Saudi Arabia's national shipping company and the Arab Petroleum Investments Corp. (APICORP) have launched a joint fund to purchase large oil tankers for the kingdom, an official statement said on Monday.

The $1.5-billion fund aims to purchase 15 Very Large Crude Carriers (VLCCs) for the kingdom's state-owned shipping firm in three phases, the statement said.

The agreement signed between the two companies Sunday night in Riyadh said the fund's duration is for 10 years.

APICORP, the development bank of the 10 Arab petroleum exporting countries, will contribute 85 percent to the fund's capital while the Saudi firm will make up the remaining 15 percent.

Established in 1978, the National Shipping Company of Saudi Arabia owns 83 various vessels including 36 VLCCs.

Saudi Energy Minister Khaled al-Faleh said the fund will contribute to turning the kingdom into a regional logistics hub.

The minister however denied that the purchase of tankers was a sign that Saudi plans to increase its oil production capacity, which currently stands at over 12 million barrels per day (bpd).

The kingdom pumps 10.2 million bpd and is the world's top crude exporter.

Source: AFP