Sanjay Mehta-backed S ONE Capital has signed a letter of intent (LOI) with South Korea’s Hyundai Heavy Industries for up to six LNG-fuelled VLCC newbuildings worth more than $630m in total.
Brokers said Mehta’s company, of which he is listed as founder and chairman, signed its LOI for the 300,000-dwt dual-fuelled tankers on 16 June and has until 13 July to firm up the vessels.
They price the ships in the region of $105m or above. Delivery dates are expected to be from 2022 onwards.
Energy major
Speculation is rife as to who the charterer might be on the ships. One broker assures that the discussions on the newbuildings are not with an energy major. But other sources following the business indicated that the vessels have been designed for Shell charters.
Last month, TradeWinds reported that Shell was in talks with Chinese leasing companies about a series of up to eight dual-fuelled VLCCs.
These vessels are expected to be built at either Shanghai Waigaoqiao Shipbuilding or Dalian Shipbuilding Industry Co (DSIC), with big-name shipowners in the frame to take on the ships against charters with the major.
But industry talk suggests Shell’s appetite for LNG-fuelled VLCC tonnage may extend beyond these initial vessels.
To date, just three LNG-fuelled VLCC newbuildings have been contracted.
China was first out of the traps, upgrading one vessel in an existing VLCC order at DSIC for Cosco Shipping Energy Transportation Co. This ship is due for handover next year.
But, in April, Total also took the plunge following a long-running project, signing up to charter in two dual-fuelled VLCCs contracted by AET at Samsung Heavy Industries for delivery in 2022.
Others have eyed LNG-fuelled VLCC tonnage. Last year, Evangelos Marinakis-controlled Capital Maritime & Trading signed an LOI with HHI for up to 10 newbuildings. But the business evaporated when the gap between the cost of the ships and the charter rates on offer did not stack up for the Greek owner.
TradeWinds has contacted Mehta for confirmation and comment on S ONE Capital’s planned order.
Track record
The former chief executive of India’s Essar Shipping does not yet have a clear track record on newbuildings under his Geneva-based S ONE Capital, but is said to have serious intentions to conclude deals.
To date, his efforts have been concentrated on tanker tonnage.
In 2016, he was reported to be behind a $320m order for six to eight LR1 product tanker newbuildings at DSIC, which failed to materialise.
He went on to pursue suezmax tanker newbuildings. But, again, a planned order was not confirmed.
Mehta is listed with a mix of experience both at the sharp end of shipping with Essar, and also in fund management and investment banking.
A former Cass Business School graduate and merchant banker with Hambros Bank, Goldman Sachs and then American Marine Advisors, now AMA Capital Partners, Mehta has been chairman of his family trust fund — S ONE Trust — for the last six years.
Prior to this, he was managing director of Essar Capital, the asset manager for the Ruia-family controlled Essar Global Fund.
