own set of challenges but it also opened up new opportunities for us.
We rely a lot on Oman's strategic location and the country's political neutrality, which certainly help us manage such risks. But the key factor is really the diversification of our business portfolio. For example, during Covid, when China adopted its zero-Covid policy, it created an upside for the group's ports and dry-docking businesses, as many shipowners chose to come to us instead. Later, when China reopened and the Red Sea closure affected the group's ports, our freight forwarding, inland logistics and shipping businesses performed very well. So, it's really this diversification across our operations that allows us to stay resilient and weather challenges effectively.
Could you give us an update on the Asyad Shipping IPO and how investors have responded? Are there plans for any additional equity offering?
Asyad Shipping is a well-established and diversified shipping company. Shipping is inherently seasonal and cyclical, which often limits the pool of financial and institutional investors. We addressed this by building a diversified vessel portfolio across oil and gas, containers, dry bulk and other segments.
We focused on long-term earning capacity, selecting A-rated customers, securing long-term contracts and maintaining revenue backlog. This approach made the offering attractive. By engaging with the right banks and investors early, both regionally and internationally, we secured the right type and size of investment. The share price has performed well post-listing, attracting a sizeable number of international investors. Since the listing, we've added over $800mn in market capitalisation. While additional offerings are potentially in the pipeline, we will announce them as plans materialise.
You plan to add approximately 30 vessels by 2029. What market signals or demand trends are influencing this expansion?
The expansion over the next five years is a mixture of both fleet renewal as well as growth. Asyad focuses on maintaining a younger fleet for purposes of increasing operational efficiency and achieving its ESG [environmental, social and governance] targets. Modernisation programmes will replace older vessels with younger, more efficient vessels which will yield higher returns, drive ESG gains and better position the company in the long term.
We also work with A-rated customers who also have specific requirements and expectations regarding ESG and carbon emissions.
Additionally, diversifying our shipping portfolio allows us to tap new markets and mitigate risk. Demand for oil, refined products, and chemicals is cyclical and these segments don't always move in the same direction or follow the same market cycles. That's why diversification across different segments is so important so that you are better positioned to weather the downturns in any one specific area.
With very large crude carrier (VLCC) rates on the rise, how is Asyad Shipping planning to capitalize on this trend? Are there plans to expand your fleet with additional VLCCs?
Yes, we are actively expanding in the tanker market. This year, we took delivery of two VLCCs. Additionally, we invested in four new builds, which are due to be delivered between 2026 and 2027. We know that demand for oil is expected to remain strong over the next decade or two, so our investments are aligned both with fleet renewal and long-term market demand. While there has been a recent spike in VLCC [freight] rates, partly due to the oil market being in a contango phase, we focus on long-term strategy rather than reacting to short-term fluctuations. Our commitment to the tanker market remains steady.
We also have a robust hedging policy, and a significant portion of our fleet is under long-term contracts. This ensures that, even if there is a market downturn, we are well-positioned to weather it while continuing to benefit from favourable market conditions.
How do you expect the dry bulk market to develop in the coming years, and are you planning to grow your fleet or add new carriers in response?
Oman is aiming to grow its export activities, particularly in iron ore, gypsum, and other commodities. Oman is the world's largest exporter of gypsum and among the leading exporters of limestone. The dry bulk segment is an important part of our portfolio and we are very much long-term investors in the dry bulk market. This year, we invested in acquiring three Newcastlemaxes, due for delivery in the first half of 2026.
Given the critical role of LPG and ammonia in the clean energy transition, do you have plans to increase your exposure or investments in these markets?
Definitely, it's very much part of our plan. We already export both LPG and ammonia, and this aligns closely with Oman's broader clean energy ambitions. Oman is uniquely positioned with abundant land, sunlight and wind, making it an ideal location for green hydrogen production. The country has set an ambitious target of producing up to 1mn t of green hydrogen by 2030. Asyad has been designated as a national champion for hydrogen and ESG initiatives. Currently, Asyad Shipping transports conventional, or "brown" ammonia, but as Oman transitions towards producing more green ammonia, we're fully ready to support that shift. We often say our vessels are "colour-blind". Today they carry brown ammonia, and tomorrow they'll carry green ammonia. The transportation element is already in place, so as Oman scales up its green energy exports, we're well-positioned to enable and support that transition.
What are your capital allocation priorities across your diverse portfolio for the next three-five years?
As a group, our operations span several verticals within logistics, including freight forwarding, shipping, dry docking, ports, and free zones. Over the next three to five years, our strategy focuses on recycling capital from mature businesses into newer or less-developed areas where we aim to offer more integrated logistics solutions. Essentially, we prioritise investment in areas where we are present but not yet as strong as in our core verticals. We pursue growth both organically and through acquisitions. M&A [mergers and acquisitions] plays an integral part and the strategy is very much to have a balanced and diversified revenue streams.
For Asyad Shipping, we are looking to expand our business and fleet. We are targeting a fleet expansion plan of between $2.3bn-2.7 bn over the next five years from 2025, across all segments.
