Knutsen NYK Offshore Tankers (KNOT) has secured a long-term charter for one of its two suezmax shuttle tankers on order at Cosco Shipping Heavy Industry in China.

Market sources said the deal was concluded with French oil major Total for the first ship, which is set for delivery in January 2021.

Details unclear

The terms of the charter are unclear, although Total has an option to extend it for up to 10 years.

KNOT ordered the 154,000-dwt shuttle tankers in October, but the shipowner and Total have so far not commented on the charter.

There appears to be no employment lined up for the second tanker under construction.

KNOT last year also ordered two 152,000-dwt shuttle tankers at South Korea’s Hyundai Heavy Industries, which reportedly cost $110m to $120m each. These have been fixed to Norway's Equinor on five to seven-year charters for employment on the Roncador field in Brazil.

KNOT is a 50:50 joint venture between Japan's NYK Line and Norway's Knutsen group of companies.

The Cosco order partly represents an expansion for KNOT, vice president of chartering John Einar Dalsvaag said.

Shunning scrubbers

However, the company still has seven shuttle tankers built in the 1990s, so it is natural at some stage to phase out older tonnage, he said. The oldest tanker is the 146,000-dwt Gerd Knutsen (built 1996), which is employed off Venezuela.

In its newbuilding programme, KNOT has taken a clear position on scrubbers.

“We have no faith in this solution,” Dalsvaag said. "It is a completely wrong approach."

The company has developed a new ballast water treatment system that is seeking US Coast Guard testing and revised IMO approval.

KNOT has a fleet of 29 shuttle tankers and is a leading player in the sector. It is also the parent of New York-listed KNOT Offshore Partners, in which it holds a 28% stake.

Norwegian shipowner Trygve Seglem and his family firm TS Shipping Invest have a 50% stake in KNOT, in addition to controlling 11 LNG carriers and four product and chemical tankers.

TS Shipping had an operating profit of NOK 425m ($47.4m) last year, up from NOK 417m in 2017. The shipowner's revenues dropped from NOK 915m to NOK 905m.

It had a book value of NOK 3.49bn at the end of 2018.

In its annual report, KNOT's board stated that it has “every reason to believe that 2019 will be a satisfactory year for the group”.