Cosco Shipping Energy Transportation (CSET) is ending its seven-year VLCC order drought by ordering six newbuildings at a Chinese shipyard.
The Shanghai-listed company disclosed that the 307,000-dwt crude tankers will be ordered through its subsidiary, Cosco Shipping Energy Transportation Hainan, also known as CSET Hainan or Hainan Energy.
CSET did not disclose the reason behind the order, but shipping players suggested that the newbuildings form part of the company’s fleet renewal and expansion programme.
The company, part of the giant China Cosco Shipping group, said the six new tankers will cost CNY 5.748bn ($794m), or $132m per ship, including taxes.
The fuel choice was not disclosed, but brokers said the VLCCs will be powered by conventional marine fuel.
The 307,000-dwt crude tankers are possibly the most expensive conventionally fuelled VLCCs to be ordered this year. They were priced even higher than the $129m value quoted by UK shipbroker Clarksons for a VLCC newbuilding.
CSET’s order for the sextet brings the global orderbook for VLCCs to 81, of which 59 were ordered this year.
Orders for VLCCs only started picking up last year, when 19 were booked.
The surge in orders is reportedly driven by the need to replace an ageing fleet and growing optimism about a stronger market ahead.
Clarksons states that 14 are LNG dual-fuelled ships, with one to be powered by methanol and the rest running on conventional marine fuel.
CSET’s website shows it controls 43 VLCCs, of which 35 are owned vessels.
The last time the company ordered VLCC newbuildings was at the end of 2017, when it booked a pair of 308,000-dwt ships at Dalian Cosco KHI Ship Engineering for $80m each. The duo, named the Yuan Peng Yang and Yuan Fu Yang, were delivered in 2021.
CSET Hainan was set up in 2020 to take advantage of Hainan’s geographic and strategic location. It is part of CSET’s strategy to bolster business in the region and support the development of the Hainan Free Trade Zone.
CSET said it will increase the registered capital of CSET Hainan by not more than CNY 1bn using internal funds.
Meanwhile, CSET’s board has approved the set-up of new subsidiary Dalian Cosco Shipping Energy Supply Chain (DSESC) to take over a fleet of LPG and chemical carriers from private sister companies.
The purpose of the merger is to integrate the operation of China Cosco Shipping’s LPG and chemical products’ transportation, warehouse and logistics assets.
The new shipping outfit will be taking a five-year loan from Cosco Shipping Finance to partially finance the CNY 126bn mergers-and-acquisitions deal. It stated that the loan amount would not exceed CNY 630m or 60% of the transaction.
DSESC will have a fleet of 14 LPG ships, including two under construction, and 10 chemical vessels, including three that are time-chartered in.
