South Korea’s Sinokor Merchant Marine has signed up to a slew of LNG-fuelled aframax tanker newbuildings worth around $620m at Samsung Heavy Industries in South Korea. The deals are backed by time charters with energy major Shell.
The energy major said Monday: "Shell Tankers (Singapore) has agreed a long-term deal to charter a fleet of 10 LNG dual-fuelled aframax crude oil tankers from Sinokor Petrochemical Co."
Shell said it expects to take delivery of these ships in 2021.
Separately, Shell also confirmed it has agreed long-term charters on four LNG dual-fuel oil product tankers from what it described as "institutional investors advised by JP Morgan Asset Management".
This quartet is also due for handover in 2021.
TradeWinds reported in early July that JP Morgan ordered four 25,000-dwt, dual-fuel chemical tankers at Hyundai Mipo Dockyard with charters to Shell under the energy giant's Project Solar. The ships will be built to IMO type 2 chemical handling standards.
Shell said it plans to fuel the tankers at existing facilities in Singapore, Rotterdam and other bunkering ports that the company is considering.
Shell’s vice president for crude trading and supply, Mark Quartermain, said: “LNG is already a commercially competitive way to reduce emissions from ships, including those delivering oil to our customers.
"This is an important step in Shell’s wider drive to help decarbonise the shipping sector, both as a leading supplier and user of LNG."
Shell vice president of shipping and maritime Grahaeme Henderson said: “LNG is a cleaner-burning and lower-carbon fuel, so shipowners are increasingly using it to help achieve their environmental ambitions in a cost-effective way.”
SHI said Monday that it had signed an order with an unnamed client for 10 crude oil tankers of 113,000 dwt.
SHI said the total value of the deal is worth KRW 751.30bn ($621m) pricing the LNG-fuelled tankers at around $62m each.
Industry sources said Sinokor has also pencilled in options for a further five slots with the yard.
The Sinokor newbuildings are the largest haul of LNG-fuelled tankers contracted to date.
Officials at SHI declined to comment on the order when contacted.
The long-term charter-hire terms to Shell have yet to be clarified.
Last month, brokers reported that Sinokor was ordering a quartet of aframax tankers at SHI, amid talk that another larger newbuilding deal was being finalised of the size of tanker order announced Monday.
Shell has worked with Sinokor on previous large tanker newbuilding projects, notably a haul of 30 MR tankers, under what was dubbed Project Silver.
The energy major, which has been pioneering the development of LNG fuelling globally, is already operating four LNG-fuelled aframax vessels.
A year ago, Shell took delivery of the world’s first LNG-fuelled aframax, the 114,000-dwt Gagarin Prospect (built 2018), with its sistership newbuilding Samuel Prospect handed over in May.
Both Hyundai Heavy Industries-built, ice-class 1A tankers ships are time chartered to Shell for up to 10 years from Sovcomflot (SCF Group).
In addition, Shell has taken in two more vessels from Malaysian shipowner AET, the 113,416-dwt Eagle Brasilia and Eagle Bintulu (both built 2018).
Shell is also in talks with three shipowners, understood to be Capital Product Partners, Euronav and Frontline about charters on what could become some of the first LNG-fuelled VLCC newbuildings in the world fleet.
