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Thu 7 Aug 2008 01:19 PM

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Oman seeks $4bn for shipping expansion

Finance ministry reveals plan to add up to 20 tankers to shipping fleet, loan deal by year-end.

Oman's state shipping firm aims to raise $4 billion by year-end to finance its proposed fleet expansion programme, a finance ministry official said.

"The $4 billion we are raising this year will finance the existing vessels already on order and the purchase of more ships," an official at the Ministry of Finance, which is arranging the deal, told Reuters on Thursday.

Oman Shipping Company (OSC) is looking to grow its fleet to meet demand for energy transportation by adding between 15 and 20 refined product tankers to its fleet.

OSC's major stakeholders include the Ministry of Finance and Oman Oil Company.

"It is too big for local financial institutions to wholly finance the deal but we can collaborate with foreign banks to raise the money," Bank Muscat chief operating officer Ahmed al-Abry told Reuters.

Abry said Oman's largest lender would "go for the role of a lead arranger" on the deal.

Part of OSC's multi-billion dollar expansion includes an order to build 10 Very Large Crude Carriers (VLCCs), chief financial officer Kuldeep Mathur said in March.

In February, OSC placed two separate orders with South Korea's Hyundai Heavy Industries Co, the world's largest shipbuilder, to build five supertankers, and with Daewoo Shipbuilding and Marine Engineering Co to build another five VLCC's. The deals were valued at about $770 million each.

Financing for the company's fleet expansion could likely come via loan arrangements from the North Asian institutions, Japan Bank for International Cooperation, Korea Export Insurance Corporation (KEIC), or European banks BNP Paribas and Societe Generale, Mathur said in March. (Reuters)

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