Japan’s Mitsui OSK Lines, among the world’s largest ship operators, expects it will take “at least several weeks, and probably about a month” for navigation through the Strait of Hormuz to take shape, President and CEO Jotaro Tamura told Platts, part of S&P Global Energy.
“At the very least, until the high-level agreement reached now is reflected on the ground and transit through the strait takes some form, I think it will take at least several weeks, and probably about a month,” Tamura said in an interview at the company’s head office in Tokyo.
Asked whether his view was related to a general shipping trend and not to the company’s ships, Tamura said: “That’s true. Of course, for our ships that are still inside the (Persian) Gulf, we want to get them out as soon as possible.”
These statements came before the United States and Iran signed a memorandum of understanding to end the war on late June 17, after the announced agreement on a temporary peace agreement earlier in the week.
He added: “At the moment, only the announcement has been made, and the actual situation on the ground in the Strait of Hormuz has not changed.” “Therefore, we are closely monitoring how the situation on the ground will change based on the announcement.”
Commenting on how the effective closure of the Strait of Hormuz will impact oil shipping practices, Tamura said: “Even if transit through the Strait of Hormuz resumes this time, based on what happened, the industry will have somewhat little choice but to diversify procurement sources while taking geopolitical risks into account.”
Noting the potential increase in demand for oil tankers across the industry, Tamura said the shipping industry will likely need to respond to those needs to some extent.
MOL currently has a fleet of 35 crude oil tankers.
Although the situation in the Strait of Hormuz has not yet been resolved, Tamura, who took over as president of the ship operator on April 1, said the company needs to be better prepared for emergencies after a series of geopolitical events in recent years.
“There is the Russian-Ukrainian conflict, then the avoidance of crossing the Red Sea because of the Palestinian issue, and now the situation in the Persian Gulf,” Tamura said. “The seemingly surprising events have continued.”
“However, if we think more broadly and look at changes in geopolitical structures, one could say that rather than being sudden, these types of events are likely to continue to some extent, and that this may now be the normal state of things.”
LNG business
As a way to stabilize income in the volatile shipping business, MOL – already the world’s largest LNG transportation operator – is expanding its LNG business as one of the pillars of its energy business, Tamura said.
“We want to expand the LNG transportation business, which has become one of our strengths, vertically as well, and expand our business opportunities across the LNG value chain,” Tamura said. “In this way, we expand our business areas both upstream and downstream in the value chain and increase profits.”
Most recently, MOL said on June 4 that it, together with Delfin Midstream and Vitol, had reached a final investment decision and formally decided to participate as an investor in the offshore floating LNG project known as Delfin FLNG 1 with an annual LNG production capacity of 4.4 million metric tons, with first production scheduled to begin in 2030.
“This is not a downstream business, but an upstream one, where the gas that was produced at sea is liquefied, temporarily stored, and then loaded onto ships,” Tamura said of Delfin FLNG 1.
Tamura added that MOL has positioned exploration and production in the LNG tanker value chain as a stable business based on medium to long-term contracts.
He added: “The importance of having these companies with stable profits is that for a shipping company like ours, many other types of ships have profits that are very unstable, or very volatile.” “Amidst these fluctuations, having a stable business contributes to the stability of the company’s performance as a whole, and therefore has a very important meaning.”
MOL has identified the Indian Ocean Arc as the regional focus for its business developments in the medium to long term.
“If we talk specifically about LNG, the country in this region where demand is currently expected to grow is India,” Tamura said. “Our company also owns and operates several LNG carriers for customers in India, and we expect business opportunities to continue in the future, so India will be one of the priority regions for LNG transportation contracts.”
MOL currently operates a fleet of just over 100 LNG carriers, with a backlog of 53 vessels across its energy business, Tamura said, adding that the fleet is expected to grow to about 130 to 140 tankers after some retirements by 2030.
Asked to comment on the global flow of LNG transportation from the EU ban on Russian LNG imports from January 1, 2027, Tamura said: “For the parties directly involved, the EU and Russia, there will naturally be something like a trade reorganization, so there will be an impact.”
“However, from a global perspective, it would be a reorganization of trade, and I don’t think it would change the overall structure significantly,” he added.
Asked whether MOL would be able to transport Yamal LNG cargoes from next year, Tamura said: “We will respond while carefully assessing the direction of the sanctions measures.”
Offsetting carbon removal
Tamura said that against the backdrop of developments in the Middle East and the importance of re-evaluating energy security, MOL does not see a shift in its pursuit of decarbonisation work.
“It’s a question of time horizon,” Tamura said. “In the near term, with the growing awareness of energy security, to put it rather harshly, there is a need to strictly secure oil and LNG supplies. Also, based on recent events, there is a feeling that procurement has to be somewhat strategically diversified.”
“Even if it is more expensive or more distant, there is a sense that procurement portfolios may need to shift somewhat and include additional procurement sources.”
Such efforts may not appear to extend beyond carbon removal, he said.
“However, over a longer period of time, I do not think the basic concept of decarbonization has changed, and we must continue to work on it,” Tamura said.
“In that sense, there is a difficult aspect: we may need to pursue what appear to be conflicting goals in parallel until about the first half of the 2030s,” he said, adding that a striking balance will be needed.
“In the world of shipping, the next major fuel for decarbonization has not necessarily been identified yet,” Tamura said.
“So, keeping an eye on commodities like LNG, which is seen as a transition fuel, as well as ammonia, methanol and biofuels, we are preparing for the next tipping point.”
source: Platts
