Island Navigation of Hong Kong has exercised options for a pair of MR product tankers and is considering LNG fuelling for the vessels.
Industry sources said the Asian tanker company signed up for the 50,000-dwt product carriers at STX Offshore & Shipbuilding, bringing to four the total number of MR tankers it has on order at the South Korean yard.
One shipbuilding source familiar with the deal said Island Navigation’s latest newbuildings represent options it held at STX. He added that the shipping company has “upgraded” the tankers to IMO Tier III emission standards.
And he said they will be LNG ready, meaning that Island Navigation holds an option to upgrade the duo to be dual-fuel vessels at a later stage.
The company’s earlier newbuildings were ordered last year, but are being constructed to older IMO Tier II standards and only with conventional fuels in mind, the source said.
STX is scheduled to deliver the conventional MR tankers early next year, and the latest pair in 2022.
Island Navigation’s newbuildings at STX are said to be part of the company’s fleet-renewal programme. The company has 10 MR tankers on the water that were built between 2004 and 2013.
STX declined to comment for this story, while Island Navigation has been approached for comment.
A newbuilding broker said he believes Island Navigation will need to pay more than $40m each if it opts to have the MR tankers running on both LNG and conventional fuel.
“A conventional MR tanker newbuilding cost around $35m,” said the shipbuilding expert. “A dual-fuel vessel will cost an additional $5m to $6m.”
Island Navigation has also turned to the secondhand market to renew its fleet. Last year, it spent nearly $26.3m to buy the 50,000-dwt Cedar Express (ex-Gan Trust, built 2013) from Fiba Holding. At the same time, the Hong Kong shipowner sold two elderly ships — the 45,800-dwt Astral Express (built 2002) and 46,000-dwt Sakura Express (built 2004).
Island Navigation was set up by shipping entrepreneur CY Tung. Today, the company is said to be led by Alan Lieh Sing Tung, grandson of Tung and son of Tung Chee-hwa, Hong Kong's first chief executive under Chinese rule.
In addition to its role at Island Navigation, the Tung family has a position in LNG shipping after Tung Chee Chen, former chairman of Orient Overseas Container Line, disclosed holding 2m shares in New York-listed GasLog.
If Island Navigation elects to receive its latest MRs as dual-fuel tankers, they will feature two 900-cbm type C tanks that will be fitted each side of the accommodation blocks.
STX started developing the design of LNG-fuelled MR tankers in 2018.
Last year, Singapore’s Eastern Pacific Shipping inked a letter of intent with STX for four LNG-fuelled, 50,000-dwt vessels with delivery starting in late 2021. However, the company did not follow through with that order.
Shipbuilding players said CSSC Leasing is the only company that has signed up for LNG-fuelled MR newbuildings thus far. The company has one 50,000-dwt vessel booked at China’s Chengxi Shipyard. It has ordered the LNG-fuelled tanker on the back of a charter contract from commodity trader Louis Dreyfus Co.
