https://arab.news/cmvfm
- Fleet expansion and rising demand is fueling the increase, company’s president tells conference
RIYADH: Cargo transported by Bahri Chemicals is set to hit 9.1 million tonnes this year — a 56.9 percent rise from 2022, according to a top official.
During a keynote session at the 19th ICIS Middle Eastern Base Oils and Lubricants Conference in Riyadh, Faisal Al-Husseini, president and board member of the firm, noted fleet expansion and rising demand was fueling the increase.
Bahri Chemicals was launched in 1990 and is a joint venture between Saudi Basic Industries Corp. and Bahri — the national shipping carrier of Saudi Arabia.
Al-Husseini said: “Bahri Chemicals is seeking to continue its growth and expand its fleet, and we intend to focus on the types of vessels that can transit through the Red Sea, because they add the most value to our customers.”
As well as reflecting on Bahri Chemicals’ growth, the official used his address to flag up the challenges to vessels caused by tensions in the Red Sea.
He said the company estimates the total cost of disruption to global shipping through the Bab Al-Mandab Strait since November has reached $323 billion and is “increasing every day.”
Concerns over the using the shipping lane increased dramatically at the end of 2023, when Houthi militants stepped up attacks on vessels in the wake of the escalation of the Israel-Hamas conflict.
Al-Husseini stated that Bab Al-Mandab Strait — the narrowest entry point to the Red Sea — is a critical choke point for global trade.
“With the attacks on shipping, we’re seeing the majority of ship owners avoiding the Bab Al-Mandab Strait, going a much longer route around the Cape of Good Hope in order to reach their destinations. In so doing, disrupting supply chains in the region,” Al-Husseini said.
The official compared the impact of recent disruptions in the Red Sea to the Ever Given incident that blocked the Suez Canal in March 2021.
While that blockage lasted just six days and cost the global economy $6-$10 billion per day, the Red Sea disruptions have lasted nearly 11 months.
“To date, at the time of preparing this presentation, there were 100 incidents that have been reported of attacks on civilian merchant vessels transiting the Red Sea,” Al-Husseini said.
He continued: “Today, that number is actually higher. It’s 103 incidents ranging in severity from threats or hostile warnings to actual attacks on vessels where there have been civilian casualties and damage to the vessels.”
Al-Husseini ended his address with a warning, saying: “The attacks against shipping in the Red Sea is ongoing, and it remains severe. I wish I could give you some good news and tell you that it’s improving, but with the ongoing geopolitical turmoil that we see, it is actually becoming more severe.”
During the opening remarks of the conference, Majed Hindi Al-Uteibi, deputy minister for oil and gas and regulatory affairs, stated that the Ministry of Energy is looking to secure international investors to help develop local expertise and increase localization.
He said government departments were working with the Royal Commission for Jubail and Yanbu, the National Industrial Development Center, Luberef, and international investors to develop the Lubricants Value Park at Yanbu.
This facility was launched in February 2020 by Saudi Aramco Base Oil Co., also known as Luberef, which is 70 percent owned by Saudi Aramco, while Jadwa Industrial Investment Co. holds the remaining 30 percent stake.
“The Ministry of Energy is working through this special team to localize new technologies in this sector and attract global investors to transform the Kingdom into the largest manufacturer and exporter of these products,” Al-Uteibi said.
Al-Uteibi explained that this will help increase localization rates and meet the growing local and regional demand for these products.
“Saudi Arabia is also positioning itself as a logistical hub for the region, supported by its strategic location, which comes at the crossroads of economic interdependence and trade flows,” Al-Uteibi said.
He continued: “This unique positioning is creating a growing local demand for fit-for-purpose lubricants, reinforcing the Kingdom’s position as a key player in the global lubricants market.”
He further highlighted the potential and growth of the global lubricants market, valued at $140 billion in 2023 and expected to grow at an annual rate of 3.8 percent through 2030.
“Those numbers are more than just figures – they represent the momentum of our industry and the vast opportunities that lie ahead. It is a call for action by all of us to push the boundaries beyond what is possible today and to be at the forefront of innovation,” Al-Uteibi said.
Saudi Arabia’s Vision 2030 aims to position the country as a global leader in industries such as lubricants and base oils.
He stressed that several sectors, including mining and industrial manufacturing, are expected to experience significant growth, helping to enhance the Kingdom’s leadership in the lubricants market.
“The renewable energy sector is also emerging as a key area of focus for us, with the expansion of renewable energy projects in the Kingdom,” Al-Uteibi said.
He continued: “This growth will drive demand for lubricants designed to improve the efficiency and durability of wind turbines, ensuring sustainable and reliable energy production.”
These developments reflect Saudi Arabia’s commitment to energy diversification and industrial advancement.