By Sarah Townsend
From revolutionary new engines set to dramatically improve shipping sustainability to Doha’s under-construction Hamad Port, the new boss of Qatari shipping operator N-KOM, Chandru Rajwani, is optimistic about what’s on the horizon. So much so, he is brushing aside competition from neighbouring Gulf states
Chandru Rajwani has a convenient rhyme for his name: ‘can-do’. It is his motto in business and in life, the newly appointed head of Qatari shipyard operator N-KOM tells Arabian Business with a broad smile.
The Singapore-born chief executive appears relaxed given he has been in the job for less than six months. Our meeting takes place at the sleepy Belmond Governor’s Residence in Doha, the city where Rajwani has been based since November after leaving his role as chief executive of the Caspian Shipyard Company in Baku, Azerbaijan.
Perched on a green velvet couch in a neat suit with a cup of tea in one hand, he cuts a distinguished figure, with a mass of silver hair that one of his employees jokes makes him look like “the George Clooney of the shipping world”. Rajwani laughs off the comment – he has heard it before – and begs me not to embarrass him by including it in the article (to which I tell him I cannot possibly agree).
Celebrity looks aside, it is clear from the outset Rajwani is a man who eats, sleeps and breathes shipping. A marine engineer by background, his speech is unapologetically technical, peppered with an abundance of acronyms and other trade jargon that I have to ask him to unravel for me or Google in haste after we meet.
He joined N-KOM at an important time for the shipyard. The 80:20 joint venture between Qatar Gas Transport Company (Nakilat) and Keppel Offshore & Marine (KOM) began operations in 2011 and last year embarked upon a series of projects intended to cement, says Rajwani, “its reputation as the preferred shipyard in the Middle East”.
The 50-acre facility already offers a range of shipping repair services to repeat clients including Teekay, MOL, NYK, K Line, Pronav and Shell. Among the services are steel renewal, boiler repairs, main engine repairs, liquefied natural gas (LNG) equipment overhaul and other equipment installation, propeller and rudder modification, hydraulic pipe repairs and hull coating treatment.
N-KOM also undertakes services for marine vessels and offshore and onshore structures, and conversion services related to Qatar’s booming gas trade – the Gulf state boasts the third largest natural gas reserves in the world.
One of N-KOM’s major new projects is related to this. Last January, it announced ambitious plans to undertake the first ME-GI (main engine gas injection) conversion of a type of LNG carrier called Q-Max, to run on a dual-fuel LNG engine from this April. Nakilat currently has the largest fleet of Q-Max carriers - tank ships designed for transporting LNG.
Rajwani says so far the use of LNG as a fuel source in the industry has been limited to conventional steam-driven carriers, but once N-KOM completes its conversion next month, the Q-Max vessel will have the world’s first low-speed marine diesel engine converted to use LNG as fuel.
This is significant, he states, because LNG is a much cleaner fuel source. It will be the first time ME engines have been modified in this way and positions N-KOM as a leader in sustainable shipping solutions in a sector not known for its environmental credentials.
The control of greenhouse gas and carbon emissions is a priority for today’s shipping industry and, when the engines are in operation, the ship will comply with all the International Maritime Organization (IMO)'s current and planned regulations governing marine carbon emissions, says Rajwani.
“The use of ME-GI as an alternative will allow a cleaner fuel technology with a significant reduction in environmental emissions and the potential to increase mean time between maintenance. Also, the dual-fuel capability enables flexibility of fuel supply to react to market changes, reducing operational risk.”
Rajwani is excited about the project, noting that “lots of people will be watching it with interest”. If successful, he says, it could have positive implications for fuel costs.
Since 2006, Qatar has led the world in annual LNG exports, producing an average of 77 million tonnes per year at its 14 gas processing and liquefaction facilities, according to the US Energy Information Administration (EIA), which also shows that of the 29 LNG-importing nations, 26 buy from Qatar.
The Gulf nation meets most of its domestic energy consumption through its gas resources, which provide for over 60 percent of government revenues, and nearly all of the natural gas exported from Qatar takes the form of LNG, with the remainder transported by pipeline to the UAE and Oman.
Qatar is aware of its prime market position and continually seeks to capitalise on it.
“The country is forward thinking, and promoting Doha as a fuel port is a key part of its 2030 economic strategy,” Rajwani notes.
Thus, promoting its expertise in LNG is important for N-KOM and Rajwani boasts that the shipyard recently completed repairs for its 100th LNG carrier, in January. “This is testament to N-KOM’s prowess when it comes to undertaking repairs for these specialised vessels”.
Other LNG-related projects launched last year include a partnership with oil and gas research consultancy DNV GL, aimed to increase the environmental sustainability of N-KOM’s operations, and completion of a training programme in collaboration with engineering company GTT, to build in-house welding and other skills needed to repair what is now an ageing LNG fleet. N-KOM is investing in new capacity to install carbon emission control technologies in vessels.
The shipyard operator also is looking to expand its offshore LNG activities. With more than 500 offshore rigs operating in the Gulf, N-KOM has plans to construct a number of open-sea bunker barges at which LNG vessels can refuel.
Another of its recent projects was an agreement with Greek engineering firm HeLeNGi to retrofit several commercial Greek ferries to run on LNG as fuel as part of the European Union’s €20m ($21.08m) Poseidon Med Project to study offshore LNG opportunities.
However, Rajwani warns “Qatar has an oversupply of LNG”. In 2005, the state halted further development of its North Field, imposing a moratorium on new projects to maintain supply stability in the medium term. The recent drop in hydrocarbon prices has had a domino effect on LNG and placed the shipping industry under pressure.
“With Asian spot LNG prices down by almost two-thirds since February 2014, from $19.84/MMBtu [million British thermal units] to $7/MMBtu in February 2015, slowing demand is combining with rising output,” Rajwani says. “We are seeing ship owners parking their tankers in nearby ports, such as Singapore, until new orders come in.
“Ship owners are becoming increasingly prudent with their expenditure. Only essential repairs are prioritised. Furthermore, the low oil prices may cause them to rethink installation of costly green technologies onboard their vessels, especially as a date for mandatory imposition of IMO regulations has yet to be confirmed.”
N-KOM must continue to diversify its services to stay ahead of the game. Rajwani says it has a particular goal to widen its customer base, from being Qatar-dominated to international.
“We want to grow our international market - at present we are 50:50 Qatar and international but we want to be 20:80 - and grow our offshore services across a wider geographical area,” he says.
Rajwani highlights a recent deal with global marine services company Wärtsilä, signed on March 1, which is intended to improve general shipyard repair services beyond the LNG sector.
Crucially, N-KOM’s docking and service capacity is expected to increase by 50 percent following a substantial redevelopment project due to be complete by mid-2015. “We are building the largest floating dock in the world, 405m x 66m,” claims Rajwani, adding quays and piers providing a total berthage capacity of 2,750 metres and more than 320,000 sqm of fabrication and on-site subcontractor facilities are also under construction.
Earlier this month, Qatar’s Deputy Emir Sheikh Abdullah bin Hamad Al Thani announced the name of Doha’s new port project at Umm Al Houl in the Mesaieed area south of Doha. Hamad Port is scheduled to be fully operational by 2016, while its general cargo loading and unloading terminal is expected to open later this year.
When completed, the port is expected to increase the volume of Qatari exports and imports. Although N-KOM has no involvement in the project, Rajwani says the company will benefit from increased shipping traffic the port will likely generate.
“Hamad Port will increase the number of vessels coming through Qatar from 2016, which is good news for us: more traffic means more trade, more repair work and greater potential for infrastructure growth,” he says.
“We are a shipyard, and if there are problems with any ships passing through we’d hope they would consider us the most reputable.”
Hamad Port also is located adjacent to a newly created economic free zone, which means more investment opportunities in sectors such as petrochemicals, building materials, maritime, metals, logistics, food processing, automobiles and machinery – and more international trade as a result.
“The new port will position Qatar as an up-and-coming regional trading hub, with its strategic location and proximity next to a free zone. It will not only bring about increased container traffic to Doha, but more cargo and vehicle carriers in the area, too,” Rajwani says.
Rajwani brushes aside a suggestion that Qatar nonetheless faces competition from other Gulf states in its quest to build the biggest and best port. Oman, for example, is pressing ahead with plans for the huge Port of Duqm in partnership with Consortium Antwerp of Belgium, which will also be located next to an economic free zone.
Dubai’s Jebel Ali already is one of the largest ports in the world, covering 134 sq kms, and Abu Dhabi Ports’ Khalifa Port, which opened in September, 2012, is planned to increase its capacity from 2.5m TEUs (twenty-foot equivalent units) to 15m TEUs.
“All the Gulf states are trying to be the best - even when it comes to airlines they are fighting. This is actually good for our clients as it forces us to be competitive,” Rajwani says.
“Qatar’s maritime cluster is still at a nascent stage. But with the creation of a free trade zone we are likely to see more investors setting up in Qatar, leading to a wider range of vendors and services available locally.
“Having a healthy range of local supplies is important for our business, as it will bring down our costs and allow us to operate in a more efficient manner, thus increasing our competitiveness with other yards in the region.
“We have been in the maritime business for decades – we have the infrastructure, customer service experience and engineering capabilities to hold our own.”
Meanwhile, Qatar’s status as the 2022 World Cup host gives it a significant regional advantage, adds Rajwani – not to mention it being the reason behind the huge volumes of construction materials that are shipped into the country on a daily basis.
“Essentially, Qatar is opening up – it is preparing for greater footfall in the lead-up to the World Cup, there is a vast amount of construction work, a rapidly growing population and we expect the shipping industry to boom here as a result.”