Osprey Maritime expands shipping services in Asia

By Benget Simbolon

KWANGJU, South Korea (JP): Shipping company Osprey Maritime, the oil and gas shipping unit of the Bimantara Group, has procured four new tankers to strengthen its fleet to 23 carriers, in a bid to benefit from the rapid growth of Asian oil and gas demand.

Speaking to reporters after the naming of two of the four new tankers, built by Halla Shipbuilding Co., here over the weekend, Osprey's chairman and chief executive officer Tim Cottew said that the other two tankers would be delivered in June next year.

Osprey is a public company listed on the main board of the Singapore Stock Exchange with activities in owning, chartering and operating oil and gas tankers.

Established in 1990 in Singapore, Osprey is 11 percent owned by PT Samudra Petrindo Asia, the shipping subsidiary of the Bimantara Group, 49 percent by individual investors from the Bimantara Group, including its chairman Bambang Trihatmodjo -- the second son of President Soeharto -- and the rest owned by the investing public.

The two new tankers, Osprey Altair and Osprey Lyra, cost a total of US$31 million. They each weigh 46,000 dead weight tons.

According to Cottew, some 70 percent of the total cost was financed by loans from Christiana Bank of Norway and Indosuez Bank of France and 30 percent by Osprey's own equity.

The other two tankers, will be the same the same size and the same price. They are being built by Halla Shipbuilding at its Samho Shipyard near here.

Cottew pointed out that the Osprey Altair will soon be operated on a five year charter to the Sabic Marketing (Saudi Arabian Basic Industry Corporation) to transport oil and chemical products from the Middle East to Japan and South Korea, while the Osprey Lyra will go into service a few months later as it still needs further modifications.

"These new tankers will increase our revenue," he told reporters at the naming ceremony, which was attended by Peter F. Gontha, a director of the widely diversified Bimantara Citra and vice president of the chemical company Chandra Asri.

Cottew, who is also the chief executive officer of PT Samudra Petrindo Asia, noted that a large portion of his company's revenues had been derived from its activities in Indonesia, mostly in transporting oil and gas for the state-owned oil and gas company Pertamina.

"Last year, some 78.4 percent of our revenues was generated by the Indonesian market," he said.

Indonesia is the world's largest exporter of LNG (Liquefied Natural Gas) and the largest oil producer in the ASEAN region.

"Our strong connections with the Indonesian oil and gas industry, built over many years, are the backbone of our group. I am committed to developing and expanding our business in the dynamic country," he said.

But he stressed that his company is also committed to internationalizing its business. "Last year, we expanded the Indonesian-derived revenue by 7.6 percent, while the contribution from non-Indonesian based revenue grew by over 70 percent," he said.

Cottew expressed his optimism about the growth of shipping services in Asia. "It is anticipated that Asian oil demand growth will account for nearly two-thirds of the expected volume increase in the world oil market until the year 2005," he said.

The shipping company saw its operating profit rise by 10 percent from $22.5 million in 1994 to $24.9 million in 1995, while its net profit increased by 120 percent to $15.5 million in 1995 from $7.0 million in 1994.

The 10 percent increase in operating profit reflected the full-year effect of the three tankers the company acquired in 1994: Ibnu, Osprey Sky and Osprey Challenger.

Disincentives

Asked why Osprey's is based in Singapore and not in Jakarta, Cottew noted that having Indonesia as a base for a shipping company like Osprey is not attractive.

"The situation after last year's deregulatory package is improving but there are still a number of disincentives," he said, adding that when Osprey was set up in Singapore in 1990, Indonesia still imposed a 10 percent VAT (Value Added Tax) levy on ships.

Indonesia, he said, cannot provide cheap funds for investments and has no legal certainty in terms of the shipping business.

"You know, the lending rate in Indonesia is above 20 percent. In Singapore we can get cheap funds with rates ranging from 7 percent to 8 percent," he noted.

Cottew explained that banks do not trust the ship mortgage system in the country. "We found from our experience in arranging financing deals that banks, particularly the foreign ones, have no trust in the ship mortgage system in Indonesia."

According to him, there is no guarantee for bankers that they can confiscate the ships they fund if the shipping investors in Indonesia fail to pay their debts.

He also said, without elaborating, that in Singapore his company can get tax incentives.