Bangalore: The petroleum shipping arm of Malaysia’s state-run shipping firm MISC Bhd, AET Tanker Holdings Sdn Bhd, said it will register at least five more tankers in India to carry petroleum products along the country’s coast, a business that is reserved for Indian-registered ships.

The tanker operator disclosed this plan after converting one of its Malaysian-registered petroleum product tankers into an Indian-registered ship. The 14-year-old ship, named Eagle Meerut, can carry as much as 30,000 tonnes of petroleum products.

Braving competition: A file photo of a Chennai port. India’s coastal trade is reserved for Indian-registered ships. Foreign vessels can be hired when Indian ships are not available, and only with the permission of DGS. Hemant Mishra / Mint

India’s coastal trade (shipping cargo between two Indian ports) is reserved for Indian-registered ships and foreign ships can be hired only when Indian ships are not available, and that too after taking the permission of the Directorate General of Shipping (DGS), the country’s maritime regulator.

“We are looking to bring some shipping tonnage to India by registering at least five more product tankers here," said an executive at the Indian office of AET. He did not want to be named, citing company policy on speaking with the media.

AET has opened an Indian subsidiary to be able to own and operate ships along the coast. All the five product tankers that AET plans to convert into Indian-registered ships are currently registered in Malaysia and fly the flag of that country. In shipping, vessels fly the flag of the country they are registered in.

“India will be a big exporter of oil to other Asian countries in the coming years," said the AET executive mentioned earlier. “We are coming to India to tap some of this business potential," he said. AET’s Indian ships will carry petroleum products along the coast for local oil companies, he added.

An email sent to AET’s public relations agency in London seeking comments remained unanswered.

Originally a subsidiary of the Singapore government-owned Neptune Orient Lines Ltd, American Eagle Tankers—as AET was known—was formed in Houston in 1994 to serve the US Gulf lightering (a term commonly used to describe ship-to-ship transfer of crude oil) services market.

MISC Bhd (formerly the Malaysian International Shipping Corp. Bhd) acquired American Eagle Tankers in July 2003. MISC Bhd is the shipping unit of Malaysia’s state-run oil company Petroliam Nasional Berhad or Petronas.

The arrival of AET will intensify competition for carrying petroleum products along the coast, according to a Mumbai-based shipping analyst.

The coastal oil shipping business, worth about Rs1,000 crore a year, is currently dominated by four local shipowners—state-run Shipping Corp. of India Ltd, or SCI, Great Eastern Shipping Co. Ltd, Mercator Lines Ltd and Pratibha Shipping Co. Ltd.

Local refiners such as the state-owned Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd have hired some 24 ships for periods ranging from one to two years to transport petroleum products along the coast.

AET’s plan has created a flutter, prompting local shipowners to demand tightening of rules on coastal trade to protect Indian ships from foreign competition in times of a downturn in global shipping.

“In today’s context, when the world is looking inward, and every government talks about protectionist measures for their indigenous industry, we must do the same in India," S. Hajara, chairman and managing director of SCI, India’s biggest ocean carrier, said in an interview last week. “Every industry has got a trade barrier. We are saying that the Indian coast should be completely reserved for the Indian flag carriers," Hajara, who is also the president of the industry lobby group, the Indian National Shipowners Association, added.

“Every country has got restrictions on domestic cargo movement. For instance, China has made (it) mandatory that only Chinese companies can move coastal cargo. So has Indonesia," said Yudhishthir D. Khatau, vice-chairman and managing director of Varun Shipping Co. Ltd, India’s biggest liquefied petroleum gas carrier.

Apart from setting up an office in India to conform to the country’s coastal shipping laws, AET has regional offices—located in Chennai, Mumbai and Gurgaon in Haryana—that also provide crewing and manning (staffing) services for the petroleum shipping company’s tankers.

India is one of the world’s biggest suppliers of manpower to the global shipping industry.