The National Shipping Company of Saudi Arabia (NSCSA) is diverting some of its vessels to the Cape of Good Hope in South Africa to avoid the threat of piracy in the Gulf of Aden, said a senior company executive.
Part of the company's fleet that will continue to ply through the Gulf of Aden will be placed under the protection of an international naval convoy.
"We do not want to take any risks given the escalation of acts of piracy in the Gulf of Aden. We will take all necessary steps within our means to keep our vessels safe," Saleh Al Shamekh, President of Oil and Gas at NSCSA, told Emirates Business on the sidelines of Offshore Arabia 2009 conference and exhibition in Dubai.
"Sailing through the Cape of Good Hope is an appealing option at the moment, although the voyage is longer compared to our traditional route through the Suez Canal," he said.
Al Shamekh said the company's vessels using the Gulf of Aden will sail 1,000 kilometres away from the Somali coast and will be escorted by a convoy manned by a coalition of navies. He said insurance premiums for both hull and cargo had gone up substantially for ships sailing through the Gulf of Aden, but could not provide the exact percentage increase.
With more than 100 vessels hijacked last year, increasing acts of piracy along the Somali coast in the Gulf of Aden have forced several shipping companies to divert part of their fleet away from the Suez Canal route.
Maersk, the world's largest shipping company, recently diverted 50 of its oil tanker fleet to avoid the pirate-plagued waters off the Somali coast because it could no longer guarantee the safety of the slow-moving ships.
Operators such as Frontline, TMT, Euronav and BW have also considered diverting their tankers away from the Suez Canal in favour of the Cape of Good Hope.
Industry body Intertanko has endorsed such plans by tanker operators, citing the "safety of seafarers" as the major concern.
Al Shamekh noted that although the current international financial crisis had brought down profits from their peak witnessed early last year, the performance of NSCSA has held up.
"Unlike the dry bulk and container sectors that have been floored by the current situation, we continue to perform well and we are very optimistic about the tanker sector's future," said Al Shamekh.
NSCSA more than doubled its 2008 third quarter profits to $75.3 million compared to $29.8m in 2007 on the back of higher crude oil transportation rates in the spot market and a rise in the company's fleet of Very Large Crude Carriers (VLCCs).
The company has invested $1.3 billion in a new-build programme aimed at doubling its current fleet size by 2011 and has no plans of cancelling any orders despite the financial crisis.
NSCSA has a total of 16 petrochemical tankers and four Very Large Crude Carriers are currently on order and all are scheduled for delivery by 2011.