Energy giant Shell is holding talks with three Chinese leasing companies for up to eight LNG-fuelled VLCC newbuildings.

Mingsheng Financial Leasing (Mingsheng FL), ICBC Financial Leasing and Bank of Communications Financial Leasing (Bocomm Leasing) are all said to be in talks with Shell over the 300,000-dwt crude tankers, industry sources told TradeWinds.

Shell is said to be looking to charter four firm dual-fuel vessels, plus four options.

“Two shipyards — Shanghai Waigaoqiao Shipbuilding (SWS) and Dalian Shipbuilding Industry Co (DSIC) — are looking to participate in the project,” said a shipbuilding source.

“It is highly possible that Chinese shipyards will be asked to build the VLCCs if Shell chooses to work with the Chinese leasing companies.”

Shell has been pioneering LNG fuelling. The major was the first to move ahead with LNG-fuelled aframax tanker newbuildings in 2017 and has been working on a similar project for VLCCs for several years.

Bocomm Leasing was not contactable, while executives at ICBC and Mingsheng FL declined to comment. A Shell spokeswoman also declined.

Industry sources believe Shell’s recent collaboration with Bocomm Leasing for a series of LNG-fuelled LR2 newbuildings has encouraged it to look to China for the VLCCs.

LR2 series

In March, Bocomm Leasing signed up for 12 dual-fuelled 120,000-dwt LR2 tanker newbuildings worth almost $650m at two state-owned shipyards. It has ordered the vessels under a 15-year leasing deal.

SWS was tasked with building four ships, while Guangzhou Shipyard International will be constructing eight vessels.

The ships are set for delivery in 2022. It is not known whether the orders involve options for additional ships.

Bocomm Leasing was reported to be paying about $54m each for the tankers.

Industry sources said that although Shell is in talks with Chinese interests over the recent VLCC newbuildings, South Korea’s shipbuilders Hyundai Heavy Industries, Samsung Heavy Industries and DSME are still in the race for the project.

“Shipping companies such as John Fredriksen’s Frontline, Euronav, AET, Tsakos Group and Evangelos Marinakis’ Capital Maritime & Trading are likely to take part on Shell’s project,” said a shipping player.

Last September, Capital Maritime was reported to have inked a letter of intent (LOI) with HHI for up to 10 dual-fuelled VLCC newbuildings. But the project has since been put on the back-burner as charter rates offered by the oil companies were not high enough.

Shell is not the only oil company that is looking to charter dual-fuelled VLCC newbuildings. Total and ExxonMobil are also pursuing the same goal.

In April, MISC Group subsidiary AET booked two LNG-fuelled 300,000-dwt VLCCs at SHI for delivery in the first quarter of 2022. It ordered the newbuildings against charters to French energy major Total.

AET was reported to have paid less than $105m each for the crude carriers, which will be fitted with type-C bunker tanks. The deal is said to include an option to build an additional three vessels at the yard.

Cosco Shipping Energy is the first company to have ordered dual-fuelled VLCCs. The Chinese owner upgraded one of the four 319,000-dwt crude tankers it ordered at DSIC two years ago into an LNG-fuelled ship. It is scheduled to take delivery of the tanker in late 2021.