Southern China Has a large Number of Independently Owned “Tea-pot” Power Plants: Offshore Engineering & Supply Chain Programs Assignment, NTU, Singapore

Assignment Brief:

Southern China has a large number of independently owned “tea-pot” power plants that use 280CST fuel oil as a feedstock for power generation. These independent owners have banded together to set up a loose association to negotiate for the purchase of feedstock on its behalf to maximize bargaining power. Iran has aging oil-producing and refining capacities.

The refineries located in Bandar Mahshahr are capable of producing 200,000 tons of 280CST fuel oil per month. Due to lack of upkeep, Bandar Mahshahr is only accessible through a channel that has a maximum water depth of 12.6m during high tide. US Dollars remain the predominant currency used in shipping.

Any transactions done in US Dollars have to be cleared and that process will be subject to scrutiny by the Office of Foreign Assets Control (OFAC) for any potential breach of sanctions imposed either by the United Nations or unilaterally by the United States of America.

The 12.6m water depth restrictions combined with port infrastructure limitations indicate that each shipment size cannot exceed 75,000 tons. The usual discharge port for the Chinese is Huangpu which has sufficient depth to match the shipment size of 75,000 tons The Chinese and Iranian have signed a Memorandum of Understanding to jointly explore the potentials of establishing a joint venture to export Iranian 280CST fuel oil to the Chinese tea-pot power plants Your company is pitching to the Chinese to secure exclusive consultancy rights.

You will need to form and lead a team of consultants to address the following concerns: What sort of sales contract should the Chinese negotiate on? How should the Chinese ensure supply chain security and reliability?