Japan’s Nippon Yusen Partners With Indonesia’s Pertamina Tanker Subsidiary

A worker prepares to label barrels of lubricant oil at the state oil company Pertamina's lubricant production facility in Cilacap, Central Java, Indonesia, on Nov. 6, 2017. Rosa Panggabean/Antara Foto via Reuters

Japan’s shipping firm Nippon Yusen Kaisha (NYK) announced Friday its strategic alliance with a tanker subsidiary of Indonesian state oil giant Pertamina, which will allow Pertamina to expand its fleet in the global market.

In a statement, NYK said that it had concluded an investment and strategic alliance agreement with Pertamina International Shipping (PIS), a Pertamina subsidiary specializing in energy transportation.

PIS CEO Yoki Firnandi said the investment is worth up to $500 million, including NYK’s purchase of a minority stake in PIS, Nikkei Asia reported.

The two companies will work together on projects involving crude oil, petroleum products, transportation of liquefied natural gas (LNG), floating storage and regasification units, and carbon capture and storage.

“We look forward to collaborating with PT Pertamina (Persero) and PIS in the energy field in the future,” Akira Kono, chief executive of NYK’s Energy Division, said in a statement.

Pertamina CEO Nicke Widyawati said the partnership with NYK will enable PIS to diversify its business beyond shipping and create new opportunities for Indonesia in the storage sector.

“Indonesia has an ambitious target to make sea transportation the backbone of the country’s economic growth,” Widyawati told reporters on Thursday, according to local reports.

PIS operates more than 400 vessels, including three very large crude carriers and two very large gas carriers.

PIS director Wisnu Santoso said in November that the company aims to invest up to $3 billion over the next five years to rejuvenate and expand its fleet, including investing in vessels to transport LNG.

“We want to reduce the average age of our fleet within the next five years to 15 years from currently at around 20 years,” Santoso told Reuters.

The company is also planning to acquire vessels for LNG transportation, which it currently does not have in its portfolio, as demand for the fossil fuel, which is considered less polluting than others, is expected to increase.

Santoso acknowledged that shipping yards are at full capacity now and building new vessels could be expensive due to high demand, but the company is open to purchasing existing vessels as long as they still have good economic value.